One of the biggest winners in the AI investment frenzy, the leader in the field of cybersecurity $Palo Alto Networks (PANW.US)$ The latest released performance data and quarterly profitability prospects can be said to have 'broken doubts', all of which exceeded Wall Street analysts' expectations, and continued to promote its share buybacks, under these factors, Palo Alto's stock price soared in post-market trading of the US stock market, and the stock price once rose more than 5%. As of Monday's close, the stock price of this cybersecurity provider has risen by more than 16% this year, and the full-year increase in 2023 is more than 110%.
In terms of earnings expectations that the market is focusing on, the company said in a statement that it expects the Non-GAAP EPS guidance range for the current quarter (i.e., the first quarter of 2025 fiscal year) to be between $1.47 and $1.49, exceeding Wall Street analysts' average expectation of $1.43. For the current quarter's revenue scale, Palo Alto Networks' revenue guidance range is $2.1 billion to $2.13 billion, with a year-on-year growth rate of 12% to 13%, while Wall Street expects about $2.1 billion.
For the entire 2025 fiscal year, Palo Alto's total revenue guidance range is $9.1 billion to $9.15 billion, meaning a year-on-year growth rate of 13% to 14%, while Wall Street expects $9.1 billion. The Non-GAAP EPS guidance range for the 2025 fiscal year is $6.18 to $6.31 per share, meaning a year-on-year growth rate of 9% to 11%, higher than Wall Street's expected EPS of $6.19.
As of the end of July, the fourth-quarter results of the 2024 fiscal year showed that driven by the new AI-based cybersecurity products, Palo Alto's revenue increased by 12% year-on-year to $2.2 billion, slightly higher than Wall Street's expected $2.16 billion. Net income under the Non-GAAP criterion was $0.522 billion, equivalent to a diluted EPS of $1.51, higher than Wall Street's expected EPS of $1.41 and the $1.44 of the same period last year. The company's reported overall revenue for the 2024 fiscal year was slightly higher than $8 billion, in line with Wall Street's expectations, while the fiscal year revenue for the same period last year was about $6.9 billion.
Before the performance data and outlook were announced after Monday's trading, Wall Street analysts were generally optimistic about the rating of cybersecurity company Palo Alto, headquartered in Santa Clara, California. Of the analysts tracked by institutions, 40 gave it a 'buy' rating and 15 a 'hold' rating, with no analyst giving a 'sell' or 'reduce' rating.
Palo Alto also announced in its financial statement that its board of directors has approved an additional $0.5 billion for its share buyback program, increasing the size of its authorized share buyback to $1 billion.
The impact of the CrowdStrike incident on Palo Alto is very small.
This latest result is a gospel for Palo Alto, the world's leading cybersecurity company. After rapid market expansion in 2023, its market cap has continued to rise from $91 billion at the beginning of the year to $111 billion.
Its CEO, Nikesh Arora, warned in February that the company's market value had plummeted a record 27% at the time because its annual revenue failed to meet Wall Street expectations and customers were experiencing 'consumption fatigue' in terms of cybersecurity. But the actual performance since then has proven the resilience of customers and the new growth period of Palo Alto's cybersecurity business with the help of generative AI.
Analysts have been observing the impact of the global outage caused by a defective system update of their strongest competitor, CrowdStrike Holdings Inc., last month on the cybersecurity market. This includes whether CrowdStrike's customers will turn to competitors such as Palo Alto, and whether there is a possibility of widespread resistance to cybersecurity suppliers. At least from Palo Alto's latest performance and outlook data, this impact seems to be very limited, but it is difficult to judge whether the customers previously belonging to CrowdStrike can be absorbed.
Arora said on the earnings call on Monday that the company was 'very satisfied' with its latest performance and added that cybersecurity issues had been brought to the attention of C-level executives following the 'recent major security tool outage event.'
Arora said the way Palo Alto updates is 'completely different' from CrowdStrike's. He emphasized, 'Since the outage, our customer base has been contacting us, asking how Palo Alto is deploying its updates and how it differs from its competitors.'
The company's CFO, Dipak Gorecha, said that the company will no longer provide bill forecasting guidance to investors in the future. Previously, Aurora stated in May that the data was lower than analysts' expectations, which disappointed investors, but he emphasized that bill forecasts represent "a human measure of performance".
Gorecha said the company will shift to releasing annual recurring revenue guidance data based on some of its products and remaining performance obligations (RPO). RPO is a measure of the scale of related revenue from contracts already concluded.
Wall Street investment firms such as Guggenheim Securities have previously warned of traps based on RPO. As early as November 2022, Guggenheim Securities believed that RPO lacked key information, such as the time frame for revenue related to contracts.
Palo Alto Networks, the leader in cybersecurity with "AI+cybersecurity", has introduced a new label. According to statistics, the stock price of Palo Alto Networks, one of the "AI giant stocks" in the US, has risen more than 16% so far this year after soaring more than 110% in 2023, mainly because investors expect global companies' investment in cybersecurity to continue to soar and expect the cybersecurity giant Palo Alto, which is incorporating generative AI technology into the field of cybersecurity, to increase its valuation during the global AI investment craze. Palo Alto, one of the "AI giant stocks", widely applies generative AI and other advanced AI technologies in the field of cybersecurity to enhance threat detection and response capabilities.
Under the epic wave of global enterprise layout of AI technology, cybersecurity giants in the U.S. securities market are also focusing their efforts on combining generative AI technology with cybersecurity technology, which may be one of the core driving forces behind increasing subscriptions to cybersecurity services by companies.
Under the new generative AI technology, cybersecurity services have both unparalleled convenience brought about by low technical thresholds, as well as an exponential increase in cybersecurity service efficiency brought about by AI technology. These two points are very attractive to companies that are developing AI software applications. Developing AI software applications cannot be achieved without the support of massive AI models and enterprise-level big data, and focusing on "AI + cybersecurity services" with low technical operation thresholds and high efficiency will undoubtedly provide stronger cybersecurity services for these two core technologies.
Palo Alto Networks has launched a technology called Precision AI, which is specifically designed for cybersecurity. Precision AI has been integrated into the company's flagship platforms including Strata, Prisma, and Cortex. This AI technology can more accurately detect and defend against complex network attacks, and provide AI-based automated threat response. The company focuses on low technical operation thresholds and efficient access to various professional modules of its "AI+cybersecurity service", which has won praise from the vast majority of its customers. Precision AI integrates the major professional modules of Palo Alto Networks, such as Strata, Prisma, and Cortex, and uses generative AI to automatically coordinate the operation of these modules. Through automated threat detection, response, and defense mechanisms, Precision AI enables users to effectively utilize its features without requiring extensive knowledge of network security. This simplified design enables more businesses to quickly adapt to and use advanced network security technologies.
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The company's overall sales volume in 2023 was 18,000 kiloliters, a year-on-year increase of 28.10%, which is a significant growth. In terms of product structure, the operating income of 10-30 billion yuan products is 401/1288/60 million yuan, respectively.
Editor/ping