Palo Alto shares rise on earnings beat, surprising investors who worried about a Friday report

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Arora Nikesh, Palo Alto Networks CEO & Chairman at the WEF in Davos, Switzerland on May 23rd, 2022.

Adam Galica | CNBC

Palo Alto Networks shares jumped as much as 9% in extended trading on Friday after the security software vendor reported earnings that exceeded analysts’ estimates.

The stock had dropped 16% in August leading up the report as investors worried that the company’s decision to announce results late on a Friday suggested the release may include troublesome numbers.

Here’s how the company did for the quarter ended July 31:

  • Earnings: $1.44 per share, adjusted, vs. $1.28 per share, adjusted, as expected by Refinitiv.
  • Revenue: $1.95 billion, vs. $1.96 billion as expected by Refinitiv.

Revenue in its fiscal fourth quarter increased 26% from $1.6 billion a year earlier, Palo Alto said. The company’s net income increased to $227.7 millions, or 74-cents per share, up from $3.3million, or one penny per share, in the previous year. That’s below analyst expectations of $1.93 billion for the fiscal first quarter and $8.38 billion for the full year, according to Refinitiv.

Palo Alto announced its earnings date on Aug. 2. West coast tech companies usually report their earnings by Thursday afternoon. This gives investors time to digest the results and trade stock before the end the week. Historically, companies with bad news often bury the numbers after the close of trading on Friday.

Nikesh Arora, CEO of Palo Alto Networks, addressed the timing of the release on the company’s earnings call, and said it’s “made for some very interesting reading” in analyst reports over the past two weeks.

“We apologize to people who are inconvenienced,” Arora said, adding that the company was caught in between a few events. Palo Alto Networks had a board of directors meeting this week, as well as a conference that starts on Sunday. They wanted to release the numbers before everyone gathered together. Arora told the crowd: “I’m sorry to drag you on a Friday but I believe it’s very important that we share all these results next week with a few thousand people.”

WATCH

: Jim Cramer interviews Palo Alto Networks CEO Nikesh Arora