Palo Alto Networks, Inc. · NASDAQ:PANW

Palo Alto Networks — Q2 2025 Earnings Presentation

28 slides from Palo Alto Networks's earnings presentation, Feb 13, 2025

  1. Slide 1: Q2 Fiscal Year 2025 Earnings Call

    Q2 Fiscal Year 2025 Earnings Call February 13, 2025 © 2025 Palo Alto Networks, Inc. All rights reserved. Proprietary and confidential information.

  2. 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

  3. 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.

  4. Slide 4: Strong profitable growth momentum in Q2

    Strong profitable growth momentum in Q2 Delivering ahead of Top-Line …while focusing on growing Targets in Q2… profitability Q2’25 NGS ARR1 Q2’25 RPO Q2’25 Operating Income (non-GAAP) Q2’25 EPS (non-GAAP) $4.78B $13.0B $640M $0.81 +37% y/y +21% y/y +14% y/y +11% y/y Q2’25 Total Revenue Q2’25 Adj. FCF

  5. Slide 5: AI is causing an inflection in cloud adoption and infrastructure investment

    AI is causing an inflection in cloud adoption and infrastructure investment Cloud adoption Infrastructure investment 91% of organizations agree their IT infrastructure 70% of workloads will run in the cloud by 20281 requires improvement to support AI⁴ 63% of organizations cite AI as the driver of Ina

  6. Slide 6: One year in, Platformization is taking hold

    One year in, Platformization is taking hold ~1,150 ~1,100 ~1,000 ~900 ~850 ~75 Net New Platformizations1, up from ~45 in Q2’24 Q2’24 Q3’24 Q4’24 Q1’25 Q2’25 Total Platformizations 1 Platformization/Platformized defined as: Active ELA contract or >$1M SASE ARR for Network Security; >$1M ARR for Cloud

  7. Slide 7: Q2 Large deals validate our platformization strategy

    Q2 Large deals validate our platformization strategy Bank $68M Deal $12M In JAPAC Customer Platformized on SecOps with NGS ARR New Cortex XSIAM, and with additional purchases in NetSec (+411% y/y) Platformization >$5M Accounts1 in Q2’25 74 | +25% y/y US $61M Deal Significant purchase across all three

  8. Slide 8: Our NetSec momentum is being driven by strong software demand

    Our NetSec momentum is being driven by strong software demand TTM FWaaP bookings1 growth SASE growth supported by +21% y/y network transformation +17% y/y +19% y/y Software growth supported by AI & Cloud demand Stable Q2’23 Q2’24 Q2’25 Appliance performance Appliance2 portion of FWaaP SASE2 portion

  9. Slide 9: NetSec: SASE Update

    NetSec: SASE Update Momentum Innovation Active SASE customers1 >5,600 +20% y/y Prisma Access Browser Mobile bringing enterprise grade security to phones and tablets SASE deals >$1 million up 2.5x 2.5x y/y >23M Over 23 million SASE seats AI Access Enabling safe use of GenAI applications through disco

  10. Slide 10: NetSec: Software Firewalls Update

    NetSec: Software Firewalls Update Momentum Innovation >50% Bookings growth for software firewalls AI Runtime API Expanding our ability to secure a broader set of AI applications of VMs are deployed in the ~70% public cloud of VM customers deploy a hybrid ~⅔ hardware / software architecture1 Securing

  11. Slide 11: Introducing Cortex Cloud, the Future of Real-Time Cloud Security

    Introducing Cortex Cloud, the Future of Real-Time Cloud Security Introducing Powered by Precision AI ® Best in class Cloud runtime Significant AI-powered Drive adoption of preferred SOC protection for real-time cloud innovation on our platform for enterprise and cloud security industry-leading CNAPP

  12. Slide 12: CORTEX: Broad momentum across Security Operations and Cloud Security

    CORTEX: Broad momentum across Security Operations and Cloud Security ~50% y/y Total Bookings growth across Cortex & Prisma Cloud >$1B Nearly 2x Cumulative Number of Prisma Cloud deals XSIAM bookings over $1M 100% Leader Detection score in First SIEM industry leadership MITRE round 6 evaluation1 posi

  13. Slide 13: We are pleased with our 1H momentum driving profitable growth

    We are pleased with our 1H momentum driving profitable growth Inflecting technology industry trends driven by AI are fueling strong cybersecurity demand Robust top-line performance as we drive platformization momentum Strong momentum and innovation in each of our platforms Efficiency focus and early AI-

  14. Slide 14: © 2025 Palo Alto Networks, Inc. All rights reserved. Proprietary and confidential information.

    © 2025 Palo Alto Networks, Inc. All rights reserved. Proprietary and confidential information.

  15. Slide 15: Strong top-line metrics in Q2

    Strong top-line metrics in Q2 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 15 © 2025 Palo Alto Networks, Inc. All rights reserved. Proprietary and confidential information.

  16. Slide 16: Q2'25 Metrics

    Q2’25 Metrics Q2’25 Q2’25 Guidance (as of 11/20/24) Actual Total Revenue $2.22B - $2.25B $2.26B 12% - 14% yr/yr 14% yr/yr Product Revenue $422M Remaining Performance Obligation $12.9B - $13.0B $13.0B 20% - 21% yr/yr 21% yr/yr Next-Gen Security ARR $4.70 - $4.75B $4.78B 35% - 36% yr/yr 37% yr/yr Gros

  17. Slide 17: Over the last year, we have successfully executed on multiple fronts

    Over the last year, we have successfully executed on multiple fronts to drive our Platformization momentum Platformization at Announcement… …Platformization Today Large number of new sales programs in Programs are ingrained the market in our sales process PANW evangelizing the benefits of Partner eco

  18. Slide 18: We are encouraged by the initial results of our AI-based efficiencies

    We are encouraged by the initial results of our AI-based efficiencies On track for ~50% reduction in contract labor to support IT processes by end Employee facing of FY’25 ~85% usage in cases in NetSec; ~50% reduction in MTTR vs. baseline Customer support ~80% of engineers leveraging coding co-pilot D

  19. Slide 19: We have continued confidence in our cash flow margins

    We have continued confidence in our cash flow margins Growing balance of future collections from deferred payments increases cash flow visibility Continued Operating Margin Expansion $3.4B $3.1B $2.0B Smooth transition to deferred payments $1.4B $1.0B Higher 41% Percentage Significant progress in transi

  20. Slide 20: Q3 & Fiscal Year 2025 Guidance

    Q3 & Fiscal Year 2025 Guidance Q3 FY’25 FY 2025 Guidance (as of 2/13/25) Guidance (as of 2/13/25) Next-Gen Security ARR $5.03B - $5.08B $5.52B - $5.57B 33% - 34% yr/yr 31% - 32% yr/yr Remaining Performance Obligation $13.5B - $13.6B $15.2B - $15.3B 19% - 20% yr/yr 19% - 20% yr/yr Total Revenue $2.26

  21. Slide 21: Modeling Points

    Modeling Points ● Q3’25 and FY’25 non-GAAP effective tax rate of 22% ● FY’25 cash taxes of $375M – $450M, up from $340M in FY’24 ● Q3’25 net interest and other income of $80M – $85M ● Q3’25 diluted shares outstanding 703 – 706 million ● FY’25 diluted shares outstanding 700 – 708 million ● Q3’25 capit

  22. Slide 22: Q&A

    Q&A © 2025 Palo Alto Networks, Inc. All rights reserved. Proprietary and confidential information.

  23. Slide 23: Appendix

    Appendix © 2025 Palo Alto Networks, Inc. All rights reserved. Proprietary and confidential information.

  24. 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: Q225 $ % GAAP gross profit and gross margin $1,658.2 73.5% Share-based compensation-related charges 39.7 1.7% Amortization expense of acquired intangible assets 29.0 1.3% Litigation-related charges⁽¹⁾

  25. 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: Q224 Q225 $ % $ % GAAP operating income and operating margin $53.6 2.7% $240.4 10.6% Share-based compensation-related charges 296.8 15.1% 343.3 15.2% Acquisition-related costs⁽¹⁾ 7.3 0.4

  26. Slide 26: GAAP to Non-GAAP Reconciliations – EPS

    GAAP to Non-GAAP Reconciliations – EPS Non-GAAP net income per share, diluted: Q224 Q225 GAAP net income per share, diluted $2.44 $0.38 Share-based compensation-related charges 0.44 0.50 Acquisition-related cost⁽¹⁾ 0.01 0.01 Amortization expense of acquired intangibles assets 0.04 0.06 Litigation-re

  27. 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): Q225 Net cash provided by operating activities $556.9 Less: purchases of property, equipment, and other assets 47.5 Free cash flow (non-GAAP) $509.4 Adjusted free cash flow (no

  28. Slide 28: Thank You

    Thank You paloaltonetworks.com © 2025 Palo Alto Networks, Inc. All rights reserved. Proprietary and confidential information.

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