Palo Alto Networks (PANW) shares leapt higher Wednesday after posted stronger-than-expected second quarter earnings and a robust outlook for its cybersecurity products follow a record year for data breaches in the United States.
Palo Alto said non-GAAP earnings for the three months ending in January, its fiscal second quarter, rose 12.2% to $1.74 per share, while revenues jumped more than 30% to $1.3 billion. Around a quarter of the revenue tally came from new product sales, which were up 21% from last year, while subscription and services revenues rose 32% to just over $1 billion.
Billings grew 32.4% from last year, a pace that will slow modestly to around 26% for the full year, Palo Alto said, thanks in part to broad-based demand across its three platforms: Strata, which focuses on enterprise, Prisma, its cloud-based security operation and Cortex, its main security division.
Overall demand for its firewall products and security applications should take current quarter sales as high a $1.365 billion, the group said, with full year revenues in the region of $5.425 billion to $5.475 billion.
"We have built a formidable set of services which are cloud-first, and these services are resonating with our customers," CEO Nikesh Arora told investors on a conference call late Tuesday. "This success is truly driven by us working with our customers to anticipate their challenges, delivering best-of-breed solutions in an integrated fashion while continuing to focus on security outcomes."
"We not only continue to see strong near-term demand but also strong medium-term trends in cybersecurity, fueled by underlying spend in IT spendings and secular trends like hybrid work and cloud-native adoption," he added.
Palo Alto Networks shares were marked 5.3% higher in early Tuesday trading to change hands at $500.90 each, a move that would extend the stock's six-month gain to around 34.4%.
The Identity Theft Resource Center (ITRC) said earlier this year that 2021 was a record year for cyber attacks, with 1,862 verified data breaches, a 68% increase from 2020.
"There is no reason to believe the level of data compromises will suddenly decline in 2022," said Velasquez said ITRC CEO Eva Velasquez.
Research from IBM (IBM) and the Ponemon Institute suggests the average cost of a data breach for a U.S.-based company is around $9.05 million,
