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

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.

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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.