Palo Alto should feel 'good' about Q3 earnings: Former CEO

Shares of Palo Alto Networks (PANW) fell sharply Monday, triggered by the company's decision to narrow its full-year guidance. Deep Instinct CEO and former Palo Alto Networks CEO Lane Bess joins Market Domination Overtime to discuss the company's third-quarter earnings results and its outlook.

Bess believes that Palo Alto "should be feeling pretty good about these numbers overall." He notes that as the company heads into the fourth quarter, it has "historically been a strong finish to their year," suggesting that Palo Alto's performance in its fiscal final quarter could offset any concerns raised by the narrowed guidance. Regarding the guidance itself, Bess notes that the company adopted a conservative approach, stating "you don't wanna promise and not meet."

Shifting the discussion to artificial intelligence (AI), Bess emphasizes that customers are currently seeking "best of breed" solutions, prioritizing quality. While acknowledging that Palo Alto "doesn't use the most sophisticated AI," Bess highlights the company's ability to create effective defenses against cyberattacks.

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This post was written by Angel Smith

Video transcript

Well, Palo Alto Networks reporting third quarter earnings moments ago, shares of slumping after the close as the company narrowed its full year billings guidance here to help us put those numbers in perspective is deep instinct.

CEO He is also the former Palo Alto Network CEO Lane, Bass Lane.

It's good to see you again.

Thanks for being here.

Thank you, Julie.

Happy to be here.

So, Lane, what do you think of these Palo Alto billings numbers and sort of what they say to us about the cybersecurity landscape?

Well, first of all, um I'm a little bit more optimistic about these numbers than most people might be having sat in a Kesha's seat before.

I'm actually feeling that he should be feeling pretty good about these numbers overall.

Um One little known fact or it's not a little known fact, but it's something that, uh I've seen consistently even since I was uh the CEO there is, they're going into their Q four.

Their Q four has historically been a strong finish to their year.

It's about sales people being motivated to make their numbers.

So I'm guessing that there was a little bit of conservative.

You don't want to promise and not meet.

So I'm optimistic that Palo Alto will have a good quarter.

The market is expanding tremendously and what Nakesha has done and I again, compliment him is increased his routes to market.

Um You note in your notes to us that Palo Alto is a platform play, but they're missing something which is a, I just talk to us about that mix and um how they might plug that hole if that's even possible.

Yes.

Well, it is possible.

Uh The use of the term A I is, is getting overused across all industries including Cyber.

Um They do have a platform play, but what customers are looking for right now is more best of breed.

And oftentimes the platform players while they go broad, uh they're not necessarily building and or acquiring the best of breed, they're trying to put together a lot of different cyber solutions that will serve different customer needs A I in terms of prevention is where the market is going to have to go.

And a lot of what uh Palo Alto does is it, it, it, it uh creates layers of defense, but it doesn't necessarily use the most sophisticated A I in fighting what's now going to become a more challenging Cyber malware attack.

Genera.

Generative A I being one of the biggest drivers lane.

What are you seeing?

And, and what do you see through these Palo Alto numbers in terms of uh client willingness to spend on this stuff.

I don't think the clients are lessening their willingness to spend.

In fact, I think they're seeing more of a need to, to spend.

Uh, I, I've talked to a lot of ciso as I do it every week and the bottom line is, um, they've been fatigued by a lot of spend, but the game is being raised in terms of the threats.

So I think they'll continue to get larger budgets, but they'll be seeking to solve the problems, they haven't yet solved.

And the generative A I threats, particularly the ones we're seeing a deep instinct that most of the platform players cannot stop is going to be a key area to focus on.