Palo Alto Q3 outlook disappoints amid execution issues

Sales for the second quarter were light relative to expectations and the outlook was well below Wall Street estimates.
Written by Larry Dignan, Contributor

Palo Alto Networks' third quarter outlook missed expectations and the company said it saw "some execution challenges" that hurt the second quarter results.

The security company reported a second quarter net loss of $60.6 million, or 67 cents a share, on revenue of $422.6 million, up 26 percent from a year ago. Non-GAAP earnings were 63 cents a share in the second quarter.

Wall Street was looking for non-GAAP second quarter earnings of 63 cents a share on revenue of $429.7 million.

CEO Mark McLaughlin said in a statement that "we were disappointed that we came in below top-line expectations due to some execution challenges, which we are moving quickly to address."

As for the outlook, Palo Alto Networks said it expected non-GAAP earnings for the third quarter to be 54 cents a share to 56 cents a share including a 4 cents a share for the acquisition of LightCyber. Revenue for the third quarter will be between $406 million to $416 million, up 17 percent to 20 percent from a year ago.

Wall Street analysts were expecting third quarter non-GAAP earnings of 70 cents a share on revenue of $454.6 million.

Palo Alto launched its next generation security platform during the second quarter. The company also said it will increase its share buyback program by $500 million to a total of $1 billion.

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