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1. Company Snapshot

1.a. Company Description

Palo Alto Networks, Inc.provides cybersecurity solutions worldwide.The company offers firewall appliances and software; Panorama, a security management solution for the control of firewall appliances and software deployed on an end-customer's network and instances in public or private cloud environments, as a virtual or a physical appliance; and virtual system upgrades, which are available as extensions to the virtual system capacity that ships with physical appliances.


It also provides subscription services covering the areas of threat prevention, malware and persistent threat, uniform resource locator filtering, laptop and mobile device protection, and firewall; and DNS security, Internet of Things security, SaaS security API, and SaaS security inline, as well as threat intelligence, and data loss prevention.In addition, the company offers cloud security, secure access, security analytics and automation, and threat intelligence and cyber security consulting; professional services, including architecture design and planning, implementation, configuration, and firewall migration; education services, such as certifications, as well as online and in-classroom training; and support services.Palo Alto Networks, Inc.


sells its products and services through its channel partners, as well as directly to medium to large enterprises, service providers, and government entities operating in various industries, including education, energy, financial services, government entities, healthcare, Internet and media, manufacturing, public sector, and telecommunications.The company was incorporated in 2005 and is headquartered in Santa Clara, California.

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1.b. Last Insights on PANW

Palo Alto Networks' recent performance was negatively impacted by slowing sales growth and premium valuation, tempering its AI-driven expansion story. Despite solid Q1 earnings and upbeat guidance, investors reacted with disappointment, citing underlying weaknesses. The company's platformization strategy and rising demand for AI-driven security solutions are expected to drive growth. However, concerns over slowing sales and Next-Generation Security (NGS) ARR growth have raised questions about its valuation. Following its Q1 earnings release, shares fell over 4% after-hours.

1.c. Company Highlights

2. Palo Alto Networks' Q1 Earnings Exceed Expectations

Palo Alto Networks reported a strong Q1 with total revenue reaching $2.47 billion, representing 16% growth, and product revenue growing 23% year over year. The company's total gross margin stood at 76.9%, and operating margin was 30.2%, achieving expansion of 140 basis points year over year. Diluted non-GAAP EPS reached $0.93, exceeding the high end of guidance and beating analyst estimates of $0.891. The company's Remaining Performance Obligation (RPO) grew 24% to $15.5 billion, and current RPO was $6.9 billion, up 16%. NGS ARR ended the quarter at $5.85 billion, achieving 29% growth.

Publication Date: Nov -20

📋 Highlights
  • Strong Q1 Financial Performance:: Exceeded guided metrics with 24% YoY RPO growth to $15.5B, 29% GSAR growth, and 16% total revenue growth to $2.47B.
  • SASE Dominance:: Achieved $1.3B ARR (34% YoY growth) with 6,800 customers, including one-third of Fortune 500, and secured a $33M deal with a US cabinet agency.
  • Large Strategic Deals:: Closed a $100M telecom contract (including $85M for XIM) and saw secure browser bookings quadruple to 7.5M units sold.
  • AI Security Momentum:: Prisma AI 2.0 launched, driving over 100% QoQ growth in AI security deals, with marquee customers adopting the platform.
  • Chronosphere Acquisition Impact:: Acquired for $3.35B to expand observability capabilities, adding $160M ARR and triple-digit growth potential, targeting 173 high-revenue enterprises.

Business Highlights

The company saw strength across its portfolio, including SASE, XIM, software firewalls, and early traction in its AI security platform, Prisma Airs. SASE ARR grew 34% year over year, surpassing $1.3 billion, with approximately 6,800 SASE customers, including one-third of the Fortune 500. The company also saw strong momentum with secure browsers, crossing seven and a half million browsers sold.

Growth Prospects and Acquisitions

The company's long-term financial model remains intact, with a scale of platforms and operating leverage reinforcing its confidence in achieving 40 plus percent free cash flow margins by FY '28. The acquisition of CyberArk and Chronosphere will expand the company's Total Addressable Market (TAM), with both categories of identity and observability experiencing an inflection due to AI. Nikesh Arora noted that the acquisition of Chronosphere will enhance the company's observability capabilities, particularly for born-in-the-cloud companies.

Valuation Metrics

With a P/E Ratio of 121.49 and an EV/EBITDA of 68.96, the market is pricing in significant growth expectations. Palo Alto Networks' ROE stands at 14.85%, and ROIC is 5.35%. The company's Free Cash Flow Yield is 2.78%, indicating a relatively attractive valuation from a cash flow perspective. Analysts estimate next year's revenue growth at 14.5%, which, considering the current valuation multiples, suggests that the stock may be fairly valued, assuming the company can deliver on its growth projections.

3. NewsRoom

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Prediction: 3 Beginner Stocks That Could Turn Small Bets Into Big Fortunes

Dec -04

Source: fool.com

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Palo Alto Networks, Inc. (PANW) Presents at UBS Global Technology and AI Conference 2025 Transcript

Dec -03

Source: seekingalpha.com

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Palo Alto Networks Plunges 14% in a Month: Time to Hold Tight or Exit?

Dec -02

Source: zacks.com

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Palo Alto Networks Buys Chronosphere: Will Observability Fuel Growth?

Dec -01

Source: zacks.com

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First Look: Airbus drops, Crypto slides, Cyber Monday

Dec -01

Source: gurufocus.com

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Boston Family Office LLC Grows Position in Palo Alto Networks, Inc. $PANW

Dec -01

Source: defenseworld.net

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Could the Next Trillion-Dollar AI Opportunity Be in Cybersecurity and Not Semiconductors?

Dec -01

Source: fool.com

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1 No-Brainer Artificial Intelligence (AI) Stock to Buy With $200 in December and Hold for the Long Term

Nov -28

Source: fool.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (14.80%)

6. Segments

Security Software & Services

Expected Growth: 14.8%

The cybersecurity industry is experiencing rapid growth due to rising threats and increasing regulatory requirements. Palo Alto Networks is well-positioned to capitalize on this trend, driven by its innovative products and strong market presence. As a result, the Security Software & Services segment is expected to grow at the global revenue growth rate of 14.8%, driven by increasing demand for its comprehensive security solutions and the company's leadership in the cybersecurity market.

7. Detailed Products

Next-Generation Firewalls (NGFWs)

Palo Alto Networks' NGFWs provide advanced threat prevention, URL filtering, and application visibility and control.

Panorama

Panorama is a centralized security management system that provides visibility, control, and automation across the entire network.

Prisma Access

Prisma Access is a cloud-based security service that provides secure access to the internet, SaaS applications, and cloud services.

Prisma SaaS

Prisma SaaS is a cloud-based security service that provides visibility, control, and protection for SaaS applications.

Cortex XDR

Cortex XDR is an extended detection and response (XDR) solution that provides advanced threat detection, investigation, and response capabilities.

Cortex Data Lake

Cortex Data Lake is a cloud-based data analytics platform that provides real-time threat detection, incident response, and security analytics.

VM-Series

VM-Series is a virtualized next-generation firewall that provides advanced threat prevention, URL filtering, and application visibility and control.

CN-Series

CN-Series is a containerized next-generation firewall that provides advanced threat prevention, URL filtering, and application visibility and control.

8. Palo Alto Networks, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Palo Alto Networks, Inc. has a strong brand presence and its products are highly differentiated, making it difficult for substitutes to gain traction.

Bargaining Power Of Customers

While customers have some bargaining power due to the presence of multiple players in the cybersecurity market, Palo Alto Networks, Inc.'s strong product offerings and customer loyalty programs help to mitigate this power.

Bargaining Power Of Suppliers

Palo Alto Networks, Inc. has a diversified supplier base, and its suppliers do not have significant bargaining power due to the company's strong negotiating position.

Threat Of New Entrants

While there are barriers to entry in the cybersecurity market, new entrants can still disrupt the market with innovative products and services. However, Palo Alto Networks, Inc.'s strong brand presence and established customer base provide some protection against new entrants.

Intensity Of Rivalry

The cybersecurity market is highly competitive, with multiple players vying for market share. Palo Alto Networks, Inc. faces intense competition from established players and new entrants, which can lead to pricing pressure and increased marketing expenses.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 56.50%
Debt Cost 4.24%
Equity Weight 43.50%
Equity Cost 9.75%
WACC 6.63%
Leverage 129.87%

11. Quality Control: Palo Alto Networks, Inc. passed 7 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Palo Alto Networks

A-Score: 5.0/10

Value: 0.3

Growth: 9.0

Quality: 8.0

Yield: 0.0

Momentum: 7.0

Volatility: 6.0

1-Year Total Return ->

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Oracle

A-Score: 4.9/10

Value: 2.2

Growth: 6.8

Quality: 6.0

Yield: 2.0

Momentum: 9.0

Volatility: 3.3

1-Year Total Return ->

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CrowdStrike

A-Score: 4.8/10

Value: 2.0

Growth: 8.8

Quality: 4.8

Yield: 0.0

Momentum: 9.0

Volatility: 4.3

1-Year Total Return ->

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Fortinet

A-Score: 4.8/10

Value: 0.8

Growth: 9.1

Quality: 8.5

Yield: 0.0

Momentum: 5.5

Volatility: 4.7

1-Year Total Return ->

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Adobe

A-Score: 4.7/10

Value: 3.0

Growth: 7.7

Quality: 9.0

Yield: 0.0

Momentum: 1.5

Volatility: 7.3

1-Year Total Return ->

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Stock-Card
Synopsys

A-Score: 3.7/10

Value: 0.9

Growth: 7.3

Quality: 7.2

Yield: 0.0

Momentum: 3.5

Volatility: 3.3

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

198.84$

Current Price

198.84$

Potential

-0.00%

Expected Cash-Flows