Palo Alto Networks exceeded Wall Street expectations for its fiscal fourth quarter, as growing artificial intelligence risks drive demand for cybersecurity tools. Shares were little changed in extended trading after falling 5% during the regular session.
Palo Alto Networks earnings beat estimates
Here is how Palo Alto Networks reported compared with LSEG estimates:
- Adjusted earnings per share: $1.02 vs. 98 cents expected
- Revenue: $3.41 billion vs. $3.35 billion expected
Revenue increased 34% during the quarter to $3.41 billion from $2.54 billion a year earlier, the company said. Palo Alto Networks reported a net loss of $282 million, or 35 cents per share, compared with net income of $254 million, or 36 cents per share, in the same period last year.
The acceleration of AI attacks is pushing customers to build stronger and faster cyber defenses, CEO Nikesh Arora told CNBC. Although those concerns have already increased demand, the long-term growth opportunity remains in its early stages.
“This is a long-term tailwind,” he said. “It will not happen in one quarter, and it will not happen in two. It just underpins the long-term duration from a growth rate perspective for our business.”
AI-driven cyberattacks fuel demand for security tools
Palo Alto Networks shares have nearly doubled this year as increasingly capable AI models, including Anthropic’s Mythos, drive demand for security tools designed to detect and respond to agentic cyberattacks.
Concerns about agentic AI have intensified after breaches such as the OpenAI-Hugging Face hack demonstrated that AI agents can increasingly plan and orchestrate attacks autonomously.
Palo Alto Networks is not the only company benefiting from the AI security race. CrowdStrike and Okta both rallied last week after reporting strong earnings and guidance, as customers increased spending on cybersecurity tools.
Arora said Palo Alto Networks has held more than 2,000 customer briefings since the launch of Anthropic’s Mythos, up from approximately 1,200 briefings disclosed last quarter. The company also announced the acquisition of AI startup Console as it expands its AI security offerings.
Over the past year, Arora has accelerated Palo Alto Networks’ aggressive dealmaking strategy. The acquisitions have included identity security company CyberArk for $25 billion and Chronosphere for nearly $3.4 billion, making them the company’s largest acquisitions to date.
“I see the cyber startup ecosystem as a large lab where people are trying different things,” Arora said, adding that Palo can look to acquire from the space if its internal approach isn’t working.
Palo Alto Networks raises revenue outlook
Palo Alto Networks issued upbeat guidance for the first quarter, forecasting revenue of $3.30 billion to $3.31 billion, above the analyst estimate of $3.22 billion.
For the full fiscal year, the company expects revenue of $14.10 billion to $14.20 billion and adjusted earnings per share of $4.16 to $4.19. Both forecasts exceeded expectations of $13.79 billion in revenue and $4.11 in adjusted earnings per share.
