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Palo Alto Networks Inc Annual Report, Year Ended Jul 31, 2017

Filing Date
Filed September 7, 2017
Period End
July 31, 2017
Security
PANW
In the record · 2016–202610-K1110-Q328-K110

PANW filed 11 annual reports (10-K), 32 quarterly reports (10-Q) and 110 current reports (8-K) between 2016 and 2026.

  1. Material agreement8-K · Jun ’20Jun ’20
  2. Leadership change8-K · Dec ’22Dec ’22
  3. Leadership change8-K · Aug ’26Aug ’26

01—Abstract

Summary

Summary of the 10-K filed September 7, 2017. Cited figures are marked; the original filing is the authoritative source.

Palo Alto Networks (PANW) reported strong revenue growth in its fiscal year ending July 31, 2017, with total revenue reaching $1.76 billiona, a 27.8% increase year-over-year.

This growth was primarily driven by its subscription and support offerings, which now constitute 59.7% of total revenue, showing a robust 48.7% increase. While product revenue saw a modest 5.7% increase, the company's strategic shift towards recurring revenue streams is evident. The company continues to invest heavily in research and development, with R&D expenses increasing by 22.2% to $347.4 millionb, indicating a commitment to innovation and platform expansion, including the upcoming Application Framework.

Despite a net loss of $216.6 millionc, the company's operational efficiency improved, with operating expenses as a percentage of revenue decreasing, and free cash flow increasing to $705.1 million. Key strategic developments include the acquisition of LightCyber for its behavioral analytics technology and the planned launch of new cloud-based subscription offerings like GlobalProtect cloud service and Logging Service.

The company also announced its Application Framework, aiming for a new SaaS consumption model. PANW's strong customer growth, now exceeding 42,500 end-customers, coupled with significant investments in technology and expanding market reach, positions it for continued growth in the competitive cybersecurity landscape.

02—Key points

Key Highlights

  1. Total revenue reached $1.76 billion for fiscal year 2017, representing a 27.8% year-over-year increase.
  2. Subscription and support revenue grew by 48.7% to $1.05 billion, now comprising 59.7% of total revenue, highlighting a successful shift towards recurring revenue models.
  3. Research and development expenses increased by 22.2% to $347.4 million, underscoring the company's commitment to innovation and platform enhancement.
  4. Acquisition of LightCyber in February 2017 for its behavioral analytics technology strengthens the platform's capabilities.
  5. The company ended the fiscal year with over 42,500 end-customers, indicating continued market penetration and adoption.
  6. Free cash flow saw a significant increase of 20.5% to $705.1 million, demonstrating improved operational efficiency and cash generation.
  7. Palo Alto Networks announced its Application Framework, a strategic move towards a new SaaS consumption model to extend platform capabilities and enable third-party development.

03—One dollar

Follow one dollar

For each $1.00 of revenue in FY2017, Palo Alto Networks Inc lost $0.12.

  1. Revenue$1.76B100.0%
  2. Cost of revenue−$482.9M27.4%
  3. Gross profit$1.28B72.6%
  4. Operating costs−$1.44B82.0%
  5. Operating income−$165.8M9.4%
  6. Interest, other & tax−$37.2M2.1%
  7. Net income−$203.0M11.5%
Computed from 10-KFY2017filed September 7, 2017Computed from this filing’s revenue, gross profit, operating income and net income · right columngrey figure: share of revenue

04—Financials

Financial Highlights

Figures from 10-KFY2017filed September 7, 2017
Revenue$1.76B72.6% Gross MarginNet Income-$203.00M-11.5% Net MarginEPS (Diluted)$-0.37Total Assets$3.44BCash & Equivalents$744.30MFree Cash Flow$868.80M

Financial Statements

FY2017 against FY2016

Line itemFY2017FY2016Change
Revenue$1.76B$1.38B+27.8%
Cost of Revenue$476.40M$370.00M+28.8%
Gross Profit$1.28B$1.01B+26.8%
R&D Expenses$347.40M$284.20M+22.2%
Operating Expenses$1.44B$1.17B+23.9%
Operating Income-$165.80M-$157.30M−5.4%
Interest Expense$24.50M$23.40M+4.7%
Net Income-$203.00M-$192.70M−5.3%
EPS (Basic)$-0.37$-0.37−1.4%
Shares Outstanding (Basic)543.60M522.60M+4.0%

05—Questions

Frequently Asked Questions

  1. What was Palo Alto Networks' revenue performance in fiscal year 2017?

    In fiscal year 2017, Palo Alto Networks generated $1.76 billion in total revenue, an increase of 27.8% compared to the previous year. Subscription and support revenue was particularly strong, growing 48.7% to $1.05 billion, and now represents 59.7% of the company's total revenue.

  2. How is Palo Alto Networks investing in future growth?

    The company is heavily investing in research and development, with R&D expenses increasing by 22.2% to $347.4 million in fiscal year 2017. Key initiatives include the planned launch of new cloud-based subscription offerings and the development of the Palo Alto Networks Application Framework, which aims to introduce a new SaaS consumption model for security applications.

  3. What significant strategic actions did Palo Alto Networks take in fiscal year 2017?

    Palo Alto Networks completed the acquisition of LightCyber Ltd. in February 2017 to enhance its platform with behavioral analytics technology. They also announced plans for the Palo Alto Networks Application Framework and expect to launch new cloud-based subscription offerings, signaling a continued focus on expanding their security platform and service delivery.

  4. What is the company's financial health and cash generation like?

    Despite reporting a net loss of $216.6 million for fiscal year 2017, the company's financial health appears solid with $2.16 billion in cash, cash equivalents, and investments. Importantly, free cash flow increased by 20.5% to $705.1 million, demonstrating the company's ability to generate cash from its operations after capital expenditures.

06—Continue

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