Palo Alto Networks To Allow Work From Home For Rest Of Year

‘There will be a shift in the way we think about employees and think about travel and think about meetings, and that is going to create a different cost structure,’ says Palo Alto Networks CEO Nikesh Arora.

Palo Alto Networks will allow most of its employees to decide how much – if at all – they wish to come into the office for the remainder of 2020.

The Santa Clara, Calif.-based platform security vendor will set aside money as part of its FLEXWORK program for employees to make their home offices more comfortable so that they can be more productive with remote work, according to Chairman and CEO Nikesh Arora. Employees will have access to key resources like office chairs and external monitors for their home workspaces, the company said.

“We think in the long-term, people will work partly from home and partly from the office, which will eventually require us to rethink our workplaces,” Arora told investors Thursday. “There will be a shift in the way we think about employees and think about travel and think about meetings, and that is going to create a different cost structure.”

[Related: 10 Things To Know About The $420M Palo Alto Networks-CloudGenix Deal]

Palo Alto Networks has shifted the money previously used for travel, face-to-face conferences and office amenities to provide more capabilities for workers in their home offices, Arora said. Palo Alto Networks moved to a fully remote workforce in early March ahead of local ordinances and announced right out of the gate that there wouldn’t be any COVID-related layoffs at the company, according to Arora.

“It’s very important for our employee base to feel secure and comfortable during these times,” Arora said. “We have been pretty ahead of the curve in making sure we had enough resources to cover our base of revenue and support our sales team.”

The company purchased land around its headquarters prior to the coronavirus pandemic but hasn’t yet started to develop it, according to Chief Financial Officer Kathy Bonanno. Palo Alto Networks was planning to develop the land somewhat quickly but will probably push that out a bit given the current environment, Bonanno said.

“We’re going to have to wait and see how long this work from home phenomenon lasts and the extent to which our employees choose to work from home,” Bonanno said.

Ultimately, though, Bonanno said the purchase still presents Palo Alto Networks with a good opportunity in the future given how valuable land is and how tight the real estate market typically is in Silicon Valley.

Palo Alto Networks sales for the quarter ended April 30 skyrocketed to $869.4 million, up 19.7 percent from $726.6 million a year ago. That beat Seeking Alpha’s projection of $831.6 million.

The company recorded a net loss of $74.8 million, or $0.77 per diluted share, 270.3 percent worse than a net loss of $20.2 million, or $0.21 per diluted share, the year before. On a non-GAAP basis, net income dipped to $114.6 million, or $1.17 per diluted share, down 11.9 percent from $130.1 million, or $1.31 per diluted share, last year. That crushed Seeking Alpha’s net income projection of $0.96 per diluted share.

Palo Alto Networks’ stock jumped $9.06 (3.95 percent) to $238.56 per share in after-hours trading Thursday, which is the highest the company’s stock has traded since Feb. 21.

Subscription and support revenue for Palo Alto Networks leapfrogged to $588.5 million, up 31.3 percent from $448.2 million the year before. And product revenue inched ahead to $280.9 million, up 0.9 percent from $278.4 million last year.

For the coming quarter, Palo Alto Networks expects non-GAAP net income of $1.37 to $1.40 per share on total sales of $915 million to $925 million. Analysts had been expecting earnings of $1.34 per share on total revenue of $918 million, according to Seeking Alpha.