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Investing.com -- Palo Alto Networks reported quarterly results and issued forecasts that beat market expectations, sending the cybersecurity company’s shares up more than 5% in premarket trading on Tuesday.
The company posted adjusted earnings of 95 cents per share for the fourth quarter ended July, beating analysts’ average estimate of 89 cents.
Revenue was $2.5 billion, in line with expectations.
The hotly watched next-generation security (NGS) annual recurring revenue (ARR) came in at $5.58 billion, up 32% year-on-year and ahead of the $5.55 billion consensus, with net new annual recurring revenue (NNARR) rising 14% year-on-year, the strongest pace since fiscal Q3 2024.
Total (EPA:TTEF) remaining performance obligations (RPO) reached $15.8 billion, topping consensus of $15.26 billion and guidance of $15.2–15.3 billion, with growth reaccelerating to 24% year-on-year from 19% in the prior quarter.
"PANW delivered some "Q4 magic", with RPOs crushing cons. & accelerating to +24% Y/Y vs. +19% Y/Y last qtr," D.A. Davidson analysts said in a note.
For the current quarter, the company expects earnings of 88 to 90 cents per share. Estimates were of 86 cents.
Revenue target is in the range of $2.45–$2.47 billion, average of which is slightly above analyst estimates.
The company projected fiscal 2026 earnings of $3.75 to $3.85 per share and revenue in the range of $10.475 to $10.525 billion, also beating Wall Street forecasts.
Looking further ahead, the management expects the combined Palo Alto and Cyberark business to generate free cash flow (FCF) margins above 40% in FY28, up from the prior medium-term target of 37%+, reflecting meaningful synergies compared with Cyberark’s standalone 27% margin goal for 2028 outlined at its Investor Day.
"Our back-of-the-envelope math suggests FY28 could generate $15B+ in combined revenue with $6B+ in FCF, which over the next two years could buy back a material portion of the dilution," Barclays (LON:BARC) analysts commented.
Palo Alto Networks (NASDAQ:PANW) also said its founder and chief technology officer Nir Zuk has retired after more than 20 years. Chief Product Officer Lee Klarich will take over as CTO and join the board.
(Pratyush Thakur contributed to this article.)