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Cyber Security Firm Palo Alto Network’s Third Quarter Loss Widens

Key Speakers At Bloomberg's The Next Big Thing SummitKey Speakers At Bloomberg's The Next Big Thing Summit
Mark McLaughlin, chairman, president and chief executive officer of Palo Alto Networks Inc., speaks during the Bloomberg Next Big Thing Summit in Half Moon Bay, California, U.S., on Monday, June 17, 2013.David Paul Morris—Bloomberg Bloomberg via Getty Images

Palo Alto Networks reported a bigger third-quarter loss as the cyber security company spent more on marketing its products.

The company’s shares fell 8.1% to $136.18 in extended trading on Thursday.

The company said operating expenses jumped 50% to $309.5 million in the quarter ended April 30, from a year earlier.

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Sales and marketing expenses also rose 54% to $202 million.

Palo Alto (PANW) also forecast an adjusted fourth-quarter profit of 48-50 cents per share and revenue of $386 million-$390 million. Analysts on average were expecting a profit of 50 cents per share and revenue of $389.5 million, according to Thomson Reuters.

Billings, defined as total revenue plus the change in deferred revenue, rose 61% to $486.2 million in the third quarter.

Cybersecurity Has a Funding Problem

Analysts expect the company to continue to gain market share from traditional security service providers as Palo Alto shifts to more lucrative subscription-based services and customers move to newer cloud platforms.

Palo Alto’s net loss widened to $70.2 million, or 80 cents per share, in the third quarter, from $45.9 million, or 56 cents per share, a year earlier.

Excluding items, the company earned 42 cents per share, in line with the average analyst estimate.

Palo Alto Networks CEO at RSA: ‘We Cannot Afford to Lose Digital Trust’

The company’s revenue rose to $345.8 million from $234.2 million, beating analysts’ estimate of $339.5 million.

Up to Thursday’s close, shares of the company have fallen 17.3% this year.