SecProbe.io

May 3 1, 2012

Via E -mail
Mark D. McLaughlin
President and CEO
Palo Alto Networks, Inc.
3300 Olcott Street
Santa Clara, CA  95054

Re: Palo Alto Networks, Inc.
Amendment No. 1 to Registration Statement on Form S -1
Filed on May 10, 2012
File No. 333 -180620

Dear Mr. McLaughlin :

We have reviewed your amended registration statement and have the following
comments.  References to prior comments are to those in our letter dated May 3, 20 12.

Prospectus Summary

Risks Affecting Us, page 5

1. We note your response to prior comment 6.  After the number of shares to be offered has
been determined, please revise the last bullet point in this section to disclose the
aggregate percentage of the company’s common stock held by  directors, executive
officers and principal stockholders.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Results of Operations, page 54

2. We note your response to prior comment 14.  Ple ase revise your disclosures to clarify the
extent to which increases in product and service revenues were attributable to increases in
prices.  Explain your consideration of providing disclosures to discuss the average sales
price of your products and service s.  In addition, tell us your consideration of including
quantitative and qualitative disclosures that discuss the impact of gross margin
distinctions between sales of higher  and lower throughput products  as well as gross
margin distinctions for subscripti ons, which  typically have higher gross margins than
support and maintenance services.  For example, where you discuss services margin
increases being due to higher margin subscription sales in the interim period ended
January 31, 2012 , you then disclose the  service s margin increase in the year ended July
31, 2011 as due to an increase in support and maintenance and subscription sales

Mark  D. McLaughlin
Palo Alto Networks, Inc.
May 3 1, 2012
Page 2

 margins. The quantitative contribution and any material trends between the two service
elements is not clearly disclosed.  We r efer you to Item 303(a)(3) (ii) and (iii) of
Regulation S -K and Section III.B.1 of SEC Release No. 33 -8350.

3. Please revise your disclosures to quantify the increases in product and service revenues
attributable to new end -customers compared with existing en d-customers.   This appears
to be important information necessary to an understanding of your results of operations
and business.  We refer you to Section III.B.3 of SEC Release 33 -8350.

4. We note your response to prior comment 15.  Please r evise to provid e a more detailed
explana tion of the underlying reasons for material changes in revenues by geographic
area.  Explain why your revised disclosures do not include a discussion of the reasons for
the increase in revenues in the EMEA during the six month peri od ended January 31,
2012 compared with the six month period ended January 31, 2011.  In addition, please
revise your disclosures to explain why revenues increased in the APAC during fiscal
2011 compared with fiscal 2010.

5. We note your revised disclosure s in response to prior comment 16.  Please revise your
disclosures to quantify the impact that you expect unrecognized compensation expense to
have on your future results of operations.

6. Please consider removing the duplicate disclosures on page 56 regar ding the increase in
service revenues for the six month  period ended January 31, 2012 compared with the six
month period ended January 31, 2011.

Critical Accounting Policies and Estimates

Revenue Recognition, page 68

7. We note your response to prior comment 19.  Please revise your critical accounting
policy for revenue recognition to describe in greater detail the significant estimates and
assumptions used to determine the estimated selling price for the deliverables in your
multiple element arrangements.  In this respect, you should expand your disclosures to
further explain how you establish BESP primarily based on historical transaction pricing
by product as a percentage of list prices and also consider several other i nternal and
external factors including pricing practices, margin objectives, competition, and the
geographies in which you offer your products and services, and the type of sales channel.
We refer you to Section V of SEC Release No. 33 -8350.

Common Sto ck Valuations, page 70

8. We note your response to prior comment 20 and your disclosures that indicate using the
straight -line methodology provides the most reasonable conclusion for valuations of your
common stock on interim dates between contemporaneous th ird-party valuations.  We
believe this suggests that you have used a straight -line approach as a valuation

Mark  D. McLaughlin
Palo Alto Networks, Inc.
May 3 1, 2012
Page 3

 methodology to determine the fair value of your common stock at the various grant dates.
Please revise your disclosure to clarify that this is a str aight -line calculation and not a
valuation methodology.

9. We note your revised disclosures in response to prior comment 22.  Please revise your
disclosures to further explain how you selected comparable public peer companies in the
information security indu stry.  In this respect, you should more clearly describe how you
considered the business size, market share, growth rates and historical operating results
when selecting comparable companies.  In addition, your disclosures should also explain
any other fac tors that you considered in determining your selection of the closest
comparable companies.

10. Please clarify your use of the market -based approach in determining the enterprise value
of your company.  In  this respect, we note from your  disclosures that the
contemporaneous  third -party valuations are determined based on the income approach  at
each respective valuation date .  In addition, please revise your disclosures to e xplain how
you adjust the revenue multiples for comparable companies based on yo ur assessment of
the strengths and weaknesses of your company relative to the comparable companies.

11. We note your response to prior comment 24.  Please revise your disclosures to  quantify
how changes in the discount rate and non -marketability discount an d weightings between
valuation methods impacted the fair value determination at each respective valuation
date.

Business

Sales and Marketing, page 95

12. We note your response to prior comment 26.  Please disclose in this section that two
channel partners r epresented 29% of your total revenue  in 2011 and briefly discuss any
material  arrangements with these partners.

Executive Compensation

Corporate Performance Measures, page 112

13. We note your response to prior comment 29 regarding the competitive harm that you
believe would result from disclosure of your bookings and adjusted operating income
targets; however, we are unable to concur with your position that disclosure of the goals
for a completed financial period reasonabl y threatens competitive harm.  In this regard, it
is unclear from your response how competitors could pull together sufficiently -specific
information about your future operations, strategy or executive compensation plans from
the disclosure of a prior year ’s performance goals  to cause you competitive harm.  In
your response letter, please address with greater specificity how the disclosure of each of
the performance targets might be expected to affect the particular business decisions of

Mark  D. McLaughlin
Palo Alto Networks, Inc.
May 3 1, 2012
Page 4

 your competitors and, in so doing, would result in substantial competitive harm to the
company.  In the alternative, please revise this section to disclose the bookings and
adjusted operating income targets for your 2011 bonus plan.

Consolidated Financial Statements

Notes to the Consolidated Financial Statements

Note 1.  Description of Business and Summ ary of Significant Accounting Policies

Revenue Recognition, page F -10

14. We note your expanded disclosures in response to prior comment 31.  Please revise your
disclosures to clarify how you determine VSOE for each of the undelivered elements
contained in y our software arrangements.  As part of your response, explain how you
determine the contractual service period over which to recognize the entire arrangement
fee when you are not able to establish VSOE for one or more of the undelivered
elements. We refer you to ASC 985-605-25-6 and 25-66 through 25 -73.

Note 10.  Net Income (Loss) Per Share

Unaudited Pro Forma Net Income (Loss) Per Share, page F -24

15. We note your revised disclosures in response to prior comment 18 that indicate share -
based compensation exp ense was excluded because you would not have recorded a
significant amount of expense related to these awards.  Explain and disclose your
consideration of Rule 11 -02(b)(5) of Regulation S -X.  In this regard, nonrecurring
charges such as these are the basis  for exclusion in the pro forma condensed income
statement and earnings per share amounts.

Note 5 Commitments and Contingencies

Litigation, page F -16

16. We note from your disclosures that you do not expect that the “ultimate ” costs to resolve
legal proceedings, claims and litigation will have a material adverse effect on your
consolidated financial position, results of operations, or cash flows.  Please explain  and
revise your disclosures to clarify your use of the term “ultim ate.”  It appears you are
using the term “ultimate” as a surrogate for the term “reasonably possible”  or “remote.”
We believe your disclosures should conform to the terms within the guidance in ASC
450-20-50.

Mark  D. McLaughlin
Palo Alto Networks, Inc.
May 3 1, 2012
Page 5

You may contact Morgan Youngwood, Staff Ac countant, at (202) 551 -3479 or Craig
Wilson, Senior Assistant Chief Accountant, at (202) 551 -3488 if you have any questions
regarding comments on the financial statements and related matters.  Please address questions
regarding all other comments to Matthe w Crispino, Staff Attorney, at (202) 551 -3456 or, in his
absence, to me at (202) 551 -3730.

        Sincerely,

        /s/ Barbara C. Jacobs

        Barbara C. Jacobs
        Assistant Director

cc: Via E-mail
 Jeffrey D. Saper, Esq.
 Wilson Sonsini Goodrich & Rosati, P.C.