Palo Alto Networks: Beating Estimates, But Margin Math Ain't My Favorite Subject!

Another Day Another Earnings Report: PANW Edition

Alright folks Bill Gates here your friendly neighborhood tech enthusiast (and occasional mosquito slayer). Just got done crunching the numbers on Palo Alto Networks' latest earnings and let me tell you it's a mixed bag. They beat expectations on both earnings per share (80 cents adjusted vs. 77 cents expected) and revenue ($2.29 billion vs. $2.28 billion expected). Not bad eh? Makes you think about the good old days of DOS... simpler times simpler spreadsheets. Though even I gotta admit Excel is pretty nifty these days.

Show Me the Money (and the Growth!)

Sales are up 15% year over year which is always a good sign. That's like going from dial up to broadband... a definite upgrade. Net income however took a little dip down to $262.1 million from $278.8 million last year. Hey nobody's perfect not even me. Remember that time I tried to make Clippy a mandatory feature? Yeah we all have our off days.

Future's So Bright I Gotta Wear Shades (Especially for Q4)

Looking ahead Palo Alto Networks is projecting adjusted earnings between 87 and 89 cents per share for the next quarter which is also ahead of what the analysts are predicting. Always a good thing to keep the markets happy which can be harder than convincing people that spending money on global health is a worthwhile investment.

The Margin Call (and Not the Movie)

Now here's where things get a little... sticky. Their non GAAP gross margin came in at 76% slightly below the 77.2% that the Wall Street wizards were expecting. It's a small miss but in the world of finance small misses can sometimes lead to big market reactions. As I always say "Success is a lousy teacher. It seduces smart people into thinking they can't lose." So a little humility is always a good thing.

CapEx: Less Spending More Lending (Maybe?)

On the bright side (again!) their capital expenditures were lower than expected $68.3 million versus the estimated $70.8 million. That's like finding a twenty dollar bill in your old jeans – a pleasant surprise! Maybe they can invest that extra cash in I don't know mosquito nets?

The Big Picture: Cybersecurity is Still King

Overall Palo Alto Networks is a solid company in a crucial industry. Cybersecurity is only going to become more important and these guys are playing a key role. While the market might be a bit jittery about the margin miss I think they've got a bright future ahead. Now if you'll excuse me I have a foundation to run. And maybe I'll buy a few shares of PANW while I'm at it… but don't tell anyone!