Shares of Palo Alto Networks (PANW) are down 23% after the American cybersecurity firm lowered its full-year guidance for both revenue and billings.
The company did manage to beat Wall Street forecasts with its latest financial results, reporting earnings per share (EPS) of $1.46 U.S. compared to $1.30 U.S. that had been expected.
Revenue for the fourth quarter of 2023 came in at $1.98 billion U.S. versus $1.97 billion U.S. that had been estimated among analysts.
However, Palo Alto Networks’ guidance disappointed, sending the stock sharply lower.
The company said it now foresees full-year billings of $10.10 billion U.S. to $10.20 billion U.S. That was down from previous guidance of $10.70 billion U.S. to $10.80 billion U.S.
Palo Alto Networks also expects full-year revenue between $7.95 billion U.S. and $8 billion U.S., which is also lower than a previous guide for $8.15 billion U.S. to $8.20 billion U.S.
Guidance for the current first quarter of 2024 also fell short of estimates.
Analysts expected the company to guide for Q1 revenue of $2.04 billion U.S., but Palo Alto Networks said it now expects revenue to range between $1.95 billion U.S. and $1.98 billion U.S.
Management said during their earnings call that the lowered guidance was due to a shift in strategy and wanting to accelerate growth in artificial intelligence (AI) products.
Several cybersecurity companies are moving rapidly to adopt AI technologies and gain market share in the fat growing technology segment.
Prior to today (Jan. 21), Palo Alto Networks’ stock had risen 120% over the past 12 months and was trading at $366.09 U.S. per share.
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