Palo Alto Networks reported better-than-expected third quarter earnings as the company continues to consolidate cybersecurity budgets.
The company, which kicked off a platformization war among security vendors last year, said third quarter earnings were 37 cents a share on revenue of $2.3 billion, up 15% from a year ago. Non-GAAP earnings were 80 cents a share.
Wall Street was looking for non-GAAP third quarter earnings of 77 cents a share on revenue of $2.29 billion.
As for the outlook, Palo Alto Networks said revenue will be between $2.49 billion to $2.51 billion with non-GAAP earnings of 87 cents a share to 89 cents a share. Wall Street was looking for non-GAAP earnings of 87 cents a share on revenue of $2.50 billion.
For fiscal 2025, Palo Alto Networks projected revenue of $9.17 billion to $9.19 billion with non-GAAP earnings of $3.26 a share to $2.28 a share.
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By the numbers:
- Next-generation security annual recurring revenue for Palo Alto Networks was $5.09 billion, up 34% from a year ago.
- Operating income was up 23% on a non-GAAP basis in the third quarter.
- About 90 customers in the third quarter standardized on Palo Alto Networks.
- The company had 44 customers with more than $10 million in annual recurring revenue on next-gen security.
CEO Nikesh Arora made the following points on the earnings conference call.
- "It is becoming increasingly clear that as organizations aspire to simplify and modernize their security architectures in the age of AI with data at the center, our strategy is resonating, resulting in larger deals."
- "The urgency to adopt AI is omnipresent in all of our customers. It no longer seems to be a choice. It's becoming a strategic imperative for every customer as the risk of inaction is too high."
- "It was not an easy quarter to execute. Had we not had the tariff conversations, the geopolitical tensions, it'll be much easier to sell through it. But we had our lessons from the pandemic. We had our lessons from supply chain crisis. So, we had to go back and pull up our shorts and execute the same practices that we did then. And we're kind of, like, on the same sort of cadence now in Q4 because we are trying to stay ahead of the curve."
