Palo Alto Networks tops earnings as AI fuels cybersecurity urgency

Palo Alto Networks surpassed Wall Street's fiscal third-quarter results as artificial intelligence threats drive demand for sophisticated cybersecurity tools.

Shares rose as much as 12% in after-hours trading, but later pulled back near the flatline.

Revenue grew 31% from a year ago, including $388 million from its recent CyberArk and Chronosphere acquisitions, the cybersecurity company said. The company reported a net loss of $177 million, a loss of 22 cents per share, down from net income of $262 million, or 37 cents per share, a year ago.

The beat comes on lowered expectations, after the company gave disappointing guidance in February that fell short of analyst estimates.

Palo Alto issued stronger-than-expected guidance for the fourth quarter. The company expects revenue to range between $3.35 billion and $ 3.36 billion, versus a $3.28 billion estimate. Full-year guidance was also lifted, coming in at $11.42 billion to $11.43 billion.

"The latest advancements at the AI frontier have increased the level of urgency around cybersecurity, and redefined the shape of the industry for the coming years," CEO Nikesh Arora said in a release.

Palo Alto shares have rallied more than 60% this year and over 80% this quarter as sophisticated cyber tools, capable of exposing software flaws, force companies to invest in cyber tools.

Earlier in the year, the sector sold off on worries that AI would massively disrupt software, including cybersecurity.