Palo Alto Networks Sinks on Earnings

SANTA CLARA, CA — Palo Alto Networks (PANW), a cybersecurity company, saw shares sink over 7% following the release of its fiscal fourth quarter and fiscal year 2016 earnings.

Total revenue for the fiscal fourth quarter 2016 grew 41 percent year over year to a record $400.8 million, compared with total revenue of $283.9 million for the fiscal fourth quarter 2015. GAAP net loss for the fiscal fourth quarter 2016 was $54.5 million, or $0.61 per diluted share, compared with GAAP net loss of $46.0 million, or $0.55 per diluted share, for the fiscal fourth quarter 2015.

Non-GAAP net income for the fiscal fourth quarter 2016 was $46.2 million, or $0.50 per diluted share, compared with non-GAAP net income of $25.0 million, or $0.28 per diluted share, for the fiscal fourth quarter 2015. A reconciliation between GAAP and non-GAAP information is contained in the tables below.

“Fourth quarter 2016 was a very strong finish to yet another record fiscal year. Revenue for the year was $1.4 billion, up 49 percent year over year, our customer base expanded to approximately 34,000 customers, we extended our platform capabilities both with new offerings and strategic partnerships, and we established new routes to market while driving significant growth across our partner ecosystem,” said Mark McLaughlin, chief executive officer of Palo Alto Networks. “The security industry is seeing a rapid transformation from legacy hardware and point products to integrated and automated capabilities that seamlessly work together as a platform. As the primary innovator driving this paradigm shift, customers are turning to our Next-Generation Security Platform in record numbers to more effectively prevent cyberattacks no matter where their data resides.”

For fiscal year 2016, total revenue grew 49 percent to $1.4 billion, compared with $928.1 million in fiscal year 2015. GAAP net loss was $225.9 million, or $2.59 per diluted share, in fiscal year 2016, compared with GAAP net loss of $165.0 million, or $2.02 per diluted share, in fiscal year 2015. Non-GAAP net income for fiscal year 2016 was $152.6 million, or $1.67 per diluted share, compared with non-GAAP net income of $75.2 million, or $0.86 per diluted share, in fiscal year 2015.

Steffan Tomlinson, chief financial officer of Palo Alto Networks, commented, “I am very pleased with our fourth quarter and fiscal year 2016 results, which once again demonstrate the competitive differentiation of our Next-Generation Security Platform and the power of our hybrid-SaaS model. In the fourth quarter, we delivered record revenue, billings and deferred revenue while generating $187.5 million in cash flow from operations and $171.2 million in free cash flow. We ended the fiscal year with approximately $1.9 billion in cash, cash equivalents and investments and are pleased to announce a $500 million share repurchase authorization.”