Palo Alto Networks (NYSE: PANW) announced fiscal first-quarter 2018 results on Monday after the market closed, showing strong customer growth and momentum for its next-generation security platform. If that wasn't enough, the cybersecurity specialist also boosted its full-year outlook.
Shares were rising before the market opened on Tuesday. Let's dig deeper to see what drove Palo Alto's business as it kicked off its new fiscal year.
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Palo Alto Networks results: The raw numbers
What happened with Palo Alto Networks this quarter?
- On an adjusted (non-GAAP) basis, which excludes expenses like stock-based compensation, Palo Alto's net income was $69.8 million, or $0.74 per share, up from $51.2 million, or $0.55 per share in the year-ago period.
- Both the top and bottom lines were well above Palo Alto's latest guidance, which called for revenue of $482 million to $492 million, and adjusted earnings per share of $0.67 to $0.69.
- Product revenue increased 13.9% to $186.5 million -- above guidance for $170 million to $173 million -- while subscription and support revenue grew 36.2% to $319 million.
- Billings grew 15.4% to $596.5 million -- near the high end of guidance -- and deferred revenue increased 37% to $1.9 billion.
- The company added over 2,500 new customers, bringing the total to more than 45,000.
- Cash flow from operations grew 34.7% to $274.1 million, and free cash flow increased 32.5% to $241.9 million.
- The company released Traps version 4.1 advanced endpoint protection, with new features to prevent malware and kernel exploit attacks.
- The company expanded the Aperature SaaS cloud access security broker (CASB) product to provide application protection for Amazon Elastic Compute Cloud, AWS Identity and Access Management, and Amazon Simple Storage Service.
- The company partnered with Telefónica Business Solutions to launch the Clean Pipes 2.0 security platform for the business-to-business market.
- In September, it opened a new state-of-the-art headquarters in Santa Clara, California.
What management had to say
"We continue to drive disruptive evolutions in a large and growing market by delivering highly automated and orchestrated security capabilities that increase prevention rates and simplify consumption models," said Palo Alto Networks CEO Marck McLaughlin.
"Execution of our 'land and expand' go-to-market model resulted in strong first quarter performance with very strong new customer acquisition and broad adoption of our Next-Generation Security Platform," added CFO Steffan Tomlinson. "Once again, we grew significantly faster than the market and our competition while delivering record deferred revenue, increasing year-over-year GAAP and non-GAAP operating margins, and generating robust cash flow."
For the current quarter, Palo Alto Networks expects revenue to increase 23% to 25%, or to a range of $518 million to $528 million, assuming 10% to 11% growth in product revenue. Billings during the quarter should rise 14% to 17%, to a range of $640 million to $655 million. And adjusted earnings per share should arrive at $0.78 to $0.80.
As such, for the full fiscal-year 2018, Palo Alto Networks increased its guidance to call for revenue of $2.145 billion to $2.185 billion, good for year-over-year growth of 22% to 24%. That assumes product revenue of $755 million to $770 million. Billings for the full year are now expected to rise between 16% and 18%. Finally, fiscal 2018 earnings per share should be $3.35 to $3.41, an increase from Palo Alto Networks' old guidance for EPS of $3.24 to $3.34.
All things considered, this was another straightforward beat-and-raise scenario from Palo Alto Networks as the world continues to realize the benefits of superior protection provided by its next-gen security platform.
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