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Palo Alto (PANW) Soars 11% as Q4 Earnings Beat Estimates
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Palo Alto Networks (PANW - Free Report) shares soared 11.2% during the extended trading session on Aug 18 after the cybersecurity solution provider reported better-than-expected results for the fourth quarter of fiscal 2023. The company reported non-GAAP earnings of $1.44 per share, beating the Zacks Consensus Estimate of $1.28. The bottom line improved 80% from the year-ago quarter’s non-GAAP earnings of 80 cents per share.
Palo Alto’s fiscal fourth-quarter revenues of $1.95 billion matched the Zacks Consensus Estimate and grew 26% from the year-ago reported figure. The top line was aided by several deal wins and the increased adoption of Palo Alto’s Next-Generation Security platforms, driven by the hybrid work culture and the heightened need for stronger security.
The company’s strong quarterly performance reflects its sustained focus on product innovation, a shift in its business model to subscription-based services, platform integration and continued investments in the go-to-market strategy.
Palo Alto Networks, Inc. Price, Consensus and EPS Surprise
Product revenues increased 24.3% year over year to $507.4 million and contributed to 26% of the total revenues. The company’s subscription and support revenues, which accounted for 74% of the total revenues, improved 26.6% to $1.45 billion. Our estimates for Product and Subscription and Support revenues were pegged at $499.6 million and $1.45 billion, respectively.
Billings increased 18% to $3.2 billion. Deferred revenues at the end of the fiscal fourth quarter were $4.67 billion. Palo Alto’s remaining performance obligation climbed to $10.6 billion, reflecting a year-over-year increase of 30%. Our estimates for billings, deferred revenues and remaining performance obligation were pegged at $3.18 billion, $9.32 billion and $8.77 billion, respectively.
Palo Alto’s next-generation security annualized recurring revenues were $2.95 billion in the reported quarter compared with $2.57 billion in the previous quarter and $1.89 billion in the year-ago quarter. Our estimate for fourth-quarter next-generation security annualized recurring revenues was pegged at $2.83 billion.
Non-GAAP gross profits increased 32.9% to $1.51 billion. The non-GAAP gross margin expanded 410 basis points (bps) to 77.3%, primarily driven by a higher software mix, a reduction in supply-chain costs and some efficiencies in customer support.
The non-GAAP operating income rose 71.4% to $554 million. Meanwhile, the non-GAAP operating margin expanded 760 bps to 28.4%.
Balance Sheet & Cash Flow
Palo Alto exited the fiscal fourth quarter with cash, cash equivalents and short-term investments of $2.39 billion, up from $3.96 billion at the end of the previous quarter. As of Jul 31, 2023, the company had long-term operating lease liabilities of $279.2 million.
PANW generated operating cash flow of $414.1 million and non-GAAP adjusted free cash flow of $376.9 million in the fiscal fourth quarter. The non-GAAP adjusted free cash flow margin for the fourth quarter came in at 19.9%.
During the full-fiscal 2023, the company generated operating and free cash flows of $2.78 billion and $2.63 billion, respectively. The non-GAAP adjusted free cash flow margin for fiscal 2023 came in at 38.8%.
Fiscal 2024 Guidance
Palo Alto initiated guidance for the first quarter and fiscal 2024. For the first quarter of fiscal 2024, PANW projects revenues between $1.82 billion and $1.85 billion, suggesting year-over-year growth of 16-18%. Total billings are anticipated between $2.05 billion and $2.08 billion, indicating an increase of 17-19% from the year-ago quarter. Non-GAAP earnings are projected in the range of $1.15-$1.17 per share.
The company projects revenues between $8.15 billion and $8.20 billion for fiscal 2024. This suggests top-line growth of 18-19% from the fiscal 2023 level.
Total billings of PANW are estimated in the range of $10.9-$11 billion for fiscal 2024, indicating a year-over-year increase of 19-20%. Palo Alto projects non-GAAP earnings in the $5.27-$5.40 per share band. The non-GAAP adjusted free cash flow margin has been forecast in the range of 37%-38%.
Zacks Rank & Stocks to Consider
Currently, Palo Alto Networks carries a Zacks Rank #3 (Hold). Shares of PANW have increased 50.3% year to date (YTD).
The Zacks Consensus Estimate for NVIDIA's second-quarter fiscal 2024 earnings has been revised upward by a couple of cents to $2.06 per share in the past 60 days. For fiscal 2024, earnings estimates have increased by 4 cents to $7.83 per share in the past seven days.
NVIDIA’s earnings beat the Zacks Consensus Estimate twice in the preceding four quarters while missing the same on two occasions, the average surprise being 0.3%. Shares of NVDA have surged 196.3% YTD.
The Zacks Consensus Estimate for Manhattan Associates’ third-quarter 2023 earnings has been revised 5 cents northward to 77 cents per share in the past 30 days. For 2023, earnings estimates have moved 22 cents upward to $3.09 per share in the past 30 days.
Manhattan Associates’ earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 31.6%. Shares of MANH have rallied 53.2% YTD.
The Zacks Consensus Estimate for Salesforce's second-quarter fiscal 2024 earnings has remained unchanged at $1.90 per share in the past 60 days. For fiscal 2024, earnings estimates have remained unchanged at $7.44 per share in the past 60 days.
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Palo Alto (PANW) Soars 11% as Q4 Earnings Beat Estimates
Palo Alto Networks (PANW - Free Report) shares soared 11.2% during the extended trading session on Aug 18 after the cybersecurity solution provider reported better-than-expected results for the fourth quarter of fiscal 2023. The company reported non-GAAP earnings of $1.44 per share, beating the Zacks Consensus Estimate of $1.28. The bottom line improved 80% from the year-ago quarter’s non-GAAP earnings of 80 cents per share.
Palo Alto’s fiscal fourth-quarter revenues of $1.95 billion matched the Zacks Consensus Estimate and grew 26% from the year-ago reported figure. The top line was aided by several deal wins and the increased adoption of Palo Alto’s Next-Generation Security platforms, driven by the hybrid work culture and the heightened need for stronger security.
The company’s strong quarterly performance reflects its sustained focus on product innovation, a shift in its business model to subscription-based services, platform integration and continued investments in the go-to-market strategy.
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 24.3% year over year to $507.4 million and contributed to 26% of the total revenues. The company’s subscription and support revenues, which accounted for 74% of the total revenues, improved 26.6% to $1.45 billion. Our estimates for Product and Subscription and Support revenues were pegged at $499.6 million and $1.45 billion, respectively.
Billings increased 18% to $3.2 billion. Deferred revenues at the end of the fiscal fourth quarter were $4.67 billion. Palo Alto’s remaining performance obligation climbed to $10.6 billion, reflecting a year-over-year increase of 30%. Our estimates for billings, deferred revenues and remaining performance obligation were pegged at $3.18 billion, $9.32 billion and $8.77 billion, respectively.
Palo Alto’s next-generation security annualized recurring revenues were $2.95 billion in the reported quarter compared with $2.57 billion in the previous quarter and $1.89 billion in the year-ago quarter. Our estimate for fourth-quarter next-generation security annualized recurring revenues was pegged at $2.83 billion.
Non-GAAP gross profits increased 32.9% to $1.51 billion. The non-GAAP gross margin expanded 410 basis points (bps) to 77.3%, primarily driven by a higher software mix, a reduction in supply-chain costs and some efficiencies in customer support.
The non-GAAP operating income rose 71.4% to $554 million. Meanwhile, the non-GAAP operating margin expanded 760 bps to 28.4%.
Balance Sheet & Cash Flow
Palo Alto exited the fiscal fourth quarter with cash, cash equivalents and short-term investments of $2.39 billion, up from $3.96 billion at the end of the previous quarter. As of Jul 31, 2023, the company had long-term operating lease liabilities of $279.2 million.
PANW generated operating cash flow of $414.1 million and non-GAAP adjusted free cash flow of $376.9 million in the fiscal fourth quarter. The non-GAAP adjusted free cash flow margin for the fourth quarter came in at 19.9%.
During the full-fiscal 2023, the company generated operating and free cash flows of $2.78 billion and $2.63 billion, respectively. The non-GAAP adjusted free cash flow margin for fiscal 2023 came in at 38.8%.
Fiscal 2024 Guidance
Palo Alto initiated guidance for the first quarter and fiscal 2024. For the first quarter of fiscal 2024, PANW projects revenues between $1.82 billion and $1.85 billion, suggesting year-over-year growth of 16-18%. Total billings are anticipated between $2.05 billion and $2.08 billion, indicating an increase of 17-19% from the year-ago quarter. Non-GAAP earnings are projected in the range of $1.15-$1.17 per share.
The company projects revenues between $8.15 billion and $8.20 billion for fiscal 2024. This suggests top-line growth of 18-19% from the fiscal 2023 level.
Total billings of PANW are estimated in the range of $10.9-$11 billion for fiscal 2024, indicating a year-over-year increase of 19-20%. Palo Alto projects non-GAAP earnings in the $5.27-$5.40 per share band. The non-GAAP adjusted free cash flow margin has been forecast in the range of 37%-38%.
Zacks Rank & Stocks to Consider
Currently, Palo Alto Networks carries a Zacks Rank #3 (Hold). Shares of PANW have increased 50.3% year to date (YTD).
Some better-ranked stocks from the broader technology sector are NVIDIA (NVDA - Free Report) , Manhattan Associates (MANH - Free Report) and Salesforce (CRM - Free Report) . NVIDIA and Manhattan Associates each sport a Zacks Rank #1 (Strong Buy), while Salesforce carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today's Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for NVIDIA's second-quarter fiscal 2024 earnings has been revised upward by a couple of cents to $2.06 per share in the past 60 days. For fiscal 2024, earnings estimates have increased by 4 cents to $7.83 per share in the past seven days.
NVIDIA’s earnings beat the Zacks Consensus Estimate twice in the preceding four quarters while missing the same on two occasions, the average surprise being 0.3%. Shares of NVDA have surged 196.3% YTD.
The Zacks Consensus Estimate for Manhattan Associates’ third-quarter 2023 earnings has been revised 5 cents northward to 77 cents per share in the past 30 days. For 2023, earnings estimates have moved 22 cents upward to $3.09 per share in the past 30 days.
Manhattan Associates’ earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 31.6%. Shares of MANH have rallied 53.2% YTD.
The Zacks Consensus Estimate for Salesforce's second-quarter fiscal 2024 earnings has remained unchanged at $1.90 per share in the past 60 days. For fiscal 2024, earnings estimates have remained unchanged at $7.44 per share in the past 60 days.
Salesforce's earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 15.5%. Shares of CRM have surged 54.5% YTD.