|
Delaware
|
001-35594
|
20-2530195
|
(State or other jurisdiction of
incorporation)
|
(Commission File Number)
|
(IRS Employer
Identification No.)
|
4401 Great America Parkway
Santa Clara, California 95054
(Address of principal executive office, including zip code)
|
|
|
PALO ALTO NETWORKS, INC.
|
|
|
By:
|
/s/ M
ARK
D. M
C
L
AUGHLIN
|
|
Mark D. McLaughlin
|
|
President and Chief Executive Officer
|
Exhibit No.
|
Description of Exhibit
|
10.1
|
Offer Letter between the Registrant and Frank Calderoni, dated February 24, 2016.
|
99.1
|
Press release dated as of February 25, 2016.
|
99.2
|
Press release dated as of February 25, 2016.
|
/s/ Frank Calderoni
|
Frank Calderoni
|
•
|
Fiscal second quarter total revenue grows 54 percent year-over-year to $334.7 million
|
•
|
Fiscal second quarter billings grow 62 percent year-over-year to $459.0 million
|
•
|
Fiscal second quarter cash flow from operations grows 100 percent year-over-year to $153.8 million and free cash flow grows 93 percent year-over-year to $136.4 million
|
•
|
Partnered with Proofpoint
–
Palo Alto Networks and Proofpoint teamed up to share intelligence on sophisticated attacks, enabling the creation of automated and coordinated protection across both Palo Alto Networks Next-Generation Security Platform and Proofpoint Targeted Attack Protection and Proofpoint SocialPatrol. Palo Alto Networks WildFire automatically generates new protections and distributes them to all WildFire subscribers globally.
|
•
|
Recognized by J.D. Power and TSIA for exceptional support services –
This recognition underscores the exceptional customer support we offer, including new certifications under the esteemed J.D. Power Certified Assisted Technical Support Program and TSIA “Outstanding Worldwide” rating.
*
|
•
|
Expanded Common Criteria certifications –
Adding to the validation of our products’ security capabilities, these certifications of our newest firewall devices with the latest rigorous National Information Assurance Partnership protection profiles set a consistent confidence bar for government and critical infrastructure customer organizations.
|
•
|
Extended our cloud ecosystem presence –
To help organizations seamlessly secure an OpenStack cloud infrastructure with next-generation security, we announced a partnership with Mirantis and made our platform available as a virtual network function within Mirantis OpenStack.
|
•
|
Appointed Frank Calderoni to the Board of Directors –
Mr. Calderoni joined our audit committee and brings a wealth of valuable experience cultivated from his previous and current executive and board positions at some of the world’s leading technology companies.
|
•
|
Total revenue in the range of $335 to $339 million, representing year-over-year growth between 43 percent and 45 percent.
|
•
|
Diluted non-GAAP earnings per share in the range of $0.41 to $0.42 using 90 to 92 million shares.
|
•
|
Free cash flow margin of approximately 40 percent.
|
Palo Alto Networks, Inc.
|
|||||||||||||||
Preliminary Condensed Consolidated Statements of Operations
|
|||||||||||||||
(In millions, except per share data)
|
|||||||||||||||
(Unaudited)
|
|||||||||||||||
|
|
|
|
|
|
|
|
||||||||
|
Three Months Ended January 31,
|
|
Six Months Ended January 31,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Revenue:
|
|
|
|
|
|
|
|
||||||||
Product
|
$
|
169.9
|
|
|
$
|
115.6
|
|
|
$
|
317.6
|
|
|
$
|
217.1
|
|
Services
|
164.8
|
|
|
102.1
|
|
|
314.3
|
|
|
192.9
|
|
||||
Total revenue
|
334.7
|
|
|
217.7
|
|
|
631.9
|
|
|
410.0
|
|
||||
Cost of revenue:
|
|
|
|
|
|
|
|
||||||||
Product
|
44.9
|
|
|
30.7
|
|
|
83.7
|
|
|
59.8
|
|
||||
Services
|
49.3
|
|
|
28.7
|
|
|
89.7
|
|
|
53.0
|
|
||||
Total cost of revenue
|
94.2
|
|
|
59.4
|
|
|
173.4
|
|
|
112.8
|
|
||||
Total gross profit
|
240.5
|
|
|
158.3
|
|
|
458.5
|
|
|
297.2
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
Research and development
|
74.0
|
|
|
47.0
|
|
|
133.7
|
|
|
84.3
|
|
||||
Sales and marketing
|
187.6
|
|
|
122.8
|
|
|
345.9
|
|
|
229.2
|
|
||||
General and administrative
|
34.2
|
|
|
27.0
|
|
|
65.0
|
|
|
46.0
|
|
||||
Total operating expenses
|
295.8
|
|
|
196.8
|
|
|
544.6
|
|
|
359.5
|
|
||||
Operating loss
|
(55.3
|
)
|
|
(38.5
|
)
|
|
(86.1
|
)
|
|
(62.3
|
)
|
||||
Interest expense
|
(5.8
|
)
|
|
(5.5
|
)
|
|
(11.6
|
)
|
|
(11.0
|
)
|
||||
Other income, net
|
2.5
|
|
|
0.3
|
|
|
4.7
|
|
|
0.7
|
|
||||
Loss before income taxes
|
(58.6
|
)
|
|
(43.7
|
)
|
|
(93.0
|
)
|
|
(72.6
|
)
|
||||
Provision for (benefit from) income taxes
|
3.9
|
|
|
(0.7
|
)
|
|
8.2
|
|
|
0.5
|
|
||||
Net loss
|
$
|
(62.5
|
)
|
|
$
|
(43.0
|
)
|
|
$
|
(101.2
|
)
|
|
$
|
(73.1
|
)
|
Net loss per share, basic and diluted
|
$
|
(0.72
|
)
|
|
$
|
(0.53
|
)
|
|
$
|
(1.18
|
)
|
|
$
|
(0.91
|
)
|
Weighted-average shares used to compute net loss per share, basic and diluted
|
86.6
|
|
|
80.8
|
|
|
85.8
|
|
|
80.1
|
|
Palo Alto Networks, Inc.
|
|||||||||||||||
Reconciliation of GAAP to Non-GAAP Financial Measures
|
|||||||||||||||
(In millions, except per share amounts)
|
|||||||||||||||
(Unaudited)
|
|||||||||||||||
|
|
|
|
|
|
|
|
||||||||
|
Three Months Ended January 31,
|
|
Six Months Ended January 31,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
GAAP net loss
|
$
|
(62.5
|
)
|
|
$
|
(43.0
|
)
|
|
$
|
(101.2
|
)
|
|
$
|
(73.1
|
)
|
Share-based compensation related charges
|
106.9
|
|
|
60.6
|
|
|
182.1
|
|
|
100.2
|
|
||||
Amortization expense of acquired intangible assets
|
2.1
|
|
|
1.8
|
|
|
4.2
|
|
|
3.3
|
|
||||
Litigation related charges
|
3.0
|
|
|
3.0
|
|
|
6.1
|
|
|
6.1
|
|
||||
Non-cash interest expense related to convertible notes
|
5.7
|
|
|
5.5
|
|
|
11.5
|
|
|
11.0
|
|
||||
Foreign currency gain associated with non-GAAP adjustments
|
(0.7
|
)
|
|
—
|
|
|
(1.5
|
)
|
|
(0.1
|
)
|
||||
Income tax and other tax adjustments related to the above
|
(18.2
|
)
|
|
(11.0
|
)
|
|
(33.3
|
)
|
|
(17.7
|
)
|
||||
Non-GAAP net income
|
$
|
36.3
|
|
|
$
|
16.9
|
|
|
$
|
67.9
|
|
|
$
|
29.7
|
|
|
|
|
|
|
|
|
|
||||||||
GAAP net loss per share, diluted
|
$
|
(0.72
|
)
|
|
$
|
(0.53
|
)
|
|
$
|
(1.18
|
)
|
|
$
|
(0.91
|
)
|
Share-based compensation related charges
|
1.21
|
|
|
0.73
|
|
|
2.08
|
|
|
1.22
|
|
||||
Amortization expense of acquired intangible assets
|
0.02
|
|
|
0.02
|
|
|
0.05
|
|
|
0.04
|
|
||||
Litigation related charges
|
0.04
|
|
|
0.04
|
|
|
0.07
|
|
|
0.08
|
|
||||
Non-cash interest expense related to convertible notes
|
0.07
|
|
|
0.07
|
|
|
0.13
|
|
|
0.14
|
|
||||
Foreign currency gain associated with non-GAAP adjustments
|
(0.01
|
)
|
|
0.00
|
|
|
(0.02
|
)
|
|
0.00
|
|
||||
Income tax and other tax adjustments related to the above
|
(0.21
|
)
|
|
(0.14
|
)
|
|
(0.39
|
)
|
|
(0.22
|
)
|
||||
Non-GAAP net income per share, diluted
|
$
|
0.40
|
|
|
$
|
0.19
|
|
|
$
|
0.74
|
|
|
$
|
0.35
|
|
|
|
|
|
|
|
|
|
||||||||
GAAP weighted-average shares used to compute net loss per share, diluted
|
86.6
|
|
|
80.8
|
|
|
85.8
|
|
|
80.1
|
|
||||
Weighted-average effect of potentially dilutive securities [a]
|
5.1
|
|
|
5.8
|
|
|
5.4
|
|
|
5.7
|
|
||||
Non-GAAP weighted-average shares used to compute net income per share, diluted
|
91.7
|
|
|
86.6
|
|
|
91.2
|
|
|
85.8
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Revenue
|
$
|
334.7
|
|
|
$
|
217.7
|
|
|
$
|
631.9
|
|
|
$
|
410.0
|
|
Change in deferred revenue
|
124.3
|
|
|
65.1
|
|
|
215.1
|
|
|
113.3
|
|
||||
Billings
|
$
|
459.0
|
|
|
$
|
282.8
|
|
|
$
|
847.0
|
|
|
$
|
523.3
|
|
|
|
|
|
|
|
|
|
||||||||
Net cash provided by operating activities
|
$
|
153.8
|
|
|
$
|
76.9
|
|
|
$
|
300.5
|
|
|
$
|
151.8
|
|
Less: purchases of property, equipment, and other assets
|
17.4
|
|
|
6.2
|
|
|
36.9
|
|
|
12.1
|
|
||||
Free cash flow
|
$
|
136.4
|
|
|
$
|
70.7
|
|
|
$
|
263.6
|
|
|
$
|
139.7
|
|
Net cash used in investing activities
|
$
|
(21.2
|
)
|
|
$
|
(286.3
|
)
|
|
$
|
(284.7
|
)
|
|
$
|
(487.4
|
)
|
Net cash provided by financing activities
|
$
|
4.8
|
|
|
$
|
8.7
|
|
|
$
|
21.6
|
|
|
$
|
24.8
|
|
Palo Alto Networks, Inc.
|
|||||||
Preliminary Condensed Consolidated Balance Sheets
|
|||||||
(In millions)
|
|||||||
(Unaudited)
|
|||||||
|
|
|
|
||||
|
January 31, 2016
|
|
July 31, 2015
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
413.2
|
|
|
$
|
375.8
|
|
Short-term investments
|
551.4
|
|
|
413.2
|
|
||
Accounts receivable, net
|
254.4
|
|
|
212.4
|
|
||
Prepaid expenses and other current assets
|
88.1
|
|
|
72.6
|
|
||
Total current assets
|
1,307.1
|
|
|
1,074.0
|
|
||
Property and equipment, net
|
92.6
|
|
|
62.9
|
|
||
Long-term investments
|
631.1
|
|
|
538.8
|
|
||
Goodwill
|
163.5
|
|
|
163.5
|
|
||
Intangible assets, net
|
48.7
|
|
|
52.7
|
|
||
Other assets
|
73.6
|
|
|
73.3
|
|
||
Total assets
|
$
|
2,316.6
|
|
|
$
|
1,965.2
|
|
Liabilities, temporary equity, and stockholders’ equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
32.5
|
|
|
$
|
13.2
|
|
Accrued compensation
|
71.2
|
|
|
79.8
|
|
||
Accrued and other liabilities
|
44.0
|
|
|
28.2
|
|
||
Deferred revenue
|
541.2
|
|
|
423.9
|
|
||
Convertible senior notes, net
|
497.5
|
|
|
487.1
|
|
||
Total current liabilities
|
1,186.4
|
|
|
1,032.2
|
|
||
Long-term deferred revenue
|
387.6
|
|
|
289.8
|
|
||
Other long-term liabilities
|
72.3
|
|
|
67.4
|
|
||
Temporary equity
|
77.5
|
|
|
87.9
|
|
||
Stockholders’ equity:
|
|
|
|
||||
Preferred stock
|
—
|
|
|
—
|
|
||
Common stock and additional paid-in capital
|
1,195.4
|
|
|
988.7
|
|
||
Accumulated other comprehensive loss
|
(0.7
|
)
|
|
(0.1
|
)
|
||
Accumulated deficit
|
(601.9
|
)
|
|
(500.7
|
)
|
||
Total stockholders’ equity
|
592.8
|
|
|
487.9
|
|
||
Total liabilities, temporary equity, and stockholders’ equity
|
$
|
2,316.6
|
|
|
$
|
1,965.2
|
|
Palo Alto Networks, Inc.
|
|||||||
Preliminary Condensed Consolidated Statements of Cash Flows
|
|||||||
(In millions)
|
|||||||
(Unaudited)
|
|||||||
|
|
|
|
||||
|
Six Months Ended January 31,
|
||||||
|
2016
|
|
2015
|
||||
Cash flows from operating activities
|
|
|
|
||||
Net loss
|
$
|
(101.2
|
)
|
|
$
|
(73.1
|
)
|
Adjustments to reconcile net loss to net cash provided by operating activities:
|
|
|
|
||||
Share-based compensation for equity based awards
|
174.8
|
|
|
95.3
|
|
||
Depreciation and amortization
|
19.5
|
|
|
12.9
|
|
||
Amortization of investment premiums, net of accretion of purchase discounts
|
1.6
|
|
|
1.5
|
|
||
Amortization of debt discount and debt issuance costs
|
11.5
|
|
|
11.0
|
|
||
Excess tax benefit from share-based compensation arrangements
|
(0.5
|
)
|
|
(1.3
|
)
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable, net
|
(42.0
|
)
|
|
0.3
|
|
||
Prepaid expenses and other assets
|
(8.3
|
)
|
|
(32.4
|
)
|
||
Accounts payable
|
13.6
|
|
|
(1.9
|
)
|
||
Accrued compensation
|
(8.6
|
)
|
|
4.4
|
|
||
Accrued and other liabilities
|
25.0
|
|
|
21.8
|
|
||
Deferred revenue
|
215.1
|
|
|
113.3
|
|
||
Net cash provided by operating activities
|
300.5
|
|
|
151.8
|
|
||
Cash flows from investing activities
|
|
|
|
||||
Purchases of investments
|
(610.2
|
)
|
|
(587.2
|
)
|
||
Proceeds from sales of investments
|
134.4
|
|
|
2.0
|
|
||
Proceeds from maturities of investments
|
228.0
|
|
|
109.9
|
|
||
Purchases of property, equipment, and other assets
|
(36.9
|
)
|
|
(12.1
|
)
|
||
Net cash used in investing activities
|
(284.7
|
)
|
|
(487.4
|
)
|
||
Cash flows from financing activities
|
|
|
|
||||
Proceeds from sales of shares through employee equity incentive plans
|
21.1
|
|
|
23.5
|
|
||
Excess tax benefit from share-based compensation arrangements
|
0.5
|
|
|
1.3
|
|
||
Net cash provided by financing activities
|
21.6
|
|
|
24.8
|
|
||
Net increase (decrease) in cash and cash equivalents
|
37.4
|
|
|
(310.8
|
)
|
||
Cash and cash equivalents - beginning of period
|
375.8
|
|
|
653.8
|
|
||
Cash and cash equivalents - end of period
|
$
|
413.2
|
|
|
$
|
343.0
|
|
•
|
“Frank Calderoni is a recognized authority on financial planning and strategy, and his expertise will be a welcome addition to our board of directors. His counsel will help us as we rapidly take market share and establish ourselves as a market leader.”
|
-
|
Mark McLaughlin, chairman, president and CEO, Palo Alto Networks
|
•
|
“Palo Alto Networks has experienced unprecedented growth in the cybersecurity industry and now stands as a top company in the enterprise security market. I am honored to be joining the board of directors, and I look forward to contributing to the team.”
|
-
|
Frank Calderoni, board member, Palo Alto Networks
|