Cybersecurity firm Palo Alto projects strong annual billings, shares rally

Santa Clara, California (Reuters): Palo Alto Networks (PANW.O) forecast annual billings above market estimates on Friday, in a sign that more businesses were turning to its integrated cybersecurity offerings to combat rising digital threats.

Shares of the company jumped more than 8% in extended trading, lifting rivals Zscaler (ZS.O) and Fortinet (FTNT.O) by 3.5% and 1.5%, respectively.

Rising cyber crime, privacy concerns and high-profile hacks have in the past year fueled demand for cybersecurity products as businesses and governments grow their digital presence.

The biggest winners of that have been the companies that serve as a one-stop shop for cybersecurity solutions, helping clients be more efficient and improve risk management.

Palo Alto projected full-year billings to be between $10.9 billion and $11.0 billion, compared with the Visible Alpha consensus estimate of $10.80 billion.

“We finished off the year with strong execution and the changing environment drove more customers towards platformization,” said Chief Executive Nikesh Arora.

Global average weekly cyber attacks rose 8% increase in the second quarter of 2023, according to Check Point Research, with the average number of attacks per organization per week hitting a two-year high.

Shares of Santa Clara, California-based Palo Alto have declined around 17% since it set Friday as its earnings date earlier this month — a move some analysts termed as “head scratching”.

Its fourth-quarter revenue grew about 26% to $1.95 billion, roughly in line with analysts’ expectations, according to Refinitiv data. The company’s adjusted profit per share was $1.44 for the quarter ended July 31, beating the estimate of $1.28.

Palo Alto expects annual adjusted profit per share to be between $5.27 and $5.40, compared with analysts’ expectations of $4.98.

Rival Check Point Software Technologies (CHKP.O) also reported a higher-than-expected quarterly profit in late-July as it benefited from higher demand for cybersecurity tools.