Is 45% Revenue Growth Guidance Enough for Palo Alto?

By Chris Lange Updated Jan 13, 12:42PM EST · Published Feb 25, 4:10PM EST

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Is 45% Revenue Growth Guidance Enough for Palo Alto? — © Thinkstock

Palo Alto Networks, Inc. (NYSE: PANW) released its fiscal second-quarter financial results prematurely before the markets closed on Thursday. Its shares initially popped higher on the news, but shares were halted after the news. The data security company had $0.40 in earnings per share (EPS) on $334.7 million in revenue, compared to Thomson Reuters consensus estimates that call for $0.39 in EPS on $318.32 million in revenue. The same period from last year had $0.19 in EPS on $217.66 million in revenue.

In terms of the outlook for the fiscal third quarter, the company expects EPS to be in the range of $0.41 to $0.42 and revenue to be in the range of $335 million to $339 million–representing a year over year growth of 43% to 45%. There are consensus estimates that call for $0.45 in EPS on $334.64 million in revenue.

During this quarter, the company announced a partnership with Mirantis and made its platform available as a virtual network function within Mirantis OpenStack. The goal of this was to help organizations seamlessly secure an OpenStack cloud infrastructure with Palo Alto’s next-generation security.

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On the books, cash, equivalents, and short-term investments totaled $964.6 million in the fiscal second quarter compared to $789.0 million at the end of the previous fiscal year.

Mark McLaughlin, President and CEO of Palo Alto Networks, commented on earnings:

We reported strong fiscal second quarter results across all metrics, including record revenue of $334.7 million, which increased 54 percent year-over-year. We are proud to now be serving more than 30,000 customers globally who are rapidly adopting the prevention capabilities of our Next-Generation Platform to achieve superior security, simplify their networks and greatly improve total cost of ownership. Security is a critical aspect of the digital age and a strategic priority embedded in all technology decisions for enterprises and organizations around the world.

Steffan Tomlinson, CFO, added:

During the quarter we saw broad adoption of all aspects of our Next-Generation Security Platform with particular strength in our subscription services. Our results demonstrate our commitment to balancing high growth and profitability as well as the increasing strength in free cash flow from our hybrid-SaaS model.

Shares of Palo Alto Networks were last trading up 9.6% at $140.24, with a consensus analyst price target of $194.49 and a 52-week trading range of $111.09 to $200.55.

About the Author Chris Lange →

Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics.

Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications.

A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.