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: 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 Jul 31, 2019 Apr 30, 2019 Jan 31, 2019 Oct 31, 2018
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: 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), 10-K (reporting date: 2019-07-31), 10-Q (reporting date: 2019-04-30), 10-Q (reporting date: 2019-01-31), 10-Q (reporting date: 2018-10-31).

Revenue Composition Trends
The revenue mix displays a clear long-term shift from product-based to subscription and support revenues. Initially, product revenue contributed around 36-38% of total revenue, but this proportion gradually declined to approximately 16-20% by the later periods. Conversely, subscription and support revenue increased from roughly 62-64% near the start to above 80% towards the end. This indicates a strategic emphasis on recurring revenue streams over time.
Cost of Revenue and Gross Profit Trends
The cost of revenue as a percentage of total revenue experienced a general increase, climbing from around 28% to about 26-27% with some fluctuations in between. Despite this, gross profit margins remained relatively stable, oscillating between ~68% and mid-70% over the timeline. The stability in gross profit suggests efficient management of costs relative to the growing subscription revenue base.
Operating Expenses
Operating expenses showed a notable downward trend as a percentage of revenue, dropping from about 77% in the earlier periods to around 60-63% by the most recent quarters. Research and development expenses decreased from over 25% to near 21%, sales and marketing expenses dropped from approximately 48% to around 33-35%, and general and administrative expenses showed variability but overall a decline relative to revenue. This reduction in operating expenses contributed positively to overall profitability improvements.
Operating Income and Profitability
Operating income, which was negative or near break-even during initial periods (around -5% to +1%), demonstrated consistent improvement in later quarters, shifting into positive territory and reaching above 10% more recently. This reflects effective control over costs combined with revenue growth in higher-margin subscription offerings.
Interest Expense and Other Income
Interest expense as a percentage of revenue declined substantially from over 3% to less than 0.1%, indicating decreased borrowing costs or reduced debt levels. Other income (net) showed volatile but generally increasing positive contributions, peaking above 4% in later periods, which further supported improved net profitability.
Net Income and Tax Provision
Net income margins were negative in the early years, reaching lows near -14%, but showed marked improvement toward positive profitability, exceeding 10% in recent periods. Income tax provisions fluctuated with occasional negative and positive values, including some abnormally high values likely due to accounting or one-off tax effects, but generally settled near or below zero in more recent quarters. The improvement in net income largely mirrors the operational efficiency gains and increased subscription revenue.
Summary of Financial Health
Overall, the data indicate a successful transition from product-centric revenue to subscription-based recurring revenue, with stable gross margins and significantly improved operating efficiency. The substantial reduction in operating expenses as a percentage of revenue and decreased interest expense have contributed to a strong turnaround in operating and net income margins. These trends reflect progress toward sustainable profitability and healthier financial performance.