Network management and security firm Palo Alto Networks Inc. delivered solid fiscal first-quarter financial results today, beating expectations on profit and meeting them on sales while upping its fiscal 2022 guidance.
The company reported a profit before certain costs such as stock compensation of $1.64 per share. Revenue came to $1.2 billion, up 32% from the same period a year ago. Wall Street had been modeling an adjusted profit of $1.57 per share on sales of $1.2 billion.
Palo Alto’s stock rose more than 3% in extended trading as investors nodded their appreciation of its results.
Palo Alto President and Chief Executive Nikesh Arora (pictured) hailed the company’s “strong start to fiscal year 2022,” saying it was driven by strength in both its product and security businesses.
The company sells an enterprise cybersecurity platform that includes both hardware and software products designed to secure networks, clouds, endpoints and other information technology infrastructure.
Executives drew attention to the strong performance of the company’s Prisma SASE product, which combines secure access service edge network security with software-defined wide-area networking. It’s meant to ensure organizations’ workers remain secure and productive while working in corporate offices, branch offices and home offices and on the road.
Prisma SASE saw rapid adoption, with 100% year-over-year annual recurring revenue growth. In addition, executives said, more than 25% of new Prisma SASE customers were entirely new to Palo Alto Networks. It now counts 1,756 Prisma SASE customers, up 61% from a year ago.
The company announced a key update to Prisma SASE in the quarter, adding integrated 5G to accelerate SASE deployments to branch offices and Autonomous Digital Experience Management to provide an enhanced online experience for users regardless of location.
Another area of strength for Palo Alto was its cloud-native security business. It said it now has 1,676 Prisma Cloud customers, up 26% from a year ago. The Prisma Cloud offering has benefited as well from recent updates that added new isolation capabilities for software containers that host modern applications. Later, a second update introduced features for detecting vulnerabilities in infrastructure-as-code templates.
Palo Alto also reported that its first-quarter billings, which reflect future business under contract, rose 28% from a year ago, to $1.4 billion. Remaining performance obligation grew 37%, to $6 billion.
Holger Mueller of Constellation Research Inc. told SiliconANGLE he was impressed to see Palo Alto break the $1 billion revenue barrier during the quarter, adding that it now has a shot at delivering $5 billion in revenue for the full year. “The only downside is that Palo Alto’s costs grew faster than revenue, increasing its loss per share by 5 cents. It’s loss is now close to a dollar per share, so the management will have to find a way to revert this trend.”
For now though, Palo Alto remains firmly focused on growing its revenue.
“We continue to see strong customer demand and have continued to release key innovations which give us confidence in the durable growth we presented at our September Analyst Day,” Arora said.
Palo Alto is so confident, in fact, that it upped its full-year revenue and billings guidance and offered a strong forecast for the current quarter.
The company sees second-quarter revenue of $1.265 billion to $1.285 billion, the midpoint of which is ahead of Wall Street’s forecast of $1.27 billion. For the full year, Palo Alto is looking at revenue of $5.35 billion to $5.4 billion, up from its earlier range of $5.28 billion to $5.33 billion and ahead of Wall Street’s projection of $5.31 billion.
Palo Alto also raised its full-year billings forecast from between $6.6 billion and $6.65 billion to a range of $6.68 billion to $6.73 billion.
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