Leading to the report of its fiscal Q3 results on Wednesday, Palo Alto Networks (PANW, Financial) is expected to share a double-digit growth of revenue as well as earnings. The California-based cyber security firm is expected to show revenue growth of 48% to touch a total of $223 million. As of May 22, 2015 Palo Alto’s shares registered a one year high of $163.21 and a one year low of $66.77 seen on May 21, 2014.
EPS for the company are expected to grow 82% y-o-y to touch 21 cents per share. Palo Alto shared a 53% increase in revenue compared y-o-y by nearly $14 million.
Beyond just software solutions
Palo Alto Networks added over 1,500 new customers in the second fiscal quarter of the 2015 financial year. The company’s total customer count as of May 2015 is over 22,500, which is an increase of 40% y-o-y. The company declares its client roster to contain 81 of the Fortune 100 companies as well as 916 of the worldwide 2,000. Wildfire, Palo Alto’s subscription service, helped with a 29% increase in revenue from services.
The company’s CEO, Mark McLaughlin claims ‘more companies are realizing that "legacy technology solutions are incapable of protecting businesses in the age of sophisticated and aggressive cyberattacks."
Company profile
Palo Alto was founded in 2005 and is based out of Santa Clara, California. The cyber security company provides enterprise security platforms for enterprises, government entities and service provides on a global scale. This platform involves Next-Generation Firewall delivering application, content and user control and visibility, on top of protection from network-based cyber threats, and Threat Intelligence Cloud offering centralized intelligence capabilities. Palo Alto’s solutions also deal with providing automated delivery of measures that protect their clients from cyber-attacks. Palo Alto provides a range of firewall appliances, such as Panorama which is a centralized security management solution for appliance control deployed at the end-customer’s side as either a virtual or a physical entity, and Virtual System Upgrades which can be provided to the consumer as extensions to the virtual system capacity that gets shipped along with the appliance.
Palo Alto also provides URL filtering, laptop and portable device protection, protection from malware, threat detection and support and maintenance services. Palo Alto is responsible for serving endpoint security markets consisting of unified threat management, intrusion detection and specialized protection and analysis from threats. Through channel partners, Palo Alto Networks sells products and services to end customers in sectors such as government entities, healthcare, internet and media, financial services and education.
Analysis
Palo Alto Network’s gross profit margin for the second quarter of 2015’s fiscal is basically unchanged when compared year-over-year. The company has witnessed a significant rise in sales and net income, outpacing the average growth rate of its competitors in the industry. The company has strong liquidity with a quick ratio of 1.95 illustrating Palo Alto’s ability to cover short-term cash requirements. Palo Alto’s liquidity has fallen y-o-y. This same period has seen stockholders’ equity has greatly risen by 81.42% from the same quarter the previous year. The key liquidity measures show Palo Alto is not likely to face financial difficulties in the coming quarters.
Palo Alto Networks is currently being given a HOLD rating by analysts. This is based off primary factors, some of which indicate strength and some indicating weakness, with little evidence to justify a positive or negative performance for this stock. Palo Alto Networks’ strengths lie in areas such as robust revenue growth, solid stock price performance and good cash flow from operations. Counters to this growth are weak returns on equity.
