Balancing profits with growth are what cybersecurity leader Palo Alto Networks (PANW) continues to excel at, leading to a better-than-expected quarter and strong earnings guidance. The late Tuesday release, which was rewarded in after-hours trading with a nearly 4% gain, came despite a more challenging deal-making environment. Revenue for PANW’s fiscal 2023 third quarter increased 24% year-over-year to $1.72 billion, beating analysts’ expectations for $1.71 billion, according to estimates compiled by Refinitiv. GAAP earnings-per-share (EPS) increased to 31 cents, compared with a loss of 25 cents a year prior, and handily beating forecasts for a 13-cents profit. Adjusted EPS grew 83% year-over-year to $1.10, ahead of estimates by 17 cents. Total billings increased 26% annually to $2.26 billion, edging estimates of $2.23 billion and beating the top-end of management’s $2.2 billion to $2.25 billion forecast. Billings provide insight into the health of a subscription software business by measuring what has been invoiced to customers for products and services. Bottom line Once again, Palo Alto Networks delivered an upside quarter despite uncertainty related to the slowing and more cost-conscious macroeconomic environment. Some smaller players in the cybersecurity industry may have recently struggled with earnings or with their outlooks, but Palo Alto hit the mark. At the same time, it’s doing more with less, and it’s committed to efficiency with that margin upside. Palo Alto Networks isn’t cheap on a classical earnings basis. But if margins continue to surprise, like they have over the past few quarters, the stock will ultimately prove to be a much better value than what it initially appears. As a leader in cybersecurity, still one of the most resilient areas of tech spending, we continue to believe Palo Alto Networks has a long runway ahead. Quarterly commentary Palo Alto Networks CEO Nikesh Arora started Tuesday evening’s post-earnings call off again cautioning about the current macro environment and how it has ..
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