Palo Alto Networks shares jump after strong outlook CEO calls 'cautious'

Shares of Palo Alto Networks Inc. jumped in Monday’s extended session after the cybersecurity company not only said its forecast, which beat Wall Street estimates, was “reasonable” given macroeconomic uncertainty, but also announced a stock split.

Palo Alto Networks
PANW,
-1.06%

shares rose more than 8% after hours, after falling 1.1% in the regular session, to close at $508.05. The company said its board has announced a three-for-one stock split, effective Sept. 14.

The company said it expects adjusted earnings of $2.03 to $2.06 per share on revenue of $1.54 billion to $1.56 billion and bills of $1.68 billion to $1.7 billion for the fiscal first quarter and $9.40 to $9.50 per share on revenue of $6.85 billion to $6.9 billion and billings of $8.95 billion to $9.05 billion for the year.

Analysts polled by FactSet had forecast $2.03 per share on revenue of $1.54 billion and billings of $1.69 billion for the first quarter and $9.27 per share on revenue of $6.74 billion and billings of 8. $58 billion for the year.

And that’s predictable given possible macroeconomic headwinds, Nikesh Arora, chairman and CEO of Palo Alto Networks, told analysts on the call.

“We’ve had companies cutting guidance, companies cutting EPS guidance, companies warning that the lifecycles of potential customer deals are shorter, so we’ve been trying to make sure we’re prepared for both the upside and the bad scenario,” Arora told analysts. “I think it’s fair to be cautious in this market.”

The company has been racking up winning quarters and raises recently. Back in May, the company raised its annual outlook for the third straight quarter to a full-year outlook to adjusted earnings of $7.43 to $7.46 per share, revenue of $5.48 billion to $5.5 billion and billings of $7.11 billion to $7.14 billion. The company reported adjusted earnings of $7.56 per share on revenue of $5.5 billion and billings of $7.47 billion.

For the fiscal fourth quarter, Palo Alto Networks reported net income of $3.3 million, or 3 cents per share, compared with a loss of $119.3 million, or $1.23 per share, in the same period last year. Adjusted earnings, which exclude stock-based compensation charges and other items, were $2.39 per share, compared with $1.60 per share in the year-ago period.

The security software company’s revenue rose to $1.55 billion from $1.22 billion in the year-ago quarter. Billings, which reflects future contract business, rose 44% to $2.7 billion from a year ago.

Analysts had forecast earnings of $2.28 per share on revenue of $1.54 billion and billings of $2.33 billion, based on Palo Alto Networks’ forecast of $2.26 to $2.29 per share on revenue of $1.53 billion to $1.55 billion and accounts from $2.32 billion to $2.35 billion.

Shares of Palo Alto Networks are down 9% for the year. In comparison, the ETFMG Prime Cyber ​​Security ETF
HACK,
-1.90%

is down 20%, the S&P 500 index
SPX,
-2.14%

down 13%, as did the Nasdaq Composite technology index
comp,
-2.55%

at a 20% discount.

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