Palo Alto’s Beat-And-Raise Q3 Doesn’t Impress Wall Street, But Retail Doubles Down On Stock

Palo Alto Networks, Inc. (PANW) stock fell post-market despite the cybersecurity company announcing a quarterly beat. The negative sentiment may have been caused by a slowdown that the company suggested for one of its key operating metrics.

The Santa Clara, California-based company reported adjusted earnings per share (EPS) of $0.80 and revenue of $2.29 billion for the third quarter of the fiscal year 2025. This marked an increase from the year-ago’s $0.66 and $1.99 billion, respectively.

The results exceeded the Finchat-compiled consensus estimates of $0.77 and $2.28 billion, as well as the company’s own guidance from mid-February.

Among the key performance metrics, the third-quarter next-generation security (NGS) annualized recurring revenue (ARR) climbed 34% year over year (YoY) to $5.1 billion, at the upper end of the company’s guidance.

The remaining performance obligations (RPO) rose 19% to $13.5 billion versus the 19%-20% growth guided by the company.

Nikesh Arora, Chairman and CEO of Palo Alto, said, “In Q3, we continued to make progress on our platformization strategy and achieved an important milestone in crossing $5 billion in Next-Gen Security ARR.”

Looking ahead, Palo Alto guided fourth-quarter adjusted EPS to $0.87-$0.89 and revenue to $2.49 billion-$2.51 billion. Analysts, on average, estimate the metrics at $0.87 and $2.50 billion, respectively. 

The company expects NGS ARR to be $5.52 billion-$5.57 billion, marking 31%-32% YoY growth, and RPO to $15.2 billion-$15.3 billion, up 19%-20%.

Palo Alto upped the full-year adjusted EPS guidance to $3.26-$3.28 from $3.18-$3.24. The company also raised the low-end of the revenue guidance to $9.17 billion from $9.14 billion, but maintained the high-end at $9.19 billion.

The consensus calls for adjusted EPS and revenue of $3.23 and $9.18 billion, respectively.

On Stocktwits, retail sentiment toward the Palo Alto stock was ‘extremely bullish’ (98/100), with the message volume at ‘extremely high’ levels.

A bullish watcher expects the stock to reach $300 in 18 months.

Another hoped the stock would trade in the green on Wednesday.

Palo Alto stock fell 3.89% in Tuesday’s after-hours session, but is up about 7% for the year.

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