Palo Alto Networks, Inc. · NASDAQ:PANW
Palo Alto Networks — Q1 2023 Earnings Presentation
27 slides from Palo Alto Networks's earnings presentation, Nov 17, 2022
Slide 1: Q1 Fiscal Year 2023 Earnings Call
Q1 Fiscal Year 2023 Earnings Call November 17, 2022
Slide 2: Safe Harbor
Safe Harbor This presentation contains “forward-looking” statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act that are based on our management’s beliefs and assumptions and on information currently available to management, including statements regard
Slide 3: Nikesh Arora, CEO & Chairman
NIKESH ARORA CEO & CHAIRMAN NETWORKS
Slide 4: Strong and balanced results in Q1'23
Strong and balanced results in Q1’23 Total Billings1 Remaining Performance Obligation Balanced $1.75B $8.3B +27% y/y +38% y/y Top Line NGS ARR2 Total Revenue Performance $2.11B $1.56B +67% y/y +25% y/y Operating Income (non-GAAP) EPS (non-GAAP) $322M $0.83 Sharp Focus on +44% y/y +$0.15 vs. Q1 Guida
Slide 5: Continuing to move our customers to more comprehensive deals
Continuing to move our customers to more comprehensive deals Q1’23 deal highlights Strength in Active Millionaire customers1 High 8-figure contract with U.S. Federal Agency Multi-year transaction for Cortex technology with a partner 7-figure deal with US Utility Software firewalls and Prisma Cloud depl
Slide 6: Maintaining our cadence of continuous innovation
Maintaining our cadence of continuous innovation Palo Alto Networks Industry Recognitions Q1’23 Innovation Highlights 17 Zero Trust A Leader in Forrester Zero Trust eXtended Ecosystem 13 Software Composition Total Platform Providers Wave Leadership Recognitions Recognitions Analysis Network Security
Slide 7: Continued above market growth in Network Security leading to share gains
Continued above market growth in Network Security leading to share gains Increasing appliance Increasing VM Large SASE opportunity market share1 market share2 within installed firewall base 35.7% 29.5% Q2 CY’22 Market Share 3.7k Active SASE Q2 CY’22 Market Share Customers3 61.2k Market Share - Q2’CY2
Slide 8: Growing module adoption in Cloud Security continues to drive consumption
Growing module adoption in Cloud Security continues to drive consumption Strong credit growth is a proxy for Strong multi-module customer value customer1 demand 2+ Modules >50% +55% y/y 3+ Modules Prisma® Cloud >33% 4+ Modules Prisma Cloud credits consumed ~20% 1 Customers is based on average custom
Slide 9: Announcing Cider - expanding software supply chain capabilities
Announcing Cider - Following “shift left” success, we are expanding our software supply chain capabilities Cloud Native Application Protection Platform (CNAPP) FUTURE Supply Infrastructure Chain as code Security Posture Infra. Security CD Vulnerability mgmt entitlement Security Scanning Workload Sec
Slide 10: Steady execution continues to drive momentum
Steady execution continues to drive momentum Platform momentum and Encouraging response to innovation XSIAM 150% Strong conversion growth in of design partners $1M+ transactions General availability Cortex® in Q1 XDR XSOAR Managed XSOAR SaaS (beta) Detection and Response SaaS version of Healthy pipe
Slide 11: Focused on high-intensity execution in the shifting macro environment
We are focused on high-intensity execution in the shifting macro environment Security is a Customers targeting vendor customer priority consolidation Competition for talent No spend impact is easing in certain industries 11 | © 2021 Palo Alto Networks, Inc. All rights reserved.
Slide 12: Dipak Golechha, Chief Financial Officer
DIPAK GOLECHHA CHIEF FINANCIAL OFFICER NETWORKS
Slide 13: Revenue ahead of guidance. NGS ARR surpasses $2 billion.
Revenue ahead of guidance. NGS ARR surpasses $2 billion. Total Revenue Next-Gen Security ARR1 Total Revenue Next-Gen Security ARR Total Revenue (y/y) 1 ARR = Annualized Recurring Revenue. Next-Gen Security ARR is the annualized allocated revenue of all active contracts as of the final day of the repo
Slide 14: Billings ahead of guidance. RPO strength.
Billings ahead of guidance. RPO strength. Total Billings1 Remaining Performance Obligation Total Billings Remaining Performance Obligation Total Billings (y/y) Remaining Performance Obligation (y/y) 1 Total billings is a key financial metric calculated as total revenue plus change in total deferred r
Slide 15: Strength across Q1 metrics
Strength across Q1 metrics Q1’23 Q1’23 Guidance (as of 8/22/22) Actual Total Billings1 $1.68B-$1.70B $1.75B 22%-23% yr/yr 27% yr/yr Total Revenue $1.535B-$1.555B $1.56B 23%-25% yr/yr 25% yr/yr Product Revenue $330M 12% yr/yr Remaining Performance Obligation $8.3B 38% yr/yr Next-Gen Security ARR2 $2.
Slide 16: Q2 fiscal 2023 guidance
Q2 fiscal 2023 guidance Q2’23 Total Billings $1.94B - $1.99B 21%-24% yr/yr Total Revenue $1.63B - $1.66B 24%-26% yr/yr EPS (Non-GAAP)1 $0.76 - $0.78 using 320 to 326 million shares 1 A reconciliation of forward-looking non-GAAP earnings per share to the corresponding GAAP measures has not been provid
Slide 17: Fiscal year 2023 guidance
Fiscal year 2023 guidance FY 2023 FY 2023 Guidance as of 8/22/22 Guidance as of 11/17/22 Total Billings1 $8.95B - $9.05B $8.95B - $9.10B +20%-21% yr/yr +20%-22% yr/yr Next-Gen Security ARR2 $2.60B - $2.65B $2.65B - $2.70B +37%-40% yr/yr +40%-43% yr/yr Total Revenue $6.85B - $6.90B $6.85B - $6.91B +2
Slide 18: Modeling points
Modeling points ● Q2’23 and FY’23 non-GAAP effective tax rate: 22% ● Q2’23 net interest and other income of $18M – $20M ● FY23 diluted shares outstanding 325 – 331 million ● Q2’23 capital expenditures of $40M – $45M ● FY’23 capital expenditures of $190M – $200M ● Based on typical seasonality, we exp
Slide 19: @paloalto
@ paloalto
Slide 20: Appendix
@ paloalto
Slide 21: Investor Links and Resources
Investor Links and Resources Analyst Day Videos | Sept 2021 (single click access to each executive’s presentation) Presenter | Video replay link Duration Nikesh Arora, CEO & Chairman | Where We Are & Looking Ahead 18:34 Lee Klarich, Chief Product Officer | Market Needs & Our Platforms 40:42 Anand Osw
Slide 22: Calculation of Billings
Calculation of Billings $ In millions Billings: Q122 Q222 Q322 Q422 Q123 Total revenue $1,247.4 $1,316.9 $1,386.7 $1,550.5 $1,563.4 Add: change in total deferred revenue, net of acquired deferred revenue 134.2 291.0 410.2 1,134.6 185.6 Total billings $1,381.6 $1,607.9 $1,796.9 $2,685.1 $1,749.0 22 |
Slide 23: GAAP to Non-GAAP Reconciliations – Gross Margin
GAAP to Non-GAAP Reconciliations – Gross Margin $ In millions Non-GAAP gross profit and gross margin: Q123 $ % GAAP gross profit and gross margin $1,101.5 70.5% Share-based compensation-related charges 36.8 2.3% Amortization expense of acquired intangible assets 23.3 1.5% Litigation-related charges⁽
Slide 24: GAAP to Non-GAAP Reconciliations – Operating Margin
GAAP to Non-GAAP Reconciliations – Operating Margin $ In millions Non-GAAP operating income and operating margin: Q122 Q123 $ % $ % GAAP operating income (loss) and operating margin ($82.7) -6.6% $15.2 1.0% Share-based compensation-related charges 270.2 21.8% 278.9 17.8% Acquisition-related costs⁽¹⁾
Slide 25: GAAP to Non-GAAP Reconciliations – EPS
GAAP to Non-GAAP Reconciliations – EPS Non-GAAP net income per share, diluted: Q123 GAAP net income per share, diluted $0.06 Share-based compensation-related charges 0.87 Acquisition-related cost⁽¹⁾ 0.00 Amortization expense of acquired intangibles assets 0.08 Litigation-related charges⁽²⁾ 0.01 Rest
Slide 26: GAAP to Non-GAAP Reconciliations – Adjusted Free Cash Flow
GAAP to Non-GAAP Reconciliations – Adjusted Free Cash Flow $ In millions Free cash flow and adjusted free cash flow (non-GAAP): Q123 Net cash provided by operating activities $1,236.7 Less: purchases of property, equipment, and other assets 39.6 Free cash flow (non-GAAP) $1,197.1 Adjusted free cash
Slide 27: Thank you
Thank you paloaltonetworks.com