Palo Alto Networks, Inc. · NASDAQ:PANW
Palo Alto Networks — Q3 2025 Earnings Presentation
26 slides from Palo Alto Networks's earnings presentation, May 20, 2025
Slide 1: Q3 Fiscal Year 2025 Earnings Call
Q3 Fiscal Year 2025 Earnings Call May 20, 2025 © 2025 Palo Alto Networks, Inc. All rights reserved. Proprietary and confidential information.
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 3: © 2025 Palo Alto Networks, Inc. All rights reserved. Proprietary and confidential information.
© 2025 Palo Alto Networks, Inc. All rights reserved. Proprietary and confidential information.
Slide 4: Palo Alto Networks Q3 at a Glance
Palo Alto Networks Q3 at a Glance NGS ARR Q3’25 NGS ARR1 Q3’25 RPO Surpasses $5.09B $13.5B $5B milestone +34% y/y +19% y/y Q3’25 Revenue Q3’25 Operating Income (non-GAAP) Durable top line growth and $2.29B $627M +15% y/y +23% y/y operating leverage Q3’25 EPS (non-GAAP) Q3’25 Adj. Free Cash Flow (non
Slide 5: Continued Robust Demand for Cybersecurity in Q3
Continued Robust Demand for Cybersecurity in Q3 AI Transformation causing urgency for enterprise data architectures and transformation Critical need to secure AI transformation in the enterprise Rising vendor consolidation as enterprises look to simplify their security infrastructure Heightened thre
Slide 6: Q3 Platformizations Keep Us on Track to Long Term Goals
Q3 Platformizations Keep Us on Track to Long Term Goals Total Platformizations Customers with >$5M NGS ARR ~1,250 ~1,150 ~1,100 ~1,000 130 | +41% y/y ~900 ~850 ~90 Net New Platformizations1 in Q3’25 Customers with >$10M NGS ARR 44 | +63% y/y 1 Platformization/Platformized defined as: Active ELA contr
Slide 7: Top Q3 Platformizations Driving Consolidation
Top Q3 Platformizations Driving Consolidation Global $90M Deal 4 Consulting Firm Customer platformized on Cortex through XSIAM, after already Products Platformized on platformizing on NetSec through ELA & SASE purchases, and has initial spending in Cloud Security. Consolidated XSIAM in Q3 US Financi
Slide 8: Cortex: Record XSIAM Bookings in Q3 Drives NGS ARR Outperformance
Cortex: Record XSIAM Bookings in Q3 Drives NGS ARR Outperformance Momentum XSIAM Drives Significant Reduction in MTTR1 >200% XSIAM ARR Growth, y/y Before XSIAM After XSIAM as low as 2-3 Days ~1 minute ~270 XSIAM Customers of deployed XSIAM ~60% customers have >$1M Average ARR per XSIAM Customer MTTR
Slide 9: XSIAM Success: Provides the Basis for "XSIAM for Peacetime" - New TAM
XSIAM Success: Provides the Basis for “XSIAM for Peacetime” - New TAM NEW | Launched in Apr’25 E-mail Exposure & VM Recent XSIAM XSOAR Innovations Multi Channel Context Enabling new markets Xpanse XDR Future Access to new TAMs Innovations Unified Data Lake Data Normalization & Stitching AI & Automati
Slide 10: NetSec: Software Firewalls – Continued Momentum in Q3
NetSec: Software Firewalls – Continued Momentum in Q3 Growth Momentum Network Security Revenue Driven by an Increasing Software Mix Software Firewall ARR ~20% growth, y/y of Software Firewall ARR is ~70% deployed in the public cloud Increase in Software Firewall >25% Marketplace bookings, y/y 10 © 2
Slide 11: NetSec: SASE – Continuing to Grow Well Above Market
NetSec: SASE – Continuing to Grow Well Above Market Growth Momentum SASE growth ahead of the market 1 2 Active SASE customers ~6,000 +22% y/y 36% SASE ARR growth1, y/y 16% Growth in $1M+ Deals, y/y of new SASE customers were ~40% new to Palo Alto Networks 1 SASE includes Prisma Access and Prisma SD-
Slide 12: Spotlight: Prisma Access Browser - The Future OS of the AI-Driven Enterprise
Spotlight: Prisma Access Browser - The Future OS of the AI-Driven Enterprise Significant Demand Licenses Sold for ~3M Prisma Access Browser (PAB) ~3M Y Y/ x rd of Prisma Access seats sold in Q3 11 ~1/3 were for Prisma Access Browser ~250K Secure GenAI adoption, access control, PAB 2.0 and LLM-powered
Slide 13: Spotlight: Prisma AIRS - Securing the Expanding AI Attack Surface Area
Spotlight: Prisma AIRS - Securing the Expanding AI Attack Surface Area Announcing Prisma AIRS Acquiring Protect AI1 The world’s most comprehensive AI security platform Game changer in Security for AI market, to Discover Assess Protect secure AI end to end from development to runtime Your AI ecosyste
Slide 14: Sustaining Strong Momentum to Close Out the Year
Sustaining Strong Momentum to Close Out the Year Strong momentum across our Platforms, driving durable NGS ARR growth Platformization has taken hold, customers are consolidating with us Continued strong execution, robust pipeline opportunity in Q4 Relentless focus on innovation for the AI security e
Slide 15: © 2025 Palo Alto Networks, Inc. All rights reserved. Proprietary and confidential information.
© 2025 Palo Alto Networks, Inc. All rights reserved. Proprietary and confidential information.
Slide 16: Q3'25 Top Line Results
Q3’25 Top Line Results Revenue Remaining Performance Obligation Next-Generation Security ARR Revenue Revenue Growth y/y RPO RPO Growth y/y NGS ARR NGS ARR Growth y/y ~$400M in AI ARR1 in Q3’25 1 Annual recurring revenue from Cortex XSIAM, AIOps subscription, and ADEM. 16 © 2025 Palo Alto Networks, I
Slide 17: Net New NGS ARR Mix Shift Towards New Market Offerings
Net New NGS ARR Mix Shift Towards New Market Offerings Net New Next-Generation Security ARR Larger Proportion of FY’25 Net New ARR driven by New Market Offerings Software Cortex SASE Firewalls Cloud Net New NGS ARR - advanced Net New NGS ARR - new subscription upgrade1 market offerings2 1 Net new NGS A
Slide 18: Q3'25 Metrics
Q3’25 Metrics Q3’25 Q3’25 Guidance (as of 2/13/25) Actual Total Revenue $2.26B - $2.29B $2.29B 14% - 15% y/y 15% y/y Product Revenue $453M Remaining Performance Obligation $13.5B - $13.6B $13.5B 19% - 20% y/y 19% y/y Next-Gen Security ARR $5.03 - $5.08B $5.09B 33% - 34% y/y 34% y/y Gross Margin (Non
Slide 19: Q4 & Fiscal Year 2025 Guidance
Q4 & Fiscal Year 2025 Guidance Q4 FY’25 FY 2025 Guidance (as of 5/20/25) Guidance (as of 5/20/25) Next-Gen Security ARR $5.52B - $5.57B $5.52B - $5.57B 31% - 32% y/y 31% - 32% y/y Remaining Performance Obligation $15.2B - $15.3B $15.2B - $15.3B 19% - 20% y/y 19% - 20% y/y Total Revenue $2.49B - $2.5
Slide 20: Modeling Points
Modeling Points ● Q4’25 product revenue y/y growth rate similar to Q3’25 ● Q4’25 and FY’25 non-GAAP effective tax rate of 22% ● FY’25 cash taxes of $375M – $450M ● Q4’25 net interest and other income of $80M – $85M ● Q4’25 diluted shares outstanding 704 – 707 million ● FY’25 diluted shares outstandin
Slide 21: Q&A
Q&A © 2025 Palo Alto Networks, Inc. All rights reserved. Proprietary and confidential information.
Slide 22: Appendix
Appendix © 2025 Palo Alto Networks, Inc. All rights reserved. Proprietary and confidential information.
Slide 23: GAAP to Non-GAAP Reconciliations – Gross Margin
GAAP to Non-GAAP Reconciliations – Gross Margin $ In millions Non-GAAP gross profit and gross margin: Q325 $ % GAAP gross profit and gross margin $1,669.7 72.9% Share-based compensation-related charges 40.9 1.8% Amortization expense of acquired intangible assets 28.1 1.2% Litigation-related charges⁽¹⁾
Slide 24: GAAP to Non-GAAP Reconciliations – Operating Margin
GAAP to Non-GAAP Reconciliations – Operating Margin $ In millions Non-GAAP operating income and operating margin: Q324 Q325 $ % $ % GAAP operating income and operating margin $176.7 8.9% $218.8 9.6% Share-based compensation-related charges 290.0 14.6% 355.3 15.5% Acquisition-related costs⁽¹⁾ 2.8 0.1
Slide 25: GAAP to Non-GAAP Reconciliations – EPS
GAAP to Non-GAAP Reconciliations – EPS Non-GAAP net income per share, diluted: Q324 Q325 GAAP net income per share, diluted $0.39 $0.37 Share-based compensation-related charges 0.43 0.52 Acquisition-related cost⁽¹⁾ 0.00 0.01 Amortization expense of acquired intangibles assets 0.05 0.06 Litigation-re
Slide 26: 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): Q325 Net cash provided by operating activities $628.7 Less: purchases of property, equipment, and other assets 68.3 Free cash flow (non-GAAP) $560.4 Add: capital expenditures