Palo Alto Networks drags after tepid guidance

APA logo sign outside of an office building occupied by Palo Alto Networks, Inc., in Reston, Virginia.

Shares of Palo Alto Networks dropped more than 12 percent Friday after the cybersecurity firm predicted lower-than-expected earnings in the fiscal fourth quarter.

The California-based company reported third-quarter earnings of 42 cents per share on sales of $346 million, above the 42 cents per share on $340 million expected by a Thomson Reuters consensus estimate. The revenue beat was due in part to particular strength in subscription services, Chief Financial Officer Steffan Tomlinson said.

Despite topping estimates and outpacing the industry in the latest quarter, Palo Alto Networks now expects upcoming quarterly earnings of 48 cents to 50 cents per share on $386 million to $390 million in revenue. Wall Street was expecting the upper end of that range: 50 cents per share in earnings on $389 million in sales.

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