Palo Alto beat forecasts and expects a strong year - it did not satisfy investors

Palo Alto published positive results and a strong forecast, but after a 96% jump in the stock since the beginning of the year, investors apparently expected more — and the stock lost almost 2% in after-hours trading. The revenue of the cybersecurity giant, which is also traded on the Tel Aviv Stock Exchange as part of the TA-35 index, grew by 34% in the fourth fiscal quarter compared to the same quarter last year, to 3.41 billion dollars. Analysts expected revenue of 3.35 billion dollars.

The company shifted to a net accounting loss of 282 million dollars, compared to a profit of 254 million dollars in the same quarter. Excluding one-time events and stock-based compensation, Palo Alto recorded an adjusted profit of 1.02 dollars per share. Market expectations were 98 cents per share.

Palo Alto published a revenue forecast of 3.30-3.31 billion dollars for the current quarter, the first in its fiscal year, while analyst expectations are only 3.22 billion dollars. The annual forecast presented by the company stands at revenue of 14.10-14.20 billion dollars and an adjusted profit of 4.16-4.19 dollars per share. Market expectations are for revenue of 13.79 billion dollars and a profit of 4.11 dollars per share.

In a conversation with CNBC today, CEO Nikesh Arora said that the acceleration of cyberattacks based on artificial intelligence is forcing customers to build better and faster security systems. According to him, this development has already begun to affect demand, but the long-term growth potential is still in its early stages.

"This is a long-term tailwind. It won't happen in one quarter, and it won't happen in two. It simply strengthens the long-term growth duration of our business in terms of growth rates."

Palo Alto also announced the acquisition of the artificial intelligence startup Console, as part of deepening its activity in the field of AI security. In just over a year, Arora has accelerated an aggressive acquisition spree, which included spending 25 billion dollars on the identity security company CyberArk, and almost 3.4 billion dollars on Chronosphere — the largest acquisitions the company has made to date.

"I see the cyber startup ecosystem as a big laboratory where people try different things," said Arora. According to him, Palo Alto can turn to acquiring companies in the field if the approach it is developing within the company does not succeed.