Palo Alto Networks Billings Miss Forecasts as Customers Change Plans, and Shares Fall

Palo Alto Networks

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Key Takeaways

  • Palo Alto Networks shares tumbled as the cybersecurity provider's billings and outlook missed estimates.
  • The company said its customers are choosing shorter contracts and just two-thirds are paying up-front.
  • Palo Alto added that high interest rates are impacting billings.

Palo Alto Networks (PANW) shares dropped over 5% in intraday trading Thursday after the cybersecurity firm’s billings and current quarter guidance missed estimates as customers changed their IT spending.

The company reported first quarter fiscal 2024 billings increased 16% from a year ago to $2.025 billion, $45 million below expectations. It anticipates second quarter bookings to be $2.34 billion to $2.39 billion, while analysts had been looking for $2.43 billion. First quarter earnings per share (EPS) were $1.38, with revenue rising 20% to $1.9 billion. Both were higher than forecasts.

Palo Alto indicated customers opted for shorter duration contracts and only about two-thirds paid up-front. Higher interest rates hurt demand, with CFO Dipak Golechha saying that “our billings were impacted by the cost of money.”

However, CEO Nikesh Arora said that there’s an “unprecedented level of attacks fueling strong demand in the cybersecurity market.”

Even with Thursday’s losses, shares of Palo Alto Networks have added about three-quarters of their value this year.

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  1. Palo Alto Networks. "Palo Alto Networks Reports Fiscal First Quarter 2024 Financial Results."

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