🛡️ Palo Alto Networks: strong growth, profit above expectations, but margins under pressure!
Palo Alto Networks $PANW, one of the leaders in cybersecurity, reported fiscal third quarter results showing solid performance, yet today the stock is down more than 6 %. While earnings and revenue beat expectations, the company missed its gross margin target, and it is precisely the latter that is key to sustainable growth in a sector with high operating costs.
💰 Results and expectations:
Earnings per share (non-GAAP): $0.80 (expectations $0.77)
Revenue: USD 2.29 billion (USD 2.28 billion)
Year-on-year revenue growth: +15%
Gross margin (non-GAAP): 76% (77.2%)
While the revenue growth from USD 1.98bn to USD 2.29bn looks very healthy, the drop in net profit to USD 262m (USD 2.29bn) is not a bad thing. USD 262.262 and a small drop in margins suggest that the company is facing pressure on the cost side, likely due to higher spending on research, cloud infrastructure, or pricing competitive pressures (CrowdStrike, Fortinet, Zscaler and others).
🔮 Q4 Outlook:
Earnings per share (non-GAAP): $0.87-0.89 ($0.86 expected)
Despite the current disappointing margins, management remains optimistic, with the outlook for the next quarter once again beating expectations, confirming confidence in continued growth in demand for security solutions.
💼 Capital expenditure:
CapEx Q3. USD 70.8 million (expectation: USD 70.8 million).
Lower capital expenditure may be viewed positively as a sign of effective investment management, but may also indicate some caution in infrastructure expansion.
Palo Alto Networks thus continues to grow at a double-digit rate, an important benchmark in the cybersecurity segment.
The outlook is encouraging, indicating confidence in future demand.
🔐 Cybersecurity is a necessity in today's society. A Palo Alto is one of those who are turning this necessity into a stable and quality business.
💬 How do you see the development in the cybersecurity sector? Do you have a representative from this growing sector?
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Great firm and one of the largest in this sector, but I also have $CRWD in my portfolio.
I have $CRWD in my portfolio, where I've already made a nice profit, but $PANW is his big competition.
The company is doing very well and almost all items are growing. I am waiting for a better price and will probably buy today.