Palo Alto Networks, Inc. Ends Its Fiscal Year on a High Note

Palo Alto Networks (NYSE: PANW) announced better-than-expected fiscal fourth-quarter 2018 results on Thursday after the market closed, showcasing narrowing GAAP losses and its role as a key beneficiary of the business world's early transition to cloud-based infrastructures.

With shares of the cybersecurity leader hitting a new all-time high in after-hours trading, let's take a closer look at how Palo Alto Networks finished its fiscal year, as well as what investors should be watching from here.

Palo Alto Networks results: The raw numbers


Fiscal Q4 2018*

Fiscal Q4 2017

Year-Over-Year Change


$658.1 million

$509.1 million


GAAP net income (loss)

($2.3 million)

($38.2 million)


GAAP earnings (loss) per share




What happened with Palo Alto Networks this quarter?

  • The top line was above the high end of Palo Alto Networks' guidance provided in June, which called for revenue in the range of $625 million to $635 million.
  • Adjusted for items like acquisition costs and stock-based compensation, Palo Alto Networks' (non-GAAP) net income was $125 million, or $1.28 per share, well above consensus estimates for $1.17, and up from $0.92 per share in the same year-ago period.
  • Product revenue increased 26% to $267.6 million, also above guidance for between 16% and 17% growth.
  • Subscription and support revenue climbed 31.6% to $390.5 million.
  • Billings jumped 29.4% to $868.1 million, above guidance for a range of $815 million to $830 million.
  • Deferred revenue rose 33% to $2.4 billion.
  • Generated cash flow from operations of $277.9 million, and free cash flow of $252.5 million.

What management had to say

Palo Alto Networks CEO Nikesh Arora stated:

Chief financial officer Kathy Bonanno added that revenue growth was "solid across all regions," including greater than 40% growth in both the EMEA and APAC geographies.

Looking forward

For the current first quarter of fiscal 2019, Palo Alto Networks told investors to expect revenue of $625 million to $635 million, good for roughly 26% growth at the midpoint. That should translate to fiscal Q1 earnings per share of $1.04 to $1.06. By comparison -- and though we don't usually pay close attention to Wall Street's demands -- most analysts watching the stock were predicting earnings near the low end of Palo Alto's guidance range on revenue closer to $619 million.

In the end, this was as strong a quarter as Palo Alto Networks investors could have hoped for. The company is continuing to take market share despite steep competition in its fast-changing niche, and its outlook indicates more of the same strength going forward. As such, I think the market is right to bid Palo Alto Networks stock to fresh highs in response.

10 stocks we like better than Palo Alto NetworksWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Palo Alto Networks wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of August 6, 2018

Steve Symington has no position in any of the stocks mentioned. The Motley Fool recommends Palo Alto Networks. The Motley Fool has a disclosure policy.