Shares of Palo Alto Networks (NASDAQ fell 9% as the company's weak revenue outlook overshadowed its fiscal third-quarter earnings.
The cybersecurity leader reported a 15% revenue increase to $2.0 billion, beating both the analyst consensus of $1.97 billion and $1.7 billion a year earlier. Adjusted earnings per share (EPS) for the quarter also beat expectations at $1.32, compared to $1.25 expected.
The company's remaining performance obligations grew 23% year-over-year (YoY) to $11.3 billion, slightly above the estimate of $11.28 billion.
Chairman and CEO Nikesh Arora attributed the strong quarter to customer enthusiasm for the company's platform strategy, which integrates artificial intelligence into security measures.
Chief Financial Officer Dipak Golechha highlighted disciplined execution and investment in market and innovation as key drivers of the company's consistent and profitable growth.
Looking ahead, Palo Alto Networks provided guidance for the fiscal fourth quarter with an EPS range of between $1.40 and $1.42, which is within the consensus of $1.41. Revenue is projected between $2.15 billion and $2.17 billion, in line with the consensus of $2.16 billion.
However, revenue outlook for the fourth quarter and full fiscal year, which ranged from $3.43 billion to $3.48 billion for the fourth quarter and $10.13 billion to $10.18 billion for the year, was slightly below of analysts' expectations. This is likely to have contributed to the negative investor sentiment reflected in the decline in PANW stock.
For the full fiscal year 2024, the company updated its guidance and forecast a revenue range of between $7.99 billion and $8.01 billion, up from the previous range of $7.95 billion and $8 billion, and above the consensus estimate of $7.98 billion.
Adjusted EPS is expected to be between $5.56 and $5.58, beating the consensus estimate of $5.52. The company also anticipates an adjusted operating margin between 26.8% and 27.0%, and an adjusted free cash flow margin in the range of 38.5% to 39.0%.
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