Prepared Remarks: Karen Fung Good morning, and thank you for joining us on today's conference call to discuss Palo Alto Networks' fiscal first-quarter financial results.
I am Karen Fung, senior director of investor relations. This call is being broadcast live over the web and can be accessed on the investors section of our website at investors.
With me on today's call are Nikesh Arora, our chairman and chief executive officer; Luis Visoso, our chief financial officer; and Lee Klarich, our earnings network product officer. This morning, we issued a press earnings network announcing our results for our fiscal first quarter ended October 31, If you would like a copy of the release, you can access it online on our website.
We would like to remind you that during the course of this conference call, management will make forward-looking statements including statements regarding the impact of COVID on our business, our customers, the enterprise and cybersecurity industry and global economic conditions, our expectations related to financial guidance, operating metrics and modeling points for fiscal second quarter and full year, Expanse's contribution to our fiscal ARR, our expectations regarding the timing of completing our acquisition of Expanse, our competitive position and the demand and opportunity for our products and subscriptions, benefits and timing of new products, features and subscription offerings including those from our proposed acquisition of Expanse as well as other financial and operating trends.
These forward-looking statements involve a number of risks and uncertainties, some of which are beyond our control which could cause actual results to differ materially from those anticipated by these statements. These forward-looking statements apply as of today. You should not rely on them as representing our views in the future, and we undertake no obligation to update these statements after this call.
For a more detailed description of factors that could cause actual results to differ, please refer to our annual report earnings network Form K filed with the SEC on September 4,and on our earnings release posted a few minutes ago on our website and filed with the SEC on Form 8-K.
Also, please note that certain financial measures we use on this call are expressed on a non-GAAP basis and have been adjusted to exclude certain charges. For historical periods, we have provided reconciliations of these non-GAAP financial measures to GAAP financial measures in the supplemental financial information that can be earnings network in the investors section of our website located at investors.
Arista Networks (ANET) Q3 2020 Earnings Call Transcript
And finally, earnings network we have completed our formal remarks, we will be posting them to our investor relations website under the quarterly results section. Please also see the investors section of our website for additional information about conferences we may be participating in.
Prepared Remarks: Operator Welcome to the third-quarter Arista Networks financial results earnings conference call. I will now turn the call over to Mr. Curtis McKee, director of corporate and investor development. Sir, you may begin.
And with that, I will turn the call over to Nikesh. This is my tenth quarterly call at Palo Alto Networks. The one thing in common between the first and the tenth is they were both 5 a.
I finally feel that we're turning the corner on all that we've been doing over the last few years.
PANW earnings call for the period ending September 30, 2020.
We have a lot of interesting stuff in store for you on this call. In addition to sharing our first-quarter results, we will discuss the financial impact of our proposed acquisition of Expanse.
Since Luis joined us last quarter, he and I have had the privilege and opportunity to talk to a lot of you.
And based on the feedback, we've come up with a more transparent approach to understanding our business. And hopefully, it gives you a better understanding of what we have been up to and a way to think about Palo Alto Networks 2. Over the last seven months, I've been cautious on the pandemic, and our teams have continued to deliver and surprised me to the upside.
I'm delighted to report this is no longer a coincidence. Our customers are investing, our teams are executing and our strategy of innovating in our firewall business and focusing on the next generation of products around cloud and Earnings network in the industry is working.
As you can see, we had a great start to fiscal year as we exceeded guidance across all metrics in Q1. Here are some of the highlights.
The EPS expansion was driven by revenue growth earnings network operating expense leverage due to efficiencies as we have seen across earnings network earnings network from lower spend associated with travel and earnings network around Binary options cme. Adjusted free cash flow margin was As mentioned last quarter, we expected a strong cash quarter following the record Q4 billings.
We think some of this will continue into the next quarter, but we expect this to normalize for the year around our full-year guidance. This continued strength during the pandemic makes me cautiously optimistic about the future prospects of the business. While we expect earnings network winter will try all of our collective resolve with COVID, fxopen binary options worst-case scenarios are unlikely to unfold, and we expect our customers to continue to invest in technology.
I also feel that the strategic bets we made a few years ago are right for our customers in the current environment.
Against that backdrop, I feel comfortable raising guidance for the full fiscal year, earnings network before including the contribution of our proposed acquisition of Expanse which we announced last week.
We earnings network expect non-GAAP operating margin adjusted free cash flow expansion up from our prior guidance of flat year over year.
We will absorb Expanse's operating expenses within the framework of our guide. Let me now highlight some of the key innovation launched in Q1 and the very positive customer traction, starting with our Firewall business. We continue to drive innovation within our firewall business.
We recently extended our new enterprise DLP solution to integrate with our complete firewall platform. Our DLP offerings is a cloud-delivered service that is powerful, simple to deploy and protects sensitive data whether a customer keeps the data in the cloud, on-prem or takes a flexible approach. This launch takes our number of potential earnings network subscriptions to eight from four just two years ago.
Our engineering-level partnership with AWS enabled us to launch this new capability earnings network significantly simplifies deployment, improves the scale and performance and reduces the total earnings network of ownership of our VM-Series customers. Going forward, we will continue to provide leading innovation to our customers. One example of this is the upcoming launch of our new 5G-native security offering.
With our unique approach to 5G security, we're the first to introduce 5G network slice security, 5G context-driven security and much more, all in the containerized solution matching the preferred architecture of 5G.
Not only will this allow mobile operators to secure their 5G infrastructure, but it will also enable them to launch value-added security services to their growing enterprise customers who are leveraging 5G for many new use cases. As a result of our efforts to drive innovation, our firewall business continues to industry accolades.
ANET earnings call for the period ending September 30, 2020.
I'm excited to share that Palo Alto Networks was crowned earnings network as a leader in Gartner's Magic Quadrant for network firewalls. This is the ninth consecutive time we are the leader in this Magic Quadrant. Once again, we've achieved the highest and furthest overall position in the Magic Quadrant for our ability to execute on our completeness of vision.
Not only earnings network our strength in next-generation firewall product capability recognized, but our services, like DLP and focus on cloud security, were cited as trends as well. Earnings network Q1, we were also recognized as a leader in the Forrester Wave zero trust extended ecosystem platform provider report, noting that we have assembled earnings network robust portfolio that delivers zero trust everywhere.
On-premise, in the data center and in the cloud. Our software and next-generation firewalls, VM-Series and CN-Series continue to gain momentum as well, and we now have over 10, customers using our software firewalls.