Key Factors To Drive Palo Alto Networks' (PANW) Q1 Earnings

Palo Alto Networks, Inc. (NYSE:PANW) is scheduled to report first-quarter fiscal 2018 results on Nov 20. The Zacks Consensus Estimate for the quarter is pegged at 68 cents — indicating year-over-year increase of a whopping 23.9%. Additionally, analysts polled by Zacks project revenues of roughly $488.4 million, up 22.7% from the year-ago quarter.

Analysts covering the stock believe the company’s to-be-reported quarterly results will likely benefit from continued product ramp-ups, acquisitions and strategic partnerships.

Product Ramp-Ups Help Win Deals

Palo Alto is growing rapidly in the cybersecurity space on the back of its innovative next-generation security platforms. The company’s security platforms have innovative traffic classification engine which helps it identify network traffic by application, user and content. As a result, organizations have in-depth visibility into all traffic and applications which help the firms control usage, content, risks and cyber threats at the user level.

Therefore, Palo Alto’s security platforms simplify security infrastructure for organizations by eliminating the need for multiple, stand-alone security appliances and software products. This reduces the total cost of ownership, in turn giving a competitive edge to the organization.

Furthermore, over the last two years, the company has launched several subscription-based products, including WildFire, AutoFocus, Aperture, Traps and Virtual, which have been witnessing strong adoption among organizations.

The company’s innovative product portfolio and continued efforts to enhance the same with advanced features helps Palo Alto win new deals. Notably, during fourth-quarter fiscal 2017, the company added nearly 3,000 customers, bringing the total to over 42,500 worldwide. It is to be noted that in each of the last 22 quarters, Palo Alto has added at least 1,000 customers.

The company’s to-be-reported quarterly result is likely to add a sizable number of new customers, which, in turn, will drive Palo Alto’s top line.

Palo Alto Networks, Inc. Price and EPS Surprise

Palo Alto Networks, Inc. Price and EPS Surprise | Palo Alto Networks, Inc. Quote

Acquisitions Broaden its Portfolio and Global Reach

Acquisitions have been one of the key strategies of Palo Alto to enhance its product portfolio as well as expand the company’s global reach. Early this year, the company acquired LightCyber for $105 million, which expanded its Next-Generation Security Platform. Over the last few years, the company has completed three important buyouts — Morta Security, Cyvera and CirroSecure.

Analysts covering the stock believe the diversity of its products and increased efficiency offered by such buyouts will attract customers. This will again bolster its top line, the benefit of which will trickle down to the bottom line.

Partnerships to Expedite Growth

The company is keen on expanding its cloud exposure through partnerships. It has existing cloud partnerships with companies like Amazon’s (NASDAQ:AMZN) Amazon Web Services and Alphabet’s (NASDAQ:GOOGL) Goole Cloud. Most recently, this August, the company expanded ties with VMware, Inc. (NYSE:VMW) . Through the new collaboration, Palo Alto will combine its security platform with VMware’s software platform, which provides private cloud-based service to make the cloud-computing environment more secure, simple, flexible, and efficient.

This deal will better equip organizations to handle private cloud technology and control business applications securely. As VMware remains one of the leading companies in the virtualization and cloud computing space, Palo Alto is likely to gain significantly from this alliance and we might witness a glimpse of the same in the to-be-reported quarter.

Currently, Palo Alto carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.

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