May 31, 2017 / 8:28 PM / 2 months ago

Cybersecurity firm Palo Alto's third quarter report eases sales fears, shares jump

3 Min Read

(Reuters) - Cybersecurity company Palo Alto Networks Inc's results and forecast topped expectations, helped by a near record number of customer additions that also eased concerns about its sales execution at a time of heightened cyber security awareness in the wake of the recent WannaCry ransomware attack.

Palo Alto's shares jumped nearly 12 percent in trading after the bell on Wednesday, a surge that will more than erase their losses so far this year.

The losses came after Palo Alto reported weak second-quarter results in February due to salesforce "execution challenges" and customers delaying purchases to wait for the company's newer products.

Palo Alto's new customers additions in the third quarter was the second highest in the company's history, which led to record revenue for the period, Chief Executive Mark McLaughlin said in a statement.

Bernstein Research analysts Pierre Ferragu said the results showed Palo Alto remained the winner in the cybersecurity space.

"In addition to signaling a good recovery in sales productivity, this set of numbers reflects an installed base growing about 30 percent, a pace we believe no integrated cybersecurity peer can match today," Ferragu said in an e-mail.

While businesses and governments were always alert to cyber threats, cybersecurity became a household buzzword after the WannaCry attack earlier in May infected 300,000 computers in more than 150 countries, disrupting factories, hospitals, shops and schools.

"There's going to be another attack like that, can't say what it is, don't know what is going to be, but there's always going to be the next one," McLaughlin said on a call with analysts.

"I think the WannaCry embraced a lot of awareness and anxiety."

Palo Alto's third-quarter revenue rose 25 percent to $431.8 million, while it earned 61 cents per share on an adjusted basis.

That comfortably beat analysts' estimate of a profit of 55 cents on revenue of $412 million, according to Thomson Reuters I/B/E/S.

Palo Alto forecast an adjusted profit of 78-80 cents per share for the current quarter, and revenue of $481-$491 million.

Analysts were expecting a profit of 74 cents per share and revenue of about $484 million.

" ... Guiding revenue in line with the Street is the prudent thing to do and could set the stage for better results for Q4," RBC Capital Markets analyst Matt Hedberg said.

Palo Alto's shares were up 11.8 percent at $132.57 in extended trading.

Reporting by Laharee Chatterjee in Bengaluru; Editing by Savio D'Souza

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