SANTA CLARA, Calif.,
Dec. 6, 2012 /PRNewswire/ -- Palo
Alto Networks, Inc. (NYSE: PANW) today announced financial results
for its fiscal first quarter of 2013 ended October 31, 2012.
Total revenue for the fiscal first quarter grew 50 percent
year-over-year to $85.9 million,
compared with $57.1 million in the
fiscal first quarter of 2012. GAAP net loss for the fiscal first
quarter was $3.5 million, or
$0.05 per basic and diluted share,
compared with net income of $4.1
million, or $0.00 per basic
and diluted share, in the fiscal first quarter of 2012.
Palo Alto Networks recorded fiscal first quarter non-GAAP net
income of $2.9 million, or
$0.04 per basic and diluted share,
compared with non-GAAP net income of $5.6
million, or $0.01 per basic
and diluted share, in the fiscal first quarter of 2012. A
reconciliation between GAAP and non-GAAP information is contained
in the tables below.
"We delivered a strong first quarter, achieving 14% sequential
revenue growth and expanding our customer base to over 10,000
customers," said Mark McLaughlin,
president and chief executive officer of Palo Alto Networks. "Our
performance demonstrates that our unique technology differentiation
is resonating with customers, and as a result, our growth continues
to significantly outpace the market."
"We also continue to build on our technology lead with
innovative and disruptive technology, which further differentiates
us from the competition," continued McLaughlin.
Commenting on the company's financial results, Steffan Tomlinson, chief financial officer of
Palo Alto Networks, added, "In the first quarter we delivered
strong revenue growth while improving our gross margin and
operating margin on a sequential basis, demonstrating the leverage
in our model. During the quarter, we also generated cash flow from
operations of $23.1 million and we
ended the quarter with approximately $342.1
million in cash, cash equivalents and
investments."
Recent Highlights
- Announced a strategic partnership with Citrix and expanded the
Technology Partner Program by adding RSA, SafeNet, Swivel, Bradford
Networks, RedSeal, Skybox Security, Lancope, Interface Masters, and
Garland Technology.
- Extended its lead in next-generation network security by
launching four new products:
- The VM-Series – a virtualized next-generation firewall platform
launched in collaboration with VMware that brings next-generation
network security into the virtualized datacenter environment;
- The WildFire™ modern malware prevention subscription, which
sets the bar for the market that until now has only been focused on
detection;
- The PA-3000 Series – a new, midrange next-generation firewall
hardware platform; and
- The M-100 appliance – a dedicated high-performance management
appliance.
- Appointed John Donovan, senior
executive vice president of AT&T Technology and Network
Operations, to its Board of Directors.
Conference Call Information
Palo Alto Networks will host a conference call for analysts and
investors to discuss its fiscal first quarter of 2013 results and
outlook for its fiscal second quarter of 2013 today at 4:30 p.m. Eastern time / 1:30 p.m. Pacific time. Open to the public,
investors may access the call by dialing (866) 700-0133 or (617)
213-8831 and entering the passcode 20601007. A live audio webcast
of the conference call along with supplemental financial
information will also be accessible from the "Investors" section of
the company's website at investors.paloaltonetworks.com.
Following the webcast, an archived version will be available on the
website for one year. A telephonic replay of the call will be
available two hours after the call and will run for five business
days and may be accessed by dialing (888) 286-8010 or (617)
801-6888 and entering passcode 48881099.
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: Palo Alto
Networks' limited operating history, particularly as a new public
company; risks associated with Palo Alto Networks' rapid growth,
particularly outside of the U.S.; and general market, political,
economic and business conditions.
Additional risks and uncertainties that could affect Palo Alto
Networks' financial results are included under the captions "Risk
Factors" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations," in the company's annual
report on Form 10-K filed with the SEC on October 4, 2012 and the company's final
prospectus for its secondary public offering filed with the SEC on
October 18, 2012, both of which are
available on the company's website at
investors.paloaltonetworks.com and on the SEC's website at
www.sec.gov. Additional information will also be set forth in other
filings that the company makes with the SEC from time to time. All
forward-looking statements in this press release are based on
information available to the company as of the date hereof, and
Palo Alto Networks does not assume any obligation to update the
forward-looking statements provided to reflect events that occur or
circumstances that exist after the date on which they were
made.
Non-GAAP Financial Measures
Palo Alto Networks has provided in this release financial
information that has not been prepared in accordance with generally
accepted accounting principles in the
United States (GAAP). The company uses these non-GAAP
financial measures internally in analyzing its financial results
and believes that the use of these non-GAAP financial measures is
useful to investors as an additional tool to evaluate ongoing
operating results and trends and in comparing the company's
financial results with other companies in its industry, many of
which present similar 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 and diluted net income per share.
Palo Alto Networks defines non-GAAP net income as net income (loss)
plus share-based compensation expense less the related tax effects.
Non-GAAP diluted net income per share is defined as non-GAAP net
income divided by the diluted weighted-average shares outstanding.
Palo Alto Networks considers these non-GAAP financial measures to
be useful metrics for management and investors because they exclude
the effect of share-based compensation expense so that management
and investors can compare the company's "core business operating
results," meaning its operating performance excluding not only
share-based compensation but also discrete charges that are
infrequent in nature, over multiple periods. The company also
excludes from non-GAAP net income and non-GAAP diluted net income
per share the tax effects associated with share-based compensation
expense in order to provide a complete picture of the company's
recurring core business operating results. Without excluding these
tax effects, investors would only see the gross effect that
excluding these expenses had on the company's operating results.
There are a number of limitations related to the use of non-GAAP
net income and non-GAAP diluted net income per share versus net
income (loss) and diluted net income (loss) per share calculated in
accordance with GAAP. First, non-GAAP net income and non-GAAP
diluted net income per share exclude share-based compensation
expense. Share-based compensation has been and will continue to be
for the foreseeable future a significant recurring expense in the
company's business. Second, share-based compensation is an
important part of Palo Alto Networks employees' compensation and
impacts their performance. Third, the components of the costs that
Palo Alto Networks excludes in its calculation of non-GAAP net
income and non-GAAP diluted net income per share may differ from
the components that its peer companies exclude when they report
their non-GAAP results of operations. Palo Alto Networks
compensates for these limitations by providing specific information
regarding the GAAP amounts excluded from non-GAAP net income and
non-GAAP diluted net income per share and evaluating non-GAAP net
income and non-GAAP diluted net income per share together with net
income (loss) and diluted net income (loss) per share calculated in
accordance with GAAP. In the future, the company may also exclude
non-recurring expenses and other expenses that do not reflect the
company's core business operating results.
About Palo Alto Networks
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 platform is its Next-Generation
Firewall, which delivers application, user, and content visibility
and control integrated within the firewall through its proprietary
hardware and software architecture. Palo Alto Networks products and
services can address a broad range of network security
requirements, from the data center to the network perimeter, as
well as the distributed enterprise, which includes branch offices
and a growing number of mobile devices. Palo Alto Networks products
are used by more than 10,000 customers in over 100 countries. For
more information, visit www.paloaltonetworks.com.
Palo Alto Networks, "The Network Security Company," the Palo
Alto Networks Logo, App-ID, GlobalProtect, and WildFire are
trademarks of Palo Alto Networks, Inc. in the United States. All other trademarks, trade
names or service marks used or mentioned herein belong to their
respective owners.
Palo
Alto Networks, Inc.
|
Preliminary Condensed Consolidated Statements of
Operations
|
(In
thousands, except per share data)
|
(Unaudited)
|
|
|
|
|
Three
Months Ended
October 31,
|
|
2012
|
2011
|
Revenue:
|
|
|
Product
|
$
55,514
|
$
42,861
|
Services
|
30,420
|
14,252
|
Total
revenue
|
85,934
|
57,113
|
|
|
|
Cost of
revenue:
|
|
|
Product
|
14,416
|
10,310
|
Services
|
9,774
|
4,530
|
Total cost
of revenue
|
24,190
|
14,840
|
|
|
|
Total
gross profit
|
61,744
|
42,273
|
|
|
|
Operating
expenses:
|
|
|
Research
and development
|
13,312
|
7,848
|
Sales and
marketing
|
42,607
|
22,368
|
General
and administrative
|
8,956
|
5,157
|
Total
operating expenses
|
64,875
|
35,373
|
|
|
|
Operating
income (loss)
|
(3,131)
|
6,900
|
|
|
|
Interest
income
|
98
|
2
|
Other
expense, net
|
(170)
|
(464)
|
Income
(loss) before income taxes
|
(3,203)
|
6,438
|
Provision
for income taxes
|
312
|
2,322
|
Net income
(loss)
|
$
(3,515)
|
$
4,116
|
|
|
|
Net income
(loss) attributable to
common stockholders
|
$
(3,515)
|
$
-
|
|
|
|
Net income
(loss) per share attributable to
common stockholders, basic and diluted
|
$
(0.05)
|
$
0.00
|
|
|
|
Weighted-average shares used to compute
net income (loss) per share attributable to
common stockholders, basic and diluted
|
66,813
|
16,715
|
|
Palo
Alto Networks, Inc.
|
Reconciliation of GAAP to Non-GAAP Financial
Measures - Fiscal Quarter
|
(In
thousands, except per share amounts)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
Months Ended October 31, 2012
|
|
Three
Months Ended October 31, 2011
|
|
GAAP
Results
|
|
Adjustments
|
|
Non-GAAP
Results
|
|
GAAP
Results
|
|
Adjustments
|
|
Non-GAAP
Results
|
Net income
(loss)
|
$
(3,515)
|
|
$
6,463
|
(a)
|
$
2,948
|
|
$
4,116
|
|
$
1,446
|
(b)
|
$
5,562
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss) attributable to common stockholders:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
(3,515)
|
|
$
6,463
|
(a)
|
$
2,948
|
|
$
-
|
|
$
105
|
(c)
|
$
105
|
Diluted
|
$
(3,515)
|
|
$
6,463
|
(a)
|
$
2,948
|
|
$
-
|
|
$
128
|
(c)
|
$
128
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss) per share attributable to common stockholders:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
(0.05)
|
|
$
0.09
|
(a)
|
$
0.04
|
|
$
0.00
|
|
$
0.01
|
(c)
|
$
0.01
|
Diluted
|
$
(0.05)
|
|
$
0.09
|
(a)
|
$
0.04
|
|
$
0.00
|
|
$
0.01
|
(c)
|
$
0.01
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares used to compute net
income (loss) per share attributable to common
stockholders:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
66,813
|
|
-
|
|
66,813
|
|
16,715
|
|
-
|
|
16,715
|
Diluted
|
66,813
|
|
11,016
|
(d)
|
77,829
|
|
16,715
|
|
5,273
|
(d)
|
21,988
|
(a) To
eliminate share-based compensation expense of $8,342 offset by
related tax effect of share-based compensation of $1,879 for the
three months ended October 31, 2012
|
(b) To
eliminate share-based compensation expense of $1,449 offset by
related tax effect of share-based compensation of $3 for the three
months ended October 31, 2011
|
(c)
Includes the effect of participating securities under the two-class
method for determining net income (loss) attributable to common
stockholders
|
(d)
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.
|
Preliminary Condensed Consolidated Balance
Sheets
|
(In
thousands)
|
(Unaudited)
|
|
|
|
|
October
31,
|
July
31,
|
|
2012
|
2012
|
Assets
|
|
|
Current
assets:
|
|
|
Cash and
cash equivalents
|
$
174,473
|
$
322,642
|
Short-term
investments
|
147,084
|
-
|
Accounts
receivable, net of allowance for doubtful accounts
|
56,369
|
45,642
|
Prepaid
expenses and other current assets
|
16,813
|
13,373
|
Total
current assets
|
394,739
|
381,657
|
|
|
|
Property
and equipment, net
|
22,965
|
20,979
|
Long-term
investments
|
20,567
|
-
|
Other
assets
|
6,026
|
5,168
|
Total
assets
|
$
444,297
|
$
407,804
|
|
|
|
Liabilities and stockholders'
equity
|
|
|
Current
liabilities:
|
|
|
Accounts
payable
|
$
10,290
|
$
9,214
|
Accrued
liabilities
|
14,743
|
15,189
|
Accrued
compensation
|
16,171
|
11,307
|
Deferred
revenue
|
101,412
|
86,296
|
Total
current liabilities
|
142,616
|
122,006
|
|
|
|
Deferred
revenue – non-current
|
58,996
|
49,512
|
Other
long-term liabilities
|
6,896
|
7,215
|
|
|
|
Stockholders' equity:
|
|
|
Preferred
stock
|
-
|
-
|
Common
stock
|
7
|
7
|
Additional
paid-in capital
|
319,352
|
309,092
|
Accumulated other comprehensive loss
|
(27)
|
-
|
Accumulated deficit
|
(83,543)
|
(80,028)
|
Total
stockholders' equity
|
235,789
|
229,071
|
Total
liabilities and stockholders' equity
|
$
444,297
|
$
407,804
|
|
Palo
Alto Networks, Inc.
|
Preliminary Condensed Consolidated Statements of
Cash Flows
|
(In
thousands)
|
(Unaudited)
|
|
|
|
|
Three
Months Ended
October 31,
|
|
2012
|
2011
|
Cash
flows from operating activities
|
|
|
Net income
(loss)
|
$
(3,515)
|
$
4,116
|
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
|
|
|
Depreciation and amortization
|
2,053
|
1,150
|
Amortization of investment premiums, net of accretion
of purchase discounts
|
316
|
-
|
Share-based compensation for equity based
awards
|
8,284
|
1,449
|
Change in
fair value of preferred stock warrants
|
-
|
404
|
Changes in
operating assets and liabilities:
|
|
|
Accounts
receivable, net
|
(10,727)
|
(5,602)
|
Prepaid
expenses and other assets
|
(3,830)
|
(2,661)
|
Accounts
payable
|
1,076
|
736
|
Accrued
and other liabilities
|
4,819
|
2,096
|
Deferred
revenue
|
24,600
|
18,904
|
Net cash
provided by operating activities
|
23,076
|
20,592
|
|
|
|
Cash
flows from investing activities
|
|
|
Purchase
of property, equipment, and other assets
|
(4,015)
|
(2,732)
|
Purchase
of investments
|
(168,475)
|
-
|
Net cash
used in investing activities
|
(172,490)
|
(2,732)
|
|
|
|
Cash
flows from financing activities
|
|
|
Changes in
restricted cash
|
-
|
1,221
|
Proceeds
from exercise of stock options
|
1,534
|
287
|
Repurchase
of restricted common stock from employees
|
(24)
|
(59)
|
Payments
of initial public offering costs
|
(265)
|
-
|
Net cash
provided by financing activities
|
1,245
|
1,449
|
|
|
|
Net
increase (decrease) in cash and cash equivalents
|
(148,169)
|
19,309
|
Cash and
cash equivalents - beginning of period
|
322,642
|
40,517
|
Cash and
cash equivalents - end of period
|
$
174,473
|
$
59,826
|
SOURCE Palo Alto Networks, Inc.