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Palo Alto Networks (PANW) earnings Q3 2022

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Palo Alto Networks shares rose 12% in prolonged trading on Thursday after the network security hardware maker announced fiscal third-quarter results that got here in stronger than analysts had expected.

Here’s how the corporate did:

  • Earnings: $1.79 per share, adjusted, vs. $1.68 per share as expected by analysts, based on Refinitiv.
  • Revenue: $1.39 billion, vs. $1.36 billion as expected by analysts, based on Refinitiv.

Palo Alto Networks said revenue grew 29% year-over-year within the quarter, which ended on April 30, based on a statement. Revenue jumped 30% in the prior quarter.

“We saw strong top-line growth in Q3, which is a testament to our teams’ consistent execution in capitalizing on the strong cybersecurity demand trends,” Palo Alto Networks CEO Nikesh Arora was quoted as saying within the statement.

Palo Alto Networks has observed Russian cyberattacks because the war broke out throughout the quarter, and it’s seeing greater interest in protection from corporations and government agencies across Europe, Arora told analysts on a conference call.

Supply shortages are posing challenges, Arora said. Higher component and shipping costs narrowed the corporate’s adjusted gross margin within the quarter, said Dipak Golechha, its finance chief. Constraints “are more likely to persist for one more 12 months,” Arora said.

Each within the U.S. and abroad, prices of products are moving higher. But up to now that is not an enormous challenge for Palo Alto Networks.

“We’re not seeing the pressure from inflation or reduced economic activity perspective,” Arora said.

Within the quarter Palo Alto Networks announced a next-generation firewall tool available exclusively through Amazon’s public cloud. The corporate also announced a tool to assist firms detect vulnerabilities in software supply chains following issues stemming from malicious updates to SolarWinds’ Orion software.

Executives raised their guidance for the complete fiscal 12 months. They now expect adjusted earnings of $7.43 to $7.46 per share on $5.481 billion to $5.501 billion in revenue. Analysts polled by Refinitiv had been searching for $7.29 in adjusted earnings per share on $5.46 billion in revenue.

The guidance takes wage inflation into consideration, Arora said, partially due to Santa Clara, California-based Palo Alto Networks’ proximity to large technology firms in Silicon Valley.

“We have not hired as many individuals as we predict during this market,” he said. “It’s a really tight labor market in its current point, as you see. Having said that, my personal view is the labor markets are going to change into easier in the subsequent six to 12 months.”

He said the corporate’s employees had been leaving to affix start-ups six months ago. Now that has modified.

“The market rationalization is causing people to take stock and say, ‘Wait, do I actually need to go make this move?'” Arora said.

Before the close of trading, the stock was down almost 21% because the start of 2022, while the S&P 500 index has fallen about 18% over the identical period.

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