Shares of Palo Alto Networks (PANW) saw big gains Friday after it reported tax revenues and earnings for the third quarter that exceeded estimates. The company’s prospects were also above expectations, despite supply chain constraints, prompting PANW shares to rally.
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“Great deal momentum and effective cross-platform strategies drove strength that was broad across product categories and geographies,” Cowen analyst Shaul Eyal said in a note to clients. “Superior supply chain management helps drive market share gains.”
The cybersecurity firm reported April’s quarterly earnings after the market closed on Thursday. PANW shares were up 6.7% near 465.50 today in stock market afternoon trading.
Palo Alto said on an adjusted basis, earnings are up 30% to $1.79 a share. Including acquisitions, revenue increased 29% to $1.4 billion, the company said. Analysts expected earnings of $1.68 per share on revenue of $1.36 billion.
“Supply chain constraints have caused demand to outstrip supply as the company continues to see strong reception for its fourth-generation firewall products and higher levels of subscription adherence rates,” said William Blair analyst Jonathan Ho in his note to customers.
Further, bills came in at $1.8 billion, up 40% from a year earlier, compared to estimates of $1.6 billion.
“Palo Alto reported results that exceeded expectations, highlighted by 40% billing growth versus a 25% consensus,” RBC Capital analyst Matthew Hedberg said in a note. Another bright spot, he added, was that next-generation annual recurring revenue grew 65% to $1.6 billion.
PANW Stock: Guidance Estimates Tops
For the current quarter ending in July, Palo Alto expects earnings per share of $2.26 to $2.29. That’s on revenue of $1.54 billion.
Analysts had expected earnings of $2.22 per share on revenue of $1.53 billion. Palo Alto also forecast bills of $2.33 billion, compared to analyst estimates of $2.23 billion.
Meanwhile, the company has spent more than $3.4 billion on 10 acquisitions in the past three years. With roots in the “firewall” network security market, Palo Alto aims to build a broad cloud-based security platform.
“PANW easily boasts the strongest suite of cloud assets among traditional network security vendors,” Mizuho Securities analyst Gregg Moskowitz said in a note.
Heading into Palo Alto’s earnings report, cybersecurity stock had relative strength of 86 out of the best possible 99, according to IBD Stock Check-up. PANW shares are down 21% in 2022.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
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