Palo Alto Networks stock slips despite earnings and guidance beats

Shares in Palo Alto Networks Inc. declined mroe than 3% in late trading today despite the network management and security firm reporting beats in its fiscal 2025 third quarter and giving a better-than-expected earnings forecast.

For the quarter that ended on April 30, Palo Alto Networks reported adjusted earnings per share of 80 cents, up from 66 cents per share in the same quarter of the previous fiscal year, on revenue of $2.29 billion, up 15% year-over-year. Both figures were ahead of the 77 cents per share and revenue of $2.28 billion expected by analysts.

The company’s strong figures were driven by growth in its Next-Generation Security offering, with NGS annual recurring revenue growing 34% year-over-year, to $5.09 billion. As of the end of the quarter, Palo Alto Networks had $13.5 billion in remaining performance obligations, up 19% year-over-year. Additionally, operating income in the quarter rose 23%, to $627 million.

Business highlights in the quarter include Palo Alto’s February launch of Cortex Cloud, a next-generation platform that combines the company’s Prisma Cloud and Cortex CDR into a unified artificial intelligence-powered solution for real-time cloud threat detection and response.

In April, Palo Alto Networks introduced new Cortex XSIAM enhancements that expanded its AI-driven Security Operations Center capabilities. The updated platform delivers broader coverage for exposure management and email security, threat detection and response through automation that improves analyst productivity.

The company also launched Prisma Access Browser 2.0, a cloud-native secure browser designed for hybrid workforces and Prisma AIRS, a dedicated platform to secure AI development and deployment pipelines.

The biggest news through the quarter came on April 28, when Palo Alto announced that it had entered into a definitive agreement to acquire cybersecurity company Protect AI Inc. According to reports, the deal, which is yet to close, is worth more than $500 million.

“In Q3, we continued to make progress on our platformization strategy and achieved an important milestone in crossing $5 billion in Next-Gen Security ARR,” said Palo Alto Chief Executive Nikesh Arora. “Our scale and platform breadth makes us a leading consolidator of choice in cybersecurity.”

For its fiscal 2025 fourth quarter, Palo Alto Networks expects adjusted earnings per share of 87 to 89 cents on revenue of $2.49 billion to $2.51 billion. The earnings forecast was ahead of an expected 86 cents per share, while revenue at the midpoint was in line with analyst expectations. For the full year, the company expects adjusted earnings per share of $3.26 to $3.28 on revenue of $9.17 billion to $9.19 billion.

Anand Oswal, senior vice president and general manager at Palo Alto Networks, spoke with theCUBE, SiliconANGLE Media Inc.’s livestreaming studio, in March, when he discussed how the company is forging a collaborative future for 5G security.

Photo: Palo Alto Networks

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