Company News - Riskified Ltd. shares dropped 16% following the release of second-quarter results [4] - Intel Corp. saw a premarket increase of 6.42% after SoftBank Group agreed to invest $2 billion in the company [15] - Palo Alto Networks Inc. rose 5.58% after reporting better-than-expected financial results for the fourth quarter of fiscal 2025 and providing strong guidance for fiscal 2026 [15] - Graphjet Technology GTI surged 34.32% after shareholders approved a share consolidation plan with a 1-for-60 ratio [15] - Laser Photonics Corp. experienced a significant increase of 63.01% following a second-quarter earnings report showing a 317% year-over-year revenue increase [15] - Fabrinet FN fell 10.02% despite reporting positive fourth-quarter financial results for fiscal 2025, as it projected fiscal first-quarter revenue below estimates [15] - Home Depot Inc. was up 0.45% ahead of its earnings report, with analysts estimating earnings of $4.69 per share on revenue of $45.31 billion [15] - Keysight Technologies Inc. was slightly up as analysts expect earnings of $1.67 per share on revenue of $1.32 billion [15] - Toll Brothers Inc. rose 0.17% with expected earnings of $3.60 per share on revenue of $2.86 billion [15] - Viking Therapeutics Inc. increased by 5.73% amid speculation of a potential acquisition by Eli Lilly & Co. [15] Industry Insights - The second-quarter earnings season has shown strong results, with S&P 500 earnings per share (EPS) growth projected at nearly 12%, significantly exceeding the sub-5% consensus estimate from June 30 [7] - The "Magnificent Seven" technology companies contributed to nearly 30% earnings growth, driven by continued investment in artificial intelligence [8] - Revenue for the S&P 500 grew by 6.3%, surpassing quarter-end expectations by over 2% [14] - A strong 81% of companies beat EPS estimates, exceeding the five-year average of 78% [14] - The communication services, technology, and financials sectors exhibited the fastest earnings growth [14]

Group 1: Core Insights - Wedbush Securities has added CrowdStrike, Roblox, GE Vernova, and Nebius to its IVES AI 30 list, which highlights companies expected to shape the AI industry in the coming years [1][2] - The IVES AI 30 list was initially launched in May, featuring major companies like Apple and Nvidia, along with Chinese firms such as Alibaba and Baidu [1] - The firm also launched the Dan Ives Wedbush AI Revolution ETF focused on artificial intelligence [1] Group 2: Newly Added Companies - **CrowdStrike (CRWD.US)**: The company is demonstrating strategic advantages in capitalizing on the AI revolution through modular expansion in its core cybersecurity business, particularly with its data protection module and Charlotte AI product [1] - **Roblox (RBLX.US)**: The platform has created an attractive incentive system for developers, and its AI-driven discovery mechanism is expected to drive user growth and enhance monetization capabilities in the coming quarters [2] - **GE Vernova (GEV.US)**: The company is strategically positioned in the grid management solutions sector, benefiting from the surge in electrification demand driven by large-scale data center construction [2] - **Nebius (NBIS.US)**: The demand for the company's AI infrastructure services remains strong, with plans to expand data center capacity in the coming years, as service demand exceeds current supply capabilities [2] Group 3: Removed Companies - **C3.ai (AI.US)**: The company is facing significant financial impacts due to a sales team restructuring and the resignation of CEO Thomas Siebel, leading to a belief that its development is encountering a slowdown, although long-term prospects remain optimistic [2] - **CyberArk (CYBR.US)**: The company was removed from the list following the announcement of a $25 billion acquisition by Palo Alto Networks, which is already part of the IVES AI 30, thereby strengthening its market position [2] - **Adobe (ADBE.US)**: The company is experiencing disruptive impacts from AI technology on its product lines, which may affect growth trajectories and free cash flow generation, with a slower-than-expected AI transformation [3] - **Elastic (ESTC.US)**: Despite increased government spending on software and AI, the company's public sector business shows signs of slowing down, leading to the identification of more promising alternatives for the IVES AI 30 list [3]

Core Viewpoint - Palo Alto Networks reported strong fourth-quarter earnings, exceeding revenue expectations while facing a decline in net profit [1] Financial Performance - Revenue for the fourth quarter increased by 16% year-over-year to $2.54 billion, surpassing the expected $2.5 billion [1] - Net profit decreased by 31% year-over-year to approximately $254 million [1] - Adjusted earnings per share (EPS) were $0.95, exceeding the forecast of $0.88 [1] Future Guidance - The company provided an optimistic outlook for the first quarter, projecting EPS between $0.88 and $0.90, above the analyst estimate of $0.85 [1] - For the entire fiscal year, the company expects adjusted EPS to be between $3.75 and $3.85, with revenue projected between $10.48 billion and $10.53 billion, both exceeding expectations [1] Leadership Change - Nir Zuk, the founder of the company, will no longer serve as Chief Technology Officer [1]

Core Viewpoint - Palo Alto Networks reported better-than-expected fiscal year 2026 guidance driven by surging demand for AI-driven cybersecurity solutions, resulting in a 5% increase in stock price during after-hours trading [1] Financial Performance - For the fourth quarter ending July 31, Palo Alto's revenue grew 16% year-over-year to $2.54 billion, exceeding market expectations of $2.5 billion [1] - Product revenue reached $573.9 million, up 19% year-over-year; subscription and support services revenue was $1.96 billion, a 15% increase [1] - Annual recurring revenue (ARR) for next-generation security solutions hit $5.6 billion, surpassing analyst expectations of $5.55 billion [1] - Deferred revenue at the end of the period was $6.3 billion, with remaining performance obligations (RPO) totaling $15.8 billion [3] - Net profit was $254 million (or $0.36 per share), down from $358 million (or $0.51 per share) year-over-year, but adjusted earnings per share reached $0.95, exceeding the expected $0.88 [3] Future Outlook - The company forecasts full-year revenue between $10.48 billion and $10.53 billion, above the analyst average expectation of $10.43 billion; adjusted earnings per share are projected at $3.75 to $3.85, also exceeding the market expectation of $3.67 [5] - For the first quarter, revenue guidance is set at $2.45 billion to $2.47 billion, and adjusted earnings per share at $0.88 to $0.90, both better than market expectations [5] - The anticipated remaining performance obligations are between $15.4 billion and $15.5 billion, significantly above the expected $15.07 billion [5] Market Context - The company is benefiting from a technology upgrade cycle driven by AI as enterprises accelerate cloud migration and upgrade security systems amid frequent data breach incidents [5] - Recent significant cyberattacks on multinational companies like Microsoft, UnitedHealth, Disney, and Oracle have increased market demand for effective security solutions [5] - Palo Alto's new offerings, including the "Cortex Cloud" security platform and the AI application protection platform "Prisma AIRS," along with a planned $25 billion acquisition of CyberArk, are expected to enhance its cybersecurity product matrix [6] Leadership Changes - The company announced the retirement of founder and CTO Nir Zuk after over 20 years, with Lee Klarich, a senior product leader, appointed as the new CTO and joining the board [6] - Klarich will also serve as the chairman of the board's security committee to strengthen the company's AI-driven platform strategy [6]

Core Insights - Palo Alto Networks (PANW) reported revenue of $2.54 billion for the quarter ended July 2025, reflecting a year-over-year increase of 15.8% and surpassing the Zacks Consensus Estimate by 1.46% [1] - Earnings per share (EPS) for the quarter was $0.95, up from $0.75 in the same quarter last year, exceeding the consensus EPS estimate of $0.88 by 7.95% [1] Financial Performance Metrics - Remaining Performance Obligation (RPO) stood at $15.80 billion, exceeding the average estimate of $15.26 billion from six analysts [4] - Product revenue reached $573.9 million, surpassing the 14-analyst average estimate of $553.4 million, marking a year-over-year increase of 19.4% [4] - Subscription and support revenue was $1.96 billion, slightly above the average estimate of $1.95 billion, with a year-over-year growth of 14.8% [4] - Subscription revenue was $1.32 billion, matching the average estimate and reflecting a 16.6% increase compared to the previous year [4] - Product gross profit (Non-GAAP) was reported at $440.9 million, exceeding the average estimate of $435.03 million [4] - Subscription and support gross profit (Non-GAAP) was $1.48 billion, slightly below the average estimate of $1.5 billion [4] - Subscription and support gross profit (GAAP) was $1.42 billion, compared to the average estimate of $1.43 billion [4] - Product gross profit (GAAP) was $437.7 million, surpassing the average estimate of $422.66 million [4] Stock Performance - Over the past month, shares of Palo Alto Networks have returned -9.6%, contrasting with a +3.5% change in the Zacks S&P 500 composite [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating potential underperformance relative to the broader market in the near term [3]

Core Viewpoint - Palo Alto Networks reported quarterly earnings of $0.95 per share, exceeding the Zacks Consensus Estimate of $0.88 per share, and showing an increase from $0.75 per share a year ago, representing an earnings surprise of +7.95% [1][2] Financial Performance - The company achieved revenues of $2.54 billion for the quarter ended July 2025, surpassing the Zacks Consensus Estimate by 1.46%, and up from $2.19 billion year-over-year [2] - Over the last four quarters, Palo Alto has consistently surpassed consensus EPS estimates and revenue estimates [2] Stock Performance and Outlook - Palo Alto shares have declined approximately 2.7% since the beginning of the year, while the S&P 500 has gained 9.7% [3] - The company's current Zacks Rank is 4 (Sell), indicating expectations of underperformance in the near future [6] Future Earnings Expectations - The current consensus EPS estimate for the upcoming quarter is $0.84 on revenues of $2.44 billion, and for the current fiscal year, it is $3.65 on revenues of $10.43 billion [7] - The outlook for the industry, particularly the Security sector, is currently in the bottom 28% of Zacks industries, which may impact stock performance [8]

Financial Performance - Palo Alto Networks' adjusted earnings reached $0.95 per share [1] - Revenue increased by 16% to $2.54 billion [1] - The company projects future commitments up to $15.5 billion [1] Guidance - The company anticipates both fiscal Q1 and full-year results to surpass estimates [1] Leadership Transition - The founder and CTO is stepping down, with the current product chief taking over [2] Strategic Developments - The $25 billion deal to acquire Cyber Arc caused investor concern and a subsequent share price decline [2]

Financial Data and Key Metrics Changes - Total revenue for Q4 was $2,540,000,000, growing 16% year over year, exceeding the high end of guidance [50][51] - Product revenue grew 19%, driven by software form factors, while total services revenue increased by 15% [51] - Remaining performance obligation (RPO) grew 24% to $15,800,000,000, marking the highest RPO growth in seven quarters [53] - Total gross margin was 75.8%, with product gross margin at 76.8% [55][56] - Operating margins expanded by 340 basis points, reaching above 30% for the first time in company history [58] Business Line Data and Key Metrics Changes - Next generation security annual recurring revenue (NGS ARR) reached $5,580,000,000, growing 32% [54] - AI ARR increased to approximately $545,000,000, up over two and a half times year over year [54] - Software firewall business had ARR up nearly 20% year on year, contributing significantly to product revenue growth [25][51] Market Data and Key Metrics Changes - The Americas grew 15%, EMEA up 19%, and JPEG growing 13%, indicating double-digit growth across all regions [52] - SASE ARR grew 35% year over year, more than twice as fast as the overall market [29] Company Strategy and Development Direction - The company aims to achieve $15,000,000,000 in next generation security ARR by FY30, focusing on platformization and integrated solutions [18][39] - The acquisition of CyberArk is seen as a strategic move to enhance identity security capabilities and expand market presence [44][45] - The company is transitioning to a model that emphasizes real-time security and AI integration, moving away from traditional security paradigms [35][41] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong demand for cybersecurity solutions, particularly in the context of AI and cloud transformations [10][11] - The company anticipates continued growth driven by software firewalls and SASE, with expectations for product revenue growth in the low teens for FY26 [64][40] - Management highlighted the importance of consolidating security solutions to improve customer outcomes and reduce response times to threats [72][74] Other Important Information - The company has a billion dollars in share buyback authorization remaining through December 2025 [59] - The transition to a contract manufacturing facility in Texas is expected to provide benefits from scale and innovation [57] Q&A Session Summary Question: Strategic view on security consolidation - Management discussed the fragmented nature of the security market and the importance of platformization to consolidate security spend, aiming for increased market share over time [69][70][72] Question: Underlying drivers of strong bookings - Management attributed the strong bookings to platformization, execution, and customer conviction in the company's ability to provide innovative solutions [79][82]

Financial Data and Key Metrics Changes - Total revenue for Q4 2025 was $2,540,000,000, growing 16% year-over-year, exceeding guidance [51] - Product revenue grew 19%, driven by software form factors, while total services revenue increased by 15% [51] - Remaining performance obligation (RPO) grew 24% year-over-year to $15,800,000,000, marking the highest RPO growth in seven quarters [53] - Total gross margin was 75.8%, with product gross margin at 76.8% [56] - Operating margins expanded by 340 basis points, reaching above 30% for the first time in company history [59] Business Line Data and Key Metrics Changes - Next generation security annual recurring revenue (ARR) reached $5,580,000,000, growing 32% year-over-year [55] - Software firewalls and SASE were notable growth drivers, with software firewalls ARR up nearly 20% year-over-year [25][55] - The software firewall market share is nearly 50%, with significant contributions from cloud service providers [26] Market Data and Key Metrics Changes - The Americas grew 15%, EMEA up 19%, and JPEG up 13% [52] - AI ARR reached approximately $545,000,000 in Q4, up over two and a half times year-over-year [55] - SASE ARR grew 35% year-over-year, more than twice as fast as the overall market [30] Company Strategy and Development Direction - The company aims to achieve $15,000,000,000 in next generation security ARR by FY 2030, focusing on platformization and integrated solutions [19] - The strategy includes leveraging AI to enhance security offerings and address the evolving cybersecurity landscape [12][41] - The company is pursuing the acquisition of CyberArk to enhance its identity security capabilities and expand its market presence [46][67] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong demand for cybersecurity solutions, particularly in cloud and AI transformations [11] - The company anticipates continued growth driven by software firewalls and SASE, with expectations for double-digit product revenue growth in FY 2026 [41][66] - Management highlighted the importance of platformization as a key driver for customer commitment and improved security outcomes [39] Other Important Information - The company completed the acquisition of ProtectAI, enhancing its AI security capabilities [12] - A leadership transition was announced, with Lee Klarich appointed as Chief Product and Technology Officer [49][50] Q&A Session Summary Question: Insights on security consolidation and market dynamics - Management emphasized that consolidation in the security market is a gradual process, with potential for significant growth in market share as customers recognize the value of platformization [69][72] Question: Drivers behind strong bookings and execution - Management attributed the strong bookings to effective execution and the benefits of platformization, while noting that macroeconomic conditions remain stable [80][84] Question: Network security ARR and software firewall market share - Management discussed the shift towards software firewalls driven by cloud transformation, highlighting the company's competitive position in the software segment [90]

Financial Performance - Palo Alto Networks' fiscal year 26 guidance exceeded expectations [3] - Free cash flow margins are guided above 38% to 39% [3] Market Trends & Industry Dynamics - Cyber security demand remains resilient despite softness seen in other vendors [5] - The geopolitical landscape and AI are driving the need for cyber security [5] - Cyber security is mission critical, making Palo Alto Networks an essential enterprise brand [5] - Digital transformations around security and AI cannot be paused [6] Strategic Initiatives & Acquisitions - CyberArk deal enhances Palo Alto Networks' platform through deeper integration with identity data [8] - The combination of networking, cloud, and endpoint data, along with identity access management, strengthens AI security [9][10] Federal Business - Federal business accounts for less than 4% or 5% of Palo Alto Networks' revenue [7] - Palo Alto Networks is a leading vendor within the federal government and is expected to continue outperforming in this sector [7]