Palo Alto Networks Reports 13.9% Revenue Growth to $2.14 Billion in Latest Quarter

Palo Alto Networks Inc. reported significant financial performance for the three months ended October 31, 2024, with total revenue reaching $2,138.8 million, a 13.9% increase from $1,878.1 million in the same period of 2023. This growth was driven by a notable rise in subscription and support revenue, which accounted for 83.5% of total revenue, increasing to $1,785.0 million from $1,537.0 million year-over-year. Product revenue also saw a modest increase, rising to $353.8 million from $341.1 million.

The company's gross profit for the quarter was $1,584.7 million, up from $1,405.3 million in the prior year, reflecting a gross margin of 74.1%. Operating income improved to $286.5 million, compared to $215.2 million in the previous year, resulting in an operating margin of 13.4%. Net income surged to $350.7 million, significantly higher than $194.2 million in the same quarter of 2023, with net income per share increasing to $1.07 from $0.63.

Palo Alto Networks' total assets as of October 31, 2024, were $20,374.6 million, up from $19,990.9 million as of July 31, 2024. The increase in total assets was supported by a rise in cash and cash equivalents, which reached $2,282.8 million, compared to $1,535.2 million in the prior quarter. Goodwill also increased to $4,050.8 million, reflecting the acquisition of certain IBM QRadar assets for $1.1 billion, completed on August 31, 2024. This acquisition is expected to enhance the company's Cortex business and generate post-acquisition synergies.

The company reported a decrease in accounts receivable, which fell to $1,132.9 million from $2,618.6 million, indicating improved cash collection. However, total current assets decreased to $6,242.7 million from $6,849.7 million. Stockholders' equity rose to $5,911.8 million, up from $5,169.7 million, bolstered by the issuance of 2.6 million shares related to employee equity incentive plans.

Operating expenses increased, primarily due to higher personnel costs in research and development and sales and marketing, which rose by $49.0 million and $57.6 million, respectively. General and administrative expenses decreased due to a release of previously accrued litigation-related charges.

The effective tax rate for the quarter was 4.9%, a significant decrease from 31.3% in the same period last year, primarily due to deferred tax benefits. The company continues to monitor macroeconomic factors that may impact its performance, including inflation and geopolitical tensions.