10-KPeriod: FY2025

Palo Alto Networks Inc Annual Report, Year Ended Jul 31, 2025

Filed August 29, 2025For Securities:PANW

Summary

Palo Alto Networks (PANW) demonstrated robust growth in fiscal year 2025, with total revenue reaching $9.2 billion, a 14.9% increase year-over-year. The company continues its strategic shift towards platformization, integrating its diverse cybersecurity offerings into cohesive solutions that simplify security architectures for customers. Subscription and support revenue now constitute a significant 80.5% of total revenue, highlighting a strong recurring revenue base and customer adoption of cloud-delivered security services. The company also made strategic acquisitions, including IBM's QRadar assets and Protect AI, to further enhance its platform capabilities, particularly in AI security and security operations. Looking ahead, Palo Alto Networks is focused on continued innovation, especially in AI-driven security, and expanding its global reach. The company has announced its intent to acquire CyberArk Software Ltd., a move expected to significantly broaden its identity security offerings. While facing intense competition and macroeconomic uncertainties, Palo Alto Networks maintains a strong financial position and continues to invest heavily in research and development to address the evolving threat landscape. Investors should monitor the integration of recent acquisitions and the potential impact of the proposed CyberArk acquisition on future growth and market position.

Financial Highlights

50 data points
Beta

Revenue

$9.22B

73.4% Gross Margin

Net Income

$1.13B

12.3% Net Margin

EPS (Diluted)

$1.60

Total Assets

$23.58B

Cash & Equivalents

$2.27B

Free Cash Flow

$3.72B

Financial Statements
Beta
Revenue$9.22B
Cost of Revenue$2.45B
Gross Profit$6.77B
R&D Expenses$1.98B
Operating Expenses$5.53B
Operating Income$1.24B
Interest Expense$3.00M
Net Income$1.13B
EPS (Basic)$1.71
EPS (Diluted)$1.60
Shares Outstanding (Basic)662.50M
Shares Outstanding (Diluted)709.30M

Key Highlights

  • 1Total revenue reached $9.2 billion in fiscal year 2025, an increase of 14.9% year-over-year, driven by strong subscription and support revenue growth.
  • 2Subscription and support revenue now represents 80.5% of total revenue, indicating a successful shift towards a recurring revenue model.
  • 3The company made strategic acquisitions, including IBM's QRadar assets and Protect AI, to bolster its AI security and security operations platforms.
  • 4Palo Alto Networks announced its definitive agreement to acquire CyberArk Software Ltd., a significant move expected to expand its identity security capabilities.
  • 5Investment in research and development remains a priority, with new offerings like Prisma Access Browser, Cortex Cloud, and Prisma AIRS launched in fiscal year 2025.
  • 6The company generated $3.7 billion in cash flow from operating activities and $3.5 billion in free cash flow (non-GAAP) in fiscal year 2025, demonstrating strong cash generation.
  • 7Palo Alto Networks has a strong balance sheet with $8.5 billion in cash, cash equivalents, and investments as of July 31, 2025.

Frequently Asked Questions

The primary financial driver was the continued strong growth in subscription and support revenue, which now constitutes over 80% of total revenue. This reflects successful customer adoption of their integrated security platforms and recurring services. Product revenue also saw growth, primarily from new hardware and enhanced on-premise software licenses. The company's overall revenue increased by 14.9% year-over-year to $9.2 billion.

Palo Alto Networks actively uses acquisitions to accelerate its platformization strategy and expand its capabilities. The acquisitions of IBM's QRadar assets and Protect AI in fiscal year 2025 are key examples, strengthening their security operations and AI security platforms, respectively. The announced acquisition of CyberArk Software Ltd. is a major strategic move aimed at significantly enhancing their identity security offerings, which is a critical component of a comprehensive cybersecurity strategy.

Palo Alto Networks views AI as a core element of its cybersecurity strategy, emphasizing its use in both its product offerings and internal operations. The company has launched AI-driven features across its platforms, including Prisma AIRS for AI ecosystem security and AI for IT Operations (AIOps). They are also embedding AI into their talent acquisition and employee enablement processes. This focus on AI is intended to provide more secure, faster, and cost-effective outcomes for their customers.

Key risks include intense competition from both large tech companies and specialized security vendors, potential disruptions from global economic and geopolitical conditions, the success of integrating acquisitions (particularly the pending CyberArk deal), and the rapid evolution of technology and cyber threats. Risks related to product defects, cybersecurity incidents affecting their own infrastructure, reliance on channel partners, and intellectual property disputes are also significant.