Palo Alto Networks Takes to the Roadshow With One IPO Worry Mitigated

The buzz from The Wall Street Journal is that Palo Alto Networks and Kayak Software will begin their roadshows next week. So offerings will likely follow before the end of the month.

With ServiceNow reopening the window to venture-funded enterprise IPOs, Palo Alto Networks should have a successful debut, right? There have been some lingering questions.

One worry is a continuing patent infringement lawsuit from network competitor Juniper Networks. Another the company appears to have partly doused with an updated S-1 last month, something that hasn’t been widely reported.

Here are the details:

Palo Alto Networks makes next generation firewalls that provide greater visibility into network traffic and more detailed traffic filtering by application. With sales growing rapidly, it has raised $64.4 million from VCs including Sequoia Capital, Greylock Partners and Globespan Capital Partners.

However in its initial May S-1 filed with the Securities and Exchange Commission, the Santa Clara, Calif., company posted lower revenue for its second fiscal quarter ended January 2012. Sales fell 0.8% from the first fiscal quarter to $56.7 million after increasing 42% in the first quarter. The decline came with the explanation that a burst of first quarter sales to resellers serving the U.S. government market did not recur in the second quarter.

Some critics seized on the news to throw cold water on the planned offering.

In a June filing, Palo Alto Networks appears to warm the temperature a bit. The company reported that third quarter sales for the three months ended in April rebounded to $65.7 million, for a 16% increase. Not quite 42%, but better than a decline.

It will be interesting to see how public market investors react.

Photo courtesy of Shutterstock.

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