At first glance, the financial report doesn't reveal any reasons for concern or disappointment.
- Revenue: $2.47 billion compared to the expected $2.46 billion. Year-over-year growth of 16%.
- EPS at $0.93 compared to the expected $0.89. Year-over-year growth of 19%.
- Increase in order portfolio to $15.5 billion, with $5.85 billion being recurring revenue from "Next Gen Security" solutions - in this segment, growth was 24% and 29% year-over-year, respectively.
- Revenue growth is not at the expense of profits, with free cash flow increasing to $1.7 billion with an FCF margin of 19%.
Forecasts are meant to reassure investors about promising future results:
Revenue for the next quarter is expected to be between $2.47-2.50 billion, and revenue for the entire fiscal year is expected to exceed $10.5 billion with EPS between 3.8-3.9 - both figures above consensus expectations. By 2028, the operating margin is expected to exceed 40%.
At the same time, the company announced another major acquisition — this time it's Chronosphere, aimed at improving Palo Alto's offerings and capabilities regarding oversight and AI. This acquisition will cost $3.35 billion.
In light of this information, which of them caused the stock price to drop?
Primarily, it's not the numbers but the trends that speak here — specifically its slope. It's about the growth rate which, although impressive, is declining when compared to historical data. The growth is still incredibly impressive, but with a P/E ratio exceeding 140, impressive is not enough.
PANW.US (D1)
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