Q3 2024 Palo Alto Networks Inc Earnings Call Transcript
Key Points
- Palo Alto Networks Inc (PANW) reported strong Q3 results with top-line growth ahead of the market.
- Next-generation security ARR grew by 47%, highlighting the company's transformation into a security software business.
- Operating margins expanded by 200 basis points year-over-year, driving 25% growth in operating income.
- The company announced a significant partnership with IBM, which is expected to enhance their market position in the SIEM/SOC category.
- Palo Alto Networks Inc (PANW) continues to innovate, particularly in AI security, with new products aimed at securing AI usage.
- Billings growth was impacted by deferred payment terms, reflecting a shift in customer preferences due to the higher cost of money.
- The company acknowledged that the accelerated consolidation and platformization strategy created significant conversation and concerns last quarter.
- Lower product bookings in the JAPAC region led to only 8% revenue growth in that geography.
- The transition to platformization is expected to impact billings and revenue growth through fiscal year 2025.
- The financial impact of the IBM partnership is still uncertain, with recognized revenue potentially being much lower than the $100 million in QRadar SaaS revenue reported for calendar year 2023.
(presentation)
Good day, everyone, and welcome to Palo Alto Networks Fiscal Third Quarter 2024 Earnings Conference Call. I'm Walter Pritchard, Senior Vice President of Investor Relations and Corporate Development. Please note that this call is being recorded today, Monday, May 20, 2024, at 1:30 p.m. Pacific Time.
With me on today's call to discuss second (sic) [third] quarter results are Nikesh Arora, our Chairman and Chief Executive Officer; and Dipak Golechha, our Chief Financial Officer. Following our prepared remarks, Lee Klarich, our Chief Product Officer, will join us for the question-and-answer portion. You can find the press release and other information to supplement today's discussion on our website at investors.paloaltonetworks.com. While there, please click on the link for quarterly results to find the Q3 '24 supplemental information and Q3 '24 earnings presentation.
During the course of today's call, we may make forward-looking statements and projections regarding the company's
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