Palo Alto Networks posts first $1 billion sales quarter

Palo Alto Networks Inc. reported its first $1 billion quarter of revenue as clients flocked to bolster network defenses in the aftermath of a sophisticated cyber-attack by suspected Russian hackers that exposed vulnerabilities across software supply chains.

Sales jumped 25% to $1.02 billion in the period ended Jan. 31, the biggest year-over-year increase in seven quarters, according to data compiled by Bloomberg. The company’s results failed to live up to some investor expectations after a rally that sent the stock up 38% since Palo Alto Networks’ last earnings report in November. The shares fell as much as 5.8% in postmarket extended trading, before paring losses.

The company said the malicious attack -- which compromised popular software from Texas-based SolarWinds Corp. -- has shaken clients and forced company boards to reconsider their cybersecurity posture, serving as a sales catalyst for security platforms.

“Every board out there is doing their cyber assessments to make sure they won’t be breached in the future,” said Nikesh Arora, chairman and chief executive officer of Palo Alto Networks. “What we’re noticing is a rethinking of the cybersecurity architecture.”

As many as 18,000 SolarWinds clients were exposed to the Russian malware, which offered attackers a back-door into victims’ networks where they were able to move about disguised as authorized users. However, far fewer were actually targeted for further attacks -- nine federal agencies and about 100 private-sector companies so far, Deputy National Security Advisor Anne Neuberger said on Feb. 17.

Several cybersecurity firms were targeted by the hackers, including Palo Alto Networks in October. The company said it successfully stopped the attack.

Palo Alto Networks projected fiscal third quarter earnings per share of $1.27 to $1.29 excluding some items and revenue of $1.05 billion to $1.06 billion. Analysts estimated profit of $1.29 a share and sales of $1.05 billion.

By Kartikay Mehrotra