Palo Alto Networks pleasantly surprised investors after reporting better-than-expected earnings in fiscal Q4 during an unusually timed presentation after stock market close on Friday.

Revenue reached $2 billion for the period ending July 31, a 26% year-over-year increase. Billings grew 18% to $3.2 billion for the quarter.

Large companies are still looking for integrated platforms to consolidate their cybersecurity software from multiple vendors, according to the company.

CEO Nikesh Arora said the new incident reporting requirements from the Securities and Exchange Commission are driving upgrades from legacy software as companies push for faster security response. 

“Our customers have told us loud and clear that the legacy products powering their SOCs are no longer working and they need to reduce their time to remediation by an order of magnitude,” Arora said during the earnings call, which included a detailed financial outlook.

“This becomes increasingly important with the new SEC rules detailing that all public companies will be required to report material breaches within four business days.”

Eric Bell, managing director at Cyber Advisory Partners, said he had not previously heard such an explicit connection between the new SEC rules and buying behavior, but acknowledged that public companies will be forced to make major adjustments to their past incident response practices. 

“It seriously changes their behavior as a buyer,” Bell said. “They have to have the ability to detect and report these things.”

Starting Sept. 5, the SEC will require all publicly traded companies to report material cyber incidents within four business days of determining they are material. 

Palo Alto Networks and other large companies, including Google Cloud, CrowdStrike and Microsoft have presented their security software as a consolidated offering with the ability to help companies quickly find and mitigate malicious attacks and breaches. 

The company also detailed several major deals to illustrate how companies are buying integrated security packages. 

One large industrial manufacturer signed a $45 million deal, which was led by an expansion of its Prisma Access technology, according to Palo Alto Networks. The deal also includes commitments to Prisma Cloud, XDR and IoT security technologies.

In another deal, a professional services firm signed a $40 million contract, which will provide security for hundreds of thousands of users. The company consolidated legacy technologies into security using the company’s Prisma Access technology. 

Palo Alto Networks CFO Dipak Golechha noted a significant shift in revenue recognition, as customers are increasingly seeking deferred payment plans. The percentage of bookings that included such plans rose 45% year-over-year.

While companies are looking to consolidate their security on single platforms, they are still taking a lot of time to make final decisions as higher-interest rates are causing companies to scrutinize their spending habits, Arora said.

“CFOs are scrutinizing deals,” Arora said. “Which means you have to be better prepared to answer their question and show the business value that you bring to them with your cybersecurity products.”

Larger economic pressures are leading to changing payment needs for the enterprise market, according to cybersecurity investors.

“[Remaining performance obligation] is robust, but bookings are down,” Lisa Donnan, a partner at Option3, said via email. “Customers probably want changes in their contract terms, though it’s not clear what is driving that – budgets most likely.”

The company has also seen a more normalized pattern of demand for hardware-based firewalls, as companies see more workers return to the office following work-from-home shifts at the height of the COVID-19 epidemic. 

Non-GAAP net income was $482.5 million, or $1.44 per share, during the quarter. The company had previously forecast earnings of $1.26 per share to $1.30 per share. 

Palo Alto Networks expects revenue to reach $1.82 billion to $1.85 billion for the fiscal first quarter.

The company is forecasting fiscal 2024 revenue of $8.15 billion to $8.2 billion. Earnings are expected to be $5.27 to $5.40 per share.