Boston, MA 05/30/2014 (wallstreetpr) – Palo Alto Networks Inc (NYSE:PANW) reported the third quarter results of 2014 ended April 30, 2014 with high growth over products and services that improved the margin significantly.
High growth in margins
Total revenue during the quarter grew by 49% to $150.7 million from $101.3 million in third quarter 2013 due to strong product demand with increasing customers and recurring subscriptions and healthy growth over support services.
During the quarter, product revenues were up by 38% year over year to $84.1 million, and service revenues were up by 64% year over year to $66.6 million.
Accordingly, cost of revenue also increased and improved the overall gross margin by 2 percentage points to 76.1% (3Q2013: 74.1%). It also increased the operating expenses with increasing R&D and SG&A costs.
As a result, Palo Alto Networks Inc (NYSE:PANW) non-GAAP operating income rose to $13.7 million from $8.6 million and improved the margin to 9.1% (3Q2013: 8.5%).
Subsequent to the increase in operating income, Palo Alto also generated non-GAAP net income of $0.11 per share versus non-GAAP net income of $0.07 per share in 3Q2013.
Positive cash generation
Palo Alto utilized its capabilities to generate positive cash flow from operating activities. During 3Q2014, the Company generated free cash flow of $28.4 million with operating cash flow of $34.3 million (3Q2013: $15.2 million) and capital expenditures of $5.9 million (3Q2013: $6.4 million).
Palo Alto Networks Inc (NYSE:PANW) ended up with net cash of $234.8 million during the period due to higher cash used in the purchase of investment and cash of $75 million used in the acquisition. The negative impact partly offset by cash inflows from the stock options.
Conclusion
Palo Alto Networks Inc (NYSE:PANW) continues to develop and offer new products to expand its growth model in the areas of enterprise security platform that will help to improve its operating margin as well as free cash flow in the future.
