Palo Alto Networks (PANW) Reports Another Big Beat-And-Raise; Billings Was Again The Star
2:18 pm Friday, May 20th, 2022
Palo Alto Networks (PANW) is trading higher today after the company reported a substantial beat in its Q3 (Apr) earnings report last night. PANW, which is seen as the gold standard in cybersecurity, continues to benefit from a strong demand environment, which drove billings, revenue, and EPS ahead of guidance. PANW also provided impressive guidance for Q4 (Jul).
PANW keeps rocking its billings numbers. After posting strong billings upside last quarter, PANW outdid itself with another huge quarter. Q3 billings grew 40% yr/yr to $1.80 bln, its highest growth in four years, coming in well ahead of the company’s prior guidance for billings of $1.59-1.61 bln prior guidance and accelerating from Q2’s +32% growth. Furthermore, PANW is guiding to a large sequential increase in Q4 at $2.32-2.35 bln. Billings is a key operating metric in terms of evaluating the sales pipeline, and clearly the next few quarters look bright.
PANW is increasingly winning larger deals, largely fueled by clients increasingly signing up for multiple PANW platforms. The number of million-dollar deal transactions signed in Q3 was up 65% yr/yr and the number of $5+ mln deals increased by 73%. PANW has a target to reach $8 bln in revs by FY24 (vs $5.5 bln in FY22), and signing up bigger accounts is a key way to get there.
Overall, this was a great quarter for PANW. Recent earnings from tech companies have displayed a clear dichotomy. Hardware-focused companies like Cisco (CSCO) are hurting due to component shortages, but software names like PANW and SNPS yesterday are obviously not component-dependent and are therefore performing better. PANW does sell some hardware, but its offerings are primarily software-based.
