Palo Alto Networks (PANW) stock hit a 52-week high on Wednesday after the company boosted the low end of its full-year revenue forecast as companies continue to spend on cybersecurity despite fears of a broader economic slowdown.
The company now projects revenue growth between 25%-26% in 2023. Palo Alto Networks produced earnings per share of $1.10 versus projections of $0.93, per Bloomberg consensus data. Third quarter revenue of $1.72 billion fell in line with estimates.
Palo Alto Networks rose more than 8% in intraday trading.
The positive print for Palo Alto comes as concerns over business-to-business spending in areas like cloud computing have pressured markets dating back to October. Palo Alto CEO Nikesh Arora noted on a call with analysts Tuesday night that while the macroeconomic environment is "still hard," his company is finding ways to fight through.
"The overall macro trends of cautious spending, deal scrutiny, and cost and value consciousness persist," Arora said on the company's earnings call. "Moreover, the behavior continues to be more widespread across a larger swath of our customers. Against this backdrop, we have been staying ahead with rigorous execution. We've increased our own deal scrutiny, gotten ahead of the challenges, and continue to sharpen our business value focus while demonstrating superior security outcomes to our customers."
Dan Ives, Wedbush Securities managing director, believes the quarter's results show the cloud transformation at Palo Alto is "well underway," and puts it ahead of other cybersecurity companies that haven't adopted to cloud as swiftly.
Goldman Sachs agrees, pointing to how well Palo Alto might hold up in the current macroeconomic backdrop. Goldman Sachs analysts Gabriela Borges wrote in a note to clients that Palo Alto's positive quarter is "indicative" of Palo Alto's strengths in times of economic uncertainty.
"Palo Alto can offer various combinations of products depending on whether a company is more focused on mission critical products and cost savings, or taking a more transformational approach to cloud and SASE," Borges wrote.
As most companies have done, Palo Alto also teased out an artificial intelligence story. The company believes it can improve the efficiency of existing products, increase customer engagement and also amplify internal projects.
"This is a new baseline," Arora said. "We think there is continued opportunity from here and we haven't even factored in the potential impact of generative AI. As you've been hearing all the conversation in the industry, we're still working on it, we're understanding it, we're really looking at processes, but we believe there is a there there. We think there will be an opportunity in the future to get more efficiency from generative AI as we go ahead and implement some of the capabilities through our organization."
Josh is a reporter for Yahoo Finance.