Palo Alto Networks Reports Fiscal Fourth Quarter and 2012 Financial Results
Total revenue for the fiscal fourth quarter grew 88 percent year-over-year to
For fiscal 2012, total revenue grew 115 percent to
"The fourth quarter was a strong finish to a great year for
"We have pioneered the next generation of network security by completely reinventing the firewall. Our unique and innovative approach to network security resonates with enterprises around the world as they look for ways to protect their networks and safely enable the explosion of application use driven by productivity trends in cloud computing, SaaS, mobility and social networking," continued McLaughlin.
Commenting on the company's financial results,
Recent Highlights
- Raised
$215.4 million in net proceeds from itsJuly 20, 2012 initial public offering. - Appointed
Mark Anderson as our head of worldwide field operations, a new organization in the company that encompasses sales and customer support and services. - Expanded presence throughout
Latin America , including opening offices inSao Paulo, Brazil andMexico City, Mexico . - Earned the
NSS Labs 'recommended' rating in its inaugural Next-Generation Firewall Group Test. NSS Labs tested Palo Alto Networks PA-5020 and PAN-OS 4.0.5 against the fourth version of its Next-Generation Firewall test methodology, comprised of 1,486 live exploits and across a wide variety of traffic, payload sizes and protocols.Palo Alto Networks also blocked 95 percent of attacks against client applications within the test bed. - Expanded the Technology Partner Program by adding
Avaya as a new Data Center Infrastructure Partner, as well as Mobile Iron and Zenprise as newMobility Partners .Palo Alto Networks also expanded its technology scope with partnerships from leading vendors in network security management, security incident and event management (SIEM), network access and NetFlow analytics with partners such as: AlgoSec, Network Critical, LogRhythm, andPlixer International . Palo Alto Networks next-generation firewall PA-500, PA-2000 and PA-4000 series solutions were thoroughly tested and officially certified byICSA Labs , an independent division of Verizon. Each next-generation firewall series was evaluated against and passed ICSA Labs Modular Firewall Product Certification Criteria version 4.1x for general purpose network firewalls, corporate category.
Conference Call Information
Forward-Looking Statements
This press release contains forward-looking statements that involve risks and uncertainties, including statements regarding momentum in the company's business. There are a significant number of factors that could cause actual results to differ materially from statements made in this press release, including:
Additional risks and uncertainties that could affect
Non-GAAP Financial Measures
Non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP financial measures, and should be read only in conjunction with the company's consolidated financial statements prepared in accordance with GAAP. A reconciliation of the company's non-GAAP financial measures to their most directly comparable GAAP measures has been provided in the financial statement tables included in this press release, and investors are encouraged to review the reconciliation.
Non-GAAP net income (loss) and diluted net income (loss) per share.
Free Cash Flow.
About
Palo Alto Networks™ is the network security company. Its innovative platform allows enterprises, service providers, and government entities to secure their networks and safely enable the increasingly complex and rapidly growing number of applications running on their networks. The core of
Palo Alto Networks, Inc. |
|||||
Preliminary Condensed Consolidated Statements of Operations |
|||||
(In thousands, except per share data) |
|||||
(Unaudited) |
|||||
Three Months Ended |
Year Ended |
||||
2012 |
2011 |
2012 |
2011 |
||
Revenue: |
|||||
Product |
$ 49,439 |
$ 29,084 |
$ 174,462 |
$ 84,800 |
|
Services |
26,203 |
11,142 |
80,676 |
33,797 |
|
Total revenue |
75,642 |
40,226 |
255,138 |
118,597 |
|
Cost of revenue: |
|||||
Product |
12,533 |
7,763 |
44,615 |
21,766 |
|
Services |
9,034 |
3,590 |
25,938 |
10,507 |
|
Total cost of revenue |
21,567 |
11,353 |
70,553 |
32,273 |
|
Total gross profit |
54,075 |
28,873 |
184,585 |
86,324 |
|
Operating expenses: |
|||||
Research and development |
11,746 |
6,929 |
38,570 |
21,366 |
|
Sales and marketing |
37,721 |
23,507 |
115,917 |
62,254 |
|
General and administrative |
8,852 |
3,818 |
26,207 |
13,108 |
|
Total operating expenses |
58,319 |
34,254 |
180,694 |
96,728 |
|
Operating income (loss) |
(4,244) |
(5,381) |
3,891 |
(10,404) |
|
Interest income |
11 |
- |
18 |
3 |
|
Other expense, net |
(77) |
(456) |
(1,110) |
(1,651) |
|
Income (loss) before income taxes |
(4,310) |
(5,837) |
2,799 |
(12,052) |
|
Provision (benefit) for income taxes |
289 |
143 |
2,062 |
476 |
|
Net income (loss) |
$ (4,599) |
$ (5,980) |
$ 737 |
$ (12,528) |
|
Net income (loss) attributable to common stockholders, basic and diluted |
$ (4,599) |
$ (5,980) |
$ - |
$ (12,528) |
|
Net income (loss) per share attributable to |
$ (0.18) |
$ (0.40) |
$ 0.00 |
$ (0.88) |
|
Weighted-average shares used to compute stockholders, basic and diluted |
25,919 |
14,969 |
19,569 |
14,201 |
Palo Alto Networks, Inc. |
|||||||||||||
Reconciliation of GAAP to Non-GAAP Financial Measures - Fiscal Year |
|||||||||||||
(In thousands, except per share amounts) |
|||||||||||||
(Unaudited) |
|||||||||||||
Year Ended July 31, 2012 |
Year Ended July 31, 2011 |
||||||||||||
GAAP |
Adjustments |
Non-GAAP |
GAAP |
Adjustments |
Non-GAAP |
||||||||
Net income (loss) |
$ 737 |
$ 13,915 |
(a) |
$ 14,652 |
$ (12,528) |
$ 4,724 |
(b) |
$ (7,804) |
|||||
Net income (loss) attributable to common stockholders: |
|||||||||||||
Basic |
$ - |
$ 3,053 |
(a) |
$ 3,053 |
$ (12,528) |
$ 4,724 |
(b) |
$ (7,804) |
|||||
Diluted |
$ - |
$ 3,701 |
(a) |
$ 3,701 |
$ (12,528) |
$ 4,724 |
(b) |
$ (7,804) |
|||||
Net income (loss) per share attributable to common stockholders: |
|||||||||||||
Basic |
$ 0.00 |
$ 0.16 |
(a) |
$ 0.16 |
$ (0.88) |
$ 0.33 |
(b) |
$ (0.55) |
|||||
Diluted |
$ 0.00 |
$ 0.14 |
(a) |
$ 0.14 |
$ (0.88) |
$ 0.33 |
(b) |
$ (0.55) |
|||||
Weighted-average shares used to compute |
|||||||||||||
Basic |
19,569 |
- |
19,569 |
14,201 |
- |
14,201 |
|||||||
Diluted |
19,569 |
6,737 |
(c) |
26,306 |
14,201 |
- |
14,201 |
||||||
(a) To eliminate share-based compensation expense of $13,925 offset by related tax effect of share-based compensation of $10 for the year ended July 31, 2012 |
|||||||||||||
(b) To eliminate share-based compensation expense of $4,733 offset by related tax effect of share-based compensation of $9 for the year ended July 31, 2011 |
|||||||||||||
(c) Difference between weighted-average shares outstanding on a diluted basis under GAAP and non-GAAP due to application of the treasury stock method for dilutive shares |
Palo Alto Networks, Inc. |
|||||||||||||
Reconciliation of GAAP to Non-GAAP Financial Measures - Fiscal Quarter |
|||||||||||||
(In thousands, except per share amounts) |
|||||||||||||
(Unaudited) |
|||||||||||||
Three Months Ended July 31, 2012 |
Three Months Ended July 31, 2011 |
||||||||||||
GAAP |
Adjustments |
Non-GAAP |
GAAP |
Adjustments |
Non-GAAP |
||||||||
Net income (loss) |
$ (4,599) |
$ 6,548 |
(a) |
$ 1,949 |
$ (5,980) |
$ 921 |
(b) |
$ (5,059) |
|||||
Net income (loss) attributable to common stockholders: |
|||||||||||||
Basic |
$ (4,599) |
$ 5,398 |
(a) |
$ 799 |
$ (5,980) |
$ 921 |
(b) |
$ (5,059) |
|||||
Diluted |
$ (4,599) |
$ 5,550 |
(a) |
$ 951 |
$ (5,980) |
$ 921 |
(b) |
$ (5,059) |
|||||
Net income (loss) per share attributable to common stockholders: |
|||||||||||||
Basic |
$ (0.18) |
$ 0.21 |
(a) |
$ 0.03 |
$ (0.40) |
$ 0.06 |
(b) |
$ (0.34) |
|||||
Diluted |
$ (0.18) |
$ 0.21 |
(a) |
$ 0.03 |
$ (0.40) |
$ 0.06 |
(b) |
$ (0.34) |
|||||
Weighted-average shares used to compute net income (loss) per share attributable to common stockholders: |
|||||||||||||
Basic |
25,919 |
- |
25,919 |
14,969 |
- |
14,969 |
|||||||
Diluted |
25,919 |
9,602 |
(c) |
35,521 |
14,969 |
- |
14,969 |
||||||
(a) To eliminate share-based compensation expense of $6,552 offset by related tax effect of share-based compensation of $4 for the three months ended July 31, 2012 |
|||||||||||||
(b) To eliminate share-based compensation expense of $923 offset by related tax effect of share-based compensation of $2 for the three months ended July 31, 2011 |
|||||||||||||
(c) Difference between weighted-average shares outstanding on a diluted basis under GAAP and non-GAAP due to application of the treasury stock method for dilutive shares |
Palo Alto Networks, Inc. |
|||||
Reconciliation of Cash Provided by Operating Activities to Free Cash Flow |
|||||
(In thousands) |
|||||
(Unaudited) |
|||||
Three Months Ended |
Year Ended |
||||
2012 |
2011 |
2012 |
2011 |
||
Net cash provided by operating activities |
$ 19,592 |
$ 10,141 |
$ 77,368 |
$ 32,102 |
|
Less: purchases of property, equipment, and other assets |
3,284 |
2,098 |
14,565 |
13,000 |
|
Free cash flow |
$ 16,308 |
$ 8,043 |
$ 62,803 |
$ 19,102 |
|
Net cash used in investing activities |
$ (3,284) |
$ (2,098) |
$ (14,565) |
$ (13,000) |
|
Net cash provided by financing activities |
$ 216,051 |
$ 1,116 |
$ 219,322 |
$ 2,580 |
Palo Alto Networks, Inc. |
|||
Preliminary Condensed Consolidated Balance Sheets |
|||
(In thousands) |
|||
(Unaudited) |
|||
July 31, |
|||
2012 |
2011 |
||
Assets |
|||
Current assets: |
|||
Cash and cash equivalents |
$ 322,642 |
$ 40,517 |
|
Accounts receivable, net of allowance for doubtful accounts |
45,642 |
29,677 |
|
Prepaid expenses and other current assets |
13,373 |
6,646 |
|
Total current assets |
381,657 |
76,840 |
|
Property and equipment, net |
20,979 |
12,666 |
|
Other assets |
5,168 |
1,666 |
|
Total assets |
$ 407,804 |
$ 91,172 |
|
Liabilities, redeemable convertible |
|||
Current liabilities: |
|||
Accounts payable |
$ 9,214 |
$ 5,435 |
|
Accrued liabilities |
15,189 |
6,957 |
|
Accrued compensation |
11,307 |
9,456 |
|
Deferred revenue |
86,296 |
45,253 |
|
Total current liabilities |
122,006 |
67,101 |
|
Deferred revenue – non-current |
49,512 |
22,002 |
|
Preferred stock warrants liability |
- |
2,068 |
|
Other long-term liabilities |
7,215 |
6,964 |
|
Redeemable convertible preferred stock |
- |
64,491 |
|
Stockholders' equity (deficit): |
|||
Common stock |
7 |
2 |
|
Additional paid-in capital |
309,092 |
9,309 |
|
Accumulated deficit |
(80,028) |
(80,765) |
|
Total stockholders' equity (deficit) |
229,071 |
(71,454) |
|
Total liabilities, redeemable convertible |
$ 407,804 |
$ 91,172 |
Palo Alto Networks, Inc. |
|||
Preliminary Condensed Consolidated Statements of Cash Flows |
|||
(In thousands) |
|||
(Unaudited) |
|||
Year Ended July 31, |
|||
2012 |
2011 |
||
Cash flows from operating activities |
|||
Net income (loss) |
$ 737 |
$ (12,528) |
|
Adjustments to reconcile net income (loss) to |
|||
Depreciation and amortization |
6,134 |
2,189 |
|
Share-based compensation for equity based awards |
13,837 |
4,733 |
|
Excess tax benefit from share-based compensation |
(215) |
- |
|
Change in fair value of preferred stock warrant |
958 |
1,577 |
|
Changes in operating assets and liabilities: |
|||
Accounts receivable, net |
(15,965) |
(15,436) |
|
Prepaid expenses and other assets |
(11,063) |
(5,114) |
|
Accounts payable |
3,779 |
2,734 |
|
Accrued and other liabilities |
9,912 |
6,340 |
|
Deferred revenue |
68,553 |
43,134 |
|
Reimbursement of cost of leasehold improvements |
701 |
4,473 |
|
Net cash provided by operating activities |
77,368 |
32,102 |
|
Cash flows from investing activities |
|||
Purchase of property, equipment, and other assets |
(14,565) |
(13,000) |
|
Net cash used in investing activities |
(14,565) |
(13,000) |
|
Cash flows from financing activities |
|||
Proceeds from initial public offering, net of offering costs |
215,375 |
- |
|
Excess tax benefit from share-based compensation |
215 |
- |
|
Changes in restricted cash |
1,221 |
- |
|
Proceeds from exercise of stock options |
1,956 |
1,775 |
|
Proceeds from settlement of note receivable |
637 |
895 |
|
Repurchase of restricted common stock from terminated employees |
(82) |
(90) |
|
Net cash provided by financing activities |
219,322 |
2,580 |
|
Net increase in cash and cash equivalents |
282,125 |
21,682 |
|
Cash and cash equivalents - beginning of period |
40,517 |
18,835 |
|
Cash and cash equivalents - end of period |
$ 322,642 |
$ 40,517 |
SOURCE
Media, Mike Haro, Director of Corporate Communications, Palo Alto Networks, +1-408-438-8628, mharo@paloaltonetworks.com; or Investor Relations, Chris Danne/Maria Riley, The Blueshirt Group, +1-415-217-7722, ir@paloaltonetworks.com