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Cloud Stocks: Palo Alto Continues to Acquire

Posted on Thursday, Sep 3rd 2020

The rising remote working trend is translating to an increased need for stronger security globally. Security players like Palo Alto Networks (NYSE:PANW) are benefitting from this transition as was evident in its quarterly performance. The company continues to acquire even in the current climate.

Palo Alto Networks’ Financials
Its fourth quarter revenues grew 18% over the year to $950.4 million, significantly ahead of the Street’s estimate of $924.3 million. Net loss was $58.9 million or $0.61 per share compared with a loss of $20.8 million or $0.22 per share a year ago. On an adjusted basis, net income was $1.48 per share compared with a net income of $1.47 per share a year ago. The market was looking for a net income of $1.47 per share.

By segment, Product revenues were relatively flat at $305.6 million. Subscription and support revenues grew 28.9% to $644.8 million.

Among other metrics, billings improved 32% to $1.4 billion and Deferred revenues grew 32% to $4.3 billion.

Palo Alto ended the year with revenues of $3.4 billion compared with $2.9 billion reported a year ago. Adjusted net income per share dropped from $5.45 in the previous year to $4.88.

For the first quarter of fiscal 2021, Palo Alto Networks expects revenues of $915-$925 million with an EPS of $1.32-$1.35. The market was looking for revenues of $893.6 million for the quarter with EPS of $1.20 and revenues of $3.95 billion for the year with an EPS of $5.82.

The Crypsis Group Acquisition

Earlier this week, Palo Alto announced the acquisition of cyber consulting and incident response company The Crypsis Group for an estimated $265 million. Virginia-based Crypsis is a privately owned organization founded in 2015 by Justin Jordan. The Crypsis Group currently operates as a part of the ZP Group, an organization that holds a portfolio of companies. Crypsis is a leading incident response, risk management, and digital forensics consulting firm. It helps customers identify and defend against cyber security threats.

Palo Alto Networks plans to integrate Crypsis’s security consulting and forensics capabilities with Cortex XDR to enhance its processes of collecting security telemetry, managing breaches, and initiating rapid response actions. Crypsis’s experts and insights will help improve the Cortex XDR platform by building a continuous feedback loop between incident response engagements and product research teams to prevent future cyberattacks. Prior to the acquisition, The Crypsis Group had over 150 security consultants handling over 1,300 security engagements per year. Its funding or financial details prior to the acquisition are not disclosed.

Palo Alto Networks’ stock is trading at $257.41 with a market capitalization of $24.9 billion. It was trading at a 52-week high of $275.03 in August. The recent market turmoil had sent the stock to a 52-week low of $125.47 in March.

This segment is a part in the series : Cloud Stocks


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