10-QPeriod: Q1 FY2013

Palo Alto Networks Inc Quarterly Report for Q1 Ended Oct 31, 2012

Filed December 10, 2012For Securities:PANW

Summary

Palo Alto Networks Inc. (PANW) is reporting its quarterly results following its Initial Public Offering (IPO) in July 2012. As an 'emerging growth company,' PANW is benefiting from certain exemptions under the JOBS Act, including delayed compliance with auditor attestation requirements for internal controls (Section 404 of Sarbanes-Oxley) until it is no longer an emerging growth company or the fiscal year after its first annual report is filed. However, the company has chosen to opt-out of the extended transition period for adopting new or revised accounting standards, committing to compliance on the same timeline as non-emerging growth companies. The company also highlights the increased costs and complexities associated with being a public company, including obtaining director and officer liability insurance and attracting qualified board members and executives. There is a focus on the ongoing process of evaluating and remediating internal controls over financial reporting, with the understanding that material weaknesses could negatively impact investor confidence and stock price. The company emphasizes that any failure to establish effective internal controls could lead to a decline in its stock value.

Financial Highlights

47 data points
Beta

Revenue

$85.93M

71.9% Gross Margin

Net Income

-$3.52M

-4.1% Net Margin

EPS (Diluted)

$-0.01

Total Assets

$444.30M

Cash & Equivalents

$174.47M

Free Cash Flow

$23.08M

Financial Statements
Beta
Revenue$85.93M
Cost of Revenue$24.19M
Gross Profit$61.74M
R&D Expenses$13.31M
Operating Expenses$64.88M
Operating Income-$3.13M
Interest Expense$40K
Net Income-$3.52M
EPS (Basic)$-0.01
EPS (Diluted)$-0.01
Shares Outstanding (Basic)400.88M

Key Highlights

  • 1Palo Alto Networks (PANW) is operating as an 'emerging growth company' post-IPO, leveraging JOBS Act exemptions.
  • 2The company is actively evaluating and remediating its internal controls over financial reporting, recognizing the potential impact on investor confidence and stock price.
  • 3PANW has opted out of the extended transition period for adopting new accounting standards, committing to full compliance alongside non-emerging growth companies.
  • 4The IPO in July 2012 raised approximately $215.4 million in net proceeds for the company.
  • 5The company acknowledges increased costs and potential challenges in attracting talent due to public company requirements, including D&O insurance.

Frequently Asked Questions

As an 'emerging growth company,' PANW benefits from reduced reporting requirements under the JOBS Act. This includes exemptions from certain auditor attestation requirements for internal controls (Section 404 of Sarbanes-Oxley) and potentially less stringent executive compensation disclosures. However, PANW has chosen to opt-out of the extended transition period for adopting new accounting standards.

PANW is currently in the process of evaluating, identifying, and remediating deficiencies in its internal controls over financial reporting. The company acknowledges that if material weaknesses are identified and not remediated in a timely manner, it could negatively impact investor confidence and the stock price.

Palo Alto Networks' IPO, declared effective on July 19, 2012, involved the sale of 5,617,259 shares at $42.00 per share. The total gross proceeds were $299.5 million, and the company received approximately $215.4 million in net proceeds after deducting underwriting discounts, commissions, and expenses.

The filing mentions that becoming a public company is expected to increase the cost of director and officer liability insurance and may make it harder to attract and retain qualified board members and executives. However, specific details on executive compensation or golden parachute payments are not detailed in this excerpt, though the company has exemptions for reduced disclosure in these areas as an emerging growth company.