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Palo Alto Networks (PANW) Q2 Earnings & Revenues Top Estimates
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Palo Alto Networks (PANW - Free Report) reported strong second-quarter fiscal 2022 results, wherein both earnings and revenues not only surpassed the respective Zacks Consensus Estimate but also improved year over year.
The company reported non-GAAP earnings of $1.74 per share, beating the Zacks Consensus Estimate of $1.65. The bottom line improved 12% from the year-ago quarter’s non-GAAP earnings of $1.55 per share.
Palo Alto’s fiscal second-quarter revenues of $1.32 billion surpassed the Zacks Consensus Estimate of $1.28 billion. The top line grew 30% from the year-earlier reported figure.
The top line was aided by several deal wins, increased adoption of Palo Alto’s next-generation security platforms due to hybrid work culture and the heightened need for stronger security.
Palo Alto’s strong quarterly performance reflects its sustained focus on product innovation, a shift in the 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 20.9% year over year to $308 million and contributed 23.4% to total revenues. The company’s subscription and support revenues, which accounted for 76.6% of total revenues, improved 32.4% to $1008.9 million.
Billings jumped 32% to $1.61 billion. Deferred revenues at the end of the second quarter were $2.96 billion. Palo Alto’s remaining performance obligation climbed to $6.3 billion, reflecting a year-over-year surge of 36%.
Palo Alto’s Next-Gen Security (NGS) annualized recurring revenues (ARR) were $1.43 billion in the reported quarter compared with $840 million in the year-ago quarter and $1.27 billion in the previous quarter.
The company’s non-GAAP gross profit increased 27.4% to $975 million. However, non-GAAP gross margin contracted 130 basis points (bps) to 74% primarily due to heightened costs associated with the supply chain issues.
Non-GAAP operating income rose 20% to $242.7 million. However, non-GAAP operating margin contracted 140 bps to 18.4%, mainly due to lower gross margin.
Balance Sheet & Cash Flow
Palo Alto exited the fiscal second quarter with cash, cash equivalents and short-term investments of $3.34 billion compared with $3.46 billion at the end of previous quarter. The company’s balance sheet does not carry any long-term debt.
The company generated an operating cash flow of $482.6 million and a non-GAAP adjusted free cash flow of $441 million during the second quarter. Non-GAAP adjusted free cash flow margin came in at 33.5%.
Guidance
Buoyed by strong second-quarter performance, Palo Alto raised its fiscal 2022 guidance.
The company now anticipates fiscal 2022 revenues of $5.425-$5.475 billion, suggesting growth in the range of 27-29% from the fiscal 2021 level. Earlier, it had projected revenues between $5.35 billion and $5.40 billion, which indicated year-over-year growth of 26-27%.
Total billings are now estimated to be $6.80-$6.85 billion for fiscal 2022, indicating a year-over-year increase of 25-26%. Earlier, it had estimated billings in the range of $6.675-$6.725 billion, implying a 22-23% increase from the year-ago quarter.
Palo Alto raised its non-GAAP earnings guidance ranges from $7.15-$7.25 per share to $7.23-$7.30 per share.
However, non-GAAP adjusted free cash flow margin is still expected in the range of 32-33%.
For the third quarter of fiscal 2022, Palo Alto projects revenues between $1.345 billion and $1.365 billion, suggesting year-over-year growth to be 25-27%.
Total billings are anticipated between $1.59 billion and $1.61 billion, indicating an increase of 24-25% from the year-ago quarter. Non-GAAP earnings are projected to be $1.65-$1.68 per share.
The Zacks Consensus Estimate for Apple’s second-quarter fiscal 2022 earnings has been revised upward by 3.6% to $1.43 per share over the past 30 days. For fiscal 2022, earnings estimates have moved north by 5.9% to $6.15 per share in the past 30 days.
Apple’s earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 20.3%. AAPL stock has appreciated 30.8% in the past year.
The Zacks Consensus Estimate for Axcelis’ first-quarter 2022 earnings has been revised upward by 2 cents to 89 cents per share over the past 30 days. For 2022, earnings estimates have moved north by 10.8% to $3.99 per share in the last 30 days.
Axcelis’ earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 30.3%. Shares of ACLS have rallied 75.6% in the past year.
The Zacks Consensus Estimate for Analog Devices’ first-quarter fiscal 2022 earnings has been revised upward by 23 cents to $2.08 per share over the past seven days. For fiscal 2022, earnings estimates have moved north by 79 cents to $8.32 per share in the past seven days.
Analog Devices’ earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 6%. Shares of ADI have gained 2.1% in the past year.
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Palo Alto Networks (PANW) Q2 Earnings & Revenues Top Estimates
Palo Alto Networks (PANW - Free Report) reported strong second-quarter fiscal 2022 results, wherein both earnings and revenues not only surpassed the respective Zacks Consensus Estimate but also improved year over year.
The company reported non-GAAP earnings of $1.74 per share, beating the Zacks Consensus Estimate of $1.65. The bottom line improved 12% from the year-ago quarter’s non-GAAP earnings of $1.55 per share.
Palo Alto’s fiscal second-quarter revenues of $1.32 billion surpassed the Zacks Consensus Estimate of $1.28 billion. The top line grew 30% from the year-earlier reported figure.
The top line was aided by several deal wins, increased adoption of Palo Alto’s next-generation security platforms due to hybrid work culture and the heightened need for stronger security.
Palo Alto’s strong quarterly performance reflects its sustained focus on product innovation, a shift in the 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 20.9% year over year to $308 million and contributed 23.4% to total revenues. The company’s subscription and support revenues, which accounted for 76.6% of total revenues, improved 32.4% to $1008.9 million.
Billings jumped 32% to $1.61 billion. Deferred revenues at the end of the second quarter were $2.96 billion. Palo Alto’s remaining performance obligation climbed to $6.3 billion, reflecting a year-over-year surge of 36%.
Palo Alto’s Next-Gen Security (NGS) annualized recurring revenues (ARR) were $1.43 billion in the reported quarter compared with $840 million in the year-ago quarter and $1.27 billion in the previous quarter.
The company’s non-GAAP gross profit increased 27.4% to $975 million. However, non-GAAP gross margin contracted 130 basis points (bps) to 74% primarily due to heightened costs associated with the supply chain issues.
Non-GAAP operating income rose 20% to $242.7 million. However, non-GAAP operating margin contracted 140 bps to 18.4%, mainly due to lower gross margin.
Balance Sheet & Cash Flow
Palo Alto exited the fiscal second quarter with cash, cash equivalents and short-term investments of $3.34 billion compared with $3.46 billion at the end of previous quarter. The company’s balance sheet does not carry any long-term debt.
The company generated an operating cash flow of $482.6 million and a non-GAAP adjusted free cash flow of $441 million during the second quarter. Non-GAAP adjusted free cash flow margin came in at 33.5%.
Guidance
Buoyed by strong second-quarter performance, Palo Alto raised its fiscal 2022 guidance.
The company now anticipates fiscal 2022 revenues of $5.425-$5.475 billion, suggesting growth in the range of 27-29% from the fiscal 2021 level. Earlier, it had projected revenues between $5.35 billion and $5.40 billion, which indicated year-over-year growth of 26-27%.
Total billings are now estimated to be $6.80-$6.85 billion for fiscal 2022, indicating a year-over-year increase of 25-26%. Earlier, it had estimated billings in the range of $6.675-$6.725 billion, implying a 22-23% increase from the year-ago quarter.
Palo Alto raised its non-GAAP earnings guidance ranges from $7.15-$7.25 per share to $7.23-$7.30 per share.
However, non-GAAP adjusted free cash flow margin is still expected in the range of 32-33%.
For the third quarter of fiscal 2022, Palo Alto projects revenues between $1.345 billion and $1.365 billion, suggesting year-over-year growth to be 25-27%.
Total billings are anticipated between $1.59 billion and $1.61 billion, indicating an increase of 24-25% from the year-ago quarter. Non-GAAP earnings are projected to be $1.65-$1.68 per share.
Zacks Rank & Key Picks
PANW currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the broader computer and technology sector include the iPhone maker Apple (AAPL - Free Report) and Axcelis Technologies (ACLS - Free Report) , both sporting a Zacks Rank #1 (Strong Buy), and Analog Devices (ADI - Free Report) carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Apple’s second-quarter fiscal 2022 earnings has been revised upward by 3.6% to $1.43 per share over the past 30 days. For fiscal 2022, earnings estimates have moved north by 5.9% to $6.15 per share in the past 30 days.
Apple’s earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 20.3%. AAPL stock has appreciated 30.8% in the past year.
The Zacks Consensus Estimate for Axcelis’ first-quarter 2022 earnings has been revised upward by 2 cents to 89 cents per share over the past 30 days. For 2022, earnings estimates have moved north by 10.8% to $3.99 per share in the last 30 days.
Axcelis’ earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 30.3%. Shares of ACLS have rallied 75.6% in the past year.
The Zacks Consensus Estimate for Analog Devices’ first-quarter fiscal 2022 earnings has been revised upward by 23 cents to $2.08 per share over the past seven days. For fiscal 2022, earnings estimates have moved north by 79 cents to $8.32 per share in the past seven days.
Analog Devices’ earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 6%. Shares of ADI have gained 2.1% in the past year.