(Bloomberg) -- Palo Alto Networks Inc. rose after issuing a quarterly profit outlook that beat Wall Street’s expectations and boosting its share buyback program.
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The shares jumped as much as 5% in post-market trading in New York. The cybersecurity provider has risen 16% through the close Monday.
Earnings for the current fiscal quarter will be $1.47 per share to $1.49 per share, the company said in a statement. Analysts had expected $1.43.
The company has attempted to refresh its sales strategy, with limited success, Bloomberg Intelligence said before the report. Despite the strategic shift, Palo Alto managed to grow its sales 12% last quarter, faster than expected.
The reported full-year sales of just over $8 billion was in line with consensus expectations that were moderated after it cut its outlook earlier this year.
Wall Street remained bullish overall on the stock of the Santa Clara, California-based company ahead of Monday’s earnings, which had 40 buys, 15 holds, and zero sell ratings among analysts tracked by Bloomberg.
Palo Alto’s also announced its board approved an additional $500 million to repurchase shares, increasing the total authorization to $1 billion.
The results come as a boon for Palo Alto, one of America’s leading cybersecurity companies, which has a market capitalization of $111 billion, up from $91 billion at the start of the year. Chief Executive Officer Nikesh Arora had warned back in February that customers were suffering from “spending fatigue” in cybersecurity, as the company missed Wall Street expectations for annual sales, sending the value of the company plummeting by a record 27% at the time.
Analysts have been watching to see any impact on the cybersecurity market from the mass outages last month triggered by a flawed update from CrowdStrike Holdings Inc. That includes whether CrowdStrike customers were switching to rivals or pushing back on cybersecurity vendors in general.
Arora said in an investor call on Monday the company was “delighted” with its results, adding cybersecurity has risen up the agenda in C-suites following “a recent broad outage involving security tools.”
Palo Alto creates its own updates in a “fundamentally different way” from CrowdStrike, Arora said. Since the outage, customers have been reaching out and asking how Palo Alto deploys its updates compared with its rival, he said.
Dipak Golechha, chief financial officer, said the company would no longer issue guidance on billings forecasts to investors in the future. That follows Arora’s contention in May that billings represent “an artificial metric” after the figure missed analyst estimates and disappointed investors.
Golechha said the company will instead issue guidance for annualized recurring revenue for part of its product offering and remaining performance obligations, known for short as RPO, a measure of how much revenue is already contracted.
Wall Street firms such as Guggenheim Securities have previously warned of pitfalls associated with relying on RPO. In November 2022, Guggenheim argued that RPO lacked crucial information, such as the time frame in which contracted revenues will be spent.
(Updates with comments starting in 11th paragraph.)
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