Company Update (NYSEARCA:PANW): Palo Alto Networks Inc Reports Fiscal Second Quarter 2016 Financial Results

Palo Alto Networks Inc (NYSE:PANW), the next-generation security company, today announced financial results for its fiscal second quarter 2016 ended January 31, 2016.

Total revenue for the fiscal second quarter 2016 grew 54 percent year-over-year to a record $334.7 million, compared with total revenue of $217.7 million for the fiscal second quarter 2015. GAAP net loss for the fiscal second quarter 2016 was $62.5 million, or $0.72 per diluted share, compared with GAAP net loss of$43.0 million, or $0.53 per diluted share, for the fiscal second quarter 2015.

Non-GAAP net income for the fiscal second quarter 2016 was $36.3 million, or $0.40 per diluted share, compared with non-GAAP net income of $16.9 million, or$0.19 per diluted share, for the fiscal second quarter 2015. A reconciliation between GAAP and non-GAAP information is contained in the tables below.

“We reported strong fiscal second quarter results across all metrics, including record revenue of $334.7 million, which increased 54 percent year-over-year. We are proud to now be serving more than 30,000 customers globally who are rapidly adopting the prevention capabilities of our Next-Generation Platform to achieve superior security, simplify their networks and greatly improve total cost of ownership,” said Mark McLaughlin, president and chief executive officer of Palo Alto Networks. “Security is a critical aspect of the digital age and a strategic priority embedded in all technology decisions for enterprises and organizations around the world.”

“During the quarter we saw broad adoption of all aspects of our Next-Generation Security Platform with particular strength in our subscription services,” saidSteffan Tomlinson, chief financial officer of Palo Alto Networks. “Our results demonstrate our commitment to balancing high growth and profitability as well as the increasing strength in free cash flow from our hybrid-SaaS model.”

Recent Highlights

  • Partnered with Proofpoint Palo Alto Networks and Proofpoint teamed up to share intelligence on sophisticated attacks, enabling the creation of automated and coordinated protection across both Palo Alto Networks Next-Generation Security Platform and Proofpoint Targeted Attack Protection and Proofpoint SocialPatrol. Palo Alto Networks WildFire automatically generates new protections and distributes them to all WildFire subscribers globally.
  • Recognized by J.D. Power and TSIA for exceptional support services – This recognition underscores the exceptional customer support we offer, including new certifications under the esteemed J.D. Power Certified Assisted Technical Support Program and TSIA “Outstanding Worldwide” rating.*
  • Expanded Common Criteria certifications – Adding to the validation of our products’ security capabilities, these certifications of our newest firewall devices with the latest rigorous National Information Assurance Partnership protection profiles set a consistent confidence bar for government and critical infrastructure customer organizations.
  • Extended our cloud ecosystem presence – To help organizations seamlessly secure an OpenStack cloud infrastructure with next-generation security, we announced a partnership with Mirantis and made our platform available as a virtual network function within Mirantis OpenStack.
  • Appointed Frank Calderoni to the Board of Directors – Mr. Calderoni joined our audit committee and brings a wealth of valuable experience cultivated from his previous and current executive and board positions at some of the world’s leading technology companies.

Financial Outlook
Palo Alto Networks provides guidance based on current market conditions and expectations.

For the fiscal third quarter 2016, we expect:

  • Total revenue in the range of $335 to $339 million, representing year-over-year growth between 43 percent and 45 percent.
  • Diluted non-GAAP earnings per share in the range of $0.41 to $0.42 using 90 to 92 million shares.
  • Free cash flow margin of approximately 40 percent. (Original Source)

Shares of Palo Alto are currently trading at $140.29, up $12.36 or 9.66%. PANW has a 1-year high of $200.55 and a 1-year low of $111.09. The stock’s 50-day moving average is $141.70 and its 200-day moving average is $165.00.

On the ratings front, Palo Alto has been the subject of a number of recent research reports. In a report issued on February 23, Robert W. Baird analyst Jayson Noland maintained a Buy rating on PANW, with a price target of $180, which implies an upside of 36.6% from current levels. Separately, on February 22, Barclays’ Saket Kalia maintained a Buy rating on the stock and has a price target of $170.

According to, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Jayson Noland and Saket Kalia have a total average return of 10.0% and -12.6% respectively. Noland has a success rate of 48.9% and is ranked #447 out of 3666 analysts, while Kalia has a success rate of 20.0% and is ranked #3370.

The street is mostly Bullish on PANW stock. Out of 15 analysts who cover the stock, 14 suggest a Buy rating and one recommends to Hold the stock. The 12-month average price target assigned to the stock is $186.33, which implies an upside of 41.4% from current levels.

Palo Alto Networks Inc offers an enterprise network security platform that allows enterprises, service providers, and government entities to secure their networks and safely enable applications running on their networks.


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