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Jan 31, 2025
Palo Alto Networks Q2 2025 Earnings Report
Palo Alto Networks reported strong revenue growth but a decline in GAAP net income due to a prior-year tax benefit.
Key Takeaways
Palo Alto Networks delivered 14.29% year-over-year revenue growth, driven by strong adoption of Next-Generation Security solutions. Non-GAAP EPS improved, but GAAP net income declined due to a prior-year tax benefit. The company continues to expand its AI-powered security offerings, raising its operating margin and EPS outlook for FY25.
Revenue grew 14.29% YoY to $2,257,400,000.
Next-Generation Security ARR increased 37% YoY to $4,800,000,000.
GAAP net income declined 84.70% YoY due to a prior-year tax benefit.
Operating margin remained strong at 28.40%.
Revenue by Segment
Forward Guidance
Palo Alto Networks expects continued revenue growth in Q3 FY25, with strong Next-Gen Security momentum and higher operating margins.
Positive Outlook
- Revenue guidance of $2,260,000,000 to $2,290,000,000 (+14% to +15% YoY).
- Next-Gen Security ARR expected to grow 33% to 34% YoY.
- RPO expected to grow 19% to 20% YoY.
- Operating margin guidance raised to 28.0% - 28.5%.
- AI-driven security solutions continue to gain traction.
Challenges Ahead
- Macroeconomic uncertainty could impact enterprise spending.
- Competition in cybersecurity remains intense.
- Potential headwinds from FX fluctuations.
- Slower than expected adoption in certain segments.
- Stock-based compensation expenses remain high.
Revenue & Expenses
Visualization of income flow from segment revenue to net income
Historical Earnings Impact
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Avg. Return Before/After Earnings
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