Palo Alto Networks (PANW) shares surged higher Tuesday after the cloud-focused cybersecurity group's stronger-than-expected fourth quarter earnings, while forecasting solid near-term profits as big customers continue to spend on cloud transitions and IT infrastructure.
Palo Alto posted a 49.4% jump in non-GAAP earnings for the three months ending in July, its fiscal fourth quarter, with a bottom line of $2.39 per share on revenues of just over $1.6 billion as demand for its cloud-focused security products amid a spate of hacking attacks on U.S. companies and government agencies and health care providers over the first half of the year.
Billings were up 44% from last year to $2.685 billion, Palo Alto said, a figure that will likely slow to around 20.5% for the coming fiscal year as many big-ticket contracts were pulled forward in the fourth quarter.
Looking into its coming fiscal year, Palo Alto Networks said it sees revenues of between $6.85 billion and $6.9 billion and non-GAAP earnings in the region of $9.40 to $9.50 per share.
"In the last year, we arguably saw the most challenging supply chain conditions the technology industry has ever seen. We executed through this well during the year with modest impacts to our gross margins," CEO Nikesh Arora told investors on a conference call late Monday.
"We expect conditions will eventually ease. For our planning, we're assuming a material improvement won't be seen prior to the end of fiscal year '23," he added. "However, as the supply challenges fade, we expect this will start to have a favorable impact on our product gross margins.
Palo Alto shares were marked 10.3% higher in early Tuesday trading to change hands at $560.60 each, a move that would trim nudge the stock into positive territory for the year.
"Palo Alto Networks’ management team generally portrays a level of confidence throughout quarterly earnings seasons, but the tone for F4Q22 seemed particularly positive as the company closed out its fiscal year with strong results," said JMP Securities analyst Trevor Walsh, who carries a 'market perform' rating with a $620 price target on the stock.
"The common theme throughout is customers buying into the multi-platform story Palo Alto Networks has created across network, cloud, and security operations," he added.
