Strong cyber security demand helps Palo Alto top estimates

Nov 20 (Reuters) – Palo Alto Networks Inc on Monday reported better-than-expected quarterly revenue and profit, as it benefited from robust demand for its cloud-based security services, sending its shares up more than 6 percent in extended trading.

The cyber security firm said it added 2,500 new customers in the quarter, bringing the total number to more than 45,000, prompting it to issue a strong second-quarter outlook and raise its full-year forecast.

The company, which competes with Fireye Inc, Fortinet Inc and Symantec Corp, has been focusing on strengthening its security platform through automation to gain an edge over its rivals and corner a bigger share of the cyber security market.

It has also been helped by a wave of recent cyber attacks, including a massive data breach at credit reporting firm Equifax Inc and the ransomware attack, that have forced companies to invest heavily in protecting their computer networks.

“The strong performance of Palo Alto this quarter contrasts with the disappointing performance of peers, another indication the company benefits from a superior platform,” Bernstein analyst Pierre Ferragu said.

Both FireEye and Symantec Corp had disappointed investors with their forecasts for the current quarter.

Palo Alto’s services revenue, which includes contract-based subscriptions, surged 36.2 percent to $319 million, accounting for more than half of its total revenue.

Billings, defined as total revenue plus the change in deferred revenue, rose 15.4 percent to $596.5 million.

The company also promoted Kathy Bonanno as chief financial officer, replacing Steffan Tomlinson, whose retirement was announced in August. Bonanno was responsible for financial planning, treasury, enterprise risk management and facilities at the company.

For the current quarter, Palo Alto forecast profit of 78 cents to 80 cents per share and revenue of $518 million to $528 million.

Analysts were estimating a profit of 77 cents and revenue of $519.9 million for the quarter, according to Thomson Reuters I/B/E/S.

Net loss widened to $64 million, or 70 cents per share, in the first quarter ended Oct. 31 from $56.9 million, or 63 cents per share, a year earlier.

On an adjusted basis, Palo Alto earned 74 cents per share, beating analysts’ average estimate of 69 cents.

Revenue rose to $505.5 million from $398.1 million. Analysts had expected revenue of $489 million.

Shares of the company were trading at $151.95 after the bell. (Reporting by Arjun Panchadar in Bengaluru; Editing by Anil D’Silva)