- Analysts forced to rip up Q3 and full year forecasts after strong guidance

- Q2 earnings beat estimates by 35%, revenues also outpaced consensus

- Share price rallies to $180.51, an eight-month high

Santa Clara-head quartered Palo Alto Networks (PANW:NASDAQ) has forced analysts to rip up their forecasts for the third quarter and full year after Q2 earnings blew past expectations.

Palo Alto is the world’s largest digital safety company, worth around $50.5 billion, providing clients with services including next-generation firewalls, anti-virus tools, threat detection and network security controls.


Q2 earnings were released after the close of the trading session overnight, showing EPS (earnings per share) of $1.05, flying past the consensus estimate of $0.78. Total revenue grew 26% year-on-year to $1.7 billion, beating the consensus estimate of $1.65 billion.

Q2 billings increased 26% year-on-year also, to $2 billion, prompting chairman and chief executive Nikesh Arora to champion the firm’s ‘significant investments’ in recent years.

‘The performance of our software-based and cloud-delivered portfolio validates the significant investments we have made over the last several years and has enabled us to raise our billings and NGS ARR guidance,’ Arora told investors.

NGS ARR means next-generation security annual recurring revenue.

Palo Alto shares rallied more than 8% in after-hours trading, implying that the stock will open at $180.51 when trading resumes later today, their highest since last summer.


Just as important as the Q2 numbers was guidance on Q3 and the rest of the full year to 31 July 2023. Palo Alto anticipates Q3 EPS in the range of $0.90 to $0.94, compared to the consensus of $0.78, on revenue in the range of $1.695 billion to $1.725 billion, modestly lower than the $1.74 billion consensus.

Total billings are expected in the range of $2.2 billion to $2.25 billion, implying year-on-year growth of 22% to 25%. This has clearly impressed investors given the gradually slowing IT spend being seen across the enterprise space.

EPS is expected in the range of $3.97 to $4.03 on $6.85 billion to $6.91 billion for the full year. That’s well ahead of consensus, which had been predicting $3.42 on $6.89 billion revenues. Total billings are seen between $9.10 billion to $9.20 billion, implying year-on-year growth of 22% to 23%.

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Issue Date: 22 Feb 2023