Shares of Palo Alto Networks (NYSE: PANW) climbed as much as 10.7% early Wednesday, then settled to trade up 8% as of 10:00 a.m. EST after the cybersecurity specialist announced strong fiscal second-quarter 2019 results.
More specifically, Palo Alto Networks' quarterly revenue grew 30.4% year over year to $711.2 million, translating to adjusted net income of $147 million, or $1.51 per share (up from $1.05 per share in the same year-ago period). By comparison, in November, the company had told investors to expect lower earnings of $1.20 per share to $1.22 per share and revenue of $675 million to $685 million.
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Within its top line, Palo Alto Networks' product revenue climbed 32.6% to $271.6 million, while subscription and support revenue rose 29% to $439.6 million. The company also reminded shareholders that just over a week ago, it agreed to acquire leading security orchestration, automation, and response (SOAR) specialist Demisto in a deal valued at $560 million in cash and stock. And only a few days ago, Palo Alto Networks' board of directors approved a new $1 billion share repurchase program valid through the end of 2020.
"We remain focused on delivering to our customers the best security in the market," added Palo Alto Networks CEO Nikesh Arora. "Our recently introduced products and services, including Cortex XDR, Traps 6.0, PAN-OS 9.0, the DNS Security Service subscription, and our fastest ever Next-Generation Firewall, coupled with the proposed acquisition of Demisto, further enhance and expand our capabilities, making security simpler and more effective through the use of artificial intelligence, analytics, automation and orchestration."
For the current third quarter of fiscal 2019, Palo Alto Networks anticipates revenue growth of between 23% and 25%, with adjusted earnings per share ranging from $1.23 to $1.25. Though we don't usually pay close attention to Wall Street's demands, most analysts were modeling roughly the same quarterly earnings on revenue growth near the low end of Palo Alto Networks' expected range.
Considering its recent habit of underpromising and overdelivering, however, particularly as the company continues to extend its industry leadership through both organic and acquisitive growth, it's no surprise to see Palo Alto Networks stock popping today.
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