Free cash flow (non-GAAP)
$ 92,077 $ 62,803 $ 19,102Net cash used in investing activities $ (151,565 ) $ (14,565 ) $ (13,000 )Net cash provided by financing activities $ 25,018 $ 219,322 $ 2,580Financial Overview Revenue We derive revenue from sales of our products and services. As discussed further in "-Critical Accounting Policies and Estimates-Revenue Recognition" below, revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable, and collectability is reasonably assured.
Our total revenue is comprised of the following:
• Product Revenue. The substantial majority of our product revenue is
derived from sales of our appliances. Product revenue also includes
revenue derived from software licenses of Panorama, Virtual Systems
Upgrades, and the VM-Series. We recognize product revenue at the time of
shipment, provided that all other revenue recognition criteria have been
met. As a percentage of total revenue, we expect our product revenue to
vary from quarter to quarter based on seasonal and cyclical factors.
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• Services Revenue. Services revenue is derived primarily from Threat
Prevention, URL Filtering, GlobalProtect, and WildFire subscriptions and
support and maintenance. Our subscriptions are priced as a percentage of
the appliance's list price. Our contractual subscription and support and
maintenance terms are typically one to five years. We recognize revenue
from subscriptions and support and maintenance over the contractual
service period. As a percentage of total revenue, we expect our services
revenue to remain at consistent levels or increase over the long term as
we introduce new subscriptions, renew existing services contracts, and expand our end-customer base.
Cost of Revenue
Our total cost of revenue consists of cost of product revenue and cost of services revenue. Our cost of revenue includes personnel costs, which consist of salaries, bonuses, and share-based compensation associated with our operations and global customer support organizations. Our cost of revenue also includes allocated costs, which consist of certain facilities, depreciation, benefits, recruiting, and information technology costs that we allocate based on headcount.
• Cost of Product Revenue. Cost of product revenue primarily includes
costs paid to our third-party contract manufacturer. Our cost of product
revenue also includes product testing costs, allocated costs, warranty
costs, shipping costs, and personnel costs associated with logistics and
quality control. We expect our cost of product revenue to increase as our product revenue increases.
• Cost of Services Revenue. Cost of services revenue includes personnel
costs for our global customer support organization, allocated costs, and