MW Palo Alto Networks' stock is falling. Here's what was missing from earnings.

By Emily Bary

The cybersecurity company says its 'platformization' strategy is working, but its latest report lacked oomph on a bookings metric

Palo Alto Networks Inc. beat expectations with certain elements of its latest results - but the company's earnings release was lacking something investors might have been looking for.

Three months ago, Palo Alto Networks (PANW) also reported upbeat results but kept intact its full-year outlook for remaining performance obligations, which is essentially a measure of bookings. And the cybersecurity company held that steady again in Thursday afternoon's report, calling for $15.2 billion to $15.3 billion on the metric.

While growth in remaining performance obligations accelerated to 21% in the January quarter from 20% in the October quarter, the dollar figure was roughly in line with expectations. For the January quarter, Palo Alto Networks reported $13.0 billion in remaining performance obligations. The FactSet consensus was for $12.96 billion.

For the April quarter, Palo Alto Networks models $13.5 billion to $13.6 billion in remaining performance obligations, about even with the $13.55 billion analysts were modeling.

Palo Alto Networks shares were down 3% in after-hours trading Thursday.

The company beat expectations with its January-quarter revenue of $2.3 billion, which was up 14% and ahead of the $2.2 billion that analysts were modeling. But adjusted earnings per share of 73 cents came in light relative to the 78-cent consensus view.

Palo Alto Networks has been in the midst of a "platformization" push, through which the company has been giving customers some product for free in order to spur greater paid adoption of its broader suite down the road. That's been a controversial move on Wall Street, but it's one that management says is yielding results.

"Platformization drove our Q2 results," Chief Financial Officer Dipak Golechha said in a release.

Chief Executive Nikesh Arora said that the results were "fueled by customers adopting technology driven by the imperative of AI, including cloud investment and infrastructure modernization."

For the April quarter, Palo Alto Networks expects $2.26 billion to $2.29 billion in revenue, while analysts were expecting $2.27 billion.

See also: Intel's stock is on a hot streak. Here's why the rally could continue.

-Emily Bary

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February 13, 2025 16:53 ET (21:53 GMT)

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