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Palo Alto Networks (PANW)
:PANW
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Palo Alto Networks
(NASDAQ:PANW)
74Outperform
Positive Factors
Customer Expansion
Palo Alto Networks saw impressive growth in customers with significant NGS ARR.
Platform Strategy
The company's platform strategy is progressing well, with reiterated FY26/27 FCF margin targets and a reasonable valuation, leading to a constructive outlook.
Product Revenue Growth
Palo Alto Networks posted strong momentum in new solutions like SASE, XSIAM, and software firewalls, contributing to ARR outperformance and robust product revenue growth.
Negative Factors
Macroeconomic Conditions
Poor macroeconomic conditions could impact the capacity for enterprise IT investments and the health of supporting ecosystem partners.
Service Line Performance
The stock experienced a decline due to softer performance in the services line.
Stock Performance
Despite raising FY25 revenue and operating margin guidance at the low end, the stock saw a ~4% drop after hours, which is viewed as misplaced due to product/service reclassification dynamics.
Palo Alto Networks (PANW) vs. S&P 500 (SPY)
Market Cap
$128.65B
Dividend YieldN/A
Average Volume (3M)5.26M
Price to Earnings (P/E)109.9
Beta (1Y)1.31
Revenue Growth13.86%
EPS Growth-46.44%
CountryUS
Employees15,758
SectorTechnology
Sector Strength77
IndustrySoftware - Infrastructure
Share Statistics
EPS (TTM)0.80
Shares Outstanding662,100,000
10 Day Avg. Volume4,330,775
30 Day Avg. Volume5,255,549
Financial Highlights & Ratios
PEG Ratio-1.79
Price to Book (P/B)19.46
Price to Sales (P/S)0.00
P/FCF Ratio41.86
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$216.50Price Target Upside11.32% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering24
Palo Alto Networks Business Overview & Revenue Model
Company DescriptionPalo Alto Networks, Inc. is a global cybersecurity leader, specializing in providing comprehensive security solutions for enterprises, service providers, and government entities. Headquartered in Santa Clara, California, the company offers a wide range of products and services, including advanced firewalls, cloud-based security solutions, endpoint protection, and threat intelligence. Palo Alto Networks is renowned for its innovative approach to cybersecurity, leveraging artificial intelligence and machine learning to deliver robust protection against cyber threats across networks, endpoints, and the cloud.
How the Company Makes MoneyPalo Alto Networks generates revenue primarily through the sale of its cybersecurity products and services. The company's revenue model is based on a combination of product sales, subscription services, and support and maintenance contracts. Product sales include advanced firewall systems and other hardware components. Subscription services, which are a significant and growing part of the company's revenue, encompass cloud-based security offerings, threat intelligence updates, and software licenses. Support and maintenance contracts provide ongoing technical assistance and updates for hardware and software products. Additionally, Palo Alto Networks has strategic partnerships with cloud service providers and cybersecurity technology firms, which further contribute to its earnings by expanding its product offerings and market reach.
Palo Alto Networks Key Performance Indicators (KPIs)
Any
Billings
Measures the total value of invoices sent to customers in a period, providing a forward-looking indicator of revenue growth and sales momentum.
Measures the total value of invoices sent to customers in a period, providing a forward-looking indicator of revenue growth and sales momentum.
Data provided by:
Main Street Data
Main Street DataPalo Alto Networks Financial Statement Overview
Summary
Palo Alto Networks showcases strong revenue growth and efficient cost management, with a robust cash generation capability. The company maintains a low leverage and solid return on equity, enhancing its financial stability. While there are minor concerns regarding increased liabilities and a dip in net income, the overall financial trajectory remains positive.Income Statement
Palo Alto Networks has shown strong revenue growth, with a significant increase in Total Revenue from $8.03 billion in 2024 to $8.57 billion in TTM (Trailing-Twelve-Months). The Gross Profit Margin is robust at 73.9%, indicating efficient cost management. The Net Profit Margin is healthy at 14.6%, and both EBIT and EBITDA margins have improved compared to the previous year, reflecting enhanced operational efficiency. However, the decrease in Net Income from 2024 is a concern, which slightly offsets the overall positive performance.85
Very Positive
Balance Sheet
The company maintains a solid financial position with a Debt-to-Equity Ratio of 0.14, indicating low leverage. The Return on Equity (ROE) is a strong 19.7%, showcasing efficient utilization of equity to generate profits. The Equity Ratio stands at 30.4%, reflecting a stable capital structure. While the overall balance sheet is strong, the slight increase in total liabilities requires monitoring to ensure financial stability.80
Positive
Cash Flow
Operating Cash Flow is robust at $3.11 billion, demonstrating strong cash generation capability. The Free Cash Flow to Net Income Ratio is particularly impressive, highlighting effective cash management strategies. The Free Cash Flow Growth Rate is consistent, further reinforcing the company's ability to support growth and investment activities through internally generated funds. The cash flow statement presents a very positive picture, with minimal concerns.88
Very Positive
| Breakdown | |||||
| TTM | Sep 2024 | Sep 2023 | Sep 2022 | Sep 2021 | Sep 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 8.57B | 8.03B | 6.89B | 5.50B | 4.26B | 3.41B | Gross Profit |
| 6.33B | 5.97B | 4.98B | 3.78B | 2.98B | 2.41B | EBIT |
| 945.70M | 683.90M | 387.30M | -188.80M | -304.10M | -179.00M | EBITDA |
| 1.52B | 1.28B | 387.30M | 95.60M | -46.60M | 364.80M | Net Income Common Stockholders |
| 1.25B | 2.58B | 439.70M | -267.00M | -498.90M | -267.00M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 3.39B | 2.58B | 2.39B | 3.63B | 2.90B | 3.75B | Total Assets |
| 20.37B | 19.99B | 14.50B | 12.25B | 10.24B | 9.07B | Total Debt |
| 1.03B | 1.41B | 2.27B | 3.95B | 3.54B | 3.42B | Net Debt |
| -1.26B | -124.90M | 1.14B | 1.83B | 1.67B | 462.70M | Total Liabilities |
| 14.46B | 14.82B | 12.75B | 12.04B | 9.48B | 7.96B | Stockholders Equity |
| 5.91B | 5.17B | 1.75B | 210.00M | 763.60M | 1.10B |
| Cash Flow | Free Cash Flow | ||||
| 2.98B | 3.10B | 2.63B | 1.79B | 1.39B | 821.30M | Operating Cash Flow |
| 3.11B | 3.26B | 2.78B | 1.98B | 1.50B | 1.04B | Investing Cash Flow |
| -980.00M | -1.51B | -2.03B | -933.40M | -1.48B | 288.00M | Financing Cash Flow |
| -1.68B | -1.34B | -1.73B | -806.60M | -1.10B | 673.00M |
Palo Alto Networks Technical Analysis
Positive
194.48
Price Trends
178.86
Positive
182.52
Positive
181.84
Positive
Market Momentum
4.94
Negative
65.39
Neutral
86.45
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PANW, the sentiment is Positive. The current price of 194.48 is above the 20-day moving average (MA) of 187.20, above the 50-day MA of 178.86, and above the 200-day MA of 181.84, indicating a bullish trend. The MACD of 4.94 indicates Negative momentum. The RSI at 65.39 is Neutral, neither overbought nor oversold. The STOCH value of 86.45 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for PANW.
Palo Alto Networks Risk Analysis
Palo Alto Networks disclosed 47 risk factors in its most recent earnings report. Palo Alto Networks reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Palo Alto Networks Peers Comparison
Overall Rating
UnderperformOutperform
Sector (60)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
82 Outperform | $23.72B | 29.17 | 30.92% | ― | 6.40% | 6.49% | |
80 Outperform | $80.18B | 43.12 | 205.91% | ― | 13.83% | 58.13% | |
76 Outperform | $110.68B | 721.64 | -0.69% | ― | 29.39% | -119.62% | |
74 Outperform | $128.65B | 109.87 | 21.16% | ― | 13.86% | -46.44% | |
74 Outperform | $39.08B | ― | -1.21% | ― | 27.77% | 89.39% | |
72 Outperform | $54.60B | ― | -7.35% | ― | 27.79% | 56.19% | |
60 Neutral | $11.59B | 10.34 | -7.15% | 2.94% | 7.49% | -10.88% |
* Technology Sector Average
Performance Comparison
PANW
Palo Alto Networks
194.48
38.65
24.80%
CHKP
Check Point
220.92
69.34
45.74%
FTNT
Fortinet
104.79
43.48
70.92%
ZS
Zscaler
251.95
74.97
42.36%
CRWD
CrowdStrike Holdings
442.25
92.93
26.60%
NET
Cloudflare
157.42
83.04
111.64%
Palo Alto Networks Earnings Call Summary
Earnings Call Date:May 20, 2025
(Q3-2025)
| % Change Since: 0.00%|
Next Earnings Date:Aug 25, 2025
Earnings Call Sentiment Positive
The earnings call primarily highlighted significant growth in ARR, especially in next-generation security and AI-driven innovations, despite some geopolitical uncertainties and challenges with contract durations.Q3-2025 Updates
Positive Updates
Record-Breaking ARR in Next-Generation Security
Palo Alto Networks crossed $5 billion in next-generation security ARR, a growth of 34% year-over-year.
Strong Momentum with XSIAM
XSIAM ARR grew over 200% year-over-year in Q3. It is noted as the fastest-growing product in the company's history with an ARR per customer of over $1 million.
Significant Growth in SASE
SASE ARR grew 36% year-over-year, more than twice the market rate, with approximately 6,000 SASE customers.
Platformization Strategy Success
Achieved over 90 net new platformization deals in Q3, with the number of customers with multiple platformizations growing nearly 70% year-over-year.
AI-Driven Innovations
Introduction of Prisma AIRS and acquisition of Protect.ai to strengthen AI security offerings; strong pipeline and early customer interest indicated.
Robust Financial Performance
Total revenue of $2.29 billion, a 15% increase, with product revenue growing 16% and services revenue 15%.
Negative Updates
Geopolitical and Market Uncertainties
April was marked by geopolitical tensions and tariff discussions that caused temporary market uncertainty.
Challenges with Contract Durations
Slight decrease in contract duration both year-over-year and quarter-over-quarter, indicating potential challenges in securing longer commitments.
Company Guidance
During the Palo Alto Networks fiscal third quarter 2025 earnings call, the company reported significant growth and set ambitious targets. They achieved a next-generation security ARR milestone of $5 billion, marking a 34% increase year-over-year, and they aim for a $15 billion ARR target by FY '30. Their Q3 revenue reached $2.29 billion, growing 15% from the previous year, and they maintained a strong gross margin of 76%. The product revenue saw a 16% increase, while total services revenue grew by 15%. The company's remaining performance obligation grew 19% to $13.5 billion. Looking ahead, they project Q4 revenue between $2.49 billion and $2.51 billion and non-GAAP EPS of $0.87 to $0.89. Their strategic focus on AI-driven solutions, platformization, and integration across their product offerings underpins their confidence in sustainable growth and industry leadership.Palo Alto Networks Corporate Events
Executive/Board ChangesBusiness Operations and Strategy
Palo Alto Networks Expands Board with Notable Appointments
Positive
Feb 13, 2025
On February 12, 2025, Palo Alto Networks appointed Helle Thorning-Schmidt, former Prime Minister of Denmark, and Ralph Hamers, former CEO of UBS Group AG and ING Group, to its Board of Directors as Class II directors. With these appointments, the board expands from nine to eleven members, reflecting the company’s strategic effort to enhance its global reach and secure its position as a cybersecurity leader. Both appointees bring extensive experience in political and business landscapes, expected to influence the company’s strategic direction and strengthen its industry position.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.