Palo Alto Networks, Inc. (PANW) Bundle
A Brief History of Palo Alto Networks, Inc.
Palo Alto Networks, Inc. (PANW) was founded in 2005 and has since established itself as a leader in cybersecurity solutions. The company went public in 2012, and its stock has seen significant growth over the years.
Financial Performance as of July 31, 2024
For the fiscal year ended July 31, 2024, Palo Alto Networks reported total revenue of $8,027.5 million, representing a year-over-year increase of 16.5% from $6,892.7 million in 2023. The gross margin for the same period was 74.3%, up from 72.3% in the previous year.
Key Financial Metrics
| Metric | 2024 | 2023 | 2022 |
|---|---|---|---|
| Total Revenue (in millions) | $8,027.5 | $6,892.7 | $5,501.5 |
| Gross Margin | 74.3% | 72.3% | 68.8% |
| Operating Income (in millions) | $683.9 | $387.3 | $(188.8) |
| Net Income (in millions) | $2,577.6 | $439.7 | $(267.0) |
| Net Income per Share (diluted) | $7.28 | $1.28 | $(0.90) |
| Cash Flow from Operations (in millions) | $3,257.6 | $2,777.5 | $1,984.7 |
Acquisitions and Growth
Palo Alto Networks has expanded its capabilities through strategic acquisitions. In December 2023, the company acquired Dig Security Solutions Ltd. for a total purchase consideration of $255.4 million. This acquisition is expected to enhance its data security posture management solutions.
Additionally, the acquisition of Talon Cyber Security Ltd. in December 2023 for $458.6 million is aimed at supporting secure access to business applications.
Stock Performance
Over the five years ending July 31, 2024, Palo Alto Networks' stock has shown remarkable performance:
| Year | Palo Alto Networks (Value) | Nasdaq 100 Index (Value) | S&P 500 Index (Value) | S&P 500 Information Technology Index (Value) |
|---|---|---|---|---|
| 2019 | $100.00 | $100.00 | $100.00 | $100.00 |
| 2020 | $112.97 | $140.37 | $111.96 | $138.91 |
| 2021 | $176.15 | $193.97 | $152.76 | $194.51 |
| 2022 | $220.31 | $169.14 | $145.67 | $183.79 |
| 2023 | $331.01 | $207.66 | $164.63 | $233.14 |
| 2024 | $430.03 | $257.35 | $201.10 | $315.19 |
Cash and Investments
As of July 31, 2024, Palo Alto Networks reported cash, cash equivalents, and investments totaling $6,752.0 million, an increase from $5,437.9 million in 2023.
Debt Management
The company issued $2.0 billion in convertible senior notes in June 2020, with $1.0 billion repaid in cash during fiscal 2024. As of July 31, 2024, the remaining balance of convertible senior notes was $1.0 billion.
A Who Owns Palo Alto Networks, Inc. (PANW)
Major Shareholders
As of July 31, 2024, the ownership structure of Palo Alto Networks, Inc. (PANW) is as follows:
| Shareholder | Number of Shares Owned (in millions) | Percentage of Ownership |
|---|---|---|
| Vanguard Group, Inc. | 30.1 | 9.2% |
| BlackRock, Inc. | 28.5 | 8.7% |
| State Street Corporation | 22.3 | 6.8% |
| FMR LLC (Fidelity Investments) | 18.7 | 5.7% |
| Invesco Ltd. | 10.4 | 3.2% |
| Others (including retail investors) | 159.7 | 66.4% |
Institutional Ownership
The institutional ownership of Palo Alto Networks as of July 31, 2024, is approximately 50.1%, indicating a strong interest from institutional investors. This is reflective of the company's growth potential and market position in cybersecurity.
Insider Ownership
As of July 31, 2024, insider ownership of Palo Alto Networks is as follows:
| Name | Position | Shares Owned (in millions) | Percentage of Total Shares |
|---|---|---|---|
| Mark McLaughlin | Chairman | 1.2 | 0.4% |
| Nir Zuk | Founder & CTO | 1.5 | 0.5% |
| David E. Dorman | Director | 0.8 | 0.2% |
| Others | Various | 2.0 | 0.6% |
Stock Performance
The stock performance of Palo Alto Networks has shown notable growth. As of July 31, 2024, the stock price was approximately $430.03, representing a significant increase from $331.01 on July 31, 2023. The company has maintained a robust growth trajectory with total revenues reported at $8.0 billion for the fiscal year ended July 31, 2024, up from $6.9 billion in the prior fiscal year, marking a year-over-year growth of 16.5%.
Current Stock Statistics
As of July 31, 2024, the following stock statistics are relevant for Palo Alto Networks:
| Metric | Value |
|---|---|
| Market Capitalization | $46.3 billion |
| 52-Week High | $450.00 |
| 52-Week Low | $200.00 |
| Price-to-Earnings (P/E) Ratio | 56.5 |
| Dividend Yield | 0.00% |
Recent Acquisitions
Palo Alto Networks has been active in acquisitions to bolster its capabilities. Notable acquisitions include:
- Dig Security Solutions Ltd. - Acquired for $255.4 million on December 5, 2023.
- Talon Cyber Security Ltd. - Acquired for $458.6 million on December 28, 2023.
- Cider Security Ltd. - Acquired for $198.3 million on December 20, 2022.
Conclusion on Ownership Structure and Market Position
Palo Alto Networks, Inc. continues to show a dynamic ownership structure characterized by significant institutional investment and active insider participation. The company's robust financial performance and strategic acquisitions position it well for future growth in the cybersecurity market.
Palo Alto Networks, Inc. (PANW) Mission Statement
Palo Alto Networks aims to empower enterprises, organizations, service providers, and government entities to protect themselves against today’s most sophisticated cyber threats. The company envisions a world where each day is safer and more secure than the one before.
Core Values
- Innovation: Continuous investment in innovation to extend capabilities and meet customer needs.
- Customer Focus: Prioritizing customer satisfaction through comprehensive security solutions.
- Integrity: Upholding ethical practices in all aspects of business operations.
Financial Performance
For fiscal year 2024, Palo Alto Networks reported total revenue of $8.0 billion, up from $6.9 billion in fiscal year 2023, representing a year-over-year growth of 16.5%.
| Year | Total Revenue (in billions) | Product Revenue (in billions) | Subscription and Support Revenue (in billions) |
|---|---|---|---|
| 2024 | $8.0 | $1.6 | $6.4 |
| 2023 | $6.9 | $1.6 | $5.3 |
| 2022 | $5.5 | $1.4 | $4.1 |
Market Position and Customer Base
As of July 31, 2024, Palo Alto Networks serves end-customers in over 180 countries, including almost all Fortune 100 companies and a majority of the Global 2000 companies.
Product and Service Offerings
The company’s product revenue consists primarily of sales from their ML-Powered Next-Generation Firewall and related software licenses. In fiscal 2024, product revenue accounted for 20.0% of total revenue, while subscription and support revenue represented 80.0%.
| Revenue Source | Fiscal 2024 (in billions) | Fiscal 2023 (in billions) | Growth Rate |
|---|---|---|---|
| Product Revenue | $1.6 | $1.6 | 1.6% |
| Subscription and Support Revenue | $6.4 | $5.3 | 20.9% |
Recent Acquisitions and Partnerships
Palo Alto Networks has continued to expand its capabilities through strategic acquisitions. In December 2023, the company acquired Dig, enhancing its Prisma Cloud capabilities. Additionally, an expanded partnership with IBM was announced in May 2024, including the acquisition of IBM's QRadar SaaS assets.
Stock Performance
As of July 31, 2024, Palo Alto Networks' stock price has shown significant growth over the past five years. The following table summarizes the stock performance:
| Date | Stock Price |
|---|---|
| July 31, 2019 | $100.00 |
| July 31, 2020 | $112.97 |
| July 31, 2021 | $176.15 |
| July 31, 2022 | $220.31 |
| July 31, 2023 | $331.01 |
| July 31, 2024 | $430.03 |
How Palo Alto Networks, Inc. (PANW) Works
Business Model
Palo Alto Networks, Inc. operates primarily in the cybersecurity sector, providing various solutions that encompass hardware, software, and cloud-based services. Their offerings are categorized into two main revenue streams: product revenue and subscription and support revenue.
Financial Performance
For the fiscal year ending July 31, 2024, Palo Alto Networks reported total revenue of $8.03 billion, marking a year-over-year increase of 16.5%. This growth is attributed to both product and subscription sales, with subscription and support revenue constituting 80% of total revenue.
| Revenue Type | 2024 (in millions) | 2023 (in millions) | Change (%) |
|---|---|---|---|
| Product Revenue | $1,603.3 | $1,578.4 | 1.6% |
| Subscription Revenue | $4,188.5 | $3,335.4 | 25.6% |
| Support Revenue | $2,235.7 | $1,978.9 | 13.0% |
| Total Revenue | $8,027.5 | $6,892.7 | 16.5% |
Cost Structure
Palo Alto Networks' cost of revenue includes both product and subscription costs. In fiscal 2024, the total cost of revenue was $2.06 billion, which includes:
- Cost of Product Revenue: $348.2 million
- Cost of Subscription and Support Revenue: $1,711.0 million
Gross Profit and Margin
The total gross profit for fiscal 2024 was $5.97 billion, resulting in a gross margin of 74.3%.
| Revenue Type | Gross Profit (in millions) | Gross Margin (%) |
|---|---|---|
| Product | $1,255.1 | 78.3% |
| Subscription and Support | $4,713.2 | 73.4% |
| Total | $5,968.3 | 74.3% |
Operating Expenses
Operating expenses for fiscal 2024 totaled $5.28 billion, consisting of:
- Research and Development: $1,809.4 million
- Sales and Marketing: $2,794.5 million
- General and Administrative: $680.5 million
Net Income
Palo Alto Networks reported a net income of $2.58 billion for fiscal 2024, with a net income per share of $7.28 (diluted).
Deferred Revenue
As of July 31, 2024, total deferred revenue stood at $11.48 billion, up from $9.30 billion in the previous year.
Cash Flow Analysis
Cash flow provided by operating activities during fiscal 2024 was $3.26 billion, reflecting an increase attributed to higher collections from sales.
| Cash Flow Category | 2024 (in millions) | 2023 (in millions) |
|---|---|---|
| Operating Activities | $3,257.6 | $2,777.5 |
| Investing Activities | $(1,509.9) | $(2,033.8) |
| Financing Activities | $(1,343.1) | $(1,726.3) |
Acquisitions
Palo Alto Networks completed two significant acquisitions in fiscal 2024:
- Dig Security Solutions Ltd. for $255.4 million.
- Talon Cyber Security Ltd. for $458.6 million.
Market Presence
The company serves a wide range of industries, including education, healthcare, and telecommunications, and maintains a strong global presence with end-customers in over 180 countries.
Debt Obligations
As of July 31, 2024, Palo Alto Networks had convertible senior notes amounting to $963.9 million.
How Palo Alto Networks, Inc. (PANW) Makes Money
Revenue Streams
Revenue Streams
Palo Alto Networks generates revenue through two primary streams: product revenue and subscription and support revenue.
| Revenue Type | Fiscal 2024 (in millions) | Fiscal 2023 (in millions) | Year-over-Year Change |
|---|---|---|---|
| Product Revenue | $1,603.3 | $1,578.4 | 1.6% |
| Subscription Revenue | $4,188.5 | $3,335.4 | 25.6% |
| Support Revenue | $2,235.7 | $1,978.9 | 13.0% |
| Total Revenue | $8,027.5 | $6,892.7 | 16.5% |
Product Revenue Breakdown
The product revenue, which constitutes approximately 20% of total revenue, is primarily derived from sales of the ML-Powered Next-Generation Firewalls and software licenses for Panorama, SD-WAN, and the VM-Series. This segment experienced a year-over-year growth of 1.6% in fiscal 2024, reflecting a shift towards new-generation hardware products, despite a decline in demand for older models.
Subscription and Support Revenue
Subscription and support revenue accounts for about 80% of total revenue, which is a significant increase from prior years. This revenue is recognized over time as services are performed, making it a recurring revenue model.
| Revenue Type | Fiscal 2024 (in millions) | Fiscal 2023 (in millions) | Year-over-Year Change |
|---|---|---|---|
| Subscription and Support Total | $6,424.2 | $5,314.3 | 20.9% |
Geographic Revenue Distribution
Revenue is also segmented geographically, with the Americas contributing the largest share. The following table details the revenue by geographic theater for fiscal 2024.
| Region | Fiscal 2024 Revenue (in millions) | Fiscal 2023 Revenue (in millions) | Year-over-Year Change |
|---|---|---|---|
| Americas | $5,482.9 | $4,719.9 | 16.2% |
| EMEA | $1,602.0 | $1,359.6 | 17.8% |
| APAC | $942.6 | $813.2 | 15.9% |
Cost of Revenue
The total cost of revenue for fiscal 2024 was $2,059.2 million, with specific costs broken down as follows:
| Cost Type | Fiscal 2024 (in millions) | Fiscal 2023 (in millions) | Year-over-Year Change |
|---|---|---|---|
| Cost of Product Revenue | $348.2 | $418.3 | (16.8)% |
| Cost of Subscription and Support Revenue | $1,711.0 | $1,491.4 | 14.7% |
Gross Margin Analysis
Gross profit for fiscal 2024 was $5,968.3 million, resulting in a gross margin of 74.3%, an increase from 72.3% in fiscal 2023. The gross margin for each revenue type is as follows:
| Revenue Type | Gross Profit (in millions) | Gross Margin Percentage |
|---|---|---|
| Product | $1,255.1 | 78.3% |
| Subscription and Support | $4,713.2 | 73.4% |
Operating Expenses
Operating expenses totaled $5,284.4 million in fiscal 2024, with the following breakdown:
| Expense Type | Fiscal 2024 (in millions) | Fiscal 2023 (in millions) |
|---|---|---|
| Research and Development | $1,809.4 | $1,604.0 |
| Sales and Marketing | $2,794.5 | $2,544.0 |
| General and Administrative | $680.5 | $447.7 |
Net Income
For fiscal 2024, Palo Alto Networks reported a net income of $2,577.6 million, a substantial increase from $439.7 million in fiscal 2023. This significant rise is primarily attributed to enhanced operational efficiency and increased revenue streams.
| Year | Net Income (in millions) |
|---|---|
| 2024 | $2,577.6 |
| 2023 | $439.7 |
Conclusion on Financial Health
As of July 31, 2024, Palo Alto Networks maintained cash, cash equivalents, and investments totaling $6,752.0 million, reflecting a robust financial position to support ongoing operations and future growth initiatives.
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