On Friday, Palo Alto Networks, the network security firm that has made its mark developing next generation firewalls, filed an S-1 registration statement with the Securities and Exchange Commission for a widely-anticipated initial public offering. According the filing, the company plans to sell as much as $175 million in stock in an offering likely to net the company slightly less after fees and expenses.
With more than 600 employees and growing, Santa Clara, California-based Palo Alto Networks so far has had 100% of its design and manufacturing take place on United States soil, and has been selling its next generation firewalls since August 2008. The company now claims more than 6,650 end-customers in more than 80 countries.
To date the company has raised approximately $64 Million, with the most recent round taking place in 2008. In August 2011 the company announced that it had achieved a bookings run above the US$200 million mark that it had previously stated as a target.
According to the filing, fiscal 2009, 2010, and 2011 revenues for the company were $13.4 million, $48.8 million, and $118.6 million, respectively, representing year-over-year growth of 265% for fiscal 2010 and 143% for fiscal 2011. Net losses came in at $19.0 million, $21.1 million, and $12.5 million, respectively.
For the six-month periods ended January 31, 2011 and 2012, revenues were $47.2 million and $113.8 million, respectively, representing year-over-year growth of 141%. For the six month period ended January 31, 2011, the company recorded a net loss of $3.8 million, and for the six month period ended January 31, 2012, it recorded net income of $4.5 million. For the six-month period ended January 31, 2011 and 2012, the company generated $9.6 million and $47.7 million, respectively, of cash flow provided by operating activities, and generated positive cash flow provided by operating activities for each of our last seven fiscal quarters.
The company in the midst of what could turn into a drawn-out legal battle with rival Juniper Networks. In December 2011, Juniper Networks filed a lawsuit against Palo Alto Networks that alleges Palo Alto Networks’ appliances infringe six of its patents. The company plans to defend the lawsuit vigorously. “Given the early stage in the litigation, we are unable to predict the likelihood of success of Juniper’s infringement claims,” the S-1 filing notes.
Interestingly, Palo Alto Networks founders Nir Zuk and Yuming Mao are the named inventors of the patents being asserted against the company, as both Mao and Zuk were employed by NetScreen Technologies which was acquired by Juniper in April 2004. Zuk left Juniper and founded Palo Alto Networks in 2005 and was joined by Mao in 2006.
Morgan Stanley, Goldman Sachs and Citigroup will act as lead joint book-running managers for the offering, with Credit Suisse, Barclays, UBS, and Raymond James acting as book-running managers for the offering.
The company said the number of shares to be sold and the price range for the proposed offering have not yet been determined.