Palo Alto Networks (PANW.O) has predicted higher than expected annual billings indicating that more businesses are opting for its comprehensive cybersecurity solutions to combat the growing digital threats.
In response, the company shares surged by over 8% during after-hours trading, leading to a 3.5% increase for Zscaler (ZS.O). A 1.5% rise for Fortinet (FTNT.O) both are competitors in the cybersecurity sector.
The escalating instances of cybercrime concerns regarding privacy and prominent hacking incidents have fueled the demand for cybersecurity products as organizations and governments expand their presence.
This trend's primary beneficiaries have been companies offering a range of cybersecurity solutions allowing clients to enhance efficiency and bolster risk management through a single provider.
Palo Alto's projected billings for the upcoming year range between $10.9 billion and $11.0 billion, surpassing the Visible Alpha consensus estimate of $10.80 billion.
Chief Executive Nikesh Arora stated, "We concluded the year with execution, and the evolving landscape has prompted more customers to embrace our integrated platform."
According to Check Point Research findings, in Q2 2023, there was an 8% surge in average weekly cyber attacks. Moreover, organizations experienced an all-time high in weekly attacks, per organization over the past two years.
The stock of Palo Alto, a company based in Santa Clara, California, has seen a decline of 17% since it announced its earnings date earlier this month. This move needs to be clarified by some analysts about the reasons behind it.
Refinitiv data indicates that the company's fourth-quarter revenue increased by around 26%, reaching $1.95 billion, which aligns with analysts' expectations.
For the quarter ending on July 31st, Palo Alto achieved an adjusted profit per share of $1.44, surpassing the estimated value of $1.28.
Palo Alto anticipates its annual adjusted profit per share will fall between $5.27 and $5.40. This projection exceeds analysts' expectations of $4.98.
Check Point Software Technologies (CHKP.O), a competitor of Palo Alto, also reported higher than anticipated quarterly profits in late July due to increased demand for cybersecurity tools.