Palo Alto Networks falls on disappointing billings guidance

Palo Alto Networks (PANW) reported fiscal third quarter results that topped Wall Street estimates but a disappointing billings forecast.

For Q3, the cybersecurity company reported adjusted earnings per share of $1.32 compared to an estimated $1.26. Revenue of $2.0 billion was slightly better than the expectations of $1.97 billion.

For the full year, Palo Alto Networks sees billings of $10.13 billion to $10.18 billion, a narrower range than the previously forecasted $10.10 billion to $10.20 billion and short of the $10.19 billion estimate. The company sees adjusted earnings per share of $5.56 to $5.58. Full-year revenue is estimated to be $7.99 billion to $8.01 billion, an increase from the prior guidance of $7.95 billion to $8.00 billion, and better than the $7.98 billion estimate.

Yahoo Finance's Julie Hyman and Jared Blikre break down Palo Alto Network's Q3 results.

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This post was written by Stephanie Mikulich.

Video transcript

Palo Alto Networks, the cyber security company.

Coming out with numbers here, a lot of attention on the billings forecast.

So I'm gonna jump right to that.

Here for the fiscal fourth quarter, the company says billings will be $3.43 billion to $3.848 billion the midpoint of that below the 3.47 billion that analysts had been estimating.

And there was a lot of concern a lot.

Um, talk about the billings.

Um, that that was gonna be the key indicator.

West Park capital writing ahead of the, uh, print here.

The importance of Billings as a leading indicator of the business can't be overlooked.

Um, and it's forecast to have grown from 2 to 32 to 4% from the third quarter.

Um, if you look at the, uh, Billings here that the company just reported, um, I'm looking for that number, not seeing it off the top of my head, But revenue in the last quarter was up by 15%.

Just about in line with estimates here.

But it does seem that that billings number is what's responsible for the drop.

Yes, and, um, just looking at some of the product.

The revenue numbers that you just quoted that can be fur further divided into product revenue.

That's 391 million, very small beat there.

And that's only up 7/10 of percent year over year, but still a minor beat subscription and support revenue.

1.59 billion.

That's up 20% year over year and also just, uh, a little bit more than the street was expecting.

Um, I do have some other I don't know if you broke this out specifically, Julie, but you did the year forecast fourth quarter forecast.

UH, we we do have a revenue of 2.15 to 2.17 billion.

Now the estimate was 2.17 billion.

So a little bit on the light side, they see billings 3.43 to 3.48 billion.

Estimate was 3.47.

So a little bit light there when you consider the midpoint, and then they see adjusted EPS as a dollar 40 to a dollar 42 and I don't have a comp on that one, right?

But by and large, it does seem like that the forward looking numbers was what was, uh, you know, sort of some trouble for Palo Alto.

Uh, versus what analysts were expecting.

If you look at the shares year to date, they're up about 10%.

I have them on the Wi Fi Interactive that, shall we?

All right, So, year to date, we are now up 9.8%.

But you see this This drop here 8.12% when we open tomorrow, Uh, that number to the right in green is going to be a little bit lower.

In fact, it might be wiped out, so we might be heading down to the unchanged line for the year.

Um, PW is an interesting stock.

Uh, so over the last five years, up 326% you can see basically holding its rather steep trend line.

So nothing out of the ordinary here.

But I would expect on tomorrow's open to be testing the lower bound there, and so that's gonna be the key level.

Probably in play