Palo Alto (PANW) to Report Q4 Earnings: What's in the Offing?
Palo Alto Networks PANW is scheduled to report its fourth-quarter fiscal 2023 results on Aug 18.
Palo Alto projects its fiscal fourth-quarter revenues in the $1.937-$1.967 billion range, suggesting a year-over-year increase of 25%-27%. The Zacks Consensus Estimate for the same is pegged at $1.96 billion, implying growth of 26.1% from the year-ago reported figure.
For the fiscal fourth quarter, the company expects non-GAAP earnings in the range of $1.26-$1.30 per share. The Zacks Consensus Estimate for PANW’s non-GAAP earnings stands at $1.28 per share, indicating an increase of 60% from the year-ago quarter’s earnings of 80 cents.
Palo Alto’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 20.3%.
Palo Alto Networks, Inc. Price and EPS Surprise
Palo Alto Networks, Inc. price-eps-surprise | Palo Alto Networks, Inc. Quote
Factors to Note Ahead of Q4 Results
In the fourth quarter, Palo Alto is likely to have benefited from the strong momentum stemming from deal wins, which is expected to have boosted its top line. The strong demand for form factor hardware products, particularly machine learning-powered models that ensure zero-trust network security for organizations, is expected to have contributed to the quarterly performance.
The growing and accelerated migration to the cloud in a post-pandemic era is likely to have boosted the adoption of the aforementioned platforms. The company projects year-over-year billings growth between 17% and 19% ($3.15 billion-$3.20 billion) in the to-be-reported quarter. Our estimate for billings is pegged at $3.18 billion.
Moreover, the increased use of the cloud and remote networks amid a hybrid working environment has resulted in escalating cyberattacks currently. This is leading to a rise in the demand for cybersecurity solutions. PANW’s fiscal fourth-quarter performance is likely to have benefited from this demand surge.
Palo Alto has been gaining from the Bridgecrew acquisition, which forms the crux of the Prisma public cloud and Xpanse, which form the basis of Cortex. Prisma and Cortex are likely to have continued performing well in the fiscal fourth quarter as well.
Our estimates for the company’s Product and Subscription & Support revenues are pegged at $499.6 million and $1.45 billion, respectively.
Federal Risk and Authorization Management Program (FedRAMP) recognitions are boosting the adoption of Palo Alto’s products by government organizations. The company’s Prisma Access, Cortex XDR, Cortex Data Lake, Prisma Cloud and WildFire received FedRAMP recognitions.
This FedRAMP recognition reflects the U.S. public sector’s trust in Palo Alto’s IoT security solutions. This is anticipated to have encouraged the adoption of its products during the period in discussion.
What Our Model Says
Our proven model does not conclusively predict an earnings beat for PANW this season. The combination of a positive Earnings ESP and Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. However, that’s not the case here.
Though Palo Alto currently carries a Zacks Rank of 3, it has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks With the Favorable Combination
Per our model, NVIDIA NVDA, Workday WDAY and PagSeguro Digital PAGS have the right combination of elements to post an earnings beat in their upcoming releases.
NVIDIA is slated to report second-quarter fiscal 2024 results on Aug 23. The company sports a Zacks Rank #1 and has an Earnings ESP of +5.56% at present. NVDA’s earnings beat the Zacks Consensus Estimate twice in the trailing four quarters while missing the same on two occasions, the average surprise being 0.3%. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for second-quarter earnings is pegged at $2.06 per share, suggesting a whopping increase of 303.9% from the year-ago quarter’s earnings of 51 cents. NVIDIA’s quarterly revenues are estimated to increase 64.4% year over year to $11.02 billion.
Workday sports a Zacks Rank #1 and has an Earnings ESP of +2.01%. The company is scheduled to report second-quarter fiscal 2024 results on Aug 24. Its earnings beat the Zacks Consensus Estimate in the preceding four quarters, with the average surprise being 13.1%.
The Zacks Consensus Estimate for Workday’s second-quarter earnings stands at $1.25 per share, 50.6% higher than the year-ago quarter. It is estimated to report revenues of $1.77 billion, which suggests an increase of approximately 15.5% from the year-ago quarter.
PagSeguro carries a Zacks Rank #2 and has an Earnings ESP of +2.97%. The company is anticipated to report second-quarter 2023 results on Aug 24. Its earnings surpassed the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 36.7%.
The Zacks Consensus Estimate for PAGS’ second-quarter earnings is pegged at 25 cents per share, indicating a year-over-year decline of 46.8%. The consensus mark for revenues stands at $689.4 million, suggesting a year-over-year decrease of 13.2%.
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