Stock Update (NYSE:PANW): Palo Alto Networks Inc Reports Fiscal First Quarter 2016 Financial Results

Palo Alto Networks Inc (NYSE:PANW), the next-generation security company, today announced financial results for its fiscal first quarter 2016 ended October 31, 2015.

Total revenue for the fiscal first quarter 2016 grew 55 percent year-over-year to a record $297.2 million, compared with total revenue of $192.3 million for the fiscal first quarter 2015. GAAP net loss for the fiscal first quarter 2016 was $38.7 million, or $0.45 per diluted share, compared with GAAP net loss of $30.1 million, or $0.38 per diluted share, for the fiscal first quarter 2015.

Non-GAAP net income for the fiscal first quarter 2016 was $31.6 million, or $0.35 per diluted share, compared with non-GAAP net income of $12.8 million, or $0.15 per diluted share, for the fiscal first quarter 2015. A reconciliation between GAAP and non-GAAP information is contained in the tables below.

“We had a very strong start to fiscal year 2016 that included achieving our highest fiscal first quarter revenue and billings year-over-year growth rates since going public,” said Mark McLaughlin, president and chief executive officer of Palo Alto Networks. “We believe that our success is due to our unwavering commitment to solving our customers’ most complex security challenges with the industry’s most innovative technology. Security remains a strategic consideration for companies globally, and it is clear from our results that our natively integrated and automated next-generation platform is resonating very well as the long-term strategic answer for customers’ security needs.”

Commenting on the company’s financial results, Steffan Tomlinson, chief financial officer of Palo Alto Networks, added, “We reported record revenue in the fiscal first quarter as robust new customer acquisition and expansion within our existing customer base drove strong demand for our appliances and subscription services. As the business scales, the power of our hybrid-SaaS model is becoming increasingly evident. Deferred revenue grew 71 percent-year-over-year to $804.5 million, and we improved non-GAAP operating leverage both sequentially and year-over-year. This resulted in cash flow from operations of $146.7 million and free cash flow of $127.2 million.”

Recent Highlights

  • Published cybersecurity book for C-suite and boards of directors The book, “Navigating the Digital Age: The Definitive Cybersecurity Guide for Directors and Officers,” was jointly published with the New York Stock Exchange (NYSE) and underscores Palo Alto Networks continued thought leadership by offering actionable, expert advice from lawyers, forensic professionals, consultants, academia, and government officials on a range of cybersecurity issues. All NYSE member company executives and boards of directors will receive a copy of the book.
  • Introduced Aperture – This new security-as-a-service offering helps organizations safely enable and strengthen security for sanctioned SaaS applications, such as Box, Dropbox, Google Drive, and Salesforce.
  • Announced commercial availability of our AutoFocus threat intelligence offering – This new cloud service, initially made available in April 2015 as a community access offering, is designed to provide users with the shared intelligence, analytics, and context required to understand which attacks require immediate response, as well as the ability to make threat indicators actionable and prevent future attacks.
  • Signed significant global managed security services agreements – These strategic alliances with Telefonica and Trustwave®, the managed security services business unit of Singapore Telecommunications Limited, extend our presence in the large and growing managed security services market and are designed to bring next-generation managed security services to global, multi-national businesses and government agencies.
  • Helped prove the power of information sharing – The collaborative Cyber Threat Alliance effort that included cyberthreat information sharing and combined intelligence has resulted in the revelation of a pervasive ransomware threat and specific measures to prevent it. As a founding member of the Cyber Threat Alliance, we believe this kind of collaboration across public and private industries is essential in the battle against cybercrime.

Financial Outlook

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

For the fiscal second quarter 2016, we expect:

  • Total revenue in the range of $314 to $318 million, representing year-over-year growth between 44 percent and 46 percent.
  • Diluted non-GAAP earnings per share in the range of $0.38 to $0.39 using 91 to 92 million shares.

Guidance for non-GAAP financial measures excludes share-based compensation and related payroll taxes, acquisition related costs, amortization expense of acquired intangible assets, litigation related charges including legal settlements, non-cash interest expense related to our convertible senior notes, the foreign currency gains (losses) and tax effects associated with these items, and certain non-recurring expenses. We have not reconciled diluted non-GAAP earnings per share guidance to GAAP net income (loss) per diluted share because we do not provide guidance on GAAP net income (loss) or the various reconciling cash and non-cash items between GAAP net income (loss) and non-GAAP net income (loss). Items that impact these measures are out of our control and/or cannot be reasonably predicted. Accordingly, a reconciliation of the non-GAAP financial measure guidance to the corresponding GAAP measures is not available without unreasonable effort. (Original Source)

Shares of Palo Alto Networks are up nearly one percent in after-hours trading. PANW has a 1-year high of $200.55 and a 1-year low of $108.10. The stock’s 50-day moving average is $164.44 and its 200-day moving average is $171.37.

On the ratings front, Palo Alto has been the subject of a number of recent research reports. In a report issued on November 12, Nomura analyst Frederick Grieb reiterated a Buy rating on PANW, with a price target of $200, which implies an upside of 17.2% from current levels. Separately, on November 6, Deutsche Bank’s Karl Keirstead maintained a Buy rating on the stock and has a price target of $210.

According to, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Frederick Grieb and Karl Keirstead have a total average return of 25.7% and 5.5% respectively. Grieb has a success rate of 82.1% and is ranked #117 out of 3858 analysts, while Keirstead has a success rate of 59.0% and is ranked #690.

Overall, 2 research analysts have assigned a Hold rating and 17 research analysts have given a Buy rating to the stock. When considering if perhaps the stock is under or overvalued, the average price target is $203.08 which is 19.0% above where the stock opened today.

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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