Paloalto (PANW) 1st quarter 2021 earnings report review
Category: Paloalto (PANW)
Date: 16 November 2020 Stock price of Paloalto: $272.26 We take a look at the 1st quarter 2021 earnings report of Paloalto (PANW) a global cybersecurity leader, that is shaping the cloud-centric future with technology that is transforming the way people and organizations operate. The group reported revenues of $946 million but a net loss of -$92.2 million for the 1st quarter of their 2021 fiscal year.
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We delivered another consecutive strong quarter of solid results, with first quarter billings of 21% year-over-year growth; both our firewall transformation and our Next-Generation Security services continue to make great progress, giving us confidence to raise previously issued guidance for the year. - Nikesh Arora, chairman and CEO of Palo Alto Networks. "
More About Paloalto
Palo Alto Networks, the global cybersecurity leader, is shaping the cloud-centric future with technology that is transforming the way people and organizations operate. Our mission is to be the cybersecurity partner of choice, protecting our digital way of life. We help address the world's greatest security challenges with continuous innovation that seizes the latest breakthroughs in artificial intelligence, analytics, automation, and orchestration. By delivering an integrated platform and empowering a growing ecosystem of partners, we are at the forefront of protecting tens of thousands of organizations across clouds, networks, and mobile devices. Our vision is a world where each day is safer and more secure than the one before
Overview of Paloalto's 1st quarter 2021 earnings
- Fiscal first quarter revenue grows 23% year over year to $946.0 million
- Fiscal first quarter billings grows 21% year over year to $1.1 billion
- Deferred revenue grows 31% year over year to $3.9 billion
Total revenue for the fiscal first quarter 2021 grew 23% year over year to $946.0 million, compared with total revenue of $771.9 million for the fiscal first quarter 2020. GAAP net loss for the fiscal first quarter 2021 was $92.2 million, or $0.97 per diluted share, compared with GAAP net loss of $59.6 million, or $0.62 per diluted share, for the fiscal first quarter 2020.
Non-GAAP net income for the fiscal first quarter 2021 was $158.1 million, or $1.62 per diluted share, compared with non-GAAP net income of $104.8 million, or $1.05 per diluted share, for the fiscal first quarter 2020. A reconciliation between GAAP and non-GAAP information is contained in the tables below.
- Fiscal first quarter billings grows 21% year over year to $1.1 billion
- Deferred revenue grows 31% year over year to $3.9 billion
Total revenue for the fiscal first quarter 2021 grew 23% year over year to $946.0 million, compared with total revenue of $771.9 million for the fiscal first quarter 2020. GAAP net loss for the fiscal first quarter 2021 was $92.2 million, or $0.97 per diluted share, compared with GAAP net loss of $59.6 million, or $0.62 per diluted share, for the fiscal first quarter 2020.
Non-GAAP net income for the fiscal first quarter 2021 was $158.1 million, or $1.62 per diluted share, compared with non-GAAP net income of $104.8 million, or $1.05 per diluted share, for the fiscal first quarter 2020. A reconciliation between GAAP and non-GAAP information is contained in the tables below.
Palo Alto management commentary on their 1st quarter 2021 earnings
SANTA CLARA, Calif., Nov. 16, 2020 /PRNewswire/ -- Palo Alto Networks (NYSE: PANW), the global cybersecurity leader, announced today financial results for its fiscal first quarter 2021, ended October 31, 2020.
"We delivered another consecutive strong quarter of solid results, with first quarter billings of 21% year-over-year growth; both our firewall transformation and our Next-Generation Security services continue to make great progress, giving us confidence to raise previously issued guidance for the year," said Nikesh Arora, chairman and CEO of Palo Alto Networks. "We introduced several significant product enhancements across the portfolio and were recognized by industry analysts as a leader in two Gartner Magic Quadrants as well as Zero Trust. Additionally, we are excited about our proposed acquisition of Expanse, Inc., which we announced last week."
"We delivered another consecutive strong quarter of solid results, with first quarter billings of 21% year-over-year growth; both our firewall transformation and our Next-Generation Security services continue to make great progress, giving us confidence to raise previously issued guidance for the year," said Nikesh Arora, chairman and CEO of Palo Alto Networks. "We introduced several significant product enhancements across the portfolio and were recognized by industry analysts as a leader in two Gartner Magic Quadrants as well as Zero Trust. Additionally, we are excited about our proposed acquisition of Expanse, Inc., which we announced last week."
Financial Outlook
Palo Alto Networks provides guidance based on current market conditions and expectations.
For the fiscal second quarter 2021, we expect:
Palo Alto Networks provides guidance based on current market conditions and expectations.
For the fiscal second quarter 2021, we expect:
- Total billings in the range of $1.17 billion to $1.19 billion, representing year-over-year growth of between 17% and 19%.
- Total revenue in the range of $975 million to $990 million, representing year-over-year growth of between 19% and 21%.
- Diluted non-GAAP net income per share in the range of $1.42 to $1.44, using 98 million to 100 million shares.
- Total billings in the range of $5.08 billion to $5.13 billion, representing year-over-year growth of between 18% and 19%.
- Total revenue in the range of $4.09 billion to $4.14 billion, representing year-over-year growth of between 20% and 21%.
- Diluted non-GAAP net income per share in the range of $5.70 to $5.80, using 99 million to 101 million shares.
- Adjusted free cash flow margin of approximately 29%.
Paloalto (PANW) stock price history over the last 5 years
The image below obtained from Google shows Paloalto stock price for the last 5 years. And its been a good time for Paloalto stockholders. 5 years ago Paloalto was trading at around $174 a stock and its currently trading at $272.26. That's decent return of 47.5% provided to Paloalto stockholders over the last 5 years.
The stock of Paloalto is trading a lot closer to its 52 week high than it is to its 52 week low which is a clear indication that the short term momentum and sentiment towards Paloalto stock is positive right now
The stock of Paloalto is trading a lot closer to its 52 week high than it is to its 52 week low which is a clear indication that the short term momentum and sentiment towards Paloalto stock is positive right now
Paloalto (PANW) vs Cisco (CSCO) stock over the last 5 years
The image below shows the stock price history of Paloalto (PANW) vs Cisco (CSCO) stock over the last 5 years. Both these firms are active in the cybersecurity and cloud-computing space. The summary below shows the returns provided by these two firms over the last 5 years.
- Cisco (CSCO): 59.2%
- Paloalto (PANW): 47.5%
Latest stock valuation of Paloalto (PANW)
So based on Paloalto latest earnings report what do we value Paloalto stock at? Based on their earnings reported our valuation model provides a target price (full value price) for Paloalto at $169.20 per stock.
We therefore believe that the stock of Paloalto is overvalued. We usually recommend long term fundamental or value investors look to enter a stock at least 10% below our target price, which in this case is $169.20 A good entry price into Paloalto would therefore be at $152.30 or below.
We expect the stock of Paloalto to pull back in coming weeks and months to levels closer to our target price (full value price). Since the stock of Paloalto is trading at well above our suggested entry point we rate the stock of Paloalto as a sell
We therefore believe that the stock of Paloalto is overvalued. We usually recommend long term fundamental or value investors look to enter a stock at least 10% below our target price, which in this case is $169.20 A good entry price into Paloalto would therefore be at $152.30 or below.
We expect the stock of Paloalto to pull back in coming weeks and months to levels closer to our target price (full value price). Since the stock of Paloalto is trading at well above our suggested entry point we rate the stock of Paloalto as a sell
Next earnings release of Paloalto (PANW)
It is expected that Paloalto will release their 2nd quarter 2021 earnings report in middle February 2021
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