Palo Alto shares rise on earnings beat, surprising investors who worried about a Friday report

Palo Alto Networks shares jumped as much as 9% in extended trading on Friday after the security software vendor reported earnings that exceeded analysts’ estimates.

The stock had dropped 16% in August leading up the report as investors worried that the company’s decision to announce results late on a Friday suggested the release may include troublesome numbers.

Here’s how the company did for the quarter ended July 31:

• Earnings: $1.44 per share, adjusted, vs. $1.28 per share, adjusted, as expected by Refinitiv.
• Revenue: $1.95 billion, vs. $1.96 billion as expected by Refinitiv.

Revenue in its fiscal fourth quarter increased 26% from $1.6 billion a year earlier, Palo Alto said. Net income climbed to $227.7 million, or 74 cents a share, from $3.3 million, or a penny a share, a year ago.

For the first quarter, Palo Alto expects revenue of $1.82 billion to $1.85 billion, and sales for the year are expected to be $8.15 billion to $8.2 billion. That’s below analyst expectations of $1.93 billion for the fiscal first quarter and $8.38 billion for the full year, according to Refinitiv.

Palo Alto announced its earnings date on Aug. 2. West coast tech companies typically report earnings no later in the week than Thursday afternoon, giving investors an opportunity to process the numbers and trade the stock based on those results before the end of the week. Historically, companies with bad news often bury the numbers after the close of trading on Friday.

Nikesh Arora, CEO of Palo Alto Networks, addressed the timing of the release on the company’s earnings call, and said it’s “made for some very interesting reading” in analyst reports over the past two weeks.

“We apologize to people who are inconvenienced,” Arora said, adding that the company was caught in between a few events. Palo Alto had a board meeting this week and has a conference kicking off on Sunday, and wanted to get the numbers out before all those people gather together.

“Sorry to drag you out on a Friday, but I think it’s important for a few thousand people next week that we shared all these results with them,” Arora said.

WATCH: Jim Cramer interviews Palo Alto Networks CEO Nikesh Arora