Palo Alto Networks Inc. (NYSE: PANW) is set to release its earnings results for the fourth quarter of 2019 on Wednesday after the market closes. The results will be benefited by the increased adoption of hybrid software-as-a-service (SaaS) revenue model, which consist of product, subscriptions, and support.
The company achieves revenue from the sale of its hardware applications, delivery of software licenses of Panorama and the VM-Series, and sale of its subscription and support offerings. However, the slowing demand for its products or subscriptions, increasing competition, a decline in the growth of its overall market, or a failure to capitalize on growth opportunities could stand in the way of achieving the top-line growth.
Over the last few years, the company experienced rapid growth and increased demand for its products and subscriptions. The company expects its employee headcount to continue growing over the next year. Palo Alto anticipates that its operating expenses will continue to increase in the foreseeable future as it continues to grow business.
To manage future growth effectively, the company is likely to improve and expand IT and financial infrastructure, operating and administrative systems and controls, and its ability to manage headcount, capital, and processes in an efficient manner.
Analysts expect the company’s earnings to jump by 10.90% to $1.42 per share and revenue will climb by 21.90% to $802.23 million for the fourth quarter. The company has surprised investors by beating analysts’ expectations in all of the past four quarters.
For the third quarter, Palo Alto Networks reported a narrower loss helped by a 28% jump in revenues. The company believes the addition of Twistlock and PureSec will help protect its customers’ journey to the cloud and will strengthen its Prisma cloud security strategy. The company introduced a new cloud security suite Prisma during the quarter.
For the fourth quarter, the company expects total revenue in the range of $795 million to $805 million, representing year-over-year growth of 21% to 22% on an ASC 606 basis. Adjusted earnings are anticipated to be in the range of $1.41 to $1.42 per share. The earnings guidance includes the impact of about $15 million in net expense related to a full quarter of the Demisto acquisition as well as the proposed acquisitions of Twistlock and PureSec.