PANW Results out

The hybrid cyber security company PANW released results yesterday. I own them and although they are probably not the growth company that gets much attention here on Saul’s board, I thought I would post a summary anyway. I have posted about the cyber security industry here before and will again once most of the players announce earnings. But I think PANW’s results are interesting enough to warrent some discussion. Even if you don’t think this company is the future. Continued growth certainly bodes well for the companies followed here.

First the links:
Earnings release:…

Earnings call presentation:…

and a Webcast of the results:…

Here are a few of the highlights:

Overall growth is up another 30%
Billings up 32%
Remaining performance obligations are up 36%

ESP (non-gap): $1.74 (+12% yr/yr, 20% on absolute dollars basis)
Adjusted Free cash flow: $441M (+33% yr / yr)

And finally, probably the most important aspect relative to this board, Next-gen security, which is Palo Alto’s cloud based cyber security business continues to grow very rapidly.

Next-Gen Security ARR:

Q2 '22          $1.431B  (70% yr/yr)   
FY '24 Target   $3.25B 

this is a growth number that matches or beats most of the start-ups in the cloud space and continues to demonstrate that perhaps this hardware based security company can compete in the cloud space and actually win. My thoughts are that there is an advantage in being the incumbent, if handled properly and it seems that PANW is doing exaclty that.

I read an article recently that was talking about how Hybrid systems are starting to get more traction. That cloud based systems are still growing rapidly but that there are certain processes and systems that are advantageous to keep in house, ie hardware based. Unfortunately, I can’t find the article now, but to be clear it had nothing to do with PANW or security in general. I just found it interesting and hit a chord with me that things always swing like a pendulum, for a while now cloud was the only way to go, perhaps you can have too much on the cloud? I don’t know but the numbers at PANW are getting both repetitive and impressive.

In addition, you have a company with a substantial free cash flow with it’s slower growing (but still growing substantially) hardware cyber business to help fund the R&D needed for the cloud growth.

Me, I am impressed and will probably be adding to my position here. Because I am a tickerguide here on TMF, I have to wait and will not be able to respond to any messages here for a least a few days, but I will be reading here…

I know that hyper growth is the focus here, but what about a company that has a substantial portion of the company growing very rapidly while the rest of the company continues to grow and generate earnings? Does that fit? Is anyone interested? In any event, I find the results both satisfying and a promise of a bright future here. Perhaps even beating out the cloud only companies… who knows…

Long (small position that I hope to grow) PANW and Tickerguide


Thank you BigECat for your summary, very good. One new product I’m excited about, is the release of Cortex XSIAM, which works as a bridge between SIEM and XDR. This should be an important product in the future, as AI/ML-based thread detection gets more and more important. Also, Cortex had its strongest growth in the last 6-quarters.

A lot of comments I read about PANW seem to dislike the many acquisitions in the past years. Because it’s hard to assess the organic growth - normally I would agree. In PANW’s case, I see it different - it’s not like they try to hide anything or boost there decelerating core business. It’s part of their main strategy to use their big network/infrastructure and integrate young start-ups to expand rapidly. A startup incubator approach that works quite well as of now. A Softbank for cybersecurity so to say…

Would be very happy to hear a more bearish view, if we have some experts here. Couldn’t find any red flags in the report as of now. Thank you!