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Palo Alto Networks, Inc. is a cybersecurity company that empowers enterprises, organizations, service providers, and government entities to secure their users, networks, clouds, and endpoints through comprehensive cybersecurity solutions enabled by artificial intelligence and automation . The company offers a range of products, including appliances, software licenses, and subscription services, to provide real-time access to security capabilities across various environments . Palo Alto Networks also provides professional services such as incident response and risk management, and operates a two-tiered, indirect fulfillment model for sales through distributors and resellers .
- Subscription and Support Services - Provide real-time access to security capabilities across networks, endpoints, and the cloud, often purchased alongside firewall appliances.
- Appliances - Include the ML-Powered Next-Generation Firewall, which secures networks with advanced machine learning capabilities.
- Software Licenses - Cover Panorama, SD-WAN, and the VM-Series, offering comprehensive management and security for various network environments.
- CN-Series Container Firewalls - Secure containerized computing environments, ensuring protection across cloud-native applications.
- Professional Services - Offer incident response and risk management to help organizations manage and mitigate cybersecurity threats.
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With your contract lengths remaining roughly consistent at three years, what implications do you see on free cash flow generation in both the short term and long term, and how might this affect your free cash flow margins?
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Given the shift towards RPO and ARR guidance and your expectation of a mix more towards annualized billings and away from financing, how do you anticipate this will impact your financial metrics, especially regarding operating margins and cash flow?
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Considering the potential uncertainties with the upcoming U.S. elections and their impact on federal budgets, how are you adjusting your expectations and strategies for your U.S. federal business in the coming quarters?
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Despite the acceleration in XSIAM bookings and the growth of your Cortex business to over $900 million in ARR, what challenges do you foresee in maintaining this growth trajectory, and how do you plan to address competition in the security operations platform market?
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As you implement AI to drive operating efficiencies within your own operations, what specific obstacles have you encountered, and how do you plan to overcome them to fully realize the potential cost savings and productivity gains?
Competitors mentioned in the company's latest 10K filing.
- Cisco Systems, Inc. ("Cisco") - Large company incorporating security features in their products .
- Microsoft - Large company incorporating security features in their products .
- Alphabet - Large company incorporating security features in their products .
- Check Point Software Technologies Ltd. ("Check Point") - Independent security vendor offering a mix of security products .
- Fortinet, Inc. ("Fortinet") - Independent security vendor offering a mix of security products .
- CrowdStrike Holdings, Inc. ("CrowdStrike") - Independent security vendor offering a mix of security products .
- Zscaler, Inc. ("Zscaler") - Independent security vendor offering a mix of security products .
- Wiz, Inc. ("Wiz") - Independent security vendor offering a mix of security products .
Start Date: Ernst & Young LLP has served as the auditor of Palo Alto Networks, Inc. since 2009. **[0001327567-24-000029_panw-20240731.htm:100]**
Recent developments and announcements about PANW.
Corporate Leadership
Board Change
Right Honorable Sir John Key, Mary Pat McCarthy, and Nir Zuk were elected as Class I directors of Palo Alto Networks, Inc. at the Annual Meeting held on December 10, 2024. They will serve until the 2027 Annual Meeting of Shareholders or until their successors are duly elected and qualified .
Financial Reporting
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Revenue Growth: The company reported a 14% year-over-year increase in total revenue, reaching $2.1 billion compared to $1.9 billion in the same quarter of the previous year .
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Net Income: GAAP net income for the quarter was $350.7 million, or $0.99 per diluted share, up from $194.2 million, or $0.56 per diluted share, in the fiscal first quarter of 2024. Non-GAAP net income was $544.9 million, or $1.56 per diluted share, compared to $466.3 million, or $1.38 per diluted share, in the previous year .
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Next-Generation Security ARR: The annual recurring revenue for Next-Generation Security grew 40% year-over-year to $4.5 billion .
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Remaining Performance Obligation: This metric increased by 20% year-over-year to $12.6 billion .
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Stock Split Announcement: The board of directors approved a two-for-one forward stock split, which will be effective after the close of trading on December 13, 2024. Trading on a split-adjusted basis is expected to begin on December 16, 2024 .
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Financial Outlook: For the fiscal second quarter of 2025, Palo Alto Networks expects:
- Next-Generation Security ARR between $4.70 billion and $4.75 billion, representing growth of 35% to 36%.
- Remaining performance obligation between $12.9 billion and $13.0 billion, representing growth of 20% to 21%.
- Total revenue in the range of $2.22 billion to $2.25 billion, representing growth of 12% to 14%.
- Diluted non-GAAP net income per share between $1.54 and $1.56 .
Earnings Report
Palo Alto Networks (PANW) Earnings Release Summary
On November 20, 2024, Palo Alto Networks announced its financial results for the fiscal first quarter of 2025, which ended on October 31, 2024. Here are the key highlights from the earnings release:
These results highlight Palo Alto Networks' strong performance and strategic focus on platformization, which the company believes will continue to drive growth and innovation in the cybersecurity market .