Posted this yesterday on the PANW discussion page and thought you all might be interested here….
From the release:
- Fiscal second quarter revenue grew 14% year over year to $2.3 billion.
- Next-Generation Security ARR grew 37% year over year to $4.8 billion.
- Remaining performance obligation grew 21% year over year to $13.0 billion.
From Nikesh:
“In Q2, our strong business performance was fueled by customers adopting technology driven by the imperative of AI, including cloud investment and infrastructure modernization,” said Nikesh Arora, chairman and CEO of Palo Alto Networks. “Our growth across regions and demand for our platforms demonstrate our customers’ confidence in our approach. It reaffirms our faith in our 2030 plans and our $15 billion NGS ARR goal.”
“Platformization drove our Q2 results, including strength in NGS ARR and RPO,” said Dipak Golechha, chief financial officer of Palo Alto Networks. “As we drive leverage from our scale and see early benefits from AI-related efficiency initiatives, we again delivered profitable growth. We expect this will continue and, as a result, we are raising operating margins and EPS for the year.”
Financial Outlook
Palo Alto Networks provides guidance based on current market conditions and expectations.
For the fiscal third quarter 2025, we expect:
- Next-Generation Security ARR of $5.03 billionto $5.08 billion, representing year-over-year growth of between 33% and 34%.
- Remaining performance obligation of $13.5 billion to $13.6 billion, representing year-over-year growth of between 19% and 20%.
- Total revenue in the range of $2.26 billion to $2.29 billion, representing year-over-year growth of between 14% and 15%.
- Diluted non-GAAP net income per share in the range of $0.76 to $0.77, using 703 million to 706 million shares outstanding.
For the fiscal year 2025, we expect:
- Next-Generation Security ARR of $5.52 billionto $5.57 billion, representing year-over-year growth of between 31% and 32%.
- Remaining performance obligation of $15.2 billion to $15.3 billion, representing year-over-year growth of between 19% and 20%.
- Total revenue in the range of $9.14 billion to $9.19 billion, representing year-over-year growth of 14%.
- Non-GAAP operating margin in the range of 28.0% to 28.5%.
- Diluted non-GAAP net income per share in the range of $3.18 to $3.24, using 700 million to 708 million shares outstanding.
- Adjusted free cash flow margin in the range of 37% to 38%.
My Commentary (worth what it costs)
So more of the same. They continue to grow nicely overall including the firewalled portion and very nicely in the cloud portion with ARR at 37%. This is continuing to come down slowly. Last quarter was 40%. I believe this is due to the law of large numbers and when their competitors report we will see if it is still best in the industry as it has been for a few quarters now.
Free cash flow margin is predicted to be in the 37-38% range which is pretty amazing for a company of this size.
In summary, a well run company in an important, growing and critical industry to our digital / AI world. Even if you don’t own PANW, it would seem that a balanced portfolio should contain some type of cyber security stock (if not 2 or 3!).
Link to release: https://investors.paloaltonetworks.com/news-releases/news-release-details/palo-alto-networks-reports-fiscal-second-quarter-2025-financial
Link to quarterly presentation (worth a look): https://investors.paloaltonetworks.com/static-files/1aec3588-68f8-4ca3-b167-740453d1e11d
Randy
Long PANW and CRWD and PANW Tickerguide