Palo Alto : Q1 FY2021 Supplemental Financial Information

Non-GAAP Financial Measures and Other Key Metrics

This supplemental financial information contains financial statements that have not been prepared in accordance with generally accepted accounting principles in the United States ("GAAP"). We use these non-GAAP financial measures and key metrics internally in analyzing our financial results and believe that the disclosure of these non-GAAP financial measures and key metrics will be useful to investors as an additional tool to evaluate our ongoing operating results and trends and in comparing our financial results with other companies in our industry, many of which present similar non- GAAP financial measures or key metrics.

Non-GAAP financial measures and key metrics are not meant to be considered in isolation or as a substitute for comparable GAAP financial measures, and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP. A reconciliation of our non-GAAP financial measures and key metrics to the most directly comparable GAAP measures has been provided in the financial statement tables included in this supplemental financial information, and investors are encouraged to review these reconciliations. We have not provided a reconciliation of forward-lookingnon-GAAP measures to the corresponding GAAP measures as they are not available without unreasonable effort.

1

Palo Alto Networks, Inc.

Condensed Consolidated Statements of Operations - Fiscal Quarters (In millions, except percentages)

		Q219		Q319		Q419		Q120		Q220		Q320		Q420		Q121
Revenue:
Product	$	271.6	$	278.4	$	305.7	$	231.2	$	246.5	$	280.9	$	305.6	$	237.3
Subscription and support		439.6		448.2		500.1		540.7		570.2		588.5		644.8		708.7
Total revenue		711.2		726.6		805.8		771.9		816.7		869.4		950.4		946.0
Cost of revenue:
Product		82.5		78.0		82.2		65.1		68.7		73.3		87.3		62.2
Subscription and support		120.1		126.9		135.2		152.6		164.4		185.0		203.1		215.6
Total cost of revenue		202.6		204.9		217.4		217.7		233.1		258.3		290.4		277.8
Total gross profit		508.6		521.7		588.4		554.2		583.6		611.1		660.0		668.2
Product gross margin		69.6 %		72.0 %		73.1 %		71.8 %		72.1 %		73.9 %		71.4 %		73.8 %
Subscription and support gross margin		72.7 %		71.7 %		73.0 %		71.8 %		71.2 %		68.6 %		68.5 %		69.6 %
Total gross margin		71.5 %		71.8 %		73.0 %		71.8 %		71.5 %		70.3 %		69.4 %		70.6 %
Operating expenses:
Research and development		128.3		139.1		158.7		170.5		185.4		196.3		215.9		237.4
Sales and marketing		320.0		339.0		370.4		365.7		374.9		388.4		391.2		388.6
General and administrative		53.7		62.3		69.2		69.8		76.2		82.9		70.7		86.7
Total operating expenses		502.0		540.4		598.3		606.0		636.5		667.6		677.8		712.7
Operating income (loss)		6.6		(18.7)		(9.9)		(51.8)		(52.9)		(56.5)		(17.8)		(44.5)
Interest expense		(20.6)		(20.6)		(20.0)		(18.9)		(19.0)		(19.4)		(31.4)		(40.2)
Other income, net		16.0		18.2		16.2		16.2		10.8		8.1		0.8		2.4
Income (loss) before income taxes		2.0		(21.1)		(13.7)		(54.5)		(61.1)		(67.8)		(48.4)		(82.3)
Provision for (benefit from) income taxes		4.6		(0.9)		7.1		5.1		12.6		7.0		10.5		9.9
Net loss	$	(2.6)	$	(20.2)	$	(20.8)	$	(59.6)	$	(73.7)	$	(74.8)	$	(58.9)	$	(92.2)

2

Palo Alto Networks, Inc.

Non-GAAP Condensed Consolidated Statements of Operations - Fiscal Quarters (In millions, except percentages)

	Q219	Q319	Q419	Q120	Q220	Q320	Q420	Q121
Revenue:
Product	$ 271.6	$ 278.4	$ 305.7	$ 231.2	$ 246.5	$ 280.9	$ 305.6	$ 237.3
Subscription and support	439.6	448.2	500.1	540.7	570.2	588.5	644.8	708.7
Total revenue	711.2	726.6	805.8	771.9	816.7	869.4	950.4	946.0
Cost of revenue:
Product	77.8	73.6	79.8	63.7	67.2	70.0	83.9	58.9
Subscription and support	91.1	96.8	101.5	117.0	125.8	145.7	160.0	170.3
Total cost of revenue	168.9	170.4	181.3	180.7	193.0	215.7	243.9	229.2
Total gross profit	542.3	556.2	624.5	591.2	623.7	653.7	706.5	716.8
Product gross margin	71.4 %	73.6 %	73.9 %	72.4 %	72.7 %	75.1 %	72.5 %	75.2 %
Subscription and support gross margin	79.3 %	78.4 %	79.7 %	78.4 %	77.9 %	75.2 %	75.2 %	76.0 %
Total gross margin	76.3 %	76.5 %	77.5 %	76.6 %	76.4 %	75.2 %	74.3 %	75.8 %
Operating expenses:
Research and development	82.4	92.4	100.6	107.5	116.0	127.0	137.4	141.1
Sales and marketing	253.8	277.7	314.7	319.4	314.7	329.0	326.9	318.9
General and administrative	31.3	34.3	35.1	42.3	47.2	54.8	53.8	51.4
Total operating expenses	367.5	404.4	450.4	469.2	477.9	510.8	518.1	511.4
Operating income	174.8	151.8	174.1	122.0	145.8	142.9	188.4	205.4
Interest expense	(3.5)	(3.4)	(3.5)	(3.4)	(3.3)	(3.6)	(4.5)	(5.1)
Other income, net	17.0	18.7	17.7	15.7	11.8	7.5	2.0	2.3
Income before income taxes	188.3	167.1	188.3	134.3	154.3	146.8	185.9	202.6
Provision for income taxes	41.3	37.0	41.4	29.5	34.0	32.2	41.0	44.5
Net income	$ 147.0	$ 130.1	$ 146.9	$ 104.8	$ 120.3	$ 114.6	$ 144.9	$ 158.1

3

Palo Alto Networks, Inc.

GAAP to Non-GAAP Reconciliations and Calculation of Other Key Metrics - Fiscal Quarters (In millions, except percentages and per share amounts)

GAAP to Non-GAAP Reconciliations

GAAP product gross profit

Share-basedcompensation-related charges Litigation-related charges(1)

Non-GAAPproduct gross profit Non-GAAP product gross margin

GAAP subscription and support gross profit Share-basedcompensation-related charges Amortization expense of acquired intangible assets

Non-GAAP subscription and support gross profit Non-GAAPsubscription and support gross margin

GAAP total gross profit

Share-basedcompensation-related charges Amortization expense of acquired intangible assets Litigation-related charges(1)

Non-GAAPtotal gross profit Non-GAAP gross margin

GAAP research and development expense Share-basedcompensation-related charges

Non-GAAP research and development expense

Non-GAAP research and development expense as a percentage of revenue

GAAP sales and marketing expense Share-basedcompensation-related charges Amortization expense of acquired intangible assets

Non-GAAP sales and marketing expense

Non-GAAP sales and marketing expense as a percentage of revenue

	Q219		Q319		Q419		Q120		Q220		Q320		Q420		Q121
$	189.1	$	200.4	$	223.5	$	166.1	$	177.8	$	207.6	$	218.3	$	175.1
	1.7		1.3		1.4		1.4		1.5		1.5		1.6		1.5
	3.0		3.1		1.0		-		-		1.8		1.8		1.8
$	193.8	$	204.8	$	225.9	$	167.5	$	179.3	$	210.9	$	221.7	$	178.4
	71.4 %		73.6 %		73.9 %		72.4 %		72.7 %		75.1 %		72.5 %		75.2 %
$	319.5	$	321.3	$	364.9	$	388.1	$	405.8	$	403.5	$	441.7	$	493.1
	19.9		19.4		20.2		20.4		22.5		21.9		23.1		25.1
	9.1		10.7		13.5		15.2		16.1		17.4		20.0		20.2
$	348.5	$	351.4	$	398.6	$	423.7	$	444.4	$	442.8	$	484.8	$	538.4
	79.3 %		78.4 %		79.7 %		78.4 %		77.9 %		75.2 %		75.2 %		76.0 %
$	508.6	$	521.7	$	588.4	$	554.2	$	583.6	$	611.1	$	660.0	$	668.2
	21.6		20.7		21.6		21.8		24.0		23.4		24.7		26.6
	9.1		10.7		13.5		15.2		16.1		17.4		20.0		20.2
	3.0		3.1		1.0		-		-		1.8		1.8		1.8
$	542.3	$	556.2	$	624.5	$	591.2	$	623.7	$	653.7	$	706.5	$	716.8
	76.3 %		76.5 %		77.5 %		76.6 %		76.4 %		75.2 %		74.3 %		75.8 %
$	128.3	$	139.1	$	158.7	$	170.5	$	185.4	$	196.3	$	215.9	$	237.4
	45.9		46.7		58.1		63.0		69.4		69.3		78.5		96.3
$	82.4	$	92.4	$	100.6	$	107.5	$	116.0	$	127.0	$	137.4	$	141.1
	11.6 %		12.7 %		12.5 %		13.9 %		14.2 %		14.6 %		14.5 %		14.9 %
$	320.0	$	339.0	$	370.4	$	365.7	$	374.9	$	388.4	$	391.2	$	388.6
	61.2		57.4		54.2		44.8		58.5		57.6		61.6		66.4
	5.0		3.9		1.5		1.5		1.7		1.8		2.7		3.3
$	253.8	$	277.7	$	314.7	$	319.4	$	314.7	$	329.0	$	326.9	$	318.9
	35.7 %		38.2 %		39.0 %		41.4 %		38.5 %		37.9 %		34.3 %		33.8 %

GAAP general and administrative expense Share-basedcompensation-related charges Acquisition-related costs(2)

(Gain) loss related to facility exit(3) Non-GAAP general and administrative expense

Non-GAAP general and administrative expense as a percentage of revenue

$	53.7	$	62.3	$	69.2	$	69.8	$	76.2	$	82.9	$	70.7	$	86.7
	20.8		21.0		21.4		24.1		25.1		23.2		16.5		22.2
	1.6		2.9		9.8		3.4		7.0		4.9		0.4		13.1
	-		4.1		2.9		-		(3.1)		-		-		-
$	31.3	$	34.3	$	35.1	$	42.3	$	47.2	$	54.8	$	53.8	$	51.4
	4.4 %		4.7 %		4.4 %		5.5 %		5.8 %		6.3 %		5.7 %		5.4 %

1. Consists of the amortization of intellectual property licenses and covenant not to sue.
2. Consists of acquisition transaction costs, share-based compensation related to the cash settlement of certain equity awards, and costs to terminate certain employment, operating lease, and other contracts of the acquired companies.
3. Consists of charges related to the relocation of our corporate headquarters (cease-use losses of $4.1 million in Q3'19 and $2.9 million in Q4'19) and a gain of $3.1 million related to the early termination of our previous headquarters leases in Q2'20.

4

Palo Alto Networks, Inc.

GAAP to Non-GAAP Reconciliations and Calculation of Other Key Metrics - Fiscal Quarters (In millions, except percentages and per share amounts)

		Q219		Q319		Q419		Q120		Q220		Q320		Q420		Q121
GAAP total operating expense	$	502.0	$	540.4	$	598.3	$	606.0	$	636.5	$	667.6	$	677.8	$	712.7
Share-basedcompensation-related charges		127.9		125.1		133.7		131.9		153.0		150.1		156.6		184.9
Acquisition-related costs(2)		1.6		2.9		9.8		3.4		7.0		4.9		0.4		13.1
Amortization expense of acquired intangible assets		5.0		3.9		1.5		1.5		1.7		1.8		2.7		3.3
(Gain) loss related to facility exit(3)		-		4.1		2.9		-		(3.1)		-		-		-
Non-GAAP total operating expense	$	367.5	$	404.4	$	450.4	$	469.2	$	477.9	$	510.8	$	518.1	$	511.4
Non-GAAP total operating expense as a percentage
	51.7 %		55.6 %		55.9 %		60.8 %		58.5 %		58.8 %		54.5 %		54.1 %
of revenue
GAAP operating income (loss)	$	6.6	$	(18.7)	$	(9.9)	$	(51.8)	$	(52.9)	$	(56.5)	$	(17.8)	$	(44.5)
Share-basedcompensation-related charges		149.5		145.8		155.3		153.7		177.0		173.5		181.3		211.5
Acquisition-related costs(2)		1.6		2.9		9.8		3.4		7.0		4.9		0.4		13.1
Amortization expense of acquired intangible assets		14.1		14.6		15.0		16.7		17.8		19.2		22.7		23.5
Litigation-related charges(1)		3.0		3.1		1.0		-		-		1.8		1.8		1.8
(Gain) loss related to facility exit(3)		-		4.1		2.9		-		(3.1)		-		-		-
Non-GAAP operating income	$	174.8	$	151.8	$	174.1	$	122.0	$	145.8	$	142.9	$	188.4	$	205.4
Non-GAAP operating margin
	24.6 %		20.9 %		21.6 %		15.8 %		17.9 %		16.4 %		19.8 %		21.7 %
GAAP interest expense	$	(20.6)	$	(20.6)	$	(20.0)	$	(18.9)	$	(19.0)	$	(19.4)	$	(31.4)	$	(40.2)
Non-cash charges related to convertible notes(4)		17.1		17.2		16.5		15.5		15.7		15.8		26.9		35.1
Non-GAAP interest expense	$	(3.5)	$	(3.4)	$	(3.5)	$	(3.4)	$	(3.3)	$	(3.6)	$	(4.5)	$	(5.1)
Non-GAAP interest expense as a percentage of
	(0.5)%		(0.5)%		(0.4)%		(0.4)%		(0.4)%		(0.4)%		(0.5)%		(0.5)%
revenue
GAAP other income, net	$	16.0	$	18.2	$	16.2	$	16.2	$	10.8	$	8.1	$	0.8	$	2.4
Non-cash charges related to convertible notes(4)		0.4		-		-		-		-		-		-		-
Foreign currency (gain) loss associated with non-		0.6		0.5		1.5		(0.5)		1.0		(0.6)		1.2		(0.1)
GAAP adjustments
Non-GAAP other income, net	$	17.0	$	18.7	$	17.7	$	15.7	$	11.8	$	7.5	$	2.0	$	2.3
Non-GAAP other income, net as a percentage of
	2.4 %		2.6 %		2.2 %		2.0 %		1.4 %		0.9 %		0.2 %		0.2 %
revenue
GAAP income (loss) before income taxes	$	2.0	$	(21.1)	$	(13.7)	$	(54.5)	$	(61.1)	$	(67.8)	$	(48.4)	$	(82.3)
Share-basedcompensation-related charges		149.5		145.8		155.3		153.7		177.0		173.5		181.3		211.5
Acquisition-related costs(2)		1.6		2.9		9.8		3.4		7.0		4.9		0.4		13.1
Amortization expense of acquired intangible assets		14.1		14.6		15.0		16.7		17.8		19.2		22.7		23.5
Litigation-related charges(1)		3.0		3.1		1.0		-		-		1.8		1.8		1.8
(Gain) loss related to facility exit(3)		-		4.1		2.9		-		(3.1)		-		-		-
Non-cash charges related to convertible notes(4)		17.5		17.2		16.5		15.5		15.7		15.8		26.9		35.1
Foreign currency (gain) loss associated with non-		0.6		0.5		1.5		(0.5)		1.0		(0.6)		1.2		(0.1)
GAAP adjustments
Non-GAAP income before income taxes	$	188.3	$	167.1	$	188.3	$	134.3	$	154.3	$	146.8	$	185.9	$	202.6

1. Consists of the amortization of intellectual property licenses and covenant not to sue.
2. Consists of acquisition transaction costs, share-based compensation related to the cash settlement of certain equity awards, and costs to terminate certain employment, operating lease, and other contracts of the acquired companies.
3. Consists of charges related to the relocation of our corporate headquarters (cease-use losses of $4.1 million in Q3'19 and $2.9 million in Q4'19) and a gain of $3.1 million related to the early termination of our previous headquarters leases in Q2'20.
4. Consists primarily of non-cash interest expense related to our convertible senior notes. Also includes non-cash losses of $0.4 million in Q2'19 related to early conversion of our convertible notes.

5

Palo Alto Networks, Inc.

GAAP to Non-GAAP Reconciliations and Calculation of Other Key Metrics - Fiscal Quarters (In millions, except percentages and per share amounts)

		Q219		Q319		Q419		Q120		Q220		Q320		Q420		Q121
GAAP provision for (benefit from) income taxes	$	4.6	$	(0.9)	$	7.1	$	5.1	$	12.6	$	7.0	$	10.5	$	9.9
Income tax and other tax adjustments related to		36.7		37.9		34.3		24.4		21.4		25.2		30.5		34.6
the above
Non-GAAP provision for income taxes	$	41.3	$	37.0	$	41.4	$	29.5	$	34.0	$	32.2	$	41.0	$	44.5
Non-GAAP effective tax rate
	22.0 %		22.0 %		22.0 %		22.0 %		22.0 %		22.0 %		22.0 %		22.0 %
GAAP net loss	$	(2.6)	$	(20.2)	$	(20.8)	$	(59.6)	$	(73.7)	$	(74.8)	$	(58.9)	$	(92.2)
Share-basedcompensation-related charges		149.5		145.8		155.3		153.7		177.0		173.5		181.3		211.5
Acquisition-related costs(2)		1.6		2.9		9.8		3.4		7.0		4.9		0.4		13.1
Amortization expense of acquired intangible assets		14.1		14.6		15.0		16.7		17.8		19.2		22.7		23.5
Litigation-related charges(1)		3.0		3.1		1.0		-		-		1.8		1.8		1.8
(Gain) loss related to facility exit(3)		-		4.1		2.9		-		(3.1)		-		-		-
Non-cash charges related to convertible notes(4)		17.5		17.2		16.5		15.5		15.7		15.8		26.9		35.1
Foreign currency (gain) loss associated with non-		0.6		0.5		1.5		(0.5)		1.0		(0.6)		1.2		(0.1)
GAAP adjustments
Income tax and other tax adjustments related to		(36.7)		(37.9)		(34.3)		(24.4)		(21.4)		(25.2)		(30.5)		(34.6)
the above
Non-GAAP net income	$	147.0	$	130.1	$	146.9	$	104.8	$	120.3	$	114.6	$	144.9	$	158.1
GAAP net loss per share, diluted	$	(0.03)	$	(0.21)	$	(0.22)	$	(0.62)	$	(0.75)	$	(0.77)	$	(0.61)	$	(0.97)
Share-basedcompensation-related charges		1.53		1.48		1.56		1.56		1.77		1.78		1.86		2.17
Acquisition-related costs(2)		0.02		0.03		0.10		0.04		0.07		0.05		0.00		0.14
Amortization expense of acquired intangible assets		0.15		0.15		0.16		0.17		0.18		0.20		0.24		0.25
Litigation-related charges(1)		0.03		0.03		0.01		0.00		0.00		0.02		0.02		0.02
(Gain) loss related to facility exit(3)		0.00		0.04		0.03		0.00		(0.03)		0.00		0.00		0.00
Non-cash charges related to convertible notes(4)		0.19		0.18		0.17		0.16		0.16		0.16		0.28		0.37
Foreign currency (gain) loss associated with non-		0.01		0.01		0.02		(0.01)		0.01		(0.01)		0.01		0.00
GAAP adjustments
Income tax and other tax adjustments related to		(0.39)		(0.40)		(0.36)		(0.25)		(0.22)		(0.26)		(0.32)		(0.36)
the above
Non-GAAP net income per share, diluted	$	1.51	$	1.31	$	1.47	$	1.05	$	1.19	$	1.17	$	1.48	$	1.62
GAAP weighted-average shares used to compute
	94.0		94.4		95.8		96.6		98.3		96.7		96.0		95.5
net loss per share, diluted
Weighted-average effect of potentially dilutive
securities(5)		3.6		5.2		4.2		3.5		2.8		1.1		2.2		2.2
Non-GAAPweighted-average shares used to		97.6		99.6		100.0		100.1		101.1		97.8		98.2		97.7
compute net income per share, diluted

1. Consists of the amortization of intellectual property licenses and covenant not to sue.
2. Consists of acquisition transaction costs, share-based compensation related to the cash settlement of certain equity awards, and costs to terminate certain employment, operating lease, and other contracts of the acquired companies.
3. Consists of charges related to the relocation of our corporate headquarters (cease-use losses of $4.1 million in Q3'19 and $2.9 million in Q4'19) and a gain of $3.1 million related to the early termination of our previous headquarters leases in Q2'20.
4. Consists primarily of non-cash interest expense related to our convertible senior notes. Also includes non-cash losses of $0.4 million in Q2'19 related to early conversion of our convertible notes.
5. Our potentially dilutive securities include the potentially dilutive effect of employee equity incentive plan awards and our convertible senior notes outstanding and related warrant agreements, partially offset by the anti-dilutive impact of our note hedge agreements.

6

Palo Alto Networks, Inc.

GAAP to Non-GAAP Reconciliations and Calculation of Other Key Metrics - Fiscal Quarters (In millions, except percentages and per share amounts)

		Q219		Q319		Q419		Q120		Q220		Q320		Q420		Q121
Net cash provided by operating activities	$	275.4	$	296.4	$	231.5	$	225.2	$	306.9	$	169.9	$	333.7	$	534.9
Less: purchases of property, equipment, and other		23.5		20.3		53.1		47.2		49.1		86.3		31.8		29.6
assets
Free cash flow (non-GAAP)	$	251.9	$	276.1	$	178.4	$	178.0	$	257.8	$	83.6	$	301.9	$	505.3
Add: capital expenditures for new headquarters(1)		0.7		0.7		26.8		22.7		17.8		53.8		-		-
Add: repayments of convertible senior notes		14.8		-		30.5		-		-		-		-		-
attributable to debt discount
Add: litigation-related payment(2)		-		-		-		-		-		50.0		-		-
Less: cash payment related to landlord lease		(4.0)		(3.0)		(2.9)		(2.0)		-		-		-		-
amendment(3)
Adjusted free cash flow (non-GAAP)	$	271.4	$	279.8	$	238.6	$	202.7	$	275.6	$	187.4	$	301.9	$	505.3
Net cash provided by (used in) investing activities	$	(523.8)	$	(140.3)	$	(448.7)	$	244.5	$	436.4	$	274.7	$	(667.6)	$	(886.2)
Net cash provided by (used in) financing activities	$	(407.8)	$	31.8	$	(136.1)	$	(167.1)	$	(6.1)	$	(959.3)	$	1,805.5	$	(464.5)
Free cash flow margin (non-GAAP)
	35.4 %		38.0 %		22.1 %		23.1 %		31.6 %		9.6 %		31.8 %		53.4 %
Adjusted free cash flow margin (non-GAAP)
	38.2 %		38.5 %		29.6 %		26.3 %		33.7 %		21.6 %		31.8 %		53.4 %
Other Key Metrics - Calculation of Billings
Total revenue	$	711.2	$	726.6	$	805.8	$	771.9	$	816.7	$	869.4	$	950.4	$	946.0
Add: change in total deferred revenue, net of		141.3		95.3		251.1		125.5		182.2		146.0		439.6		136.8
acquired deferred revenue
Total billings	$	852.5	$	821.9	$	1,056.9	$	897.4	$	998.9	$	1,015.4	$	1,390.0	$	1,082.8

1. Consists of capital expenditures for new headquarters including a land purchase of $51.7 million in Q3'20.
2. Consists of a one-time payment in Q3'20 related to covenant not to sue.
3. During Q1'18, we received an upfront cash reimbursement of $38.2 million from our landlords in connection with the exercise of their option to amend the lease payment schedules and eliminate the rent holiday periods under certain of our lease agreements. The upfront cash reimbursement was applied against increased rental payments totaling $38.2 million due in FY'18 through Q1'20 under the amended lease agreements. Adjusted free cash flow for the periods presented reflects adjustments for these increased rental payments made during the respective periods.

7

Palo Alto Networks, Inc.

Condensed Consolidated Balance Sheets - Fiscal Quarters (In millions)

Assets Current assets:

Cash and cash equivalents Short-term investments Accounts receivable, net

Prepaid expenses and other current assets Total current assets

Property and equipment, net Operating lease right-of-use assets Long-term investments Goodwill

Intangible assets, net Other assets

Total assets

Liabilities, temporary equity, and stockholders' equity

Current liabilities:

Accounts payable

Accrued compensation

Accrued and other liabilities

Deferred revenue

Convertible senior notes, net

Total current liabilities

Convertible senior notes, net Long-term deferred revenue Long-term operating lease liabilities Other long-term liabilities

Temporary equity

Stockholders' equity: Preferred stock

Common stock and additional paid-in capital

Accumulated other comprehensive income (loss)

Accumulated deficit Total stockholders' equity

Total liabilities, temporary equity, and stockholders' equity

	Q219		Q319		Q419		Q120		Q220		Q320		Q420		Q121
$	1,127.8	$	1,314.9	$	961.4	$	1,263.7	$	2,000.0	$	1,484.7	$	2,958.0	$	2,142.0
	1,702.2		1,733.2		1,841.7		1,597.5		1,133.9		554.1		789.8		1,075.6
	415.0		407.5		582.4		499.2		540.3		668.8		1,037.1		675.5
	242.5		261.9		279.3		289.4		304.0		306.4		344.3		407.8
	3,487.5		3,717.5		3,664.8		3,649.8		3,978.2		3,014.0		5,129.2		4,300.9
	273.2		275.0		296.0		316.4		311.4		357.2		348.1		337.9
	-		-		-		282.6		270.0		263.8		258.7		251.2
	808.6		669.9		575.4		467.6		317.9		151.2		554.4		873.2
	636.4		1,027.3		1,352.3		1,400.4		1,511.7		1,812.9		1,812.9		1,968.6
	171.8		234.2		280.6		284.1		290.0		380.6		358.2		388.8
	330.0		337.9		423.1		423.9		504.9		522.1		603.9		605.9
$	5,707.5	$	6,261.8	$	6,592.2	$	6,824.8	$	7,184.1	$	6,501.8	$	9,065.4	$	8,726.5

$	27.9	$	68.6	$	73.3	$	74.7	$	55.4	$	52.3	$	63.6	$	48.5
	143.4		144.0		235.5		125.7		175.2		174.9		322.2		188.4
	171.4		178.5		162.4		192.3		251.2		253.9		256.8		260.7
	1,369.2		1,449.6		1,582.1		1,658.9		1,757.7		1,854.6		2,049.1		2,137.5
	156.3		158.1		-		-		-		-		-		-
	1,868.2		1,998.8		2,053.3		2,051.6		2,239.5		2,335.7		2,691.7		2,635.1
	1,399.5		1,414.7		1,430.0		1,445.5		1,461.2		1,477.0		3,084.1		3,119.2
	1,156.5		1,182.6		1,306.6		1,357.1		1,440.8		1,516.0		1,761.1		1,809.3
	-		-		-		371.6		353.5		344.6		336.6		323.9
	208.7		211.1		216.0		82.6		80.6		83.8		90.1		92.0
	2.8		1.1		-		-		-		-		-		-
	-		-		-		-		-		-		-		-
	1,941.5		2,340.8		2,490.9		2,477.5		2,644.5		1,855.7		2,259.2		2,003.9
	(9.8)		(7.2)		(3.7)		(0.6)		(1.8)		(2.0)		10.5		3.2
	(859.9)		(880.1)		(900.9)		(960.5)		(1,034.2)		(1,109.0)		(1,167.9)		(1,260.1)
	1,071.8		1,453.5		1,586.3		1,516.4		1,608.5		744.7		1,101.8		747.0
$	5,707.5	$	6,261.8	$	6,592.2	$	6,824.8	$	7,184.1	$	6,501.8	$	9,065.4	$	8,726.5

8

Palo Alto Networks, Inc.

Condensed Consolidated Statements of Cash Flows - Fiscal Quarters (In millions)

		Q219		Q319		Q419		Q120	Q220	Q320		Q420		Q121
Cash flows from operating activities
Net loss	$	(2.6)	$	(20.2)	$	(20.8)	$	(59.6)	$ (73.7)	$ (74.8)	$	(58.9)	$	(92.2)
Adjustments to reconcile net loss to net cash provided by operating
activities:
Share-based compensation for equity-based awards		142.4		138.2		150.2		149.9	168.5	165.8		174.2		205.8
Depreciation and amortization		38.8		40.3		42.2		44.0	48.4	53.2		60.5		58.0
(Gain) loss related to facility exit		-		4.1		2.9		-	(3.1)	-		-		-
Amortization of deferred contract costs		46.8		57.2		76.2		55.6	55.3	60.5		83.0		65.8
Amortization of debt discount and debt issuance costs		17.1		17.1		16.6		15.5	15.7	15.8		26.9		35.1
Amortization of operating lease right-of-use assets		-		-		-		10.4	10.7	13.1		13.2		10.0
Amortization of investment premiums, net of accretion of purchase		(5.3)		(5.3)		(4.5)		(3.2)	(1.4)	(1.6)		-		2.7
discounts
Loss on conversions of convertible senior notes		0.4		-		-		-	-	-		-		-
Repayments of convertible senior notes attributable to debt discount		(14.8)		-		(30.5)		-	-	-		-		-
Changes in operating assets and liabilities, net of effects of
acquisitions:
Accounts receivable, net		(32.7)		9.9		(172.5)		83.9	(40.8)	(110.3)		(368.4)		382.3
Prepaid expenses and other assets		(65.5)		(73.8)		(168.1)		(59.2)	(82.3)	(66.5)		(201.0)		(96.9)
Accounts payable		(10.4)		34.4		9.1		(2.5)	(14.8)	(5.5)		10.0		(17.7)
Accrued compensation		44.0		(1.7)		89.5		(109.9)	48.8	(10.5)		147.3		(134.8)
Accrued and other liabilities		(24.1)		0.9		(9.9)		(25.2)	(6.6)	(15.3)		7.3		(20.0)
Deferred revenue		141.3		95.3		251.1		125.5	182.2	146.0		439.6		136.8
Net cash provided by operating activities		275.4		296.4		231.5		225.2	306.9	169.9		333.7		534.9
Cash flows from investing activities
Purchases of investments	(1,290.9)		(394.7)		(558.0)		(274.3)	(9.0)	(12.2)		(885.3)		(829.7)
Proceeds from sales of investments		1.0		-		3.0		-	1.1	309.7		3.2		-
Proceeds from maturities of investments		789.7		502.6		550.3		632.4	622.7	451.3		246.3		198.2
Business acquisitions, net of cash acquired		(0.1)		(227.9)		(390.9)		(66.4)	(129.3)	(387.8)		-		(225.1)
Purchases of property, equipment, and other assets		(23.5)		(20.3)		(53.1)		(47.2)	(49.1)	(86.3)		(31.8)		(29.6)
Net cash provided by (used in) investing activities		(523.8)		(140.3)		(448.7)		244.5	436.4	274.7		(667.6)		(886.2)
Cash flows from financing activities
Repayments of convertible senior notes attributable to principal and		(73.5)		-		(128.9)		-	-	-		-		-
equity component
Payments for debt issuance costs		(0.1)		-		-		-	-	-		-		(0.2)
Proceeds from borrowings on convertible senior notes, net		-		-		-		-	-	-		1,979.1		-
Proceeds from issuance of warrants		-		-		-		-	-	-		202.8		-
Purchase of note hedges		-		-		-		-	-	-		(370.8)		-
Repurchases of common stock		(330.0)		-		-		(198.1)	-	(1,000.0)		-		(500.0)
Proceeds from sales of shares through employee equity incentive plans		2.9		36.7		1.4		36.3	0.6	46.8		0.3		45.4
Payments for taxes related to net share settlement of equity awards		(7.1)		(3.6)		(8.6)		(5.3)	(6.7)	(4.8)		(5.9)		(9.7)
Payment of deferred consideration related to prior year business		-		(1.3)		-		-	-	(1.3)		-		-
acquisition
Net cash provided by (used in) financing activities		(407.8)		31.8		(136.1)		(167.1)	(6.1)	(959.3)		1,805.5		(464.5)
Net increase (decrease) in cash, cash equivalents, and restricted cash		(656.2)		187.9		(353.3)		302.6	737.2	(514.7)		1,471.6		(815.8)
Cash, cash equivalents, and restricted cash - beginning of period		1,786.6		1,130.4		1,318.3		965.0	1,267.6	2,004.8		1,490.1		2,961.7
Cash, cash equivalents, and restricted cash - end of period	$1,130.4	$	1,318.3	$	965.0	$	1,267.6	$2,004.8	$1,490.1	$	2,961.7	$	2,145.9
Reconciliation of cash, cash equivalents, and restricted cash to the
condensed consolidated balance sheets
Cash and cash equivalents	$1,127.8	$	1,314.9	$	961.4	$	1,263.7	$2,000.0	$1,484.7	$	2,958.0	$	2,142.0
Restricted cash included in prepaid expenses and other current assets		1.3		2.2		1.9		1.9	2.5	2.7		2.8		2.9
Restricted cash included in other assets		1.3		1.2		1.7		2.0	2.3	2.7		0.9		1.0
Total cash, cash equivalents, and restricted cash	$1,130.4	$	1,318.3	$	965.0	$	1,267.6	$2,004.8	$1,490.1	$	2,961.7	$	2,145.9

9