Palo Alto Networks (PANW) Q2 2024 Earnings

Shares of a cybersecurity company Palo Alto Networks plunged 19% in extended trading on Tuesday after the company reported beat on the top and bottom lines, but lowered its full-year guidance for revenue and billings.

Here’s how the company compares to the ratings of LSEG, formerly known as Refinitiv:

• Earnings per share: $1.46 adjusted vs. $1.30 expected
• Income: $1.98 billion vs. $1.97 billion expected

Net income was $1.7 billion for the quarter, or $4.89 per share, compared with $84 million, or $0.25 per share, for the fiscal second quarter of 2023.

The company is now targeting full-year total billings of between $10.1 billion and $10.2 billion, compared to its previous guidance of between $10.7 billion and $10.8 billion. Palo Alto Networks also expects full-year revenue to range between $7.95 billion and $8 billion, compared with previous estimates of between $8.15 billion and $8.2 billion.

In a conference call with analysts, CEO Nikesh Arora said the lowered guidance was due to a “shift” in strategy, “looking to accelerate growth, our platform migration and consolidation and enabling AI leadership,” adding that the company expects ” difficult customer,’ as the company changed its position.

Guidance for the upcoming quarter also fell short of consensus estimates. Analysts polled by LSEG had expected the company to report fiscal third-quarter revenue of $2.04 billion, but Palo Alto Networks now expects revenue to range between $1.95 billion and $1.98 billion.

The new billing guidance represents full-year growth of between 10% and 11% versus previous guidance showing 16% to 17% billing growth. Similarly, Palo Alto Networks now expects full-year revenue growth of between 15% and 16%, down from initial guidance of 18% to 19% growth.

The lower valuations come even as the artificial intelligence craze sweeps cybersecurity stocks and the broader tech sector. Arora said the company will look to activate its “AI leadership strategy” in the earnings call.