Palo Alto Networks Likely To Benefit In Cyber Warfare

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According to a recent market report, the global cyber security market is expected to grow at 12% CAGR from $165.78 billion in 2021 to reach $366.1 billion by 2028. The growth is expected to be driven by the increased adoption of e-commerce platforms, the growing integration of machine learning, internet-of-things (IoT), and cloud solutions. Security player Palo Alto Networks (NYSE: PANW) recently announced its quarterly results that surpassed market expectations.

Palo Alto Network’s Financials

Its second-quarter revenues grew 30% to $1.3 billion, ahead of the Street’s estimate of $1.28 million. GAAP net loss was $93.5 million or $0.95 per share compared with a loss of $142.3 million or $1.48 per share a year ago. Non-GAAP net income was $1.74 per share compared with a net income of $1.55 per share reported a year ago. The market was looking for a net income of $1.65 per share.

By segment, Product revenues grew 20.9% to $308 million. Subscription and support revenues grew 32.4% to $1.009 million. Among other metrics, billings improved 32% to $6.3 billion.

For the third quarter of fiscal 2022, Palo Alto expects revenues of $1.59-$1.61 billion and an EPS of $1.65-$1.68. For the fiscal year 2022, Palo Alto expects revenues of $6.8-$6.85 billion and an EPS of $7.23-$7.30. The market was looking for revenues of $1.34 billion and EPS of $1.64 for the fourth quarter and revenues of $5.39 billion and an EPS of $7.24 for the year.

Palo Alto Product Upgrades

Recently Palo Alto announced the launch of the latest upgrade of its PAN-OS software, Nebula. The software collects, analyzes, and interprets potential zero-day threats in real-time with inline deep learning, resulting in faster prevention and more evasive threats being detected.

It continued to expand AI capabilities into its products with the release of AIOps, its tenth security service, and Cortex XSIAM. Cortex XSIAM is its AI-driven platform that reengineers the way data, analytics, and automation are deployed by security organizations. Extended Security Intelligence & Automation Management (XSIAM) converts infrastructure telemetry into an intelligent data foundation, fueling best-in-class AI and accelerating threat response. It is able to natively ingest, normalize, and integrate granular data across the security infrastructure at nearly half the cost of legacy security products. It is also able to detect emerging threats across the entire security infrastructure, in addition to automating the correlation of alerts and data into incidents, and leveraging a self-learning recommendation engine to determine response next steps. By using native attack surface management, Cortex XSIAM is able to enable continuous discovery of vulnerabilities as well as automating response-based integrated threat intelligence from Palo Alto customers.

According to analysts, the Russia-Ukraine crisis has manifested beyond the physical invasion of Ukraine to one of the highest cyber risks faced by the rest of the world. Some believe that the sanctions that Russia will respond to the sanctions being imposed on it by the other countries by indulging in cyber warfare. Recently, the US Cybersecurity and Infrastructure Security Agency (CISA) warned of the risk of Russian cyberattacks spilling over onto US networks. The European Central Bank (ECB) has also warned European financial institutions of the risk of Russian cyber-attacks in those markets. While overall the situation is far from pleasant, cyber security companies like Palo Alto will surely benefit from it.

Palo Alto’s stock is trading at $539.94 with a market capitalization of $53.3 billion. It was trading at a 52-week high of $572.67 in December last year. The stock was at a 52-week low of $311.56 in March last year.

Disclosure: All investors should make their own assessments based on their own research, informed interpretations and risk appetite. This article expresses my own opinions based on my own ...

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