Palo Alto Networks' revenue increased by 10% in the last quarter, saying Microsoft's blue screen incident brought new development opportunities
2024-08-21
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Global cybersecurity giant Palo Alto Networks said that the Microsoft blue screen incident brought new impetus to the development of the platform.
On August 19th local time, Palo Alto released its fourth-quarter results for fiscal year 2024 ending July 31. The company's fourth-quarter revenue increased 12% year-on-year to US$2.189 billion, slightly higher than the market expectation of US$2.16 billion; net profit under Non-GAAP standards was US$522 million, an increase of 8% year-on-year; diluted earnings per share were US$1.51, higher than the market expectation of US$1.41.
For the entire fiscal year 2024, Palo Alto's revenue reached US$8.028 billion, a year-on-year increase of 16.5%; subscription-based recurring revenue accounted for 53% of total revenue, and Palo Alto hopes to increase this proportion to 64% in fiscal 2025.
At the same time, Palo Alto gave higher-than-expected performance guidance, predicting that revenue in the current quarter (the first quarter of fiscal 2025) will reach between US$2.1 billion and US$2.13 billion, a year-on-year increase of more than 12%, higher than the market expectation of US$2.1 billion; Non-GAAP earnings per share are expected to reach between US$1.47 and US$1.49, higher than the market expectation of US$1.43.
For fiscal year 2025, Palo Alto expects revenue to reach $9.1 billion to $9.15 billion, a year-on-year increase of more than 13%; Non-GAAP earnings per share will reach between $6.18 and $6.31, a year-on-year increase of more than 9%. Palo Alto also announced that the company's board of directors approved an additional $500 million to repurchase the company's shares, bringing the total size of stock repurchases authorized by the board of directors to $1 billion.
Palo Alto's fourth quarter results summary. Source: Palo Alto's financial report
On the 19th, Palo Alto (Nasdaq: PANW) stock price closed at $343.36 per share, up 2.77%, with a total market value of $111.2 billion. After the financial report was released, the company's after-hours stock price rose by more than 5%. Wind data shows that the company's stock price has risen by more than 16% since the beginning of this year.
Previously, the Microsoft blue screen crash caused by competitor CrowdStrike has brought extra attention to Palo Alto's performance. On July 19, many Microsoft users around the world reported that their company computers running Windows systems had a "blue screen" failure and could not start normally. The failure lasted for several hours. According to Microsoft's subsequent report, this large-scale downtime was caused by CrowdStrike's security software upgrade, affecting approximately 8.5 million devices installed with Microsoft Windows operating systems worldwide, which is less than 1% of the total number of all Windows system devices.
After the blue screen incident, the market began to speculate whether CrowdStrike's customers would turn to competitors including Palo Alto, or whether the incident would have a negative impact on the entire cybersecurity industry.
Judging from Palo Alto's latest performance and outlook data, the impact of the incident on the cybersecurity market seems to be relatively limited. However, Palo Alto emphasized that the outage has attracted much attention in the cybersecurity field and brought new development opportunities to the company.
In a post-earnings conference call, Palo Alto CEO Nikesh Arora said the company was "very pleased" with last quarter's results. After "recent large-scale disruptions involving security software tools," some customers are re-evaluating their options: "These customers have engaged in conversations with us about our Extended Detection and Response Architecture (XDR) and Extended Security Intelligence and Automation Management Platform (XSIAM), in addition to our industry-leading Cortex security platform. Based on what we've talked to customers about, we believe the Cortex platform has the potential to grow further."
In addition, Arora emphasized that Palo Alto's security software update method is "completely different" from CrowdStrike: "Since the outage, our customer base has been contacting us, asking how Palo Alto deploys updates and how it differs from competitors." He pointed out that when the company releases a product, it will first deploy a sample test within 1% to 3% of the user base to ensure that there are no problems, and then release the content update in stages.
On the other hand, CrowdStrike will release its latest financial report on August 28. According to the latest analysis by cloud monitoring and insurance company Parametrix, the direct economic losses caused by the previous Microsoft blue screen incident to Fortune 500 companies are estimated to exceed US$5.4 billion. The medical and banking industries are the hardest hit sectors in this failure, and the aviation industry has also been hit hard.
Previously, CrowdStrike shareholders had filed a class action lawsuit in the U.S. Federal Court in Austin, Texas, accusing CrowdStrike of making materially false and misleading statements about its technology. Delta Air Lines also said on August 8 that it was filing a legal claim against CrowdStrike.
Hu Hanyan, reporter of The Paper
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