Why Palo Alto Networks CEO Is So Optimistic



New CEO sees bright future

On September 6, Palo Alto Networks (PANW) reported better-than-expected fiscal Q4 2018 results and forecasted that the current quarter results will come in above estimates. What makes Palo Alto Networks leaders optimistic? First, Palo Alto Networks made leadership changes recently, where former Google executive Nikesh Arora was brought in as chief executive officer in June.

From a business reliant on network sales, Palo Alto Networks has expanded and diversified into the security market. The company’s bullish outlook for the current quarter and the management’s overall optimism are largely due to the positive trends in the security market.

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Company excited by expanding market

The new CEO, Arora, sees Palo Alto Networks going places under his leadership. While discussing fiscal 4Q 2018 results, Arora said the security market is large and growing. The executive sees Palo Alto Networks expanding its share in the security spending space.

A growing understanding of the value of data and the need to protect it, enterprise mobility, and cloud computing are some of the factors fueling growth in the security market. Cloud security is a nascent segment of the security market, and the Palo Alto Networks CEO has said the company could do a lot better in this space. The global cloud security space was estimated at $4.1 billion in 2017 and is poised to expand to $12.7 billion by 2022, according to Markets and Markets.

Revenue jumped 29%

Palo Alto Networks’ fiscal Q4 2018 ended on July 31. Revenue rose 29% YoY (year-over-year) to $658.1 million during that period, exceeding the consensus estimate of $633.2 million. Adjusted EPS (earnings per share) was $1.28, topping the consensus estimate of $1.17. Cisco Systems (CSCO) said its fiscal Q4 2018 revenue grew 5.9% YoY. Check Point Software (CHKP) and FireEye (FEYE) grew their second-quarter revenue for the period ended in June by 2.1% and 5.7% YoY, respectively. Revenue was down 8.0% YoY at Juniper Networks (JNPR) in the June quarter.

Palo Alto Networks is anticipating fiscal Q1 2019 (current quarter) revenue in the band of $625 million and $635 million, which implies top-line growth of 25% to 27% YoY. Analysts on average are expecting revenue of $616.5 million.


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