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Palo Alto (PANW) Beats Q1 Earnings and Revenue Estimates
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Palo Alto Networks (PANW - Free Report) reported first-quarter fiscal 2021 non-GAAP earnings of $1.62 per share, which surpassed the Zacks Consensus Estimate $1.34. Moreover, the bottom line compared favorably with the year-ago quarter’s earnings of $1.05 per share.
The company’s revenues of $946 million improved 23% year over year. The figure also beat the Zacks Consensus Estimate of $920.7 million.
The top line was primarily aided by several deal wins and increased adoption of the company’s next-generation security platforms on the rise in remote-working trend and heightened need for stronger security. Growing traction in the Prisma and Cortex offerings also acted as a tailwind.
Palo Alto Networks, Inc. Price, Consensus and EPS Surprise
Product revenues increased 2.6% year over year to $237.3 million and contributed to 25% of the total revenues. The company’s subscription and support revenues, which accounted for 75% of the total revenues, improved 31.1% to $708.7 million.
Further, billings improved 21% year over year to $1.1 billion. Deferred revenues jumped 31% to $3.9 billion.
Palo Alto’s non-GAAP gross margin contracted 80 basis points (bps) on a year-over-year basis to 75.8%. However, non-GAAP operating margin improved 590 bps to 21.7% mainly due to lower operating expenses as a percentage of sales. Operating expenses as a percentage of revenues shrunk 670 bps to 54.1%.
Palo Alto exited the fiscal first quarter with cash, cash equivalents and short-term investments of $3.22 billion compared with $3.75 billion recorded at the end of the previous quarter. The company’s balance sheet does not carry any long-term debt.
During the quarter, it generated cash flow from operations of $534.9 million and free cash flow of $505.3 million.
Guidance
For second-quarter fiscal 2021, Palo Alto anticipates year-over-year revenue growth of 19-21%, which comes in between $975 million and $990 million. Billing growth is anticipated between 17% and 19%, ($1.17 billion-$1.19 billion).
Non-GAAP earnings per share are estimated in the range of $1.42-$1.44.
For fiscal 2021, the company projects revenue in the $4.09 billion and $4.14 billion, indicating year-over-year growth of 20%-21%. Billing growth is anticipated between 18% and 19%, ($5.08 billion-$5.13 billion).
Palo Alto forecasts fiscal 2021 adjusted earnings between $5.70 and $5.80 per share.
Zacks Rank & Stocks to Consider
Palo Alto currently carries a Zacks Rank #4 (Sell).
The long-term earnings growth rate for Arrow, NVIDIA and Covetrus is currently pegged at 8.5%, 20.1%, and 20.1%, respectively.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for regular investors who make the right trades early.
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Palo Alto (PANW) Beats Q1 Earnings and Revenue Estimates
Palo Alto Networks (PANW - Free Report) reported first-quarter fiscal 2021 non-GAAP earnings of $1.62 per share, which surpassed the Zacks Consensus Estimate $1.34. Moreover, the bottom line compared favorably with the year-ago quarter’s earnings of $1.05 per share.
The company’s revenues of $946 million improved 23% year over year. The figure also beat the Zacks Consensus Estimate of $920.7 million.
The top line was primarily aided by several deal wins and increased adoption of the company’s next-generation security platforms on the rise in remote-working trend and heightened need for stronger security. Growing traction in the Prisma and Cortex offerings also acted as a tailwind.
Palo Alto Networks, Inc. Price, Consensus and EPS Surprise
Palo Alto Networks, Inc. price-consensus-eps-surprise-chart | Palo Alto Networks, Inc. Quote
Quarterly Details
Product revenues increased 2.6% year over year to $237.3 million and contributed to 25% of the total revenues. The company’s subscription and support revenues, which accounted for 75% of the total revenues, improved 31.1% to $708.7 million.
Further, billings improved 21% year over year to $1.1 billion. Deferred revenues jumped 31% to $3.9 billion.
Palo Alto’s non-GAAP gross margin contracted 80 basis points (bps) on a year-over-year basis to 75.8%. However, non-GAAP operating margin improved 590 bps to 21.7% mainly due to lower operating expenses as a percentage of sales. Operating expenses as a percentage of revenues shrunk 670 bps to 54.1%.
Palo Alto exited the fiscal first quarter with cash, cash equivalents and short-term investments of $3.22 billion compared with $3.75 billion recorded at the end of the previous quarter. The company’s balance sheet does not carry any long-term debt.
During the quarter, it generated cash flow from operations of $534.9 million and free cash flow of $505.3 million.
Guidance
For second-quarter fiscal 2021, Palo Alto anticipates year-over-year revenue growth of 19-21%, which comes in between $975 million and $990 million. Billing growth is anticipated between 17% and 19%, ($1.17 billion-$1.19 billion).
Non-GAAP earnings per share are estimated in the range of $1.42-$1.44.
For fiscal 2021, the company projects revenue in the $4.09 billion and $4.14 billion, indicating year-over-year growth of 20%-21%. Billing growth is anticipated between 18% and 19%, ($5.08 billion-$5.13 billion).
Palo Alto forecasts fiscal 2021 adjusted earnings between $5.70 and $5.80 per share.
Zacks Rank & Stocks to Consider
Palo Alto currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the broader technology sector include Arrow Electronics (ARW - Free Report) , NVIDIA (NVDA - Free Report) and Covetrus , all carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The long-term earnings growth rate for Arrow, NVIDIA and Covetrus is currently pegged at 8.5%, 20.1%, and 20.1%, respectively.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>