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Analyzing Palo Alto Networks’ Key Business Catalysts

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What’s driving growth?

Palo Alto Networks (PANW) has gained market traction through its strong portfolio and network security products. The digital transformation across industries is creating new business opportunities for Palo Alto. Growing cybersecurity threats have also spurred demand for security products.

In the last five years, the company’s billings have grown at a compound annual rate of 46%, which clearly reflects the growing demand for security products. Palo Alto’s strategic partnerships with Microsoft (MSFT) and Amazon (AMZN) to deliver its products through the cloud have also been a driving force in the company’s business. Palo Alto has seen double-digit annual growth across all segments in the last five quarters, maintained by increased client additions and retention.

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Revenue guidance

The graph above shows Palo Alto Networks’ top-line performance, which has increased over the last five quarters, growing at a compound annual rate of 5%. In fiscal 2Q18, the company’s total revenue rose 20% YoY (year-over-year) to $505.5 million. In fiscal 1H18, it had revenue of ~$1 billion, up 23% YoY.

Palo Alto Networks has projected fiscal 3Q18 revenue of $538 million–$548 million. In fiscal 2018, it expects revenue of $2.19 billion–$2.22 billion, reflecting 24%–26% YoY growth.

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