Palo Alto Networks, Inc. · NASDAQ:PANW

Palo Alto Networks — Q1 2025 Earnings Presentation

28 slides from Palo Alto Networks's earnings presentation, Nov 20, 2024

Slide 2: Safe Harbor
Safe Harbor This presentation contains “forward-looking” statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act, including the cybersecurity threat landscape, expectations regarding our platformization strategy and related progress and opportunities, l
Slide 4: Q1 FY'25: Off to a good start, top-line metrics ahead of expectations
Q1 FY’25: Oﬀ to a good start, top-line metrics ahead of expectations Delivering ahead of Top-Line …balanced with strong Targets in Q1… proﬁtability and cash generation Q1’25 NGS ARR1 Q1’25 RPO Q1’25 Operating Margin (non-GAAP) Q1’25 EPS (non-GAAP) $4.52B $12.6B 28.8% $1.56 +40% y/y +20% y/y +60 bps
Slide 5: Platformization conversations expanding - taking hold in the industry
Platformization conversations expanding - taking hold in the industry Platforms are a growing focus of the Industry experts are seeing a shift in conversation the market Y Y/ 0% >5 “A majority of enterprise customers will beneﬁt from a platform approach.” Jan - Oct Jan - Oct Gartner2 2023 2024 Menti
Slide 6: Continued momentum in Platformization
Continued momentum in Platformization - validating our conviction in the opportunity Cumulative Platformizations ~1,100 On Track for FY’30 Target of 2,500-3,500 Platformizations +6% Increase in NGS ARR On per platformized 15,000 customer in Q1’25 vs. Platformization opportunity FY’24 average set in
Slide 7: Strong NGS ARR growth in Q1
Strong NGS ARR growth in Q1 $4.52B1 $4.22B $3.79B +40% y/y Increase in Q1’25 NGS ARR $3.49B $3.23B On Track for FY’30 Target of $15B NGS 53% ARR 50% Q1’24 Q2’24 Q3’24 Q4’24 Q1’25 FY’30 NGS ARR from platformized accounts NGS ARR from non-platformized accounts 1 Q1'25 NGS ARR includes ~$74M attributab
Slide 8: Large deals continued to headline platformization success
Large deals continued to headline platformization success >$50M SOC transformation >$15M NetSec platformization with a technology ﬁrm with a national hospital system Platformization transaction in Security Customer consolidated on our appliances Operations replacing multiple SIEMs and while platform
Slide 9: Netsec: Strong innovation paired with SASE & ELA growth
Netsec: Strong innovation paired with SASE & ELA growth Strong NetSec momentum led by SASE Q1 NetSec innovation milestones SASE customer traction Release of AI-powered OT oﬀering, +20% y/y >40% leveraging new ruggedized FWs Active SASE of new customers, new customers1 to Palo Alto Networks Hundreds
Slide 10: Netsec: SASE Highlight | Prisma Access Browser
Netsec: SASE Highlight | Prisma Access Browser Signiﬁcant opportunity as ﬁrst mover natively Strong Prisma Access Browser integrating enterprise browser into SASE traction since acquisition Extension of SASE to unmanaged devices +115 Customers since acquisition Advanced phishing prevention SaaS, AI
Slide 11: Cortex growth driven by XSIAM momentum
Cortex growth driven by XSIAM momentum Innovation milestones fuel $1B in Cortex ARR1 Signiﬁcant Q1 XSIAM milestones QRadar SaaS >400 new XSIAM ML detection modules added in Q1 Cortex® >$1.0B XSIAM2 Cortex NGS ARR Cortex® XSIAM customers with >$1M Cortex® XSOAR Xpanse ~40 ARR, up ~180% y/y Cortex® XD
Slide 12: SecOps Highlight | Initial traction and opportunity from IBM Deal
SecOps Highlight | Excited by initial traction and opportunity from IBM Deal Early commercial traction Signiﬁcant XSIAM opportunity ahead Signiﬁcant pipeline of QRadar on-prem and SaaS opportunities 1 >550 QRadar SaaS customers >500 >$1B Customer opportunities in Total Pipeline Value pipeline >$80M
Slide 13: Cortex innovation - bringing Cloud and Cortex together
Cortex innovation - bringing Cloud and Cortex together Integration traction as we address real-time Cloud Security Millions of CDR Agents sold >15% Growth in combined Prisma Cloud and Cortex customer base 1 Release of automated data security General availability of AI-Copilots for remediation with X
Slide 14: Our Q1 performance bolsters our confidence in our strategy and FY'25 goals
Our Q1 performance bolsters our conﬁdence in our strategy and our FY’25 goals Broader recognition of Platformization beneﬁts and our third quarter of continued progress bolsters our conﬁdence Steady Platformization momentum will continue to fuel our NGS ARR growth Continuing to invest in innovation
Slide 16: Top-line metrics ahead of our guidance in Q1
Top-line metrics ahead of our guidance in Q1 Revenue Remaining Performance Obligation1 Next-Generation Security ARR2 Revenue Revenue Growth y/y RPO RPO Growth y/y NGS ARR NGS ARR Growth y/y ~$250M in AI ARR3 in Q1’25 1 Q1'25 Remaining performance obligation includes ~$68M attributable to acquired QR
Slide 17: Q1'25 Metrics
Q1’25 Metrics Q1’25 Q1’25 Guidance (as of 8/19/24) Actual Total Revenue $2.10B - $2.13B $2.14B 12% - 13% yr/yr 14% yr/yr Product Revenue $354M 4% yr/yr Remaining Performance Obligation $12.4B - $12.5B $12.6B 19% - 20% yr/yr 20% yr/yr Next-Gen Security ARR $4.33 - $4.38B $4.52B 34% - 36% yr/yr 40% yr
Slide 18: Reflections from our first quarter of focus on RPO and NGS ARR
Reﬂections from our ﬁrst quarter of focus on RPO and NGS ARR as key metrics Early signs of reduced cycle times for certain steps of our deal close process Deals structured to maximize exit ARR and proﬁtability Reduction in business on PAN-FS relative to prior periods 18 | © 2024 Palo Alto Networks,
Slide 19: Q2 & Fiscal Year 2025 Guidance
Q2 & Fiscal Year 2025 Guidance Q2 FY’25 FY 2025 Guidance (as of 11/20/24) Guidance (as of 11/20/24) Next-Gen Security ARR $4.70B - $4.75B $5.52B - $5.57B1 35% - 36% yr/yr 31% - 32% yr/yr Remaining Performance Obligation $12.9B - $13.0B $15.2B - $15.3B 20% - 21% yr/yr 19% - 20% yr/yr Total Revenue $2
Slide 20: Our two-for-one stock split
Our two-for-one stock split Ensuring Palo Alto Networks shares are accessible to all employees and investors Announcement Record Payment Ex-Split Date Date Date Date 11/20/2024 12/12/2024 12/13/2024 12/16/2024 Shareholders as of close of Shareholders are Shares begin trading at trading on this date
Slide 21: Modeling Points
Modeling Points ● Q2’25 and FY’25 non-GAAP eﬀective tax rate: 22% ● FY’25 Cash taxes of $550M – $625M, up from $340M in FY’24 ● Q2’25 net interest and other income of $75M – $80M ● Q2’25 diluted shares outstanding 350 – 352 million ● FY’25 diluted shares outstanding 350 – 354 million ● Q2’25 capital
Slide 24: GAAP to Non-GAAP Reconciliations – Gross Margin
GAAP to Non-GAAP Reconciliations – Gross Margin $ In millions Non-GAAP gross proﬁt and gross margin: Q124 Q125 $ % $ % GAAP gross proﬁt and gross margin $1,405.3 74.8% $1,584.7 74.1% Share-based compensation-related charges 39.6 2.1% 38.1 1.7% Amortization expense of acquired intangible assets 19.1
Slide 25: GAAP to Non-GAAP Reconciliations – Operating Margin
GAAP to Non-GAAP Reconciliations – Operating Margin $ In millions Non-GAAP operating income and operating margin: Q124 Q125 $ % $ % GAAP operating income and operating margin $215.2 11.5% $286.5 13.4% Share-based compensation-related charges 287.8 15.3% 315.1 14.7% Acquisition-related costs⁽¹⁾ - 0.0
Slide 26: GAAP to Non-GAAP Reconciliations – EPS
GAAP to Non-GAAP Reconciliations – EPS Non-GAAP net income per share, diluted: Q124 Q125 GAAP net income per share, diluted $0.56 $0.99 Share-based compensation-related charges 0.86 0.92 Acquisition-related cost⁽¹⁾ 0.00 0.04 Amortization expense of acquired intangibles assets 0.07 0.11 Litigation-re
Slide 27: GAAP to Non-GAAP Reconciliations – Adjusted Free Cash Flow
GAAP to Non-GAAP Reconciliations – Adjusted Free Cash Flow $ In millions Free cash ﬂow and adjusted free cash ﬂow (non-GAAP): Q125 Net cash provided by operating activities $1,509.6 Less: purchases of property, equipment, and other assets 44.1 Free cash ﬂow (non-GAAP) $1,465.5 Adjusted free cash ﬂow

Palo Alto Networks — Q1 2025 Earnings Presentation on 6ix

Palo Alto Networks — Q1 2025 Earnings Presentation

Slide 1: Q1 Fiscal Year 2025 Earnings Call

Slide 2: Safe Harbor

Slide 3: | © 2024 Palo Alto Networks, Inc. All rights reserved.

Slide 4: Q1 FY'25: Off to a good start, top-line metrics ahead of expectations

Slide 5: Platformization conversations expanding - taking hold in the industry

Slide 6: Continued momentum in Platformization

Slide 7: Strong NGS ARR growth in Q1

Slide 8: Large deals continued to headline platformization success

Slide 9: Netsec: Strong innovation paired with SASE & ELA growth

Slide 10: Netsec: SASE Highlight | Prisma Access Browser

Slide 11: Cortex growth driven by XSIAM momentum

Slide 12: SecOps Highlight | Initial traction and opportunity from IBM Deal

Slide 13: Cortex innovation - bringing Cloud and Cortex together

Slide 14: Our Q1 performance bolsters our confidence in our strategy and FY'25 goals

Slide 15: | © 2024 Palo Alto Networks, Inc. All rights reserved.

Slide 16: Top-line metrics ahead of our guidance in Q1

Slide 17: Q1'25 Metrics

Slide 18: Reflections from our first quarter of focus on RPO and NGS ARR

Slide 19: Q2 & Fiscal Year 2025 Guidance

Slide 20: Our two-for-one stock split

Slide 21: Modeling Points

Slide 22: Q&A

Slide 23: Appendix

Slide 24: GAAP to Non-GAAP Reconciliations – Gross Margin

Slide 25: GAAP to Non-GAAP Reconciliations – Operating Margin

Slide 26: GAAP to Non-GAAP Reconciliations – EPS

Slide 27: GAAP to Non-GAAP Reconciliations – Adjusted Free Cash Flow

Slide 28: Thank You