Stock Update (NYSEARCA:PANW): Palo Alto Networks Inc Reports Fiscal Fourth Quarter and Fiscal Year 2015 Financial Results

Palo Alto Networks Inc (NYSE:PANW), the next-generation security company, announced financial results for its fiscal fourth quarter and fiscal year ended July 31, 2015.

Total revenue for the fiscal fourth quarter 2015 grew 59 percent year-over-year to a record $283.9 million, compared with total revenue of $178.2 million for the fiscal fourth quarter 2014. GAAP net loss for the fiscal fourth quarter 2015 was $46.0 million, or $0.55 per diluted share, compared with GAAP net loss of $32.1 million, or $0.41 per diluted share, for the fiscal fourth quarter 2014.

Non-GAAP net income for the fiscal fourth quarter 2015 was $25.0 million, or $0.28 per diluted share, compared with non-GAAP net income of $9.1 million, or $0.11 per diluted share, for the fiscal fourth quarter 2014. A reconciliation between GAAP and non-GAAP information is contained in the tables below.

“We are very pleased with our results for both the fourth quarter and fiscal year 2015. During the year we grew our customer base to over 26,000 customers, expanded our technology partnerships and distribution relationships, enhanced our next-generation security platform with new offerings and achieved $928.1 million in revenue, an increase of 55 percent year-over-year. We are significantly outgrowing the market and rapidly taking share,” said Mark McLaughlin, president and chief executive officer of Palo Alto Networks. “Once again, our performance demonstrates that our natively integrated and automated security platform is highly differentiated, and our focus on innovation continues to increase our lead over the competition.”

For fiscal year 2015, total revenue grew 55 percent to $928.1 million, compared with $598.2 million in fiscal year 2014. GAAP net loss was $165.0 million, or $2.02 per diluted share, in fiscal year 2015, compared with GAAP net loss of $226.5 million, or $3.05 per diluted share, in fiscal year 2014. Non-GAAP net income for fiscal year 2015 was $75.2 million, or $0.86 per diluted share, compared with non-GAAP net income of $31.8 million, or $0.40 per diluted share, in fiscal year 2014.

Steffan Tomlinson, chief financial officer of Palo Alto Networks, commented, “We delivered strong fourth quarter and fiscal year 2015 results with accelerating revenue growth and expanding operating and cash flow margins. In the fourth quarter, our land and expand sales model once again drove substantial growth in billings, revenue and deferred revenue, which all reached new records. We generated $111.3 million in cash flow from operations in the fourth quarter and ended fiscal year 2015 with $1.3 billion of cash, cash equivalents and investments.”

Recent Highlights

  • Rated Outstanding by the Technology Services Industry Association for Commitment to Customer Support and Success This certification identifies Palo Alto Networks as one of an elite group of organizations that deliver excellence across all significant modes of technical support and recognizes that our support standards and processes will help customers maximize their technology investment.
  • Released PAN-OS 7.0 – The newest release of our next-generation security platform operating system included more than 70 feature enhancements, including analysis, automation and operational efficiencies designed to help customers block threats from compromising their networks, endpoints and cloud-enabled data centers.
  • Introduced the PA-7080 – This new 200Gbps chassis-based device represents our most powerful next-generation firewall, delivering unrivaled performance and scalability for service providers and large enterprises.
  • Established exclusive alliance with Tanium – This alliance marries our respective capabilities and will transform the effectiveness, accuracy, and speed by which large, distributed organizations prevent, detect, and respond to today’s cyberthreats in their network and endpoints before damage is done.
  • Hosted more than 500 channel partners at our 2016 Sales Kickoff – We continued our investment in our channel relationships by hosting more than 500 channel partners who participated side-by-side with our sales representatives in our annual sales training event in early August.

Financial Outlook

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

For the fiscal first quarter 2016, we expect:

  • Total revenue in the range of $280 to $284 million, representing year-over-year growth between 46 percent and 48 percent.
  • Diluted non-GAAP earnings per share in the range of $0.31 to $0.32 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)

In reaction, shares of Palo Alto Networks are up 4.89% to $173.25 in after-hours trading. PANW has a 1-year high of $200.55 and a 1-year low of $87.83. The stock’s 50-day moving average is $175.03 and its 200-day moving average is $162.45.

On the ratings front, Palo Alto has been the subject of a number of recent research reports. In a report released yesterday, Piper Jaffray analyst Andrew Nowinski reiterated a Buy rating on PANW, with a price target of $185, which implies an upside of 9.6% from current levels. Separately, on the same day, Stephens Inc’s Jonathan Ruykhaver reiterated a Buy rating on the stock and has a price target of $180.

According to, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Andrew Nowinski and Jonathan Ruykhaver have a total average return of 6.9% and 19.8% respectively. Nowinski has a success rate of 48.0% and is ranked #828 out of 3752 analysts, while Ruykhaver has a success rate of 64.3% and is ranked #750.

Overall, 11 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 $194.29 which is 15.1% 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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