Revenue growth has accelerated sharply to 34.4% YoY, but this has coincided with a structural decline in gross margins to 67.6% and inconsistent operating profitability, highlighting the margin trade-offs of the platformization push.
Palo Alto Networks, Inc. (PANW) annual income statement — 16-year revenue, gross profit & net income history
| 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 |
|---|
| Sales/Revenue | 11.48B | 9.22B | 8.03B | 6.89B | 5.5B | 4.26B | 3.41B | 2.9B | 2.27B | 1.76B | 1.38B | 928.05M | 598.18M | 396.11M | 255.14M | 118.6M | 48.78M |
| Revenue Growth % | 24.49% | 14.87% | 16.46% | 25.29% | 29.26% | 24.87% | 17.55% | 27.56% | 29.04% | 27.79% | 48.54% | 55.15% | 51.01% | 55.25% | 115.13% | 143.12% | - |
| Cost of Goods Sold | 3.4B | 2.45B | 2.06B | 1.91B | 1.72B | 1.27B | 999.5M | 808.4M | 645.3M | 476.6M | 370M | 251.5M | 159.63M | 109.76M | 70.55M | 32.27M | 15.63M |
| COGS % of Revenue | - | 26.59% | 25.65% | 27.71% | 31.24% | 29.95% | 29.32% | 27.88% | 28.39% | 27.05% | 26.84% | 27.1% | 26.69% | 27.71% | 27.65% | 27.21% | 32.05% |
| Gross Profit | 8.08B | 6.77B | 5.97B | 4.98B | 3.78B | 2.98B | 2.41B | 2.09B | 1.63B | 1.28B | 1.01B | 676.55M | 438.55M | 286.35M | 184.59M | 86.32M | 33.15M |
| Gross Margin % | 70.36% | 73.41% | 74.35% | 72.29% | 68.76% | 70.05% | 70.68% | 72.12% | 71.61% | 72.95% | 73.16% | 72.9% | 73.31% | 72.29% | 72.35% | 72.79% | 67.95% |
| Gross Profit Growth % | - | 13.43% | 19.77% | 31.73% | 26.89% | 23.76% | 15.19% | 28.47% | 26.68% | 27.42% | 49.06% | 54.27% | 53.15% | 55.13% | 113.83% | 160.42% | - |
| Operating Expenses | 7.38B | 5.53B | 5.28B | 4.6B | 3.97B | 3.29B | 2.59B | 2.15B | 1.73B | 1.44B | 1.17B | 776.4M | 653.9M | 304.97M | 180.69M | 96.73M | 53.8M |
| OpEx % of Revenue | - | 59.94% | 65.83% | 66.67% | 72.19% | 77.19% | 75.93% | 73.99% | 76.23% | 82% | 84.57% | 83.66% | 109.32% | 76.99% | 70.82% | 81.56% | 110.3% |
| Selling, General & Admin | 4.83B | 3.54B | 3.48B | 2.99B | 2.55B | 2.14B | 1.82B | 1.61B | 1.33B | 1.1B | 881.6M | 590.6M | 407.9M | 242.49M | 142.12M | 75.36M | 41.02M |
| SG&A % of Revenue | - | 38.42% | 43.29% | 43.4% | 46.42% | 50.4% | 53.39% | 55.38% | 58.6% | 62.28% | 63.95% | 63.64% | 68.19% | 61.22% | 55.7% | 63.54% | 84.08% |
| Research & Development | 2.55B | 1.98B | 1.81B | 1.6B | 1.42B | 1.14B | 768.1M | 539.5M | 400.7M | 347.4M | 284.2M | 185.83M | 104.81M | 62.48M | 38.57M | 21.37M | 12.79M |
| R&D % of Revenue | - | 21.52% | 22.54% | 23.27% | 25.77% | 26.79% | 22.54% | 18.61% | 17.63% | 19.72% | 20.62% | 20.02% | 17.52% | 15.77% | 15.12% | 18.02% | 26.21% |
| Other Operating Expenses | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 141.2M | 0 | 0 | 0 | 0 |
| Operating Income | 695M | 1.24B | 683.9M | 387.3M | -188.8M | -304.1M | -179M | -54.1M | -104.2M | -165.8M | -157.3M | -99.8M | -215.3M | -18.62M | 3.89M | -10.4M | -20.66M |
| Operating Margin % | 6.05% | 13.48% | 8.52% | 5.62% | -3.43% | -7.14% | -5.25% | -1.87% | -4.58% | -9.41% | -11.41% | -10.75% | -35.99% | -4.7% | 1.53% | -8.77% | -42.35% |
| Operating Income Growth % | - | 81.74% | 76.58% | 305.14% | 37.92% | -69.89% | -230.87% | 48.08% | 37.15% | -5.4% | -57.62% | 53.65% | -1056.22% | -578.57% | 137.4% | 49.63% | - |
| EBITDA | 185M | 1.59B | 967.2M | 669.5M | 93.8M | -43.7M | 27.1M | 99.7M | -7.8M | -106M | -114.5M | -70.9M | -195.9M | -8.73M | 10.03M | -8.21M | -19.53M |
| EBITDA Margin % | 1.61% | 17.2% | 12.05% | 9.71% | 1.7% | -1.03% | 0.8% | 3.44% | -0.34% | -6.02% | -8.31% | -7.64% | -32.75% | -2.2% | 3.93% | -6.93% | -40.04% |
| EBITDA Growth % | -88.33% | 64.01% | 44.47% | 613.75% | 314.65% | -261.25% | -72.82% | 1378.21% | 92.64% | 7.42% | -61.5% | 63.81% | -2144.24% | -187.07% | 222.03% | 57.95% | - |
| D&A (Non-Cash Add-back) | -510M | 343.4M | 283.3M | 282.2M | 282.6M | 260.4M | 206.1M | 153.8M | 96.4M | 59.8M | 42.8M | 28.9M | 19.4M | 9.89M | 6.13M | 2.19M | 1.12M |
| EBIT | 536M | 1.6B | 993.1M | 586.8M | -187M | -307M | -146.6M | 9.3M | -75.7M | -155.6M | -148.9M | -99.6M | -220.3M | -18.58M | 2.83M | -10.4M | -20.66M |
| Net Interest Income | 0 | 360.8M | 309.6M | 197.2M | -11.8M | -154.6M | -47.3M | -14.1M | -2.5M | -9.8M | -14.6M | -18.4M | -1.9M | -74K | -36K | 3K | 4K |
| Interest Income | 0 | 363.5M | 317.9M | 224.4M | 15.6M | 8.5M | 41.4M | 69.8M | 27.1M | 14.7M | 8.8M | 3.9M | 0 | 484K | 18K | 3K | 4K |
| Interest Expense | 0 | 3M | 8.3M | 27.2M | 27.4M | 163.3M | 88.7M | 83.9M | 29.6M | 24.5M | 23.4M | 22.32M | 1.88M | 35K | 2.2M | 0 | 0 |
| Other Income/Expense | -159M | 352.8M | 304.4M | 179M | -18.4M | -160.9M | -52.8M | -20.5M | -1.1M | -28.3M | -15M | -22.04M | -6.86M | -35K | -1.09M | -1.65M | -420K |
| Pretax Income | 536M | 1.6B | 988.3M | 566.3M | -207.2M | -465M | -231.8M | -74.6M | -130.2M | -194.1M | -205.1M | -155.58M | -222.16M | -18.66M | 2.8M | -12.05M | -21.08M |
| Pretax Margin % | 4.67% | 17.3% | 12.31% | 8.22% | -3.77% | -10.93% | -6.8% | -2.57% | -5.73% | -11.02% | -14.88% | -16.76% | -37.14% | -4.71% | 1.1% | -10.16% | -43.21% |
| Income Tax | 229M | 461.8M | -1.59B | 126.6M | 59.8M | 33.9M | 35.2M | 7.3M | 17.7M | 22.5M | 20.8M | 9.4M | 4.29M | 10.59M | 2.06M | 476K | 56K |
| Effective Tax Rate % | 42.72% | 28.94% | -160.81% | 22.36% | -28.86% | -7.29% | -15.19% | -9.79% | -13.59% | -11.59% | -10.14% | -6.05% | -1.93% | -56.76% | 73.67% | -3.95% | -0.27% |
| Net Income | 307M | 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 |
| Net Margin % | 2.67% | 12.3% | 32.11% | 6.38% | -4.85% | -11.72% | -7.83% | -2.82% | -6.51% | -12.3% | -16.39% | -17.78% | -37.86% | -7.38% | 0.29% | -10.56% | -43.32% |
| Net Income Growth % | -72.93% | -56.01% | 486.22% | 264.68% | 46.48% | -86.85% | -226.01% | 44.62% | 31.72% | 4.12% | -36.92% | 27.14% | -674.3% | -4068.25% | 105.88% | 40.72% | - |
| Net Income (Continuing) | 307M | 1.13B | 2.58B | 439.7M | -267M | -498.9M | -267M | -81.9M | -122.2M | -216.6M | -192.7M | -164.98M | -226.45M | -29.25M | 737K | -12.53M | -21.13M |
| Discontinued Operations | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Minority Interest | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| EPS (Diluted) | 0.40 | 1.60 | 3.64 | 0.64 | -0.45 | -0.86 | -0.46 | -0.15 | -0.27 | -0.40 | -0.43 | -0.34 | -0.51 | -0.07 | 0.00 | -0.03 | -0.07 |
| EPS Growth % | -72.5% | -56.04% | 468.75% | 242.22% | 47.67% | -86.96% | -217.24% | 46.3% | 32.5% | 6.98% | -28.36% | 34.31% | -628.57% | - | 105.55% | 50.08% | - |
| EPS (Basic) | - | 1.71 | 4.04 | 0.73 | -0.45 | -0.86 | -0.46 | -0.15 | -0.27 | -0.40 | -0.43 | -0.34 | -0.51 | -0.07 | 0.00 | -0.04 | -0.07 |
| Diluted Shares Outstanding | 764M | 709.3M | 708M | 684.6M | 591M | 578.4M | 581.4M | 567M | 550.2M | 543.6M | 522.6M | 489.6M | 445.8M | 412.09M | 400.24M | 385.97M | 331.71M |
| Basic Shares Outstanding | 749M | 662.5M | 638.4M | 606.4M | 591M | 578.4M | 581.4M | 567M | 550.2M | 543.6M | 522.6M | 489.6M | 445.8M | 412.09M | 400.24M | 350.53M | 331.71M |
| Dividend Payout Ratio | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - |
Quick answers to the most common questions about buying PANW stock.
For fiscal year 2025, Palo Alto Networks, Inc. (PANW) reported total revenue of $9.22B. This represents a 18803.5% increase compared to $48.8M in 2010.
Palo Alto Networks, Inc. (PANW) is profitable, generating $1.13B in net income for the fiscal year ending 2025 with a net profit margin of 12.3%.
Palo Alto Networks, Inc. (PANW) reported an operating income of $1.24B, resulting in an operating profit margin of 13.5%. This margin reflects the operational efficiency of the business before interest and taxes.
Palo Alto Networks, Inc. (PANW) generated $6.77B in gross profit for the year, representing a gross profit margin of 73.4%. This demonstrates the company's core pricing power and production efficiency.
Key Metrics
Top Statement Risk
Aggressive platformization compresses margins
Metrics are mathematically derived from official filings.
Revenue Growth Accelerates Sharply
PANW's revenue growth has accelerated significantly, jumping from a 12.1% year-over-year increase in 2024Q3 to 34.4% in 2026Q4, suggesting strong execution on the platformization strategy is driving new customer acquisitions and wallet share expansion.
The acceleration appears concentrated in the most recent two quarters, with growth rates exceeding 30%, a pace not seen in the prior eight quarters. This surge aligns with the company's stated shift toward offering free-of-charge product periods to incentivize platform adoption, which may be pulling forward demand and lengthening sales cycles for some customers. The durability of this growth rate will be a key monitor, as it may partially reflect a strategic land grab rather than purely organic, margin-accretive expansion.
Gross Margin Erosion from Platform Push
Structural gross margins have compressed notably, falling from a stable ~74% range in early 2025 to 67.6% in the two most recent quarters, a trend that appears directly linked to the economic concessions of the platformization strategy.
This 600+ basis point decline in gross margin is significant for a software-focused business and suggests the company is absorbing direct costs or offering aggressive pricing to win consolidated deals. While gross profit dollars are still growing, the margin pressure indicates that the volume gains from platformization are currently coming at a direct cost to profitability. Investors should monitor whether this represents a temporary investment phase or a new, lower-margin structural baseline for the business.
Operating Leverage Severely Tested
Operating income has swung from consistent profitability to losses in two of the last three quarters, with SG&A and R&D expenses surging in tandem with revenue, indicating a complete absence of operating leverage during this investment cycle.
The collapse in operating margin from 19.6% in 2025Q4 to -6.1% in 2026Q3 is stark. SG&A and R&D costs have scaled faster than revenue, not slower, which is the opposite of what investors expect from a scaling software business. This suggests the 'platformization' push is requiring massive upfront investment in sales capacity and engineering to integrate the platform, overwhelming any near-term efficiency gains from the growing revenue base.
GAAP Losses Mask Underlying Cash Generation
Reported GAAP net income and EPS have turned negative in recent quarters, heavily distorted by massive swings in stock-based compensation, with a $671M expense in 2026Q2 followed by $0 in 2026Q3, creating extreme volatility in bottom-line metrics.
The erratic SBC pattern, alternating between hundreds of millions and zero, suggests non-standard vesting or grant timing that makes GAAP profitability metrics highly unreliable for trend analysis. The swing from a $432M net income in 2026Q2 to a $177M loss in 2026Q3, on similar revenue, underscores this distortion. Analysts must focus on non-GAAP metrics and cash flow to assess true operational performance, as the reported GAAP figures are not indicative of recurring economic earnings.
Platformization Risks Deep Margin Compression
The most significant risk is that the aggressive platformization strategy is fundamentally eroding the company's margin structure, as evidenced by the simultaneous collapse in both gross and operating margins despite record revenue growth.
Short-sellers would focus on the possibility that PANW is buying revenue growth at the expense of long-term profitability. The data shows gross margins are down ~650 bps y/y, while operating margins have swung negative, meaning the incremental revenue is not just low-margin, but is generating an operating loss. If platformization requires permanent, deep discounts or free product periods to maintain competitiveness against peers like Fortinet (80.8% gross margin) and Check Point (86.7% gross margin), PANW may be sacrificing its historical pricing power and financial profile to gain market share, with unclear returns on that investment.
The Platformization Pivot Reshapes Economics
The operational inflection point appears to be the 2026Q2 quarter, where the strategic shift to 'platformization' became fully visible, causing a sharp, simultaneous deterioration in gross margin, operating margin, and EPS quality despite strong top-line growth.
Before this quarter, margins were stable and growth was moderate. After it, the financial profile fundamentally changed: revenue growth surged above 30%, but gross margins broke their historical 73-74% band, operating income turned negative, and earnings quality was disrupted by erratic SBC. This inflection suggests management has prioritized market share and platform lock-in over near-term profitability, a strategic choice whose success will be measured by future retention and cross-sell metrics, not current income statement results.