Palo Alto Networks Earnings Preview: ‘Strong’ Quarter Expected Amid SASE, Cloud Security Growth

Partners report that major growth in their business with Palo Alto Networks continues despite the economic turbulence.

Wall Street analysts are expecting another quarter of “strong” financial results from cybersecurity giant Palo Alto Networks, as the company continues to distinguish itself from its traditional competitors in network security in areas such as secure access service edge (SASE) and cloud security.

Palo Alto Networks will report results for its fiscal second quarter of 2023, ended Jan. 31, on Tuesday.

[Related: 10 Hot XDR Security Companies You Should Watch In 2023]

For the company and its CEO Nikesh Arora, the expansion in recent years to acquire numerous startups and build out a broad security platform — covering key emerging areas such as SASE, cloud and application security, and extended detection and response (XDR) — would appear to be paying off in a big way as customers look to consolidate their security vendors during the current challenging economic conditions.

In an earnings preview note, KeyBanc analysts wrote that Palo Alto Networks’ “relative bookings strength, based on our checks, stands out” when compared to the “mixed” quarterly results that were recently shared by peer vendors Fortinet and Check Point.

“Of the three, we see Palo as best positioned in cloud/software security—SASE, endpoint, cloud security, analytics, application security,” the KeyBanc analysts wrote.

Notably, “all partners we spoke to were on or above plan on bookings and billings bases,” the analysts wrote.

Cleveland-based Advizex, No. 104 on the 2022 CRN Solution Provider 500, is expecting significant revenue growth from its Palo Alto Networks business this year, CTO Chris Miller said. That’s thanks both to the company’s flagship next-generation firewalls and the vendor’s newer solutions, such as zero trust network access (ZTNA), according to Miller.

ZTNA is considered a more-secure remote access solution compared to VPNs, and for Palo Alto Networks it’s available as part of the company’s Prisma SASE and Prisma Access offerings. The company offers endpoint detection and response (EDR) along with XDR and an “autonomous” security operations solution through its Cortex platform, meanwhile.

Shaul Eyal, managing director at Cowen, wrote in a note to investors that Palo Alto Networks’ “broad and deep product portfolio positions it well in a market characterized by vendor consolidation.” Additionally, the company’s prior-quarter results “demonstrated that the company is executing efficiently,” he wrote.

For Palo Alto Networks’ fiscal first quarter of 2023, which ended Oct. 31, 2022, revenue and earnings both beat Wall Street analyst forecasts, and the company raised its guidance. The results included revenue growth of 25 percent, year-over-year, to reach $1.56 billion.

Daniel Ives, managing director and senior equity research analyst at Wedbush Securities, also said in a note to investors that he is “expecting a strong quarter next week” from Palo Alto Networks.

“Despite an uncertain macro [environment] we are seeing strong deal activity across the board with cloud-influenced enterprise-wide deals the theme of the quarter,” Ives wrote.

Palo Alto Networks’ stock price closed at $169.28 a share in regular trading Friday, which is up nearly 20 percent from Jan. 3, the first day of trading in 2023, when its stock price opened at $141.32 a share.