Palo Alto Networks surpassed fiscal fourth-quarter estimates as mounting artificial intelligence risks boost demand for its cybersecurity tools.
Shares dipped about 2% in extended trading, following a 5% drop during the regular session.
Here's how the company did versus LSEG estimates:
- Earnings per share: $1.02 adjusted vs. 98 cents expected
- Revenue: $3.41 billion vs. $3.35 billion expected.
Revenue jumped 34% during the quarter from $2.54 billion a year ago, the company said. Palo Alto reported a net loss of $282 million, or 35 cents per share, down from net income of $254 million, or 36 cents per share, a year ago.
The acceleration of AI attacks is forcing customers to build better and faster cyber defenses, CEO Nikesh Arora told CNBC. Those concerns have already moved the needle, but the long-term growth runway is still in the early stages.
"This is a long-term tailwind," he said. "It will not happen in one quarter, and it will not happen in two. It just underpins the long-term duration from a growth rate perspective for our business."
Arora joined CNBC's Jim Cramer on "Mad Money" following the earnings call and said the AI threat is forcing companies to upgrade aging cyber infrastructure.
Shares of Palo Alto Networks have nearly doubled this year as the rise of highly capable AI models like Anthropic's Mythos spurs demand for newer security tools to detect and respond to agentic cyberattacks.
Agentic AI concerns have accelerated as breaches, like the OpenAI-Hugging Face hack, prove that agents can increasingly plan and orchestrate attacks autonomously.
But Palo Alto isn't the only beneficiary of the AI security race. Last week, both CrowdStrike and Okta surged on upbeat earnings and guidance as customers spend on more cyber tools.
Arora said Palo Alto has held over 2,000 customer briefings, up from the roughly 1,200 it disclosed last quarter, in the wake of the Anthropic Mythos launch.
Palo Alto also announced the acquisition of AI startup Console as it deepens its AI security offerings. In just over a year, Arora has accelerated an aggressive dealmaking push, which included shelling out $25 billion for identity security firm CyberArk and nearly $3.4 billion for Chronosphere — its largest acquisitions to date.
"I see the cyber startup ecosystem as a large lab where people are trying different things," Arora said, adding that Palo can look to acquire from the space if its internal approach isn't working.
Palo Alto issued upbeat guidance, expecting $3.30 billion to $3.31 billion in revenue for the first quarter, topping an analyst estimate of $3.22 billion.
For the full year, the company forecasted between $14.10 billion and $14.20 billion in revenue and adjusted EPS of $4.16 to $4.19. That surpassed the $13.79 billion revenue and $4.11 EPS forecast.
