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The remaining performance obligations (RPO) of a tech company, indicating expected revenue from existing contracts, surged by 21% to $13 billion, meeting the high end of its previous forecast. Current RPO also saw a notable increase of 17% to $6.1 billion. Adjusted earnings per share (EPS) showed an 11% rise to $0.81, surpassing the $0.77 to $0.78 guidance post stock split adjustments.
Looking ahead, Palo Alto projected a 14% to 15% rise in fiscal third-quarter revenue, reaching between $2.26 billion to $2.29 billion. It anticipates next-generation security Annual Recurring Revenue (ARR) to fall between $5.03 billion to $5.08 billion, reflecting a year-over-year growth between 33% and 34%. The company expects RPO growth to reach 19% to 20%, totaling $13.5 billion to $13.6 billion. Additionally, it forecasted adjusted EPS to range between $0.76 to $0.77.
For the full year, the firm revised its revenue and adjusted EPS guidance upwards, now expecting revenue of $9.14 billion to $9.19 billion and adjusted EPS of $3.18 to $3.24. See the table below for the company’s guidance revisions.
| Metric | Revenue | Revenue Growth | Adjusted EPS | EPS Growth |
|———————|———————|—————–|————–|————|
| Original FY2025 guidance | $9.10B to $9.15B | 13% to 14% | $3.09 to $3.16| 9% to 11% |
| FY 2025 guidance after fiscal Q1 | $9.11B to $9.17B | 14% | $3.13 to $3.20| 10% to 13% |
| FY 2025 guidance after fiscal Q2 | $9.14B to $9.19B | 14% | $3.18 to $3.24| 12% to 14% |
Data source: Palo Alto Networks.
Is it a good time to invest in Palo Alto stock? The company is progressing well with its platform strategy, gaining customer commitment to its platforms. Although this has impacted short-term growth, it is a strategic move for the long term. Moreover, Palo Alto foresees revenue growth picking up momentum in the next quarter.
The company’s new solutions seem to be resonating with customers, as demonstrated by the significant surge in next-generation security ARR. Its offerings like Cortex and cloud security solution Prisma Cloud are driving larger deals. Additionally, Palo Alto is incorporating artificial intelligence (AI) into its security solutions to enhance operational efficiencies,
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