Cloud Stocks: Palo Alto Networks Has Missed The Window To Buy Zscaler

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According to a recent report, the global enterprise cyber security market size is estimated to grow 7% annually over the next few years to become a $177.5 billion industry. The industry was pegged at $107.8 billion last year. Security players like Palo Alto Networks (PANW) and Zscaler (ZS) are seeing significant growth in their revenues and investing in product upgrades, partnerships, and acquisitions to help cash in on the trend.

Palo Alto Network’s Financials

Palo Alto Network’s first quarter revenues grew 23% to $946 million, significantly ahead of the Street’s estimate of $921.48 million. Net loss narrowed to $92.2 million, or $0.97 per share, from a loss of $59.6 million, or $0.62 per share a year ago. On an adjusted basis, net income improved to $1.62 per share from a net income of $1.05 per share a year ago. The market was looking for a net income of $1.31 per share.

By segment, Product revenues grew 2.6% to $237.3 million. Subscription and support revenues grew 31.1% to $708.7 million. Among other metrics, billings improved 21% to $1.1 billion and Deferred revenues grew 31% to $3.9 billion.

For the second quarter of fiscal 2021, Palo Alto expects revenues of $975-$990 million with an EPS of $1.42-$1.44. The market was looking for revenues of $966.4 million for the quarter with EPS of $1.33, and revenues of $4.01 billion for the year with an EPS of $5.55.

Product Upgrades and Acquisition

During the quarter, Palo Alto announced several new products. Its new DLP solution that integrates with its Firewall platform is cloud-delivered, making it simple to deploy. The offering helps protect sensitive data regardless of where the customer keeps the data. It also announced a joint solution with its VM series virtual firewall and AWS Gateway Load Balancer, making it easier to launch the capability, improve the scale and performance, and reduce the cost.

It also launched Prisma Cloud 2.0, which enables customers to easily and rapidly extend their cloud security coverage in several critical areas. The new modules included in the upgrade provide additional data security, simplify discovery and protection of cloud storage data at scales and velocities common in public cloud environments, and address common data exposure issues found in cloud transformation.

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Note: This segment is a part in the series: Cloud Stocks.

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