Updated from 4:33 p.m. EDT.
Palo Alto Networks (PANW) stock was sliding about 12% to $142.06 in after-hours trading on Monday after the company posted mixed results for the quarter ended Oct. 31.
Despite beating analysts' estimates on earnings for the first quarter of fiscal 2017, the cybersecurity provider's lower-than-anticipated first-quarter revenue and downbeat outlook took the focus.
Following today's market close, the Santa Clara, Calif.-based company reported adjusted earnings of 55 cents per share on revenue of $398.1 million. Analysts surveyed by FactSet were looking for adjusted earnings of 52 cents a share on revenue of $400.3 million.
Product revenue was $163.8 million and subscription and support revenue was $234.3 million, while Wall Street projected $166.9 million and $233.5 million, respectively.
First-quarter billings jumped 33% year-over-year to $516.9 million. Wall Street was modeling billings of $525 million for the quarter.
Evercore analysts Ken Talanian, Kirk Materne and Fenn Hoffman said in an earnings preview on Nov. 17 that the company's billings growth is one of the best indicators for its business. The analysts had estimated about 34% year-over-year growth for billings in the period.
CEO Mark McLaughlin said in the conference call that the results were "not as robust as expected."
This was partly due to the fact that the company has begun to pick up many larger customers which are slow to make purchasing decisions. These bigger deals elongate sales cycles and will impact results in the near-term, but are positive for Palo Alto Networks in the long-term.
McLaughlin added that the weak results are not related to competition in the segment, adding that Palo Alto Networks is growing about three times faster than networking company Cisco (CSCO) , which he said indicates that the company is beating competitors.
"It's clear that security is a priority and will remain so for organizations, governments and businesses for a long period to come," McLaughlin added. "It's so important to everything underpinning the digital age. I don't see that changing anytime soon."
For the second quarter, Palo Alto Networks expects adjusted earnings per share of 61 cents to 63 cents on revenue between $426 million and $432 million. Analysts surveyed by FactSet anticipate adjusted earnings of 63 cents per share on revenue of $439 million.
For the fiscal year, Palo Alto Networks forecasts that revenue will climb 30% to 31% year-over-year with product revenue gaining 12% to 13% annually. Adjusted earnings per share are projected between $2.75 and $2.80. Wall Street is looking for annual revenue growth of 33% and adjusted earnings of $2.78 per share.
"Our first quarter 2017 results underscore that our Next-Generation Security Platform uniquely solves customers' most complex security challenges," McLaughlin said in a company statement. "Our platform's ability to provide high degrees of prevention, automation, leverage and consistent security, regardless of wherever data may be, is becoming increasingly important in the face of today's important macro technology changes."
CFO Steffan Tomlinson noted that Palo Alto Networks added 1,500 new customers in the quarter. Existing customers also began to broadly adopt the Next-Generation Security Platform.
Palo Alto Networks had beat analysts' expectations for the past thirteen quarters, according to Piper Jaffray.
About 4.33 million shares of the company traded hands on Monday, well above the 30-day average volume of roughly 1.24 million shares.