Palo Alto Networks reports fiscal Q3 2021 financial results

Palo Alto Networks announced financial results for its fiscal third quarter 2021. Total revenue for the fiscal third quarter 2021 grew 24% year over year to $1.1 billion, compared with total revenue of $869.4 million for the fiscal third quarter 2020. GAAP net loss for the fiscal third quarter 2021 was $145.1 million, or $1.50 per diluted share, compared with GAAP net loss of $74.8 million, or $0.77 per diluted share, for the fiscal third quarter 2020.

Non-GAAP net income for the fiscal third quarter 2021 was $139.5 million, or $1.38 per diluted share, compared with non-GAAP net income of $114.6 million, or $1.17 per diluted share, for the fiscal third quarter 2020. A reconciliation between GAAP and non-GAAP information is contained in the tables below.

“The work-from-home shift earlier in the year and recent cybersecurity issues have increased the focus on security. Coupled with good execution, this has driven great strength across our business, with Q3 billings growth accelerating to 27% year over year. In particular, we saw a number of customers make large commitments to Palo Alto Networks across our three major platforms,” said Nikesh Arora, chairman and CEO of Palo Alto Networks. “We are pleased to be raising our guidance for fiscal year 2021 as we see these trends continuing into our fiscal fourth quarter, bolstering our confidence in our pipeline.”

Financial Outlook

Palo Alto Networks provides guidance based on current market conditions and expectations.

For the fiscal fourth quarter 2021, the company expects:

• Total billings in the range of $1.695 billion to $1.715 billion, representing year-over-year growth of between 22% and 23%.
• Total revenue in the range of $1.165 billion to $1.175 billion, representing year-over-year growth of between 23% and 24%.
• Diluted non-GAAP net income per share in the range of $1.42 to $1.44, using 101 million to 103 million shares.

For the fiscal year 2021, the company is raising guidance and expects:

• Total billings in the range of $5.28 billion to $5.30 billion, representing year-over-year growth of 23%.
• Total revenue in the range of $4.20 billion to $4.21 billion, representing year-over-year growth between 23% and 24%.
• Diluted non-GAAP net income per share in the range of $5.97 to $5.99, using 99 million to 101 million shares.
• Adjusted free cash flow margin of approximately 30%.

Guidance for non-GAAP financial measures excludes share-based compensation-related charges, including share-based payroll tax expense, acquisition-related costs, amortization expense of acquired intangible assets, litigation-related charges, including legal settlements, gains (losses) related to facility exit, non-cash charges related to convertible notes, foreign currency gains (losses), and income and other tax effects associated with these items, along with certain non-recurring expenses . We have not reconciled diluted non-GAAP net income per share guidance to GAAP net income (loss) per diluted share because we do not provide guidance on GAAP net income (loss) and would not be able to present the various reconciling cash and non-cash items between GAAP net income (loss) and non-GAAP net income, including share-based compensation expense, without unreasonable effort. Share-based compensation expense is impacted by the company’s future hiring and retention needs and, to a lesser extent, the future fair market value of the company’s common stock, all of which is difficult to predict and subject to constant change. The actual amounts of such reconciling items will have a significant impact on the company’s GAAP net income (loss) per diluted share.