(Bloomberg) – The cybersecurity company Palo Alto Networks Inc. rose sharply after forecasting higher bills for the year than Wall Street had expected, allaying fears that a slowdown in demand could weigh on results.
Most read from Bloomberg
The company sees billings for the fiscal year range from $10.9 billion to $11 billion, compared to an average analyst estimate of $10.8 billion. Still, the company’s quarterly and annual revenue outlook fell short of analyst estimates.
Palo Alto’s outlook is a potential bright spot for the cybersecurity industry. Companies like Fortinet Inc. and Check Point Software Technologies Ltd. reported earnings that pointed to a slowdown across the space, which was hurt by a broader pullback in tech spending and a shaky economy.
Palo Alto Chief Executive Officer Nikesh Arora said in a statement that the company’s “strategy is resonating with a growing number of our customers, driving continued consolidation.” He also noted that the Santa Clara, California-based company was “gratified” with the reception of its artificial intelligence-based security platform.
The stock was up 10% to $228.29 in late trading from 4:30 p.m. New York time.
In a departure from the company’s usual timing, results came after the closing bell on Friday, sparking speculation that the forecast may not have been promising. The stock had fallen about 20% since that announcement as “sheer fear” spread among investors.
At the top of the earnings call, Arora apologized for what he said was the “unique attention” the company had attracted by its decision to hold its earnings call late Friday afternoon, saying it was due to wanting to give it plenty of time for one-on-one calls with analysts before a sales conference starts on Sunday.
Total revenue for the fiscal fourth quarter was $1.95 billion, just short of analyst estimates of $1.96 billion.
Arora argued that the cybersecurity industry needs to move much more towards solutions that can stop attacks in real time, rather than the four to six days it now takes, he says.
“That is not acceptable,” he said. “This thing will have to be reduced to minutes.” Arora pointed to one reason to accelerate cyber solutions: a new rule from the US Securities and Exchange Commission that requires publicly traded companies to disclose cyber breaches within four days of determining they are material.
Artificial intelligence, which could help deliver such real-time autonomous solutions, would require further investment, he said, but added that it has a “dark side” that the industry will need to address to avoid abuse. Palo Alto Networks “quadruples” to ensure accurate AI is deployed in every product, he said.
(Updates with additional information from the eighth paragraph. An earlier version of the story has been corrected to reflect that the full-year outlook is in the second paragraph.)
Most read from Bloomberg Businessweek
©2023 Bloomberg LP
