Shares of Palo Alto Networks (NYSE: PANW) soared over 18% on Tuesday, a day after the company delivered strong results for the fourth quarter of 2021. Revenue grew 28% year-over-year to $1.2 billion and adjusted EPS rose 8% to $1.60, surpassing market estimates. Billings grew 34% to $1.9 billion.
The company has benefited from the digital transformation that was brought on by the pandemic and the rising need for cybersecurity solutions as the trend of remote work gained traction. Here are three trends that are expected to drive growth for the cybersecurity firm over the coming months:
Rise in ransomware threat
There have been a number of cyberattacks over the past couple of months and along with it a rise in the threat from ransomware. On its quarterly conference call, Palo Alto stated that according to its Unit 42 team research, the average ransom demand in the first half of 2021 jumped 518% year-over-year.
The company is witnessing meaningful engagement in ransomware readiness and these service engagements are expected to help it sign larger product deals with customers. During the fourth quarter, Palo Alto had 18 customers sign transactions over $10 million.
Adoption of hybrid work
Palo Alto believes that the trend of hybrid work is here to stay and with this comes the need to access all applications from any location as well as a need for network security. The company believes its SASE product category is well positioned to lead this transformation as evidenced by the large number of deals in this category. Palo Alto’s customer count has grown by 50% to almost 2,500 customers. The company believes there is significant opportunity to grow within SASE as it moves into FY2022.
Cloud security opportunity
Palo Alto sees significant opportunity in cloud security. The company currently has seven modules in its cloud security platform and it managed to release 29 major products during FY2021. Palo’s strategy of investing early in cloud-native security solutions is beginning to pay off.
During the fourth quarter, its Prisma Cloud Credits consumption rose to 2 million and its top three customers in Prisma Cloud committed over $40 million to bookings. Palo believes it will benefit from increased cloud adoption going into FY2022.
Palo Alto believes there is significant room for growth in cybersecurity. The company expects revenue to grow 24-25% year-over-year to $5.27-5.32 billion in FY2022. Billings are estimated to grow 21-22% to $6.60-6.65 billion. Adjusted EPS is expected to be $7.15-7.25 for the year.
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The cloud computing market witnessed accelerated growth in the last couple of years, as enterprises across the world shifted their digital assets to cloud for ensuring safety and enhancing data
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