Palo Alto Networks Forecasts Strong Security Demand

Matthew Broersma,
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Shares in Palo Alto Networks rise after company forecasts fiscal 2025 revenues and profits exceeding analysts’ estimates

Shares in cybersecurity firm Palo Alto Networks rose as much as 4 percent in after-hours trading on Monday after it forecast fiscal 2025 revenue and profit above analysts’ estimates, an indication of strong demand.

The company’s fiscal fourth-quarter results follow a worldwide IT outage on 19 July caused by a faulty update by competitor CrowdStrike, illustrating the danger of relying on a single company for integrated security, something also offered by Palo Alto.

Palo Alto offers products that aid in the prevention and detection of complex cybersecurity attacks.

The company said it expects its annual 2025 revenue to be $9.1 billion (£7bn) to $9.15bn, representing year-over-year growth of 13 to 14 percent. Analysts had estimated $9.11bn.

View of Earth at night. Image credit: Unsplash. Networks, data.

Strong demand

Revenue for the fourth quarter rose about 12 percent year-over-year to $2.19bn, compared to analysts’ expectations of $2.16bn.

GAAP net income for the quarter was $357.7m, compared to $227.7m a year earlier, while non-GAAP net income was $522.2m, up from $482.5m during the same period the previous year.

“We finished off the year with strong execution on our platformization strategy in Q4,” said Palo Alto chief executive Nikesh Arora in a statement.

“As we look forward to fiscal year 2025 and beyond, we are focused on scaling our Next-Generation Security business through continued innovation and execution.”

The July outage sent shockwaves through the cybersecurity sector after a faulty update from CrowdStrike shut down millions of Windows computers, many of which had to be manually restored.

Disruption

Texas-based CrowdStrike faced a shareholder lawsuit over the incident, who alleged the firm defrauded them by concealing how its inadequate software testing could cause the huge outage.

In the proposed class action was filed in the Austin, Texas federal court CrowdStrike shareholders said they learned that CrowdStrike’s assurances about its technology were materially false and misleading when a flawed software update disrupted airlines, banks, hospitals, emergency lines and business operations around the world.

They said the company’s share price fell 32 percent over the next 12 days, wiping out $25bn of market value, as the outage’s effects became known.

Chief executive George Kurtz was called to testify to the US Congress over the incident, while Delta Air Lines, which faced costs of up to $500m due to nearly 7,000 cancelled flights, hired prominent attorney David Boies to seek damages.