Why Jim Cramer Finds Palo Alto 'Remarkable'

Katherine Ross

Palo Alto reported earnings after the bell Monday.

The company posted adjusted earnings in the fourth quarter that topped analysts' estimates and issued better-than-expected guidance.

And they also announced an acquisition.

"Palo Alto Networks, the global cybersecurity leader, announced that it has entered into a definitive agreement to acquire The Crypsis Group, a leading incident response, risk management and digital forensics consulting firm. Under the terms of the agreement, Palo Alto Networks will acquire The Crypsis Group for a total purchase price of $265 million, subject to adjustment, to be paid in cash. The addition of The Crypsis Group’s security consulting and forensics capabilities will strengthen Cortex XDR's ability to collect rich security telemetry, manage breaches and initiate rapid response actions. The Crypsis Group’s experts and insights will also fuel the Cortex XDR platform with a continuous feedback loop between incident response engagements and product research teams to prevent future cyberattacks," the company posted on its website. 

Stifel analysts, in a note post-earnings, wrote, "Despite the single largest billings beat in the company’s history ($185.6mn beat, 15.4% upside surprise), shares of Palo Alto Networks are indicating down in the low-tomid-single digits in aftermarket trading. We see two culprits behind the tepid reaction: first, we believe that investors continue to pay attention to product revenue, which has historically been seen as a key leading indicator for the business. While product revenue beat, the $8mn in upside relative to Street expectations was smaller than last quarter’s $26mn beat (though we note that F4Q20 product revenue beat our estimate by $27.6mn, and we believe that our model was a more appropriate reflection of the company’s initial expectations given a smaller relative beat on subscription/services revenue)."

So, what does Jim Cramer think? Watch the video above for more.

You can follow Jim Cramer and Katherine Ross on Twitter at @JimCramer and @byKatherineRoss. Read more from Katherine Ross here.

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