Security company Palo Alto Networks reported increased earnings today for both its fourth quarter and fiscal year ended July 31. It also announced the promotion of its head of sales Mark Anderson to president.

Despite its increased earnings, Palo Alto’s stock was down about 5.5 percent in early after-hours trading.

Palo Alto reported fourth-quarter revenue of $400.8 million, up 41 percent year over year — a record for the company. This compared to its guidance for the quarter in the range of $386 million to $390 million. Total revenue for 2016 was $1.4 billion, up 49 percent year over year.

Non-GAAP net income for the fiscal fourth quarter 2016 was $46.2 million, or $0.50 per share, compared with $25.0 million, or $0.28 per share, for the fiscal fourth quarter 2015.

The security industry is rapidly transforming from legacy hardware and point products to software-based security with recurring revenue.

“As the primary driver of this paradigm shift, we are benefitting disproportionately compared to the rest of the industry,” said Palo Alto’s CEO, Mark McLaughlin.

(UPDATE 8/31: What seems to have spooked investors is the speed at which Palo Alto's services model is growing, writes analyst Catharine Trebnick of Dougherty & Co. in a research note. "All-in-all, we believe the pullback will be overdone, as the company made no changes to their long-term targets," she writes. "Peripheral indicators such as customer acquisition figures, life-time value expansion, and subscription attach rates all continued to be very strong.")

In terms of customer growth, in the fourth quarter, the company added over 2,000 new customers — the highest customer increase in its history. It now has about 34,000 total customers.

The company expects first-quarter revenue to be in the range of $396 million to $402 million, which represents 33 to 35 percent growth year over year.

Dave Peranich was hired as executive vice president for worldwide sales to focus exclusively on sales and channels. Peranich will report to Anderson, who will retain ownership of sales and also lead customer support and business development.