Palo Alto Networks (PANW) reported fiscal second-quarter earnings and revenue that topped Wall Street targets amid slowing growth in its core computer network “firewall” appliance business.

Company guidance for PANW stock missed expectations despite growth in security products delivered from its cloud computing platform.

X

The cybersecurity company released fiscal Q2 earnings after the market close on Tuesday. On the stock market today, Palo Alto stock retreated more than 13% to 316 in extended trading.

For the quarter ended Jan. 31, Palo Alto earnings rose 39% to $1.46 a share on an adjusted basis. Further, revenue for PANW stock rose19% to $2 billion, including acquisitions.

Analysts expected earnings of $1.30 a share on sales of $1.97 billion.

PANW Stock: Billings Growth Misses

For the current quarter ending in April, Palo Alto forecast revenue in a range of $1.95 billion to $1.98 billion versus estimates of $2.04 billion. The company predicted billings, a sales growth metric, in a range of $2.3 billion to $2.35 billion, missing estimates of$2.62 billion.

In November, Palo Alto lowered full-year fiscal 2024 billings guidance due to pressure in the network firewall business.

Also, management has told analysts that companies are taking longer to approve computer security purchases.

In addition, sales for firewall network appliances have slowed. Firewall appliances protect computer networks by blocking online intrusions and monitoring web-based apps. However, Palo Alto has built a broad cloud-based computer security platform through acquisitions.

Heading into the Palo Alto earnings report, the cybersecurity stock had advanced 24% in 2023.

PANW stock holds a perfect Relative Strength Rating of 97 out of a best-possible 99, according to IBD Stock Check-up.

Follow Reinhardt Krause on X, formerly called Twitter, @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing.

YOU MAY ALSO LIKE:

IBD Digital: Unlock IBD’s Premium Stock Lists, Tools And Analysis Today

Learn How To Time The Market With IBD’s ETF Market Strategy

Get Free IBD Newsletters: Market Prep | Tech Report | How To Invest