Palo Alto Networks (NASDAQ:PANW) saw its shares drop over 4% intra-day today after issuing a weaker-than-expected income forecast for the current quarter, overshadowing its solid second-quarter performance.
For its fiscal third quarter, the cybersecurity firm projects adjusted earnings per share of $0.76 to $0.77, falling just short of analyst expectations of $0.78. Revenue is expected to grow 14% to 15% year-over-year, reaching $2.26 billion to $2.29 billion, aligning with consensus estimates at the midpoint.
In Q2, Palo Alto reported revenue of $2.26 billion, slightly beating the $2.24 billion forecast, marking a 14% increase from the prior year. Adjusted EPS came in at $0.81, narrowly missing the $0.82 consensus.
CEO Nikesh Arora attributed the company’s growth to heightened demand for cybersecurity solutions, fueled by the increasing adoption of artificial intelligence and a rise in cyber threats. Palo Alto’s “platformization” strategy, which encourages businesses to consolidate security tools into a single system, has also been a key growth driver.
Despite the strong momentum in AI-driven security demand, investors reacted negatively to the slightly weaker Q3 guidance, leading to a stock decline.