Palo Alto Networks announces second quarter earnings

Palo Alto Networks released financial results for its fiscal second quarter 2018. The fiscal second quarter 2018 grew 28% year-over-year to $542.4 million, compared with total revenue of $422.6 million for the fiscal second quarter 2017.

Palo Alto attributed its increase in revenue to more demand for security as businesses continue to reshape their networks through virtualization. The company also noted it extended capabilities to its platform to provide customers managing multi-cloud environments with security. The company said this includes extended protections to the Google Cloud Platform as well as enhanced capabilities for AWS and Azure environments.

For the fiscal third quarter 2018, the company expects total revenue in the range of $538 to $548 million, representing year-over-year growth between 25 and 27%. For the fiscal year 2018, the company said it expects total revenue in the range of $2.19 to $2.220 billion, representing year-over-year growth between 24 and 26%.

“We delivered a strong fiscal second quarter with total revenue growing 28 percent year over year to $542.4 million as we saw robust new customer acquisition and expansion in existing accounts,” said Mark McLaughlin, chief executive officer of Palo Alto Networks. “Digital transformation requires security transformation built upon increasing automation, leverage, and consistency, the hallmarks of our Next-Generation Security Platform. We continue to harness the power of innovation to introduce new technology and disrupt traditional consumption models as we help customers solve their most complex security challenges and embrace the benefits of the digital age.”

Non-GAAP net income for the fiscal second quarter 2018 was $91.5 million, or 97 cents per diluted share, in comparison with non-GAAP net income of $59.6 million, or 63 cents per diluted share, for the fiscal second quarter 2017, reports the company. In its fiscal second quarter 2018, the company changed its non-GAAP effective tax rate from 31 to 22% due to the reduction of the U.S. federal corporate income tax rate under the Tax Cuts and Jobs Act. The company said the change in tax rate resulted in a benefit to fiscal second quarter 2018 non-GAAP net income and non-GAAP earnings per diluted share of $10.6 million and 11 cents, respectively.

“The team executed well in our fiscal second quarter, and we were once again able to outgrow the security market and the competition at scale, while driving leverage in our operating model,” said Kathy Bonanno, chief financial officer of Palo Alto Networks. “We delivered record revenue and deferred revenue; increased operating margins both sequentially and year over year; and generated $243.7 million in cash flow from operations and $218.1 million in free cash flow. We ended the quarter with approximately $2.4 billion in cash, cash equivalents and investments.”

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