What To Expect From Palo Alto Networks’s (PANW) Q2 Earnings

Kayode Omotosho /
2023/02/20 2:41 am EST

Cybersecurity provider Palo Alto Networks (NASDAQ:PANW) will be reporting earnings tomorrow after the bell. Here's what investors should know.

Last quarter Palo Alto Networks reported revenues of $1.56 billion, up 25.3% year on year, in line with analyst expectations. It was a decent quarter for the company, with a significant improvement in gross margin but underwhelming revenue guidance for the next quarter.

Is Palo Alto Networks buy or sell heading into the earnings? Read our full analysis here, it's free.

This quarter analysts are expecting Palo Alto Networks's revenue to grow 25.2% year on year to $1.64 billion, slowing down from the 29.5% year-over-year increase in revenue the company had recorded in the same quarter last year. Adjusted earnings are expected to come in at $0.77 per share.

Palo Alto Networks Total Revenue

Majority of analysts covering the company have reconfirmed their estimates over the last thirty days, suggesting they are expecting the business to stay the course heading into the earnings. The company has a history of exceeding Wall St's expectations, beating revenue estimates every single time over the past two years on average by 2.27%.

Looking at Palo Alto Networks's peers in the cybersecurity segment, some of them have already reported Q2 earnings results, giving us a hint what we can expect. Qualys delivered top-line growth of 19.1% year on year, beating analyst estimates by 0.54% and Tenable reported revenues up 23.8% year on year, exceeding estimates by 1.79%. Qualys traded down 0.63% on the results, Tenable was up 4.90%. Read our full analysis of Qualys's results here and Tenable's results here.

There has been positive sentiment among investors in the software segment, with the stocks up on average 7.77% over the last month. Palo Alto Networks is up 14.5% during the same time, and is heading into the earnings with analyst price target of $204.9, compared to share price of $171.0.

One way to find opportunities in the market is to watch for generational shifts in the economy. Almost every company is slowly finding itself becoming a technology company and facing cybersecurity risks and as a result, the demand for cloud-native cybersecurity is skyrocketing. This company is leading a massive technological shift in the industry and with revenue growth of 70% year on year and best-in-class SaaS metrics it should definitely be on your radar.

The author has no position in any of the stocks mentioned.