Stock Analysis on Net
Stock Analysis on Net

Palo Alto Networks Inc. (NASDAQ:PANW)

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Common-Size Income Statement
Quarterly Data

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Palo Alto Networks Inc., common-size consolidated income statement (quarterly data)

Microsoft Excel
3 months ended: Jan 31, 2026 Oct 31, 2025 Jul 31, 2025 Apr 30, 2025 Jan 31, 2025 Oct 31, 2024 Jul 31, 2024 Apr 30, 2024 Jan 31, 2024 Oct 31, 2023 Jul 31, 2023 Apr 30, 2023 Jan 31, 2023 Oct 31, 2022 Jul 31, 2022 Apr 30, 2022 Jan 31, 2022 Oct 31, 2021 Jul 31, 2021 Apr 30, 2021 Jan 31, 2021 Oct 31, 2020 Jul 31, 2020 Apr 30, 2020 Jan 31, 2020 Oct 31, 2019
Product
Subscription and support
Revenue
Product
Subscription and support
Cost of revenue
Gross profit
Research and development
Sales and marketing
General and administrative
Operating expenses
Operating income (loss)
Interest expense
Other income (expense), net
Income (loss) before income taxes
(Provision for) benefit from income taxes
Net income (loss)

Based on: 10-Q (reporting date: 2026-01-31), 10-Q (reporting date: 2025-10-31), 10-K (reporting date: 2025-07-31), 10-Q (reporting date: 2025-04-30), 10-Q (reporting date: 2025-01-31), 10-Q (reporting date: 2024-10-31), 10-K (reporting date: 2024-07-31), 10-Q (reporting date: 2024-04-30), 10-Q (reporting date: 2024-01-31), 10-Q (reporting date: 2023-10-31), 10-K (reporting date: 2023-07-31), 10-Q (reporting date: 2023-04-30), 10-Q (reporting date: 2023-01-31), 10-Q (reporting date: 2022-10-31), 10-K (reporting date: 2022-07-31), 10-Q (reporting date: 2022-04-30), 10-Q (reporting date: 2022-01-31), 10-Q (reporting date: 2021-10-31), 10-K (reporting date: 2021-07-31), 10-Q (reporting date: 2021-04-30), 10-Q (reporting date: 2021-01-31), 10-Q (reporting date: 2020-10-31), 10-K (reporting date: 2020-07-31), 10-Q (reporting date: 2020-04-30), 10-Q (reporting date: 2020-01-31), 10-Q (reporting date: 2019-10-31).

The common-size income statement reveals significant shifts in the company’s revenue composition and profitability over the analyzed period. Initially, product revenue represented approximately 30% of total revenue, while subscription and support constituted the majority at around 70%. Over time, product revenue declined to a low of 18.16% before fluctuating, while subscription and support revenue increased, peaking at 83.46% before settling around 80%. This indicates a strategic shift towards a subscription-based business model.

Cost of revenue consistently remained a substantial portion of revenue, generally between 28% and 32%. Gross profit percentage exhibited relative stability, fluctuating between approximately 68% and 74% throughout the period. However, operating expenses demonstrated a more pronounced trend. Initially around 78% of revenue, operating expenses decreased to a low of 61% before increasing significantly, peaking at 78.48% and then fluctuating again.

Revenue Composition
The proportion of revenue derived from products decreased substantially over the observed timeframe, while subscription and support revenue became increasingly dominant. This suggests a successful transition towards a recurring revenue model, potentially enhancing revenue predictability.
Profitability Trends
Operating income initially showed modest losses, but improved significantly, reaching a peak of 16.20% of revenue. However, this improvement was followed by fluctuations, influenced heavily by tax provisions. The substantial increase in income before income taxes in late periods (particularly driven by a large positive impact from income taxes) resulted in a dramatic increase in net income as a percentage of revenue, reaching 88.45% in one quarter. This appears to be an outlier and requires further investigation.
Expense Management
Sales and marketing expenses were consistently the largest component of operating expenses, initially around 46% of revenue, decreasing to a low of 33.99% before increasing again. Research and development expenses also represented a significant portion of revenue, fluctuating between approximately 22% and 29%. General and administrative expenses remained relatively stable, generally between 7% and 10% of revenue. The significant increase in general and administrative expenses in later periods warrants further scrutiny.

The company experienced periods of net loss, particularly in the earlier part of the analyzed period. However, net income improved substantially in later periods, largely driven by the increase in operating income and, in one instance, a significant benefit from income taxes. The volatility in net income, particularly the outlier quarter with 88.45% net income, suggests the presence of non-recurring items or significant tax adjustments that require further examination.

Tax Impact
The provision for (or benefit from) income taxes exhibited considerable variability, ranging from a significant benefit (reducing net income) to a substantial provision (increasing net income). This volatility significantly impacted net income and requires detailed analysis to understand the underlying drivers.