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Palo Alto (PANW) to Report Q2 Earnings: What's in the Offing?
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Palo Alto Networks (PANW - Free Report) is slated to report second-quarter fiscal 2022 results on Feb 22.
Palo Alto projects year-over-year revenue increase of 24-26% to the $1.265-$1.285 billion range. The Zacks Consensus Estimate for the same is pegged at $1.28 billion, suggesting growth of 25.9% from the year-ago reported figure.
For the second quarter, PANW expects non-GAAP earnings in the range of $1.63-$1.66 per share. The consensus mark for the same stands at $1.65 per share, which indicates an increase of 6.5% from the year-ago quarter’s $1.55.
Palo Alto’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 7.8%.
Let’s see how things have shaped up before the announcement.
Palo Alto’s performance in the quarter may have gained from the strong momentum stemming from deal wins. This is likely to have boosted revenues. Strong demand for form factor hardware products, particularly the recently launched machine learning powered models that ensure zero-trust network security for organizations, is expected to have contributed to the quarterly performance.
Amid the pandemic-induced continued remote-working wave, the increased use of the cloud and remote networks has resulted in escalating cyberattacks. This has led to a rise in demand for cybersecurity solutions. Palo Alto’s fiscal second-quarter performance is likely to have benefited from this demand surge.
Palo Alto has been gaining from the Bridgecrew acquisition, which forms the crux of the Prisma public cloud, and Xpanse, which forms the basis of Cortex. Prisma and Cortex are likely to have continued performing well in the fiscal second quarter as well.
The growing and accelerated migration to the cloud due to social-distancing regulations is likely to have boosted the adoption of the aforementioned platforms. The company projects year-over-year billings growth between 24% and 26% ($1.51 billion-$1.53 billion) during the to-be-reported quarter.
Furthermore, Federal Risk and Authorization Management Program (FedRAMP) recognitions are boosting the adoption of Palo Alto’s products by government organizations. The company’s Prisma Access, Cortex XDR, Cortex Data Lake, Prisma Cloud and WildFire have received FedRAMP recognitions.
This FedRAMP recognition reflects the trust that the U.S. public sector puts in Palo Alto’s IoT security solutions. This is anticipated to have encouraged the adoption of its products during the period in discussion.
However, higher sales incentives related to Next-Generation Security products are expected to have hurt the company’s bottom line. Additionally, forex headwinds, and higher marketing and sales expenses might have weighed on the company’s profitability during the fiscal second quarter. Also, high acquisition-related expenses might have dragged down margins.
What Our Model Says
Our proven model does not predict an earnings beat for PANW this season. The combination of a positive Earnings ESP and Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. However, that is not the case here.
Palo Alto currently carries a Zacks Rank of 3 and has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell, before they’re reported, with our Earnings ESP Filter.
Stocks With the Favorable Combination
Per our model, Zscaler (ZS - Free Report) , NetApp (NTAP - Free Report) and Keysight Technologies (KEYS - Free Report) have the right combination of elements to post an earnings beat in their upcoming releases.
Zscaler carries a Zacks Rank #2 and has an Earnings ESP of +2.10%. The company is scheduled to report second-quarter fiscal 2022 results on Feb 24. Zscaler’s earnings surpassed the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 52.9%. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for ZS’ second-quarter earnings is pegged at 11 cents per share, indicating year-over-year growth of 10%. The consensus mark for revenues stands at $242 million, suggesting a year-over-year increase of 54.1%.
NetApp is slated to report third-quarter fiscal 2022 results on Feb 23. The company carries a Zacks Rank #2 and has an Earnings ESP of +0.39% at present. NetApp’s earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 9.8%.
The Zacks Consensus Estimate for NTAP’s quarterly earnings is pegged at $1.28 per share, suggesting a year-over-year improvement of 16.4%. NetApp’s quarterly revenues are estimated to increase 9.7% year over year to $1.61 billion.
Keysight currently carries a Zacks Rank #2 and has an Earnings ESP of +2.17%. The company is slated to report its first-quarter fiscal 2022 results on Feb 17. Keysight’s earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 7.1%.
The Zacks Consensus Estimate for Keysight’s first-quarter earnings stands at $1.57 per share, implying a year-over-year increase of 9.8%. KEYS is estimated to report revenues of $1.24 billion, which suggests growth of 5.3% from the year-ago quarter.
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Palo Alto (PANW) to Report Q2 Earnings: What's in the Offing?
Palo Alto Networks (PANW - Free Report) is slated to report second-quarter fiscal 2022 results on Feb 22.
Palo Alto projects year-over-year revenue increase of 24-26% to the $1.265-$1.285 billion range. The Zacks Consensus Estimate for the same is pegged at $1.28 billion, suggesting growth of 25.9% from the year-ago reported figure.
For the second quarter, PANW expects non-GAAP earnings in the range of $1.63-$1.66 per share. The consensus mark for the same stands at $1.65 per share, which indicates an increase of 6.5% from the year-ago quarter’s $1.55.
Palo Alto’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 7.8%.
Let’s see how things have shaped up before the announcement.
Palo Alto Networks, Inc. Price and EPS Surprise
Palo Alto Networks, Inc. price-eps-surprise | Palo Alto Networks, Inc. Quote
Factors to Note Ahead of Q2 Results
Palo Alto’s performance in the quarter may have gained from the strong momentum stemming from deal wins. This is likely to have boosted revenues. Strong demand for form factor hardware products, particularly the recently launched machine learning powered models that ensure zero-trust network security for organizations, is expected to have contributed to the quarterly performance.
Amid the pandemic-induced continued remote-working wave, the increased use of the cloud and remote networks has resulted in escalating cyberattacks. This has led to a rise in demand for cybersecurity solutions. Palo Alto’s fiscal second-quarter performance is likely to have benefited from this demand surge.
Palo Alto has been gaining from the Bridgecrew acquisition, which forms the crux of the Prisma public cloud, and Xpanse, which forms the basis of Cortex. Prisma and Cortex are likely to have continued performing well in the fiscal second quarter as well.
The growing and accelerated migration to the cloud due to social-distancing regulations is likely to have boosted the adoption of the aforementioned platforms. The company projects year-over-year billings growth between 24% and 26% ($1.51 billion-$1.53 billion) during the to-be-reported quarter.
Furthermore, Federal Risk and Authorization Management Program (FedRAMP) recognitions are boosting the adoption of Palo Alto’s products by government organizations. The company’s Prisma Access, Cortex XDR, Cortex Data Lake, Prisma Cloud and WildFire have received FedRAMP recognitions.
This FedRAMP recognition reflects the trust that the U.S. public sector puts in Palo Alto’s IoT security solutions. This is anticipated to have encouraged the adoption of its products during the period in discussion.
However, higher sales incentives related to Next-Generation Security products are expected to have hurt the company’s bottom line. Additionally, forex headwinds, and higher marketing and sales expenses might have weighed on the company’s profitability during the fiscal second quarter. Also, high acquisition-related expenses might have dragged down margins.
What Our Model Says
Our proven model does not predict an earnings beat for PANW this season. The combination of a positive Earnings ESP and Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. However, that is not the case here.
Palo Alto currently carries a Zacks Rank of 3 and has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell, before they’re reported, with our Earnings ESP Filter.
Stocks With the Favorable Combination
Per our model, Zscaler (ZS - Free Report) , NetApp (NTAP - Free Report) and Keysight Technologies (KEYS - Free Report) have the right combination of elements to post an earnings beat in their upcoming releases.
Zscaler carries a Zacks Rank #2 and has an Earnings ESP of +2.10%. The company is scheduled to report second-quarter fiscal 2022 results on Feb 24. Zscaler’s earnings surpassed the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 52.9%. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for ZS’ second-quarter earnings is pegged at 11 cents per share, indicating year-over-year growth of 10%. The consensus mark for revenues stands at $242 million, suggesting a year-over-year increase of 54.1%.
NetApp is slated to report third-quarter fiscal 2022 results on Feb 23. The company carries a Zacks Rank #2 and has an Earnings ESP of +0.39% at present. NetApp’s earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 9.8%.
The Zacks Consensus Estimate for NTAP’s quarterly earnings is pegged at $1.28 per share, suggesting a year-over-year improvement of 16.4%. NetApp’s quarterly revenues are estimated to increase 9.7% year over year to $1.61 billion.
Keysight currently carries a Zacks Rank #2 and has an Earnings ESP of +2.17%. The company is slated to report its first-quarter fiscal 2022 results on Feb 17. Keysight’s earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 7.1%.
The Zacks Consensus Estimate for Keysight’s first-quarter earnings stands at $1.57 per share, implying a year-over-year increase of 9.8%. KEYS is estimated to report revenues of $1.24 billion, which suggests growth of 5.3% from the year-ago quarter.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.