Cramer's Morning Take: Palo Alto 5/21/24

Jim Cramer (0:01)

Hey, it's Cramer, and this is my morning take on the market from today's CNBC Investing Club Morning Meeting.

David Faber (0:08)

Let's jump to Palo Alto next. So the company reported last night.

Jim Cramer (0:11)

Yeah, let's plug it in first.

David Faber (0:13)

It was very in line. I think it was just a very in line quarter. Billing's up 3.4%. Missed estimates by $5 million. That's an M.

Earnings beat by 7 cents. They bought back 1.7 million shares for 500 million. Q4 guidance in line though, but I would think that the tone of this call was much different from what we heard in the past couple of calls, where this was more of about Palo Alto, I think, playing offense, securing large deals, some early signs that the platformization strategy is working.

He's still saying don't look at Billing's because of the high cost of money, changing the duration of contracts. Look at RPO, RPO actually ticked up in the quarter up 23%.

Jim Cramer (0:54)

Yeah, you would think that it went down from all the chatter.

David Faber (0:59)

Right, just talking about platformization, there was obviously one of the biggest hacks of all time in the quarter, United Healthcare. They chose Palo Alto, and when Palo Alto explained to them the benefits of platformization, they adopted it, so I think that's a nice...

Jim Cramer (1:12)

Did you see how much more they make on a platformization customer? 10 times what they make from a non.

David Faber (1:18)

Sure, because they're selling so many more different products.

Jim Cramer (1:22)

Yeah, you can get bogged down on Billings. I'm never going to tell you that something is plus three in the universe, where we have companies that are plus 40 on this.

You can go with a profitless company.

David Faber (1:34)

It's soft.

Jim Cramer (1:34)

Right, but I'm also going to point out that there was a moment in time when you heard if there was a giant hack like UnitedHealth, whoever got that deal, stock would go up 25%. And I think that this is not... I think this is reasonable because it went up last week.

It's why we sold some.

David Faber (1:53)

Yeah, at 313, it's $4 below that price. But to your point, it's up nearly 20% since the sell-off last quarter, which is obviously that decline you can see. It's pretty obvious there. But I like, too, what you said about a significant pipeline of deals heading into their largest quarter of the year.

And then again, it wasn't a cut to the full year billings. They narrowed it, but it kind of ends this streak of cuts that they unfortunately had. So stocks down 4.5%, looked worse last night, but again, the call was a lot more upbeat.

Jim Cramer (2:29)

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