Palo Alto Networks recently announced its financial performance for the latest quarter, reporting earnings and revenue that exceeded analyst expectations. However, the company experienced a drop in gross margin, which contributed to a 4% decline in its stock during extended trading on Tuesday.
For the fiscal third quarter, Palo Alto Networks posted adjusted earnings per share of 80 cents, surpassing the expected 77 cents. Revenue reached $2.29 billion, slightly above the anticipated $2.28 billion, marking a 15% increase from $1.98 billion the previous year. Nevertheless, the company reported a decrease in net income, with figures falling to $262.1 million or 37 cents per share, down from $278.8 million or 39 cents per share in the same period last year.
Looking ahead, Palo Alto Networks provided a positive outlook for the fourth quarter, forecasting adjusted earnings per share between 87 and 89 cents, which is above analysts’ expectations of 86 cents. Despite its strong revenue performance, the company’s non-GAAP gross margin was recorded at 76%, falling short of the estimated 77.2%. Additionally, capital expenditures for the quarter totaled $68.3 million, below Wall Street estimates of $70.8 million.
Overall, while the drop in gross margin is a concern, the positive earnings outlook suggests that Palo Alto Networks remains committed to growth and addressing challenges effectively. This demonstrates the resilience of the company in navigating a competitive landscape.