The network security company, Palo Alto Networks came out with its second-quarter earnings and missed the market expectations on the revenue front. This resulted in the hammering of its shares in after-hours trading by a whopping 17 percent. The company attributed this miss to the execution challenges that it faced in the second quarter operations.
During the second quarter, the company also launched its next generation security platform. The company also has plans to increase its share buyback from the current $500 million to $1 billion
The company reported a net loss of $60.6 million in its Q2 results, which translates to 67 cents a share on $422.6 million revenue. This is 26% more when compared to the year before. If the non-GAAP earnings are seen, the company reported it at 63 cents a share on $422.6 million revenue. The analysts had expected it to be 62 cents on $429.7 million revenue.
The chief executive officer of Palo Alto Networks, Mark McLaughlin said, “While fiscal second-quarter revenue of $423 million was yet another record for the company, we were disappointed that we came in below top-line expectations due to some execution challenges, which we are moving quickly to address.”
Elaborating on the outlook for the third quarter, the company said that it expects the non-GAAP earnings to be between 54 cents a share and 56 cents a share in Q3. This will also include 4 cents a share from the acquisition of Israeli cyber security company LightCyber. Palo Alto has acquired it for $130 million in total out of which $105 million were paid in cash and the remaining $25 million in shares.
The company expects the revenue to remain in the range of $406 million to $416 million which will be 17 percent to 20 percent more on a year-on-year basis. The market expectations for the coming quarter are however of non-GAAP earnings of 70 cents a share from a revenue of $454.6 million.
LightCyber is Palo Alto Networks’ second Israeli acquisition. Earlier in 2014, it acquired Cyvera, an information security company for $200 million. The recent acquisition LightCyber is associated with the development of automated behavioural analytics capabilities. They use sophisticated machine learning, which helps them to identify attacks quickly, efficiently, and accurately. They make use of identifying behavioural anomalies that arise inside the network.