Palo Alto Networks guidance falls short of estimates; shares slump

Investing.com -- Palo Alto Networks reported current-quarter guidance on Tuesday that missed estimates, offsetting better-than-expected fiscal second-quarter results. 

Palo Alto Networks Inc (NASDAQ:PANW) fell up more than 18% in afterhours trading following the report.

The cybersecurity firm said it expects to deliver fiscal third-quarter adjusted earnings per share (EPS) of between $1.24 to $1.26 on revenue of $1.95B to $1.98B. That was below Wall Street expectations for an EPS outlook of $1.29 on revenue of $2.04B. Total billings was guided in the range of $2.30B to $2.35B.

Speaking to analysts following the report, Chief Executive Officer Nikesh Arora flagged that clients are closely watching expenditures on cyber protection after recently shelling out cash to bolster their safeguards against rising digital threats. 

"The customers are demanding to get more for the amount of money they have allocated to cybersecurity," Arora said. However, he noted that demand for its offerings continues to be "very strong."

For its 2024 fiscal year, the company guided for adjusted EPS of $5.45 to $5.55 per share on revenue of between $7.95B to $8.00B. That compared with a prior estimate for adjusted EPS of $5.40 to $5.53 on revenue of $8.15B to $8.20B.

Palo Alto Networks said it now sees annual billings of between $10.1B and $10.2B, down from a previous range of $10.7B to $10.8B. It also lowered its sales forecast for the year, as it now expects revenue to be between $7.95B and $8B, down from a prior view of $8.15B to $8.2B.

In the three months ended on Dec. 31, California-based Palo Alto Networks posted adjusted profit of $1.46 a share on revenue of $1.98 billion, compared with estimates of $1.30 and $1.97B, respectively.