Palo Alto Networks' third-quarter results beat Wall Street expectations, driving its stock price up. The company stated that advanced AI models are accelerating the evolution of cyberattack methods, leading to increased demand from enterprises for more sophisticated security tools.

Third fiscal quarter revenue increased by 31%.

According to the company's disclosure, revenue in the third fiscal quarter increased by 31% year-over-year. Among them, the recently acquired CyberArk and Chronosphere contributed a total of $388 million in revenue.

However, the company recorded a net loss of $177 million, or 22 cents per share, for the quarter, compared with a net profit of $262 million, or 37 cents per share, in the same period last year.

Fourth-quarter and full-year guidance revised upward

The company provided fourth-quarter revenue guidance of $3.35 billion to $3.36 billion, higher than the market estimate of $3.28 billion. Full-year revenue guidance was also revised upward to $11.42 billion to $11.43 billion.

Previously, Palo Alto's guidance in February was weaker than analysts' expectations, leading the market to lower its growth forecasts. This better-than-expected performance was achieved on top of those lower expectations.

AI risks drive up security investment

At the beginning of the year, the market worried that AI would impact the software industry, and the cybersecurity sector also came under pressure. However, with the popularization of agent-based AI tools, enterprises' investment in defense systems has regained attention.

Palo Alto, like its peers, has been strengthening its product lines through acquisitions over the past year to cover areas such as identity security and AI observability. The acquisitions mentioned by the company include CyberArk, Chronosphere, KOI Security, and Protect AI.

Participate in Anthropic security testing

Palo Alto was also an early participant in Anthropic's "Project Glasswing," a project that primarily tested the potential cybersecurity consequences of Mythos models, raising concerns that hackers might use such tools to accelerate attacks.

Additional information:The report mentioned that Anthropic expanded the testing of the model to 150 partners on Tuesday.