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10-QPeriod: Q3 FY2019

Palo Alto Networks Inc Quarterly Report for Q3 Ended Apr 30, 2019

Filed May 30, 2019For Securities:PANW

Summary

Palo Alto Networks, Inc. (PANW) reported total revenue of $726.6 million for the third quarter of fiscal year 2019, a significant increase of 28.0% year-over-year. This growth was driven by robust performance in both product revenue ($278.4 million, up 27.6%) and subscription and support revenue ($448.2 million, up 28.2%), indicating strong customer adoption of their security platform. While the company reported an operating loss of $18.7 million, this marks an improvement from the prior year's loss of $45.3 million. The balance sheet shows healthy liquidity with $1.3 billion in cash and cash equivalents and substantial investments, although total assets grew to $6.3 billion, partly due to recent acquisitions. The company completed the acquisition of Demisto, Inc. for $474.2 million, enhancing its security orchestration, automation, and response (SOAR) capabilities. This strategic move, along with the earlier acquisition of RedLock Inc., underscores PANW's commitment to expanding its platform's functionality and securing cloud environments. Despite continued investments in R&D and Sales & Marketing, the company's focus on recurring revenue models and platform innovation positions it for continued growth in the cybersecurity market.

Financial Highlights

47 data points
Beta

Revenue

$726.60M

0.7% Gross Margin

Net Income

-$20.20M

-0.0% Net Margin

EPS (Diluted)

$-0.04

Total Assets

$6.26B

Cash & Equivalents

$1.31B

Free Cash Flow

$296.40M

Financial Statements
Beta
Revenue$726.60M
Cost of Revenue$204.90M
Gross Profit$521.70M
R&D Expenses$139.10M
Operating Expenses$540.40M
Operating Income-$18.70M
Interest Expense$20.60M
Net Income-$20.20M
EPS (Basic)$-0.04
Shares Outstanding (Basic)566.40M

Key Highlights

  • 1Total revenue increased by 28.0% year-over-year to $726.6 million.
  • 2Product revenue grew 27.6% to $278.4 million, while subscription and support revenue increased by 28.2% to $448.2 million.
  • 3Operating loss improved to $18.7 million from $45.3 million in the prior year's quarter.
  • 4Completed the acquisition of Demisto, Inc. for $474.2 million to bolster SOAR capabilities.
  • 5Cash, cash equivalents, and investments totaled $3.7 billion, providing strong liquidity.
  • 6Deferred revenue increased to $2.6 billion, signaling future revenue potential.
  • 7Continued investment in Research and Development and Sales & Marketing to drive innovation and market expansion.

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