Palo Alto Networks (PANW) Q3 2022 Results

Shares of Palo Alto Networks rose 12% in extended trading Thursday after the network security hardware maker reported stronger fiscal third-quarter results than analysts had expected.

Here’s how the company did it:

  • Earnings: $1.79 per share, adjusted, versus $1.68 per share as expected by analysts, according to Refinitiv.
  • Revenue: $1.39 billion, versus $1.36 billion as forecast by analysts, according to Refinitiv.

Palo Alto Networks said revenue grew 29% year over year in the quarter, which ended April 30, according to a statement. Revenue jumped 30% in the prior quarter.

“We delivered strong revenue growth in the third quarter, a testament to our teams’ consistent execution to capitalize on strong demand trends in cybersecurity,” said Palo Alto Networks CEO , Nikesh Arora, quoted in the press release.

Palo Alto Networks has been watching Russian cyberattacks since the war broke out in the quarter, and it’s seeing increased interest in protecting businesses and government agencies across Europe, Arora told analysts at a conference call. telephone.

Supply shortages pose problems, Arora said. Rising component and shipping costs reduced the company’s adjusted gross margin in the quarter, said Dipak Golechha, its chief financial officer. The constraints “are likely to persist for another year,” Arora said.

Both in the United States and abroad, the prices of goods are rising. But so far, that’s not a big challenge for Palo Alto Networks.

“We don’t see the pressure of inflation or the prospect of reduced economic activity,” Arora said.

During the quarter, Palo Alto Networks announced a next-generation firewall tool available exclusively through Amazon’s public cloud. The company also announced a tool to help companies detect vulnerabilities in software supply chains due to issues resulting from malicious updates to SolarWinds’ Orion software.

Leaders raised their forecasts for the full year. They now expect adjusted earnings of $7.43 to $7.46 per share on revenue of $5.481 billion to $5.501 billion. Analysts polled by Refinitiv were looking for $7.29 in adjusted earnings per share on $5.46 billion in revenue.

The guidelines take wage inflation into account, Arora said, in part because of Santa Clara, Calif.-based Palo Alto Networks’ proximity to big tech companies in Silicon Valley.

“We haven’t hired as many people as expected in this market,” he said. “It’s a very tight labor market at its current point, as you can see. That said, my personal view is that labor markets are going to get easier over the next six to 12 months.”

He said the company’s employees left to join start-ups six months ago. Now that has changed.

“Market rationalization causes people to take stock and say, ‘Wait, do I really want to take this step?'” Arora said.

Before the close of trading, the stock was down almost 21% since the start of 2022, while the S&P 500 index has fallen around 18% over the same period.

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