Palo Alto Networks Q2 Earnings Report Preview: What To Look For

Kayode Omotosho /
2022/02/21 6:13 am EST
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Cybersecurity provider Palo Alto Networks (NYSE:PANW) will be reporting results tomorrow after the bell. Here's what investors should know.

Last quarter Palo Alto Networks reported revenues of $1.24 billion, up 31.8% year on year, beating analyst revenue expectations by 3.58%. It was a decent quarter for the company, with a strong top line growth but a decline in gross margin.

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 26% year on year to $1.28 billion, in line with the 24.5% year-over-year increase in revenue the company had recorded in the same quarter last year. Adjusted earnings are expected to come in at $1.65 per share.

Palo Alto Networks Total Revenue

The analysts covering the company have been growing increasingly bullish about the business heading into the earnings, with revenue estimates seeing 24 upwards revisions over the last thirty days. The company only missed Wall St's revenue estimates once over the last two years, and has on average exceeded top line expectations by 2.39%.

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 (NASDAQ:QLYS) delivered top-line growth of 15.8% year on year, beating analyst estimates by 1.2% and Tenable (NASDAQ:TENB) reported revenues up 26.1% year on year, exceeding estimates by 3.09%. Qualys traded down 14.3% on results, Tenable was down 2.81%. Read our full analysis of Qualys's results here and Tenable's results here.

The fears around raising interest rates have been putting pressure on tech stocks and while some of the software stocks have fared somewhat better, they have not been spared, with share price declining 5.78% over the last month. Palo Alto Networks is down 4.8% during the same time, and is heading into the earnings with analyst price target of $551.1, compared to share price of $480.

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.