Moving on to operating expenses. We see similar benefits from being a platform company across our major functional areas. At the top of this list is the sales productivity improvements already discussed. It’s important to reinforce my point around the platform benefits in R&D. We choose to redeploy those resources to ensure we are leaning into innovation instead of driving overall financial leverage in R&D. Our fiscal year ’23 focus on accelerated efficiency did yield benefits in terms of leverage and OpEx, and we expect to continue many of these initiatives. One to highlight is the consolidation of sales specialists. Similar to customer support, we also have generative AI initiatives to both improve outcomes across sales and marketing and our G&A functions that we expect will contribute to efficiency in fiscal year ’24 and beyond.
Translating this to operating margins, while some may see a 500 basis point improvement in one year as a milestone achievement from our 2021 Analyst Day, we simply see – this as a new beginning as we see many opportunities to drive this higher. We look for non-GAAP operating margins in the range of 28% to 29% in fiscal year ’26, with a long-term opportunity for those to be in the low to mid-30s as we further scale our platforms, and gain confidence in the power of AI, and other business transformations. We’re also committed to growing non-GAAP EPS on a compounded rate greater than 20% from fiscal year ’23 to ’26. Moving on to cash flow. We call that in fiscal year ’21, we guided to 33% free cash flow margins. In front of that guidance, we spent considerable effort looking at our entire business end-to-end from the point of view of cash flow, and understanding all the drivers.
We have now had two years’ operating in this manner. We’re confident we can sustain our high cash conversion, focusing on areas such as best-in-class working capital management, and low CapEx, business models. Our top line growth and underlying improvement in operating margin form the foundation of our strong cash generation. There are other factors impacting cash flow, that I want to highlight, and that we have already included in our forward-looking guidance. First, with a rising cost of money, we have seen more customers asking for deferred payments over the last three years, but especially in the last 12 months. As we previously talked about. Also, our rising GAAP profitability and some changes in U.S. tax law, we see rising tax – cash taxes.
This has all been included in our forward-looking guidance. I want it to double click on the impact of deferred payments for a moment. We’ve already seen this have a significant effect on our cash flow. In the second half of fiscal year ’20, along with the pandemic, we launched Palo Alto Networks Financial Services, or PANFS, to ease customers’ challenges with short-term cash flow issues. As I mentioned, with a rising cost of money in the last year, we have seen this trend broaden. PANFS and deferred payments allow us to drive success partnering with our customers on long-term transformation of their security architectures while working with their cash flow constraints. The amount of bookings with deferred payments was up 4x in the fourth quarter as compared to three years ago.
This impacted our reported cash flow in the last three years, yet we have maintained our strong cash generation. As we look to the next three years, we expect this impact to continue, and have accounted for this in our medium term targets. A byproduct of – the rise in deferred payments is greater predictability of our cash flow over time. For example, we now expect about a $1 billion in cash flow from deals entered into in prior years, where payments will now come in fiscal year ’24. This $1 billion is twice what it was in contribution to our fiscal year ’23 cash flow when we entered the year. Summarizing cash flow, I’m confident we can maintain a baseline of 37% free cash flow margins over the next three years after accounting for the factors I noted.
This and the revenue growth targets, I covered should keep us on the aspirational path to Rule of 60 economics in our business. This combination of top line and cash generation puts us in a rare peer group, and allows us the flexibility to navigate the changing environment. Finally, I’ll cover the capital structure as the last tenant in TSR. With all the opportunities ahead of us, organic investment in our business to drive growth will remain our number one priority. We have ample cash generation to make these investments. From here, we have three capital allocation priorities. As we’ve done previously, we will continue to balance these. Our first capital allocation priority is our M&A strategy. We have successfully acquired companies that are early leaders in adjacent, and emerging cybersecurity markets.
Many times, these are markets in which, we’ve had an early organic effort, but we see external innovation that can significantly accelerate our time to market. We target companies – that have achieved product market fit, with teams that can accelerate their innovation inside Palo Alto Networks. Revenue is not a focus for us, but we do ensure that we have a solid plan to accelerate, the trajectory of our business. We’ve used $2.5 billion in cash over the last five years, pursuing the strategy successfully. Secondly, we manage a capital structure that gives us flexibility. For example, we use our balance sheet as a competitive advantage with PANFS, and deferred payments. We repaid our 2023 convertible debt in July, and have a have another convert coming due in about two years, which we also plan to settle for cash.
