Palo Alto Plummets on Revenue Miss, Weak Guidance

Palo Alto was able to top earnings estimates, but a wide revenue miss has the stock down significantly on Monday.
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Palo Alto Networks  (PANW) - Get Report shares were falling sharply after hours Monday after the company reported second quarter revenue results that missed analyst expectations for the period.

The Santa Clara-based cyber security solutions provider reported second quarter earnings of $1.19 per share on revenue of $816.7 million. Analysts were expecting the company to report earnings of $1.12 per share on revenue of $843.26 million.

Palo Alto shares were falling more than 13% to $206 after hours Monday. 

The revenue miss came despite a 15% year over year increase in top-line results .

"Fiscal second quarter revenue was below our expectations primarily as a result of continued impact of sales incentives related to our Next-Generation Security products from our prior fiscal year. We have made progress to address this and have implemented several go-to-market programs to reignite our firewall sales growth,” said CEO Nikesh Arora.

Meanwhile, the company also forecast third quarter revenue between $835 million and $850 million, representing year over year growth between 15% and 17%. Analysts are expecting the company to report revenue of $873 million in the quarter.

The company’s soft revenue outlook continues throughout the full fiscal year, with the company estimating fiscal 2020 revenue between $3.35 billion and $3.39 billion, a 16% to 17% year over year increase. Analysts are expecting the company to report revenue of $3.47 billion for the year.

The stock has dropped more than 4% over the past five sessions, including a more than 2.4% decline in trading Monday. Year to date, the stock was up 2.5% heading into earnings.