What's going on?

Palo Alto Networks, a major provider of cyber security software, saw its stock jump more than 5% after it reported results that suggest it�s gaining market share in its increasingly important industry.

What does this mean?

Palo Alto�s revenue and profit in its latest quarter were both ahead of Wall Street�s expectations. But the bigger news was its projections for future quarters: a growing customer base led the company to increase its profit expectations for later this year. Given the recent wave of high-profile cyber attacks directed at targets like Equifax, it�s no surprise that companies are investing more in protecting themselves. But there�s more to the story than that�

Why should I care?

For markets: Palo Alto is swiping market share from its peers.

It�s good news for the industry as a whole that companies are spending more money on their cyber security. But it seems that Palo Alto�s competitors aren�t in line to get as thick a slice of the pie � most of them have not raised their guidance for future earnings. By contrast, Palo Alto is reaping outsized rewards, which research analysts chalk up to a more compelling product (in short, customers seem to think it does a better job!).

The bigger picture: Subscription-based revenue is key for software companies.

Palo Alto�s �services� revenue, which includes security software that it offers on a subscription basis, jumped more than 30% versus a year ago. Last week tech infrastructure giant Cisco, which is attempting to shift from selling hardware to subscription-based software, reported much better results than Wall Street was expecting � and its stock is up almost 10% since then. The idea is that subscription-based revenue is more dependable than relying on a series of one-off sales � kind of like how, in theory, your Spotify subscription is �stickier� than your desire to keep buying CDs every month�