Palo Alto Networks Inc. experienced a significant decline in late trading following a downbeat forecast for its fiscal fourth quarter. The company projected revenue of $2.15 billion to $2.17 billion, slightly below analysts’ expectations, and estimated billings of $3.43 billion to $3.48 billion, which also fell short of the anticipated $3.47 billion. This tepid outlook renewed concerns about a potential slowdown in cybersecurity services, causing shares to drop as much as 10% to $291.55 in after-market trading.
The recent forecast followed a similarly disappointing quarterly report in February, which had triggered the worst single-day drop in the company’s stock. At that time, CEO Nikesh Arora cited “spending fatigue” among customers, fueling fears of tighter budgets despite increasing cyberattacks. During a call with analysts, CFO Dipak Golechha acknowledged significant volatility in billings but emphasized the importance of other metrics, such as new subscription sales for next-generation products. Arora supported this view, arguing that billings are an “artificial metric” and highlighting the strength in subscription revenue and remaining performance obligations. Despite the market’s reaction, Arora assured that cybersecurity spending would continue, driven by the ongoing threat of sophisticated cyberattacks.