This is not your father's firewall. Palo Alto Networks offers enterprise-wide Internet security (including mobile) for the malware-fraught world. Its Next-Generation Firewall product includes hardware and software that identifies network traffic in detail and provides the ability to control access by user. In the past, a company could either allow its employees access to applications like Oracle, Skype, and YouTube or not. But in a world where so many legitimate job tools live online, that's not always practical. Palo Alto Networks designs its products to identify and manage threats rather than simply blocking access. Formed in 2005, the company went public in 2012.
Palo Alto Networks slated its IPO proceeds for general corporate purposes including the purchase of new technology and possible business acquisitions. The company's strategy also includes investments in its direct sales and marketing team, as well as international expansion.
As a technology company, Palo Alto Networks has considerably R&D expenses and expects that to continue. It recognizes revenue from products and from services. Product revenue includes the sale of hardware and software licenses while services revenue includes product subscriptions, support, and maintenance.
Total revenue increased 143% for 2011 on higher volume based on new customers and additional sales to existing customers. Costs increased as well while the company spent on R&D and ramped up personnel across the board. It also incurred a slight increase in income tax costs related to international expansion. Palo Alto was still operating at a loss at the end of 2011 but had reduced its net loss from $21 million to $12.5 million and generated positive cash flow for the first time. The $32 million came partially from deferred revenue. – less