All things considered, the PANW numbers weren't all that bad. Revenues rose by 34% and gross margins are at the historical median point. However, they issued a warning for next quarter, taking with it the entirety of the cyber-security sector.
Reports Q1 (Oct) earnings of $0.55 per share, $0.03 better than the Capital IQ Consensus of $0.52; revenues rose 34.0% year/year to $398.1 mln vs the $400.38 mln Capital IQ Consensus.
Billings grew 33% y/y to $516.9 bln (Q2 increased 45% y/y)
Co issues guidance for Q2, sees EPS of $0.61-0.63, excluding non-recurring items, vs. $0.63 Capital IQ Consensus Estimate; sees Q2 revs of $426-432 mln vs. $439.28 mln Capital IQ Consensus Estimate.
Judging by the growth numbers, one might surmise PANW to be a wonderful enterprise, unless of course you bothered to take a gander at its balance sheet and come to the realization that the company is unable to earn a profit.
Taking a cursory view at their balance sheet, it appears the growth of the company is entirely tied and offset by the amount of money spent on sales and marketing. Since 2015, revenues have nearly doubled, and so have expenses in sales and marketing! How delightful.
Valuation wise, PANW is absurdly expensive at 11x sales -- especially when compared to their peers, like CHKP (8x), SYMC (5x), VRSN (8x) and the clown of the sector, FEYE at 3x.
Shares are plummeting in an after-hours bloodfest.
Other stocks in the sector, down in sympathy, include FEYE (-2%), SPLK (-1.75%), FTNT (-2.1%), CYBR (-1.1%) and PFPT (-4.5%).
Content originally graced in the halls of iBankCoin.