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Cybersecurity firm Palo Alto projects strong annual billings, shares rally

Cybersecurity firm Palo Alto projects strong annual billings, shares rally

On August 18, Palo Alto Networks (PANW.O) made a forecast for annual billings that exceeded market expectations, indicating an increasing number of businesses turning to its comprehensive cybersecurity solutions to counter the escalating digital threats. Consequently, the company’s shares surged by over 8% during after-hours trading, consequently boosting the stock prices of competitors Zscaler (ZS.O) and Fortinet (FTNT.O) by 3.5% and 1.5% respectively.

The surge in cybercrime, privacy concerns, and notable hacking incidents over the past year have driven a surge in demand for cybersecurity products. In this context, businesses and governments are focusing on enhancing their digital presence and security. The companies benefitting most from this trend are those providing all-encompassing cybersecurity solutions that enhance efficiency and risk management for clients.

Palo Alto Networks projected its full-year billings for the upcoming period to be within the range of $10.9 billion to $11.0 billion. This forecast surpasses the Visible Alpha consensus estimate of $10.80 billion.

CEO Nikesh Arora attributed this positive performance to strong execution and an evolving business landscape that is prompting more customers to adopt comprehensive cybersecurity solutions. According to Check Point Research, global average weekly cyber attacks increased by 8% in the second quarter of 2023, with the average number of attacks per organization per week reaching a two-year high.

Interestingly, shares of Palo Alto had experienced a decline of approximately 17% since the announcement of its earnings date earlier in the month, which had puzzled some analysts.

For the fourth quarter, Palo Alto reported revenue growth of around 26%, reaching $1.95 billion. This figure was roughly in line with analysts’ expectations based on Refinitiv data. The company’s adjusted profit per share for the same period was $1.44, surpassing the estimated value of $1.28.

Looking forward, Palo Alto Networks anticipates an annual adjusted profit per share ranging from $5.27 to $5.40, which exceeds analysts’ expectations of $4.98.

In a similar vein, rival Check Point Software Technologies (CHKP.O) also reported a higher-than-anticipated quarterly profit towards the end of July, benefiting from the growing demand for cybersecurity tools.


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