Palo Alto Networks Soars: Q4 Revenue Hits $2.19 Billion, Beating Expectations

Palo Alto Networks Surpasses Expectations with Strong Q4 Earnings

Palo Alto Networks (PANW) delivered a robust earnings report for the fourth quarter of fiscal 2024, marking a significant turnaround after two challenging quarters. The cybersecurity giant’s stock rose 2% in after-hours trading following the announcement.

The company reported revenue of $2.19 billion, representing a 12% year-over-year increase and surpassing the consensus estimate of $2.16 billion. Adjusted earnings per share (EPS) grew 5% to $1.51, exceeding analysts’ expectations of $1.41.

Total billings for the quarter reached $3.5 billion, an 11% increase from the previous year, outperforming the estimated $3.46 billion. The remaining performance obligation (RPO) saw a substantial 20% year-over-year growth, reaching $12.7 billion.

Despite the strong performance, management provided a mixed outlook for the upcoming quarters, which some analysts view as conservative, particularly considering the approaching U.S. presidential election. In response to the positive results, the price target for Palo Alto Networks’ stock has been raised to $380 per share from $360.

The company’s financial performance demonstrated strength across various metrics. While product sales showed slight weakness, this was offset by robust subscription and support offerings. Both gross income and operating income exceeded expectations at the company-wide level.

Free cash flow surpassed estimates, prompting an increase in the corporate buyback plan by $500 million, bringing the total to $1 billion. Although RPO guidance was lighter than anticipated, it was counterbalanced by better-than-expected sales, earnings, and recurring revenue outlook for the first quarter and full year of fiscal 2025.

In a notable shift, management has ceased providing billings guidance, instead emphasizing RPO and annual recurring revenue (ARR) as key metrics.

CEO Nikesh Arora highlighted the increasing pressure on companies to prevent cyberattacks, noting new government regulations requiring prompt breach disclosures. The financial impact of such breaches continues to grow, with some incidents resulting in damages exceeding $1 billion.

Palo Alto Networks remains well-positioned in the competitive cybersecurity landscape, leveraging its comprehensive platform solutions to differentiate itself from rivals such as CrowdStrike, Fortinet, and Cisco Systems.

Looking ahead, the company has provided guidance for the first quarter and full year of fiscal 2025, projecting continued growth in revenue, EPS, RPO, and next-gen security ARR.