palo alto networks The company beat Wall Street’s third-quarter results as artificial intelligence threats drive demand for advanced cybersecurity tools.
The stock price rose as much as 12% in after-hours trading, but has since fallen back to around the same level.
Here’s how the company performed against LSEG’s estimates:
Earnings per share: 85 cents adjusted, 80 cents expected; Revenue: $3 billion, $2.94 billion expected.
The cybersecurity company said its revenue increased 31% year over year, including $388 million from the recent acquisitions of CyberArk and Chronosphere. The company reported a net loss of $177 million, or 22 cents per share, down from net income of $262 million, or 37 cents per share, in the year-ago period.
This comes as expectations fell after the company announced disappointing forecasts in February that fell short of analysts’ expectations.
Palo Alto issued stronger-than-expected guidance for the fourth quarter. The company expects sales to be in the range of $3.35 billion to $3.36 billion, compared to expectations of $3.28 billion. The full-year forecast was also raised, from $11.42 billion to $11.43 billion.
“The latest advances on the AI frontier have increased the level of urgency around cybersecurity and redefined the shape of the industry for years to come,” CEO Nikesh Arora said in a release.
Palo Alto stock has risen more than 60% this year and more than 80% this quarter as advanced cyber tools that can expose software flaws force companies to invest in them.
Earlier this year, the sector was sold off over concerns that AI would cause massive disruption to software, including cybersecurity.
Arora told analysts on Tuesday’s earnings call that those concerns were overblown and declared cyber SaaSpocalpyse “dead.”
More than 1,200 customers have contacted Palo Alto in the wake of Mythos, and the company has held 800 meetings in the past six weeks to prepare for the changing AI landscape, Arora told analysts Tuesday.
“Within a few years, we expect agent AI to reach truly unprecedented levels of autonomous execution, scanning environments, generating bespoke exploits, and orchestrating end-to-end campaigns at machine speed without human intervention.” “That’s the trajectory of modern threats.”
As the agent revolution paves the way for attackers to execute cyberattacks faster, both Palo Alto and its competitors are leaning into further AI acquisitions to enhance their tool suites. Last year, the company acquired CyberArk, an Israeli identity security platform, for $25 billion.
Other significant acquisitions include KOI Security, AI observability platform Chronosphere, and Protect AI. The company rebranded CyberArk to Idira last month.
Palo Alto was an early participant in Anthropic’s Project Glasswing, limiting deployment of the Mythos model and allowing selected partners to test potential cybersecurity implications.
The model sparked concerns that hackers could use the tool to accelerate attacks, and the company began testing it on Tuesday with an additional 150 partners.
Palo Alto Networks stock price chart from the beginning of the year to the present.
