Palo Alto Networks reports financial results for its fiscal second-quarter 2021

Palo Alto Networks announced financial results for its fiscal second quarter 2021, ended January 31, 2021.

Total revenue for the fiscal second quarter 2021 grew 25% year over year to $1.0 billion, compared with total revenue of $816.7 million for the fiscal second quarter 2020. GAAP net loss for the fiscal second quarter 2021 was $142.3 million, or $1.48 per diluted share, compared with GAAP net loss of $73.7 million, or $0.75 per diluted share, for the fiscal second quarter 2020.

Non-GAAP net income for the fiscal second quarter 2021 was $154.2 million, or $1.55 per diluted share, compared with non-GAAP net income of $120.3 million, or $1.19 per diluted share, for the fiscal second quarter 2020. A reconciliation between GAAP and non-GAAP information is contained in the tables below.

“The momentum in the business continues to be strong, with second quarter revenue growth of 25% year over year to over 1 billion USD, driven by strong execution across the board,” said Nikesh Arora, chairman and CEO of Palo Alto Networks. “Events like the SolarStorm attack highlight the importance of cybersecurity, and Palo Alto Networks is well positioned to protect our customers with best-of-breed solutions. We are excited about the bets that we have made in SASE, Cloud, and AI. Our three-platform strategy is paying off.”

Financial Outlook

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

For the fiscal third quarter 2021, the company expects:

• Total billings in the range of $1.22 billion to $1.24 billion, representing year-over-year growth of between 20% and 22%.
• Total revenue in the range of $1.05 billion to $1.06 billion, representing year-over-year growth of between 21% and 22%.
• Diluted non-GAAP net income per share in the range of $1.27 to $1.29, which incorporates net expenses related to the proposed acquisition of Bridgecrew, using 100 million to 102 million shares.

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

• Total billings in the range of $5.13 billion to $5.18 billion, representing year-over-year growth of between 19% and 20%.
• Total revenue in the range of $4.15 billion to $4.20 billion, representing year-over-year growth of between 22% and 23%.
• Diluted non-GAAP net income per share in the range of $5.80 to $5.90, which incorporates net expenses related to the proposed acquisition of Bridgecrew, using 99 million to 101 million shares.
• Adjusted free cash flow margin of approximately 29%, which includes net expenses and acquisition transaction costs attributable to the proposed acquisition of Bridgecrew.

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.