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Why Is Palo Alto (PANW) Up 7.1% Since Last Earnings Report?
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A month has gone by since the last earnings report for Palo Alto Networks (PANW - Free Report) . Shares have added about 7.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Palo Alto due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Palo Alto Q4 Earnings and Revenues Beat Estimates
Palo Alto reported strong fourth-quarter fiscal 2021 results, wherein both earnings and revenues not only topped the respective Zacks Consensus Estimate but also improved year over year.
It reported non-GAAP earnings of $1.60 per share beating the Zacks Consensus Estimate of $1.44 per share. The bottom line grew 8.1% from $1.48 per share in the year-ago quarter.
Palo Alto’s fiscal fourth-quarter revenues of $1.22 billion surpassed the Zacks Consensus Estimate of $1.17 billion. The top line improved 28% from the year-earlier reported figure.
The company’s strong quarterly performance reflects its sustained focus on product innovation, shift in business model to subscription-based services, platform integration and continued investments in go-to-market strategy.
The top line was primarily aided by several deal wins, and increased adoption of the company’s next-generation security platforms owing to remote-working trend and heightened need for stronger security. Growing traction in the Strata, Prisma and Cortex offerings acted as a tailwind.
Quarterly Details
Product revenues increased 11.1% year over year to $339.4 million and contributed 27.8% to total revenues. The company’s subscription and support revenues, which accounted for 72.2% of total revenues, improved 36.5% to $879.9 million.
Billings jumped 34% to $1.9 billion. Deferred revenues increased 32% to $5 billion. The global cyber security leader’s remaining performance obligation climbed to $5.9 billion, reflecting a year-over-year surge of 36%.
Palo Alto’s Next-Gen Security (NGS) Annualized Recurring Revenues (ARR) was $1.18 billion in the reported quarter, compared with $651 in the year-ago quarter and $973 million in the previous quarter.
The company’s non-GAAP gross margin expanded 100 basis points (bps) on a year-over-year basis to 75.3%. However, non-GAAP operating margin contracted 230 bps to 17.5%.
Guidance
Palo Alto exited the fiscal fourth quarter with cash, cash equivalents and short-term investments of $2.90 billion compared with $2.95 billion at the end of the previous quarter. The company’s balance sheet does not carry any long-term debt.
The company generated operating cash flow of $325.8 million and non-GAAP adjusted free cash flow of $298.5 million during the fourth quarter. For full fiscal 2021, cash generated through operating activities totaled $1.50 billion and non-GAAP free cash flow amounted to $1.39 billion.
Palo Alto returned $328.1 million to its shareholder through stock buyback. In fiscal 2021, it repurchased share worth $1.18 billion.
Concurrent with its earnings release, the company announced that its board of directors has increased its existing share repurchase authorization limit by $676.1 million to $1 billion. The newly updated share repurchase program will expire on Dec 31, 2022.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month. The consensus estimate has shifted -2433.33% due to these changes.
VGM Scores
Currently, Palo Alto has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Palo Alto has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Palo Alto (PANW) Up 7.1% Since Last Earnings Report?
A month has gone by since the last earnings report for Palo Alto Networks (PANW - Free Report) . Shares have added about 7.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Palo Alto due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Palo Alto Q4 Earnings and Revenues Beat Estimates
Palo Alto reported strong fourth-quarter fiscal 2021 results, wherein both earnings and revenues not only topped the respective Zacks Consensus Estimate but also improved year over year.
It reported non-GAAP earnings of $1.60 per share beating the Zacks Consensus Estimate of $1.44 per share. The bottom line grew 8.1% from $1.48 per share in the year-ago quarter.
Palo Alto’s fiscal fourth-quarter revenues of $1.22 billion surpassed the Zacks Consensus Estimate of $1.17 billion. The top line improved 28% from the year-earlier reported figure.
The company’s strong quarterly performance reflects its sustained focus on product innovation, shift in business model to subscription-based services, platform integration and continued investments in go-to-market strategy.
The top line was primarily aided by several deal wins, and increased adoption of the company’s next-generation security platforms owing to remote-working trend and heightened need for stronger security. Growing traction in the Strata, Prisma and Cortex offerings acted as a tailwind.
Quarterly Details
Product revenues increased 11.1% year over year to $339.4 million and contributed 27.8% to total revenues. The company’s subscription and support revenues, which accounted for 72.2% of total revenues, improved 36.5% to $879.9 million.
Billings jumped 34% to $1.9 billion. Deferred revenues increased 32% to $5 billion. The global cyber security leader’s remaining performance obligation climbed to $5.9 billion, reflecting a year-over-year surge of 36%.
Palo Alto’s Next-Gen Security (NGS) Annualized Recurring Revenues (ARR) was $1.18 billion in the reported quarter, compared with $651 in the year-ago quarter and $973 million in the previous quarter.
The company’s non-GAAP gross margin expanded 100 basis points (bps) on a year-over-year basis to 75.3%. However, non-GAAP operating margin contracted 230 bps to 17.5%.
Guidance
Palo Alto exited the fiscal fourth quarter with cash, cash equivalents and short-term investments of $2.90 billion compared with $2.95 billion at the end of the previous quarter. The company’s balance sheet does not carry any long-term debt.
The company generated operating cash flow of $325.8 million and non-GAAP adjusted free cash flow of $298.5 million during the fourth quarter. For full fiscal 2021, cash generated through operating activities totaled $1.50 billion and non-GAAP free cash flow amounted to $1.39 billion.
Palo Alto returned $328.1 million to its shareholder through stock buyback. In fiscal 2021, it repurchased share worth $1.18 billion.
Concurrent with its earnings release, the company announced that its board of directors has increased its existing share repurchase authorization limit by $676.1 million to $1 billion. The newly updated share repurchase program will expire on Dec 31, 2022.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month. The consensus estimate has shifted -2433.33% due to these changes.
VGM Scores
Currently, Palo Alto has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Palo Alto has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.