Free cash flow remains volatile, with margins fluctuating from 68.2% in 2026Q1 to 26.2% in 2026Q3, reflecting the lumpy nature of enterprise billing and heavy capital deployment.
| Metric | TTM | Jul'25 | Jul'24 | Jul'23 | Jul'22 | Jul'21 | Jul'20 | Jul'19 | Jul'18 | Jul'17 | Jul'16 | Jul'15 | Jul'14 | Jul'13 | Jul'12 | Jul'11 | Jul'10 |
|---|
| Cash from Operations | 4.22B | 3.72B | 3.26B | 2.78B | 1.98B | 1.5B | 1.04B | 1.06B | 1.04B | 868.5M | 658.1M | 350.3M | 88.41M | 114.52M | 77.37M | 32.1M | -2.68M |
| Operating CF Margin % | - | 40.3% | 40.58% | 40.3% | 36.08% | 35.31% | 30.39% | 36.41% | 45.62% | 49.3% | 47.74% | 37.75% | 14.78% | 28.91% | 30.32% | 27.07% | -5.5% |
| Operating CF Growth % | 154.44% | 14.07% | 17.29% | 39.95% | 32.05% | 45.12% | -1.89% | 1.79% | 19.4% | 31.97% | 87.87% | 296.24% | -22.8% | 48.02% | 141.01% | 1296.5% | - |
| Net Income | 842.8M | 1.13B | 2.58B | 439.7M | -267M | -498.9M | -267M | -81.9M | -147.9M | -216.6M | -225.9M | -164.98M | -226.45M | -29.25M | 737K | -12.53M | -21.13M |
| Depreciation & Amortization | 653.7M | 302.3M | 283.3M | 282.2M | 282.6M | 304.9M | 253.5M | 153.8M | 96.4M | 59.8M | 42.8M | 28.88M | 19.42M | 9.89M | 6.13M | 2.19M | 1.12M |
| Stock-Based Compensation | 1.03B | 1.3B | 1.08B | 1.07B | 1.01B | 894.5M | 658.4M | 567.7M | 496.7M | 474.5M | 392.8M | 221.31M | 99.77M | 43.7M | 13.84M | 4.73M | 869K |
| Deferred Taxes | 129.6M | -349.9M | -2.03B | 1.91B | -3.1M | 13.1M | -6.2M | -17.5M | 500K | 23.6M | 2.5M | 706K | 6.42M | -4.82M | -952K | 12.53M | 21.13M |
| Other Non-Cash Items | 497.4M | 411.8M | 444.7M | -1.48B | 440.3M | 440.8M | 325.2M | 206M | 69.9M | 24.5M | 23.4M | 22.27M | 48M | 262K | 1.7M | -10.95M | -20.71M |
| Working Capital Changes | 187.8M | 922.8M | 910.3M | 550.8M | 520.8M | 348.6M | 71.8M | 227.5M | 521.4M | 502.7M | 422.5M | 242.12M | 141.25M | 94.73M | 55.92M | 36.13M | 16.04M |
| Change in Receivables | -311.6M | -154.2M | -1.02B | -1.06B | -902M | -172.4M | -435.6M | -108.7M | -33M | -82.9M | -136.4M | -76.83M | -47.95M | -41.82M | -15.96M | -15.44M | -10.71M |
| Change in Inventory | 0 | 0 | 0 | 0 | 0 | -327.6M | -448.8M | -353.1M | -80.6M | 5.1M | 23M | 303K | -9.23M | 17.29M | -1.15M | 1.23M | 7.33M |
| Change in Payables | 38.1M | 106.8M | -15M | 1M | 69.3M | -11.8M | -12.8M | 32.3M | 3.7M | 5.9M | 15.1M | -3.5M | -1.1M | 5.83M | 3.78M | 2.73M | 894K |
| Cash from Investing | -2.86B | -2.2B | -1.51B | -2.03B | -933.4M | -1.48B | 288M | -1.83B | -520M | -472.6M | -338.9M | -679.01M | -320.35M | -151.56M | -14.56M | -13M | -1.69M |
| Capital Expenditures | 76.9M | -246.2M | -156.8M | -146.3M | -192.8M | -116M | -214.4M | -131.2M | -112M | -163.4M | -72.5M | -33.83M | -36.11M | -22.44M | -14.56M | -13M | -1.69M |
| CapEx % of Revenue | 0.73% | 2.67% | 1.95% | 2.12% | 3.5% | 2.73% | 6.29% | 4.52% | 4.93% | 9.28% | 5.26% | 3.65% | 6.04% | 5.67% | 5.71% | 10.96% | 3.45% |
| Acquisitions | -5.12B | -1.05B | -610.6M | -204.5M | -37M | -777.3M | -583.5M | -773.7M | -374.1M | -90.7M | -6.4M | -15.13M | -85.73M | 22.44M | 0 | 0 | 0 |
| Investments | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - |
| Other Investing | -500.2M | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 6.4M | 0 | 0 | -22.44M | 0 | 0 | 0 |
| Cash from Financing | -1.38B | -778.9M | -1.34B | -1.73B | -806.6M | -1.1B | 673M | -773.9M | 1.25B | -386M | 39.4M | 50.7M | 575.14M | 25.02M | 219.32M | 2.58M | 1.84M |
| Debt Issued (Net) | 592.3M | -965.6M | -1.03B | -1.69B | -600K | -900K | 1.98B | -477.4M | 1.68B | 0 | 0 | 0 | 560.4M | 0 | 0 | 0 | 0 |
| Equity Issued (Net) | -1.23B | 370.5M | -566.7M | -272.7M | -892.3M | -1.18B | -1.22B | -258.3M | -302.8M | -432.4M | 0 | 0 | 111.86M | -2.78M | -82K | -90K | -17K |
| Dividends Paid | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Share Repurchases | -1B | 0 | -566.7M | -272.7M | -892.3M | -1.18B | -1.2B | -330M | -259.1M | -411M | 0 | 0 | -132K | -2.78M | -82K | -90K | -24K |
| Other Financing | -736.8M | -183.8M | 257.3M | 238.4M | 86.3M | 75M | -85.3M | -38.2M | -134M | 46.4M | 38.9M | 50.7M | -97.12M | 27.79M | 219.4M | 2.67M | 1.85M |
| Net Change in Cash | -20.8M | 732.4M | 404.6M | -982.6M | 244.7M | -1.08B | 2B | -1.54B | 1.76B | 9.9M | 358.6M | -278M | 343.2M | -12.03M | 282.13M | 21.68M | -2.53M |
| Free Cash Flow | 4.29B | 3.47B | 3.1B | 2.63B | 1.79B | 1.39B | 821.3M | 924.4M | 925M | 705.1M | 585.6M | 316.48M | 52.3M | 92.08M | 62.8M | 19.1M | -4.37M |
| FCF Margin % | 40.48% | 37.63% | 38.63% | 38.17% | 32.57% | 32.59% | 24.1% | 31.88% | 40.69% | 40.03% | 42.48% | 34.1% | 8.74% | 23.25% | 24.62% | 16.11% | -8.95% |
| FCF Growth % | 43.09% | 11.9% | 17.85% | 46.84% | 29.19% | 68.88% | -11.15% | -0.06% | 31.19% | 20.41% | 85.04% | 505.13% | -43.2% | 46.61% | 228.78% | 537.32% | - |
| FCF per Share | 5.77 | 4.89 | 4.38 | 3.84 | 3.03 | 2.40 | 1.41 | 1.63 | 1.68 | 1.30 | 1.12 | 0.65 | 0.12 | 0.22 | 0.16 | 0.05 | -0.01 |
| FCF Conversion (FCF/Net Income) | 5.09x | 3.28x | 1.26x | 6.32x | -7.43x | -3.01x | -3.88x | -12.89x | -7.01x | -4.01x | -2.91x | -2.12x | -0.39x | -3.92x | 104.98x | -2.56x | 0.13x |
| Interest Paid | 0 | 1.7M | 5.6M | 20.2M | 20.2M | 20M | 13.5M | 13.5M | 800K | 0 | 0 | 61K | 0 | 58K | 23K | 25K | 1K |
| Taxes Paid | 0 | 505.5M | 342.3M | 147.1M | 34.6M | 24.9M | 17.2M | 22M | 11.2M | 9M | 7.1M | 17.5M | 1.5M | 304K | 1.35M | 32K | 9K |
Platformization margin dilution risk
As reported in recent financial filings, PANW's operating cash flow to net income ratio reached -4.92 in 2026Q3, illustrating a significant divergence between accounting losses and cash generation that warrants careful scrutiny regarding the sustainability of current earnings quality and underlying operational efficiency.
The extreme variance between net income and operating cash flow suggests that non-cash charges and working capital adjustments are heavily influencing the bottom line. Investors should monitor whether this disconnect is a temporary byproduct of the platformization strategy or a structural shift in how the company recognizes value versus cash collection.
Based on the company's reported figures, free cash flow margins have fluctuated significantly, ranging from a high of 68.2% in 2026Q1 to 24.6% in 2026Q2, reflecting the lumpy nature of large-scale contract renewals and the aggressive capital deployment required to support the platformization transition.
The volatility in FCF margins appears to be tied to the timing of multi-year deal closures and the associated upfront cash inflows. This trend suggests that while the company remains cash-generative, the predictability of its free cash flow is currently compromised by the evolving nature of its customer acquisition model.
According to quarterly data, working capital changes have been highly erratic, swinging from a $845 million inflow in 2026Q1 to a $845 million outflow in 2026Q2, which indicates that the company's cash conversion cycle is heavily dependent on the timing of large enterprise billing cycles.
These sharp reversals in working capital suggest that PANW is utilizing flexible payment terms to incentivize vendor consolidation among its largest clients. Such practices may temporarily inflate or deflate cash flow, making it difficult to assess the underlying health of the core subscription business without adjusting for these timing effects.
As indicated by recent financial statements, PANW has prioritized significant capital deployment, including $2.0 billion in acquisitions and $1.0 billion in share repurchases during 2026Q3, signaling a management focus on inorganic growth and shareholder returns despite the ongoing transition toward a platform-centric business model.
The heavy reliance on M&A to bolster the product suite suggests that the company is attempting to buy its way into new security verticals rather than relying solely on organic development. Investors should monitor whether these acquisitions provide the expected return on invested capital or if they are merely masking slower organic growth in legacy segments.
Quick answers to the most common questions about buying PANW stock.
Palo Alto Networks, Inc. (PANW) generated $3.72B in net cash from operating activities in 2025. This reflects the cash generated directly from core business operations.
Palo Alto Networks, Inc. (PANW) generated $3.47B in free cash flow in 2025. Free cash flow is the cash left over after capital expenditures, which can be used to pay dividends, repurchase shares, or pay down debt.
Palo Alto Networks, Inc. (PANW) spent $246.2M on capital expenditures in 2025. CapEx represents the cash invested in physical assets like property, plant, and equipment to maintain or grow the business.