Palo Alto Networks Q4 earnings: ‘they’ll grow above market and expand margins’

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Written on Aug 18, 2023

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Palo Alto Networks reports upbeat earnings for its fiscal fourth quarter.
Truist analyst Joel Fishbein discussed its earnings print on CNBC.
Palo Alto Networks stock jumped nearly 10% after the earnings print.

Palo Alto Networks Inc (NASDAQ: PANW) just reported upbeat earnings for its fiscal fourth quarter. Its shares jumped roughly 9.0% in after-hours.

Palo Alto’s guidance for the full year

Shareholders are also cheering the full-year earnings guidance that topped Street estimates.

Palo Alto Networks expects its adjusted profit to fall between $5.27 a share and $5.40 a share this year. In comparison, analysts were at $4.98 per share. According to Joel Fishbein of Truist Securities:

The Street was expecting fireworks, we got sprinklers. What we liked is the free cash flow, really good free cash flow.

The cybersecurity stock is still down over 10% versus its year-to-date high.

Fishbein is bullish on Palo Alto Networks

Note that Palo Alto Networks did come in a bit shy of expectations on the revenue front.

It’s calling for up to $8.20 billion in fiscal 2024 versus analysts at $8.38 billion. Still, the Truist analyst said today on CNBC’s “Closing Bell: Overtime”:

They’re the long-term winner in this space. Palo Alto is one of the go-to companies in cybersecurity. They’ll grow above market and expand margins in the near-to-mid-term.

He has a “buy” rating on the California-based multinational that now sees a 19% to 20% increase in its full-year billings.

Palo Alto Networks Q4 financial highlights

Net income printed at $227.7 million versus the year-ago $3.3 million
Per-share earnings also climbed sharply from a penny to 74 cents
Adjusted EPS came in at $1.44 as per the earnings press release
Revenue went up 26% on a year-over-year basis to $1.95 billion
Consensus was $1.29 of per-share earnings on $1.96 billion in revenue
Billings also grew 18% in the fourth quarter to $3.16 billion

Truist’s Fishbein expects Palo Alto Networks to make acquisitions moving forward. He also told CNBC today:

They’re in the pole position in [cloud security]. It’s a $2.0 billion plus business growing at 50%. What they’ve shown today is not only can they grow above market, they can do it very profitably and expand margins.