Palo Alto Networks, Inc. (NASDAQ:PANW) shares slipped in premarket trading on Wednesday as CEO Nikesh Arora pushed back against lackluster sentiment, saying the markets “have it wrong” in assessing the company’s outlook.
The cybersecurity firm’s mixed guidance reaction appeared to overshadow management’s optimism around recent acquisitions and growing AI-driven demand.
On Tuesday, the cybersecurity company lowered its full-year adjusted earnings guidance from a range of $3.80 to $3.90 per share to a range of $3.65 to $3.70 per share, versus estimates of $3.86 per share.
The company reported fiscal second-quarter revenue of $2.59 billion, beating analyst estimates of $2.58 billion. The cybersecurity company posted adjusted earnings of $1.03 per share for the quarter, beating analyst estimates of 94 cents per share.
Total revenue was up 15% year-over-year and remaining performance obligations grew 23% year-over-year to $16 billion. The company said next-generation security annual recurring revenue increased 33% year-over-year to $6.3 billion.
Palo Alto ended the quarter with approximately $4.16 billion in cash and cash equivalents.
Markets ‘Have It Wrong’
However, in an interview with the Bloomberg Television, Arora said, “I think the market is not paying attention to our numbers carefully.”
Regarding the guidance cut, Arora explained that the guidance for the next two quarters includes CyberArk.
In its earnings call, the CEO said that they were excited to head into the second half of the year after closing the CyberArk and Chronosphere acquisitions, and added that they wanted to extend a warm welcome to both teams.
“If you take the consensus of CyberArk and ours, you’re actually guiding above the collective consensus,” Arora said. He highlighted that the market has not understood the dilution of shares, adding, “So I think they have it wrong”.
Notably, the firm reported fiscal second-quarter revenue of $2.59 billion, beating analyst estimates of $2.58 billion.
During its earnings call, the CEO added that, after closing the Chronosphere acquisition, the company signed a multi-year, nine-figure expansion deal with a leading AI model provider in the second quarter.
Palo Alto also raised its fiscal 2026 revenue guidance.
The company now expects full-year revenue of $11.28 billion to $11.31 billion, up from prior guidance of $10.50 billion to $10.54 billion. Analysts are expecting full-year revenue of $10.55 billion.
Analyst’s Rating
BTIG analyst Gray Powell reiterated a Buy rating on the stock, maintaining $200 price forecast.
Needham analyst Mike Cikos maintained Palo Alto Networks with a Buy, lowering the price forecast from $230 to $200.
PANW Price Action: Palo Alto Networks shares were down 7.22% at $151.69 during premarket trading on Wednesday, according to Benzinga Pro data.
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