Goodwill and Intangible Asset Disclosure
Adjustments to Financial Statements: Removal of Goodwill
Adjusted Financial Ratios: Removal of Goodwill (Summary)
Adjusted Total Asset Turnover
Adjusted Financial Leverage
Adjusted Return on Equity (ROE)
Adjusted Return on Assets (ROA)

Palo Alto Networks Inc., balance sheet: goodwill and intangible assets

US$ in thousands

	Jul 31, 2024	Jul 31, 2023	Jul 31, 2022	Jul 31, 2021	Jul 31, 2020	Jul 31, 2019
Goodwill	3,350,100)	2,926,800)	2,747,700)	2,710,100)	1,812,900)	1,352,300)
Developed technology	813,900)	633,200)	600,700)	596,200)	425,900)	318,800)
Customer relationships	172,700)	172,700)	172,700)	172,700)	87,600)	39,800)
Acquired intellectual property	18,200)	14,600)	11,300)	7,900)	6,300)	8,900)
Trade name and trademarks	9,400)	9,400)	9,400)	9,400)	9,400)	9,400)
Other	900)	900)	900)	1,800)	3,100)	2,200)
Intangible assets subject to amortization, gross carrying amount	1,015,100)	830,800)	795,000)	788,000)	532,300)	379,100)
Accumulated amortization	(640,200)	(519,300)	(414,400)	(289,400)	(174,100)	(100,100)
Intangible assets subject to amortization, net carrying amount	374,900)	311,500)	380,600)	498,600)	358,200)	279,000)
In-process research and development	—)	3,900)	3,900)	—)	—)	1,600)
Intangible assets not subject to amortization	—)	3,900)	3,900)	—)	—)	1,600)
Purchased intangible assets	374,900)	315,400)	384,500)	498,600)	358,200)	280,600)
Goodwill and intangible assets	3,725,000)	3,242,200)	3,132,200)	3,208,700)	2,171,100)	1,632,900)

Based on: 10-K (reporting date: 2024-07-31), 10-K (reporting date: 2023-07-31), 10-K (reporting date: 2022-07-31), 10-K (reporting date: 2021-07-31), 10-K (reporting date: 2020-07-31), 10-K (reporting date: 2019-07-31).

Download chart

Item	Description	The company
Goodwill	Amount after accumulated impairment loss of an asset representing future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized.	Palo Alto Networks Inc. goodwill increased from 2022 to 2023 and from 2023 to 2024.
Purchased intangible assets	Sum of the carrying amounts of all intangible assets, excluding goodwill, as of the balance sheet date, net of accumulated amortization and impairment charges.	Palo Alto Networks Inc. purchased intangible assets decreased from 2022 to 2023 but then increased from 2023 to 2024 not reaching 2022 level.
Goodwill and intangible assets	Sum of the carrying amounts of all intangible assets, including goodwill, as of the balance sheet date, net of accumulated amortization and impairment charges.	Palo Alto Networks Inc. goodwill and intangible assets increased from 2022 to 2023 and from 2023 to 2024.

Palo Alto Networks Inc., adjustments to financial statements

US$ in thousands

	Jul 31, 2024	Jul 31, 2023	Jul 31, 2022	Jul 31, 2021	Jul 31, 2020	Jul 31, 2019
Adjustment to Total Assets
Total assets (as reported)	19,990,900)	14,501,100)	12,253,600)	10,241,600)	9,065,400)	6,592,200)
Less: Goodwill	3,350,100)	2,926,800)	2,747,700)	2,710,100)	1,812,900)	1,352,300)
Total assets (adjusted)	16,640,800)	11,574,300)	9,505,900)	7,531,500)	7,252,500)	5,239,900)
Adjustment to Stockholders’ Equity
Stockholders’ equity (as reported)	5,169,700)	1,748,400)	210,000)	634,500)	1,101,800)	1,586,300)
Less: Goodwill	3,350,100)	2,926,800)	2,747,700)	2,710,100)	1,812,900)	1,352,300)
Stockholders’ equity (adjusted)	1,819,600)	(1,178,400)	(2,537,700)	(2,075,600)	(711,100)	234,000)

Based on: 10-K (reporting date: 2024-07-31), 10-K (reporting date: 2023-07-31), 10-K (reporting date: 2022-07-31), 10-K (reporting date: 2021-07-31), 10-K (reporting date: 2020-07-31), 10-K (reporting date: 2019-07-31).

Palo Alto Networks Inc., Financial Data: Reported vs. Adjusted

Download chart

Palo Alto Networks Inc., adjusted financial ratios

	Jul 31, 2024	Jul 31, 2023	Jul 31, 2022	Jul 31, 2021	Jul 31, 2020	Jul 31, 2019
Total Asset Turnover
Reported total asset turnover	0.40	0.48	0.45	0.42	0.38	0.44
Adjusted total asset turnover	0.48	0.60	0.58	0.57	0.47	0.55
Financial Leverage
Reported financial leverage	3.87	8.29	58.35	16.14	8.23	4.16
Adjusted financial leverage	9.15	—	—	—	—	22.39
Return on Equity (ROE)
Reported ROE	49.86%	25.15%	-127.14%	-78.63%	-24.23%	-5.16%
Adjusted ROE	141.66%	—	—	—	—	-35.00%
Return on Assets (ROA)
Reported ROA	12.89%	3.03%	-2.18%	-4.87%	-2.95%	-1.24%
Adjusted ROA	15.49%	3.80%	-2.81%	-6.62%	-3.68%	-1.56%

Based on: 10-K (reporting date: 2024-07-31), 10-K (reporting date: 2023-07-31), 10-K (reporting date: 2022-07-31), 10-K (reporting date: 2021-07-31), 10-K (reporting date: 2020-07-31), 10-K (reporting date: 2019-07-31).

Financial ratio	Description	The company
Adjusted total asset turnover	An activity ratio calculated as total revenue divided by adjusted total assets.	Palo Alto Networks Inc. adjusted total asset turnover ratio improved from 2022 to 2023 but then deteriorated significantly from 2023 to 2024.
Adjusted ROA	A profitability ratio calculated as net income divided by adjusted total assets.	Palo Alto Networks Inc. adjusted ROA improved from 2022 to 2023 and from 2023 to 2024.

Palo Alto Networks Inc., Financial Ratios: Reported vs. Adjusted

Download chart

	Jul 31, 2024	Jul 31, 2023	Jul 31, 2022	Jul 31, 2021	Jul 31, 2020	Jul 31, 2019
As Reported
Selected Financial Data (US$ in thousands)
Revenue	8,027,500)	6,892,700)	5,501,500)	4,256,100)	3,408,400)	2,899,600)
Total assets	19,990,900)	14,501,100)	12,253,600)	10,241,600)	9,065,400)	6,592,200)
Activity Ratio
Total asset turnover¹	0.40	0.48	0.45	0.42	0.38	0.44
Adjusted for Goodwill
Selected Financial Data (US$ in thousands)
Revenue	8,027,500)	6,892,700)	5,501,500)	4,256,100)	3,408,400)	2,899,600)
Adjusted total assets	16,640,800)	11,574,300)	9,505,900)	7,531,500)	7,252,500)	5,239,900)
Activity Ratio
Adjusted total asset turnover²	0.48	0.60	0.58	0.57	0.47	0.55

Based on: 10-K (reporting date: 2024-07-31), 10-K (reporting date: 2023-07-31), 10-K (reporting date: 2022-07-31), 10-K (reporting date: 2021-07-31), 10-K (reporting date: 2020-07-31), 10-K (reporting date: 2019-07-31).

2024 Calculations

¹ Total asset turnover = Revenue ÷ Total assets
= 8,027,500 ÷ 19,990,900 = 0.40

² Adjusted total asset turnover = Revenue ÷ Adjusted total assets
= 8,027,500 ÷ 16,640,800 = 0.48

Download chart

Activity ratio	Description	The company
Adjusted total asset turnover	An activity ratio calculated as total revenue divided by adjusted total assets.	Palo Alto Networks Inc. adjusted total asset turnover ratio improved from 2022 to 2023 but then deteriorated significantly from 2023 to 2024.

	Jul 31, 2024	Jul 31, 2023	Jul 31, 2022	Jul 31, 2021	Jul 31, 2020	Jul 31, 2019
As Reported
Selected Financial Data (US$ in thousands)
Total assets	19,990,900)	14,501,100)	12,253,600)	10,241,600)	9,065,400)	6,592,200)
Stockholders’ equity	5,169,700)	1,748,400)	210,000)	634,500)	1,101,800)	1,586,300)
Solvency Ratio
Financial leverage¹	3.87	8.29	58.35	16.14	8.23	4.16
Adjusted for Goodwill
Selected Financial Data (US$ in thousands)
Adjusted total assets	16,640,800)	11,574,300)	9,505,900)	7,531,500)	7,252,500)	5,239,900)
Adjusted stockholders’ equity	1,819,600)	(1,178,400)	(2,537,700)	(2,075,600)	(711,100)	234,000)
Solvency Ratio
Adjusted financial leverage²	9.15	—	—	—	—	22.39

Based on: 10-K (reporting date: 2024-07-31), 10-K (reporting date: 2023-07-31), 10-K (reporting date: 2022-07-31), 10-K (reporting date: 2021-07-31), 10-K (reporting date: 2020-07-31), 10-K (reporting date: 2019-07-31).

2024 Calculations

¹ Financial leverage = Total assets ÷ Stockholders’ equity
= 19,990,900 ÷ 5,169,700 = 3.87

² Adjusted financial leverage = Adjusted total assets ÷ Adjusted stockholders’ equity
= 16,640,800 ÷ 1,819,600 = 9.15

Download chart

	Jul 31, 2024	Jul 31, 2023	Jul 31, 2022	Jul 31, 2021	Jul 31, 2020	Jul 31, 2019
As Reported
Selected Financial Data (US$ in thousands)
Net income (loss)	2,577,600)	439,700)	(267,000)	(498,900)	(267,000)	(81,900)
Stockholders’ equity	5,169,700)	1,748,400)	210,000)	634,500)	1,101,800)	1,586,300)
Profitability Ratio
ROE¹	49.86%	25.15%	-127.14%	-78.63%	-24.23%	-5.16%
Adjusted for Goodwill
Selected Financial Data (US$ in thousands)
Net income (loss)	2,577,600)	439,700)	(267,000)	(498,900)	(267,000)	(81,900)
Adjusted stockholders’ equity	1,819,600)	(1,178,400)	(2,537,700)	(2,075,600)	(711,100)	234,000)
Profitability Ratio
Adjusted ROE²	141.66%	—	—	—	—	-35.00%

Based on: 10-K (reporting date: 2024-07-31), 10-K (reporting date: 2023-07-31), 10-K (reporting date: 2022-07-31), 10-K (reporting date: 2021-07-31), 10-K (reporting date: 2020-07-31), 10-K (reporting date: 2019-07-31).

2024 Calculations

¹ ROE = 100 × Net income (loss) ÷ Stockholders’ equity
= 100 × 2,577,600 ÷ 5,169,700 = 49.86%

² Adjusted ROE = 100 × Net income (loss) ÷ Adjusted stockholders’ equity
= 100 × 2,577,600 ÷ 1,819,600 = 141.66%

Download chart

	Jul 31, 2024	Jul 31, 2023	Jul 31, 2022	Jul 31, 2021	Jul 31, 2020	Jul 31, 2019
As Reported
Selected Financial Data (US$ in thousands)
Net income (loss)	2,577,600)	439,700)	(267,000)	(498,900)	(267,000)	(81,900)
Total assets	19,990,900)	14,501,100)	12,253,600)	10,241,600)	9,065,400)	6,592,200)
Profitability Ratio
ROA¹	12.89%	3.03%	-2.18%	-4.87%	-2.95%	-1.24%
Adjusted for Goodwill
Selected Financial Data (US$ in thousands)
Net income (loss)	2,577,600)	439,700)	(267,000)	(498,900)	(267,000)	(81,900)
Adjusted total assets	16,640,800)	11,574,300)	9,505,900)	7,531,500)	7,252,500)	5,239,900)
Profitability Ratio
Adjusted ROA²	15.49%	3.80%	-2.81%	-6.62%	-3.68%	-1.56%

Based on: 10-K (reporting date: 2024-07-31), 10-K (reporting date: 2023-07-31), 10-K (reporting date: 2022-07-31), 10-K (reporting date: 2021-07-31), 10-K (reporting date: 2020-07-31), 10-K (reporting date: 2019-07-31).

2024 Calculations

¹ ROA = 100 × Net income (loss) ÷ Total assets
= 100 × 2,577,600 ÷ 19,990,900 = 12.89%

² Adjusted ROA = 100 × Net income (loss) ÷ Adjusted total assets
= 100 × 2,577,600 ÷ 16,640,800 = 15.49%

Download chart

Profitability ratio	Description	The company
Adjusted ROA	A profitability ratio calculated as net income divided by adjusted total assets.	Palo Alto Networks Inc. adjusted ROA improved from 2022 to 2023 and from 2023 to 2024.

Palo Alto Networks Inc. (NASDAQ:PANW)

Analysis of Goodwill and Intangible Assets

Goodwill and Intangible Asset Disclosure

Adjustments to Financial Statements: Removal of Goodwill

Palo Alto Networks Inc., Financial Data: Reported vs. Adjusted

Adjusted Financial Ratios: Removal of Goodwill (Summary)

Palo Alto Networks Inc., Financial Ratios: Reported vs. Adjusted

Adjusted Total Asset Turnover

Adjusted Financial Leverage

Adjusted Return on Equity (ROE)

Adjusted Return on Assets (ROA)