Palo Alto Networks is seeing tailwinds from customers looking to cut costs amid the deteriorating economy, CEO Nikesh Arora said Thursday.
“The silver lining in the current environment is that we’re having more consolidation conversations – because all of a sudden the number one priority besides being secure is, ‘Can you help me do without increasing the cost?'” he told Jim Cramer. .
Macroeconomic uncertainty sparked by persistent inflation, Federal Reserve interest rate hikes, Russia’s invasion of Ukraine and China’s Covid shutdowns have forced businesses across all sectors to cut their costs by making layoffs, freezing hiring and cutting other expenses.
The cybersecurity company, whose shares are in the Cramer’s Charitable Trust bullpen, reported better-than-expected fiscal first-quarter revenue and earnings per share after the bell. Shares of Palo Alto Networks rose nearly 7% in extended trading after initially falling when the report was released. In Friday trading, the stock jumped more than 7%.
Calling the business prioritization of streamlining cash outflows a “silver bullet” for Palo Alto Networks, Arora also pointed out that customers are increasingly demanding with their spending.
“You go over there and say, ‘Look, I can substitute seven vendors for you. I can help you get a better safety score. And I can do it for less,” he said, adding, “we have to increase the activity and focus that we need to have in the market and hope that our better execution can help us correct the trends. macroeconomics that we observe.”