Palo Alto Networks should benefit from increased security budgets as companies move to protect their data following a record year for U.S. cyber attacks.
Palo Alto Networks (PANW) – Get Palo Alto Networks, Inc. Report shares leapt higher Wednesday after posted stronger-than-expected second quarter earnings and a robust outlook for its cybersecurity products follow a record year for data breaches in the United States.
Palo Alto said non-GAAP earnings for the three months ending in January, its fiscal second quarter, rose 12.2% to $1.74 per share, while revenues jumped more than 30% to $1.3 billion. Around a quarter of the revenue tally came from new product sales, which were up 21% from last year, while subscription and services revenues rose 32% to just over $1 billion.
Billings grew 32.4% from last year, a pace that will slow modestly to around 26% for the full year, Palo Alto said, thanks in part to broad-based demand across its three platforms: Strata, which focuses on enterprise, Prisma, its cloud-based security operation and Cortex, its main security division.
Overall demand for its firewall products and security applications should take current quarter sales as high a $1.365 billion, the group said, with full year revenues in the region of $5.425 billion to $5.475 billion.
“We have built a formidable set of services which are cloud-first, and these services are resonating with our customers,” CEO Nikesh Arora told investors on a conference call late Tuesday. “This success is truly driven by us working with our customers to anticipate their challenges, delivering best-of-breed solutions in an integrated fashion while continuing to focus on security outcomes.”
“We not only continue to see strong near-term demand but also strong medium-term trends in cybersecurity, fueled by underlying spend in IT spendings and secular trends like hybrid work and cloud-native adoption,” he added.
Palo Alto Networks shares were marked 7.7% higher in pre-market trading to indicate an opening bell price of $512.00 each, a move that would extend the stock’s six-month gain to around 38%.
The Identity Theft Resource Center (ITRC) said earlier this year that 2021 was a record year for cyber attacks, with 1,862 verified data breaches, a 68% increase from 2020.
“There is no reason to believe the level of data compromises will suddenly decline in 2022,” said Velasquez said ITRC CEO Eva Velasquez.
Research from IBM (IBM) – Get International Business Machines Corporation Report and the Ponemon Institute suggests the average cost of a data breach for a U.S.-based company is around $9.05 million,
