Palo Alto Financials
Financial Health Signals
Based on FY2025 annual data. Scores normalized against common benchmarks. How we calculate these scores
Palo Alto has an operating margin of 13.5%, meaning the company retains $13 of operating profit per $100 of revenue. This strong profitability earns a score of 67/100, reflecting efficient cost management and pricing power. This is up from 8.5% the prior year.
Palo Alto's revenue grew 14.9% year-over-year to $9.2B, a solid pace of expansion. This earns a growth score of 71/100.
Palo Alto has a moderate D/E ratio of 1.72. This balance of debt and equity financing earns a leverage score of 48/100.
Palo Alto's current ratio of 0.99 means current assets barely cover short-term liabilities. This tight liquidity results in a low score of 19/100, which could limit financial flexibility.
Palo Alto converts 37.6% of revenue into free cash flow ($3.5B). This strong cash generation earns a score of 100/100.
Palo Alto's ROE of 13.1% shows moderate profitability relative to equity, earning a score of 52/100. This is down from 43.6% the prior year.
Palo Alto scores 6.17, well above the 2.99 safe threshold. The score is driven primarily by a large market capitalization ($134.9B) relative to total liabilities ($14.9B). This indicates low bankruptcy risk based on profitability, leverage, and asset efficiency.
Palo Alto passes 4 of 9 financial strength tests. 3 of 4 profitability signals pass, 1 of 3 leverage/liquidity signals pass, neither operating efficiency signal passes.
For every $1 of reported earnings, Palo Alto generates $3.28 in operating cash flow ($3.7B OCF vs $1.1B net income). This indicates profits are well-supported by actual cash generation, not accounting adjustments.
Palo Alto earns $414.3 in operating income for every $1 of interest expense ($1.2B vs $3.0M). This wide margin provides strong safety for debt servicing, even if earnings decline temporarily.
This page shows Palo Alto (PANW) financial statements, including the income statement, balance sheet, cash flow statement, and key financial ratios. View 15 years of annual fundamentals and quarterly data, with year-over-year growth rates and compound annual growth rates (CAGR). All figures are derived from SEC filings (10-K and 10-Q reports).
Key Financial Metrics
Palo Alto generated $9.2B in revenue in fiscal year 2025. This represents an increase of 14.9% from the prior year.
Palo Alto's EBITDA was $1.6B in fiscal year 2025, measuring earnings before interest, taxes, depreciation, and amortization. This represents an increase of 64.0% from the prior year.
Palo Alto generated $3.5B in free cash flow in fiscal year 2025, representing cash available after capex. This represents an increase of 11.9% from the prior year.
Palo Alto reported $1.1B in net income in fiscal year 2025. This represents a decrease of 56.0% from the prior year.
Palo Alto earned $1.60 per diluted share (EPS) in fiscal year 2025. This represents a decrease of 56.0% from the prior year.
Palo Alto held $3.1B in cash against $0 in long-term debt as of fiscal year 2025.
Palo Alto had 697M shares outstanding in fiscal year 2025. This represents an increase of 114.1% from the prior year.
Palo Alto's gross margin was 73.4% in fiscal year 2025, indicating the percentage of revenue retained after direct costs. This is down 0.9 percentage points from the prior year.
Palo Alto's operating margin was 13.5% in fiscal year 2025, reflecting core business profitability. This is up 5.0 percentage points from the prior year.
Palo Alto's net profit margin was 12.3% in fiscal year 2025, showing the share of revenue converted to profit. This is down 19.8 percentage points from the prior year.
Palo Alto's ROE was 13.1% in fiscal year 2025, measuring profit generated per dollar of shareholder equity. This is down 30.5 percentage points from the prior year.
Palo Alto invested $2.0B in research and development in fiscal year 2025. This represents an increase of 9.7% from the prior year.
Palo Alto spent $0 on share buybacks in fiscal year 2025, returning capital to shareholders by reducing shares outstanding. This represents a decrease of 100.0% from the prior year.
Palo Alto invested $246.2M in capex in fiscal year 2025, funding long-term assets and infrastructure. This represents an increase of 57.0% from the prior year.
PANW Income Statement
| Metric | Q1'25 | Q3'25 | Q2'25 | Q1'24 | Q2'24 | Q3'24 | Q1'23 | Q2'23 |
|---|---|---|---|---|---|---|---|---|
| Revenue | $2.5B+8.1% | $2.3B+1.4% | $2.3B+5.5% | $2.1B+8.3% | $2.0B-0.5% | $2.0B+5.7% | $1.9B+13.5% | $1.7B |
| Cost of Revenue | $638.0M+3.0% | $619.3M+3.4% | $599.2M+8.2% | $554.0M+11.0% | $499.1M-2.8% | $513.6M+8.6% | $472.8M+1.4% | $466.2M |
| Gross Profit | $1.8B+10.0% | $1.7B+0.7% | $1.7B+4.6% | $1.6B+7.4% | $1.5B+0.3% | $1.5B+4.7% | $1.4B+18.2% | $1.2B |
| R&D Expenses | $528.0M+6.8% | $494.5M-2.2% | $505.7M+5.1% | $481.0M+7.4% | $447.9M-2.0% | $457.2M+11.6% | $409.5M+1.3% | $404.1M |
| SG&A Expenses | $179.0M+9.2% | $163.9M+6.6% | $153.8M+56.9% | $98.0M-67.5% | $301.5M+154.2% | $118.6M-1.2% | $120.1M+0.6% | $119.4M |
| Operating Income | $309.0M+41.2% | $218.8M-9.0% | $240.4M-15.9% | $286.0M+433.6% | $53.6M-69.7% | $176.7M-17.9% | $215.2M+439.3% | $39.9M |
| Interest Expense | $0-100.0% | $700K-22.2% | $900K-10.0% | $1.0M-64.3% | $2.8M+21.7% | $2.3M-20.7% | $2.9M-58.0% | $6.9M |
| Income Tax | $78.0M+61.2% | $48.4M-15.8% | $57.5M+238.2% | $17.0M+101.1% | -$1.6B-5738.4% | -$27.6M-131.2% | $88.4M+44100.0% | $200K |
| Net Income | $334.0M+27.4% | $262.1M-1.9% | $267.3M-23.8% | $351.0M-79.9% | $1.7B+526.6% | $278.8M+43.6% | $194.2M+130.6% | $84.2M |
| EPS (Diluted) | $0.47+27.0% | $0.37-2.6% | $0.38-22.4% | $0.49-79.9% | $2.44+525.6% | $0.39-30.4% | $0.56+124.0% | $0.25 |
PANW Balance Sheet
| Metric | Q1'25 | Q3'25 | Q2'25 | Q1'24 | Q2'24 | Q3'24 | Q1'23 | Q2'23 |
|---|---|---|---|---|---|---|---|---|
| Total Assets | $23.5B+7.0% | $22.0B+5.0% | $21.0B+2.8% | $20.4B+1.9% | $20.0B+11.5% | $17.9B+21.1% | $14.8B+2.1% | $14.5B |
| Current Assets | $7.3B+6.0% | $6.9B+8.8% | $6.3B+1.6% | $6.2B-8.9% | $6.8B+15.7% | $5.9B-8.6% | $6.5B+7.1% | $6.0B |
| Cash & Equivalents | $3.1B+28.6% | $2.4B+7.1% | $2.2B-2.5% | $2.3B+48.7% | $1.5B+11.8% | $1.4B-44.9% | $2.5B+119.4% | $1.1B |
| Inventory | $113.4M | N/A | N/A | N/A | $115.9M | N/A | N/A | N/A |
| Accounts Receivable | $1.3B-31.1% | $1.9B+30.4% | $1.5B+32.0% | $1.1B-56.7% | $2.6B+52.7% | $1.7B+21.4% | $1.4B-42.6% | $2.5B |
| Goodwill | $4.6B+12.7% | $4.1B0.0% | $4.1B0.0% | $4.1B+20.9% | $3.4B-0.7% | $3.4B+15.2% | $2.9B0.0% | $2.9B |
| Total Liabilities | $14.9B+0.7% | $14.8B+1.3% | $14.6B+0.8% | $14.5B-2.4% | $14.8B+10.1% | $13.5B+6.5% | $12.6B-0.9% | $12.8B |
| Current Liabilities | $7.4B-3.7% | $7.7B+2.0% | $7.6B+2.0% | $7.4B-3.6% | $7.7B+8.4% | $7.1B-5.7% | $7.5B-2.9% | $7.7B |
| Long-Term Debt | N/A | N/A | N/A | N/A | N/A | N/A | N/A | $2.0B |
| Total Equity | $8.7B+19.8% | $7.2B+13.4% | $6.4B+7.8% | $5.9B+14.4% | $5.2B+15.7% | $4.5B+105.8% | $2.2B+24.1% | $1.7B |
| Retained Earnings | $2.8B+26.4% | $2.2B+13.3% | $2.0B+15.7% | $1.7B+26.0% | $1.4B+36.0% | $992.5M+196.1% | -$1.0B+15.8% | -$1.2B |
PANW Cash Flow Statement
| Metric | Q1'25 | Q3'25 | Q2'25 | Q1'24 | Q2'24 | Q3'24 | Q1'23 | Q2'23 |
|---|---|---|---|---|---|---|---|---|
| Operating Cash Flow | $1.8B+181.7% | $628.7M+13.0% | $556.5M-63.1% | $1.5B+194.5% | $512.7M-3.1% | $528.9M-65.3% | $1.5B+268.5% | $414.1M |
| Capital Expenditures | $84.0M+23.0% | $68.3M+43.5% | $47.6M+8.2% | $44.0M-7.2% | $47.4M+26.7% | $37.4M+1.6% | $36.8M-1.1% | $37.2M |
| Free Cash Flow | $1.7B+201.0% | $560.4M+10.1% | $508.9M-65.3% | $1.5B+215.1% | $465.3M-5.3% | $491.5M-67.0% | $1.5B+295.1% | $376.9M |
| Investing Cash Flow | -$983.0M-89.9% | -$517.6M-36.0% | -$380.6M+30.0% | -$544.0M-222.8% | -$168.5M-249.0% | $113.1M+187.7% | -$129.0M-135.6% | $362.6M |
| Financing Cash Flow | $8.0M-83.0% | $47.1M+120.3% | -$231.9M-5.4% | -$220.0M-22.7% | -$179.3M+82.9% | -$1.0B-2410.5% | -$41.8M+97.4% | -$1.6B |
| Dividends Paid | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A |
| Share Buybacks | $0 | $0 | $0 | $0 | $0-100.0% | $500.0M+649.6% | $66.7M | $0 |
PANW Financial Ratios
| Metric | Q1'25 | Q3'25 | Q2'25 | Q1'24 | Q2'24 | Q3'24 | Q1'23 | Q2'23 |
|---|---|---|---|---|---|---|---|---|
| Gross Margin | 74.2%+1.3pp | 72.9%-0.5pp | 73.5%-0.6pp | 74.1%-0.6pp | 74.7%+0.6pp | 74.1%-0.7pp | 74.8%+3.0pp | 71.8% |
| Operating Margin | 12.5%+2.9pp | 9.6%-1.1pp | 10.7%-2.7pp | 13.4%+10.7pp | 2.7%-6.2pp | 8.9%-2.6pp | 11.5%+9.0pp | 2.4% |
| Net Margin | 13.5%+2.1pp | 11.5%-0.4pp | 11.8%-4.6pp | 16.4%-72.0pp | 88.4%+74.4pp | 14.1%+3.7pp | 10.3%+5.3pp | 5.1% |
| Return on Equity | 3.9%+0.2pp | 3.6%-0.6pp | 4.2%-1.8pp | 5.9%-34.1pp | 40.1%+33.8pp | 6.2%-2.7pp | 8.9%-2.6pp | 11.6% |
| Return on Assets | 1.4%+0.2pp | 1.2%-0.1pp | 1.3%-0.4pp | 1.7%-7.8pp | 9.6%+8.0pp | 1.6%+0.2pp | 1.3%+0.7pp | 0.6% |
| Current Ratio | 0.99+0.1 | 0.90+0.1 | 0.840.0 | 0.84-0.0 | 0.89+0.1 | 0.84-0.0 | 0.86+0.1 | 0.78 |
| Debt-to-Equity | 1.72-0.3 | 2.04-0.2 | 2.29-0.2 | 2.45-0.4 | 2.87-0.1 | 3.01-2.8 | 5.82+4.7 | 1.14 |
| FCF Margin | 68.2%+43.7pp | 24.5%+1.9pp | 22.5%-46.0pp | 68.5%+35.4pp | 33.1%+8.4pp | 24.8%-54.5pp | 79.3%+39.6pp | 39.6% |
Note: The current ratio is below 1.0 (0.99), indicating current liabilities exceed current assets, which may suggest potential short-term liquidity concerns.
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Frequently Asked Questions
What is Palo Alto's annual revenue?
Palo Alto (PANW) reported $9.2B in total revenue for fiscal year 2025. This represents a 14.9% change compared to the previous fiscal year. Revenue measures the total income earned from the company's primary business operations before any expenses are deducted.
How fast is Palo Alto's revenue growing?
Palo Alto (PANW) revenue grew by 14.9% year-over-year, from $8.0B to $9.2B in fiscal year 2025.
Is Palo Alto profitable?
Yes, Palo Alto (PANW) reported a net income of $1.1B in fiscal year 2025, with a net profit margin of 12.3%.
What is Palo Alto's earnings per share (EPS)?
Palo Alto (PANW) reported diluted earnings per share of $1.60 for fiscal year 2025. This represents a -56.0% change compared to the previous fiscal year. EPS represents the portion of a company's net income allocated to each outstanding share of common stock and is widely used to evaluate profitability on a per-share basis.
What is Palo Alto's EBITDA?
Palo Alto (PANW) had EBITDA of $1.6B in fiscal year 2025, measuring earnings before interest, taxes, depreciation, and amortization.
What is Palo Alto's gross margin?
Palo Alto (PANW) had a gross margin of 73.4% in fiscal year 2025, indicating the percentage of revenue retained after direct costs of goods sold.
What is Palo Alto's operating margin?
Palo Alto (PANW) had an operating margin of 13.5% in fiscal year 2025, reflecting the profitability of core business operations before interest and taxes.
What is Palo Alto's net profit margin?
Palo Alto (PANW) had a net profit margin of 12.3% in fiscal year 2025, representing the share of revenue converted into profit after all expenses.
What is Palo Alto's return on equity (ROE)?
Palo Alto (PANW) has a return on equity of 13.1% for fiscal year 2025, measuring how efficiently the company generates profit from shareholder equity.
What is Palo Alto's free cash flow?
Palo Alto (PANW) generated $3.5B in free cash flow during fiscal year 2025. This represents a 11.9% change compared to the previous fiscal year. Free cash flow represents the cash a company generates after accounting for capital expenditures, and is widely used to assess financial flexibility and shareholder value.
What is Palo Alto's operating cash flow?
Palo Alto (PANW) generated $3.7B in operating cash flow during fiscal year 2025, representing cash generated from core business activities.
What are Palo Alto's total assets?
Palo Alto (PANW) had $23.5B in total assets as of fiscal year 2025, including both current and long-term assets.
What are Palo Alto's capital expenditures?
Palo Alto (PANW) invested $246.2M in capital expenditures during fiscal year 2025, funding long-term assets and infrastructure.
How much does Palo Alto spend on research and development?
Palo Alto (PANW) invested $2.0B in research and development during fiscal year 2025.
How many shares does Palo Alto have outstanding?
Palo Alto (PANW) had 697M shares outstanding as of fiscal year 2025.
What is Palo Alto's current ratio?
Palo Alto (PANW) had a current ratio of 0.99 as of fiscal year 2025, which is below 1.0, which may suggest potential liquidity concerns.
What is Palo Alto's debt-to-equity ratio?
Palo Alto (PANW) had a debt-to-equity ratio of 1.72 as of fiscal year 2025, measuring the company's financial leverage by comparing total debt to shareholder equity.
What is Palo Alto's return on assets (ROA)?
Palo Alto (PANW) had a return on assets of 4.8% for fiscal year 2025, measuring how efficiently the company uses its assets to generate profit.
What is Palo Alto's Altman Z-Score?
Palo Alto (PANW) has an Altman Z-Score of 6.17, placing it in the Safe Zone (low bankruptcy risk). The Z-Score combines five financial ratios—working capital, retained earnings, EBIT, market capitalization, and revenue relative to total assets—to predict the likelihood of bankruptcy. Scores above 2.99 indicate financial safety while scores below 1.81 suggest financial distress. Learn more in our complete guide to financial health indicators.
What is Palo Alto's Piotroski F-Score?
Palo Alto (PANW) has a Piotroski F-Score of 4 out of 9, indicating neutral financial health. The F-Score evaluates nine binary signals across profitability (positive ROA, positive cash flow, improving ROA, earnings quality), leverage (decreasing debt, improving liquidity, no share dilution), and operating efficiency (improving gross margin, improving asset turnover). Scores of 7–9 indicate strong and improving fundamentals. Learn more in our complete guide to financial health indicators.
Are Palo Alto's earnings high quality?
Palo Alto (PANW) has an earnings quality ratio of 3.28x, considered cash-backed (high quality). This ratio compares operating cash flow to net income. A ratio above 1.0x means the company generates more cash than its reported earnings, indicating sustainable, cash-backed profits. Ratios below 1.0x suggest earnings rely on accounting accruals rather than actual cash generation. Learn more in our complete guide to financial health indicators.
Can Palo Alto cover its interest payments?
Palo Alto (PANW) has an interest coverage ratio of 414.3x, meaning it can comfortably cover its interest obligations. This ratio divides operating income by interest expense. Ratios above 5x indicate strong debt-servicing ability, while ratios below 2x suggest the company may face difficulty meeting interest payments if earnings decline. Learn more in our complete guide to financial health indicators.
How financially healthy is Palo Alto?
Palo Alto (PANW) scores 60 out of 100 on our Financial Profile, indicating moderate overall financial health. This composite score evaluates six dimensions: profitability (operating margin), revenue growth, leverage (debt-to-equity), liquidity (current ratio), cash flow quality (free cash flow margin), and shareholder returns (return on equity). Each dimension is normalized against standard financial benchmarks. Learn more in our complete guide to financial health indicators.