Early Access

10-QPeriod: Q2 FY2024

Palo Alto Networks Inc Quarterly Report for Q2 Ended Jan 31, 2024

Filed February 21, 2024For Securities:PANW

Summary

Palo Alto Networks, Inc. (PANW) reported strong financial results for the fiscal second quarter ended January 31, 2024. Total revenue increased by 19.3% year-over-year to $1.98 billion, driven by robust growth in subscription and support revenue, which now constitutes over 80% of total revenue. The company also saw a significant improvement in profitability, with net income soaring to $1.75 billion compared to $84.2 million in the prior year's quarter. This substantial increase in net income was significantly influenced by a large benefit from income taxes related to the release of a valuation allowance on deferred tax assets. Operationally, the company continues to invest in research and development and sales and marketing, though these expenses as a percentage of revenue have decreased year-over-year. The company also completed two strategic acquisitions in the quarter: Dig Security Solutions Ltd. and Talon Cyber Security Ltd., adding to its goodwill and intangible assets and strengthening its cloud security and SASE offerings. Remaining performance obligations stood at $10.8 billion, indicating strong future revenue visibility.

Financial Highlights

49 data points
Beta

Revenue

$1.98B

0.7% Gross Margin

Net Income

$1.75B

0.9% Net Margin

EPS (Diluted)

$2.44

Total Assets

$18.29B

Cash & Equivalents

$1.78B

Free Cash Flow

$690.00M

Financial Statements
Beta
Revenue$1.98B
Cost of Revenue$499.10M
Gross Profit$1.48B
R&D Expenses$447.90M
Operating Expenses$1.42B
Operating Income$53.60M
Interest Expense$2.80M
Net Income$1.75B
EPS (Basic)$2.73
EPS (Diluted)$2.44
Shares Outstanding (Basic)639.30M
Shares Outstanding (Diluted)715.00M

Key Highlights

  • 1Total revenue grew 19.3% year-over-year to $1.98 billion.
  • 2Subscription and support revenue, the largest segment, grew 21.7% to $1.58 billion, now representing 80.2% of total revenue.
  • 3Net income dramatically increased to $1.75 billion from $84.2 million in the prior year, largely due to a significant tax benefit.
  • 4Gross margin improved to 74.7% from 71.8% in the prior year's quarter.
  • 5The company completed two acquisitions: Dig Security Solutions Ltd. for $255.4 million and Talon Cyber Security Ltd. for $458.6 million, enhancing its cloud security and SASE capabilities.
  • 6Remaining performance obligations were $10.8 billion, with $5.2 billion expected to be recognized in the next 12 months.
  • 7The company's cash, cash equivalents, and investments increased to $7.0 billion from $5.4 billion.

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