Non-GAAP Financial Measures and Other Key Metrics

This unaudited supplemental financial information contains financial statements that have not been prepared in accordance with generally accepted accounting principles in the United States ("GAAP"). We use these non-GAAP financial measures and key metrics internally in analyzing our financial results and believe that the disclosure of these non-GAAP financial measures and key metrics will be useful to investors as an additional tool to evaluate our ongoing operating results and trends and in comparing our financial results with other companies in our industry, many of which present similar non-GAAP financial measures or key metrics.

Non-GAAP financial measures and key metrics are not meant to be considered in isolation or as a substitute for comparable GAAP financial measures, and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP. A reconciliation of our non-GAAP financial measures and key metrics to the most directly comparable GAAP measures has been provided in the financial statement tables included in this supplemental financial information, and investors are encouraged to review these reconciliations. We have not provided a reconciliation of forward-looking non-GAAP measures to the corresponding GAAP measures as they are not available without unreasonable effort.

After the close of trading on December 12, 2024, we effected a two-for-one stock split. All share and per-share amounts presented have been retroactively adjusted to reflect the stock split.

1

Palo Alto Networks, Inc.

Condensed Consolidated Statements of Operations - Fiscal Quarters (In millions, except percentages)

Q323

Q423

Q124

Q224

Q324

Q424

Q125

Q225

Revenue:

Product

$ 388.1

$ 507.4

$ 341.1

$ 390.7

$ 391.0

$ 480.5

$ 353.8

$ 421.5

Subscription and support

1,332.8

1,445.9

1,537.0

1,584.4

1,593.8

1,709.0

1,785.0

1,835.9

Total revenue

1,720.9

1,953.3

1,878.1

1,975.1

1,984.8

2,189.5

2,138.8

2,257.4

Cost of revenue:

Product

93.4

104.3

77.4

88.2

77.9

104.7

75.0

101.3

Subscription and support

381.4

402.5

395.4

410.9

435.7

469.0

479.1

497.9

Total cost of revenue

474.8

506.8

472.8

499.1

513.6

573.7

554.1

599.2

Total gross profit

1,246.1

1,446.5

1,405.3

1,476.0

1,471.2

1,615.8

1,584.7

1,658.2

Product gross margin

75.9 %

79.4 %

77.3 %

77.4 %

80.1 %

78.2 %

78.8 %

76.0 %

Subscription and support gross margin

71.4 %

72.2 %

74.3 %

74.1 %

72.7 %

72.6 %

73.2 %

72.9 %

Total gross margin

72.4 %

74.1 %

74.8 %

74.7 %

74.1 %

73.8 %

74.1 %

73.5 %

Operating expenses:

Research and development

413.7

414.4

409.5

447.9

457.2

494.8

480.4

505.7

Sales and marketing

639.5

664.0

660.5

673.0

718.7

742.3

720.1

758.3

General and administrative

114.2

114.6

120.1

301.5

118.6

140.3

97.7

153.8

Total operating expenses

1,167.4

1,193.0

1,190.1

1,422.4

1,294.5

1,377.4

1,298.2

1,417.8

Operating income

78.7

253.5

215.2

53.6

176.7

238.4

286.5

240.4

Interest expense Other income, net Income before income taxes

Provision for (benefit from) income taxes Net income

(7.8)

(5.7)

(2.9)

(2.8)

(2.3)

(0.3)

(1.2)

(0.9)

60.1

68.7

70.3

84.7

76.8

80.9

83.3

85.3

131.0

316.5

282.6

135.5

251.2

319.0

368.6

324.8

23.2

88.8

88.4

(1,611.4)

(27.6)

(38.7)

17.9

57.5

$ 107.8

$ 227.7

$ 194.2

$1,746.9

$ 278.8

$ 357.7

$ 350.7

$ 267.3

2

Palo Alto Networks, Inc.

Non-GAAP Condensed Consolidated Statements of Operations - Fiscal Quarters (In millions, except percentages)

Q323

Q423

Q124

Q224

Q324

Q424

Q125

Q225

Revenue:

Product

$ 388.1

$ 507.4

$ 341.1

$ 390.7

$ 391.0

$ 480.5

$ 353.8

$ 421.5

Subscription and support

1,332.8

1,445.9

1,537.0

1,584.4

1,593.8

1,709.0

1,785.0

1,835.9

Total revenue

1,720.9

1,953.3

1,878.1

1,975.1

1,984.8

2,189.5

2,138.8

2,257.4

Cost of revenue:

Product

89.7

100.8

73.8

84.8

74.4

101.8

71.8

98.2

Subscription and support

321.0

343.2

338.5

349.8

370.0

405.2

413.3

430.5

Total cost of revenue

410.7

444.0

412.3

434.6

444.4

507.0

485.1

528.7

Total gross profit

1,310.2

1,509.3

1,465.8

1,540.5

1,540.4

1,682.5

1,653.7

1,728.7

Product gross margin

76.9 %

80.1 %

78.4 %

78.3 %

81.0 %

78.8 %

79.7 %

76.7 %

Subscription and support gross margin

75.9 %

76.3 %

78.0 %

77.9 %

76.8 %

76.3 %

76.8 %

76.6 %

Total gross margin

76.1 %

77.3 %

78.0 %

78.0 %

77.6 %

76.8 %

77.3 %

76.6 %

Operating expenses:

Research and development

281.4

294.5

285.6

302.0

319.8

350.8

338.0

356.5

Sales and marketing

547.4

574.1

571.2

586.0

631.8

660.1

626.0

648.9

General and administrative

74.7

86.7

79.7

88.3

80.9

83.3

73.5

82.9

Total operating expenses

903.5

955.3

936.5

976.3

1,032.5

1,094.2

1,037.5

1,088.3

Operating income

406.7

554.0

529.3

564.2

507.9

588.3

616.2

640.4

Interest expense

(6.0)

(4.2)

(1.9)

(1.7)

(1.5)

0.3

(0.7)

(0.6)

Other income, net

60.1

68.7

70.3

84.7

76.8

80.9

83.3

85.3

Income before income taxes

460.8

618.5

597.7

647.2

583.2

669.5

698.8

725.1

Provision for income taxes

101.4

136.0

131.4

142.5

128.3

147.3

153.9

159.4

Net income

$ 359.4

$ 482.5

$ 466.3

$ 504.7

$ 454.9

$ 522.2

$ 544.9

$ 565.7

3

Palo Alto Networks, Inc.

GAAP to Non-GAAP Reconciliations and Disaggregation of Revenue by Type - Fiscal Quarters (In millions, except percentages and per share amounts)

GAAP to Non-GAAP Reconciliations

GAAP product gross profit

Share-based compensation-related charges Litigation-related charges(1)

Non-GAAPproduct gross profit Non-GAAP product gross margin

GAAP subscription and support gross profit Share-based compensation-related charges Amortization expense of acquired intangible assets

Non-GAAP subscription and support gross profit Non-GAAPsubscription and support gross margin

GAAP total gross profit

Share-based compensation-related charges Amortization expense of acquired intangible assets Litigation-related charges(1)

Non-GAAPtotal gross profit Non-GAAP gross margin

GAAP research and development expense Share-based compensation-related charges

Non-GAAP research and development expense

Non-GAAP research and development expense as a percentage of revenue

GAAP sales and marketing expense Share-based compensation-related charges Amortization expense of acquired intangible assets

Non-GAAP sales and marketing expense

Non-GAAP sales and marketing expense as a percentage of revenue

GAAP general and administrative expense Share-based compensation-related charges Acquisition-related costs(2) Litigation-related charges(1)

Non-GAAP general and administrative expense

Non-GAAP general and administrative expense as a percentage of revenue

Q323

Q423

Q124

Q224

Q324

Q424

Q125

Q225

$

294.7

$

403.1

$

263.7

$

302.5

$

313.1

$

375.8

$

278.8

$

320.2

1.9

1.8

1.8

1.6

1.7

1.2

1.4

1.3

1.8

1.7

1.8

1.8

1.8

1.7

1.8

1.8

$

298.4

$

406.6

$

267.3

$

305.9

$

316.6

$

378.7

$

282.0

$

323.3

76.9 %

80.1 %

78.4 %

78.3 %

81.0 %

78.8 %

79.7 %

76.7 %

$

951.4

$1,043.4

$1,141.6

$1,173.5

$1,158.1

$1,240.0

$1,305.9

$1,338.0

40.5

40.0

37.8

38.6

38.0

36.3

36.7

38.4

19.9

19.3

19.1

22.5

27.7

27.5

29.1

29.0

$1,011.8

$1,102.7

$1,198.5

$1,234.6

$1,223.8

$1,303.8

$1,371.7

$1,405.4

75.9 %

76.3 %

78.0 %

77.9 %

76.8 %

76.3 %

76.8 %

76.6 %

$1,246.1

$1,446.5

$1,405.3

$1,476.0

$1,471.2

$1,615.8

$1,584.7

$1,658.2

42.4

41.8

39.6

40.2

39.7

37.5

38.1

39.7

19.9

19.3

19.1

22.5

27.7

27.5

29.1

29.0

1.8

1.7

1.8

1.8

1.8

1.7

1.8

1.8

$1,310.2

$1,509.3

$1,465.8

$1,540.5

$1,540.4

$1,682.5

$1,653.7

$1,728.7

76.1 %

77.3 %

78.0 %

78.0 %

77.6 %

76.8 %

77.3 %

76.6 %

$

413.7

$

414.4

$

409.5

$

447.9

$

457.2

$

494.8

$

480.4

$

505.7

132.3

119.9

123.9

145.9

137.4

144.0

142.4

149.2

$

281.4

$

294.5

$

285.6

$

302.0

$

319.8

$

350.8

$

338.0

$

356.5

16.4 %

15.1 %

15.2 %

15.3 %

16.1 %

16.0 %

15.8 %

15.8 %

$

639.5

$

664.0

$

660.5

$

673.0

$

718.7

$

742.3

$

720.1

$

758.3

86.7

84.5

83.9

81.6

81.7

76.0

82.5

94.6

5.4

5.4

5.4

5.4

5.2

6.2

11.6

14.8

$

547.4

$

574.1

$

571.2

$

586.0

$

631.8

$

660.1

$

626.0

$

648.9

31.8 %

29.4 %

30.4 %

29.6 %

31.8 %

30.1 %

29.3 %

28.7 %

$

114.2

$

114.6

$

120.1

$

301.5

$

118.6

$

140.3

$

97.7

$

153.8

32.1

27.9

40.4

29.1

31.2

29.6

52.1

59.8

7.4

-

-

7.3

2.8

3.5

15.1

9.7

-

-

-

176.8

3.7

23.9

(43.0)

1.4

$

74.7

$

86.7

$

79.7

$

88.3

$

80.9

$

83.3

$

73.5

$

82.9

4.3 %

4.4 %

4.2 %

4.5 %

4.1 %

3.8 %

3.4 %

3.7 %

  1. Consists of the amortization of intellectual property licenses and covenant not to sue. Also includes a legal contingency charge (credit) in Q2'24 through Q2'25, and a litigation settlement charge in Q4'24.
  2. Consists of acquisition transaction costs, share-based compensation related to the cash settlement of certain equity awards, change in fair value of contingent consideration liability, and costs to terminate certain employment, operating lease, and other contracts of the acquired companies.

4

Palo Alto Networks, Inc.

GAAP to Non-GAAP Reconciliations and Disaggregation of Revenue by Type - Fiscal Quarters (Continued) (In millions, except percentages and per share amounts)

Q323

Q423

Q124

Q224

Q324

Q424

Q125

Q225

GAAP total operating expense

$1,167.4

$1,193.0

$1,190.1

$

1,422.4

$1,294.5

$1,377.4

$1,298.2

$1,417.8

Share-based compensation-related charges

251.1

232.3

248.2

256.6

250.3

249.6

277.0

303.6

Acquisition-related costs(1)

7.4

-

-

7.3

2.8

3.5

15.1

9.7

Amortization expense of acquired intangible assets

5.4

5.4

5.4

5.4

5.2

6.2

11.6

14.8

Litigation-related charges(2)

-

-

-

176.8

3.7

23.9

(43.0)

1.4

Non-GAAP total operating expense

$

903.5

$

955.3

$

936.5

$

976.3

$1,032.5

$1,094.2

$1,037.5

$1,088.3

Non-GAAP total operating expense as a percentage

52.5 %

48.9 %

49.8 %

49.4 %

52.0 %

49.9 %

48.5 %

48.2 %

of revenue

GAAP operating income

$

78.7

$

253.5

$

215.2

$

53.6

$

176.7

$

238.4

$

286.5

$

240.4

Share-based compensation-related charges

293.5

274.1

287.8

296.8

290.0

287.1

315.1

343.3

Acquisition-related costs(1)

7.4

-

-

7.3

2.8

3.5

15.1

9.7

Amortization expense of acquired intangible assets

25.3

24.7

24.5

27.9

32.9

33.7

40.7

43.8

Litigation-related charges(2)

1.8

1.7

1.8

178.6

5.5

25.6

(41.2)

3.2

Non-GAAP operating income

$

406.7

$

554.0

$

529.3

$

564.2

$

507.9

$

588.3

$

616.2

$

640.4

Non-GAAP operating margin

23.6 %

28.4 %

28.2 %

28.6 %

25.6 %

26.9 %

28.8 %

28.4 %

GAAP interest expense

$

(7.8)

$

(5.7)

$

(2.9)

$

(2.8)

$

(2.3)

$

(0.3)

$

(1.2)

$

(0.9)

Non-cash charges related to convertible notes(3)

1.8

1.5

1.0

1.1

0.8

0.6

0.5

0.3

Non-GAAP interest expense

$

(6.0)

$

(4.2)

$

(1.9)

$

(1.7)

$

(1.5)

$

0.3

$

(0.7)

$

(0.6)

Non-GAAP interest expense as a percentage of

(0.3)%

(0.2)%

(0.1)%

(0.1)%

(0.1)%

0.0 %

0.0 %

0.0 %

revenue

GAAP income before income taxes

$

131.0

$

316.5

$

282.6

$

135.5

$

251.2

$

319.0

$

368.6

$

324.8

Share-based compensation-related charges

293.5

274.1

287.8

296.8

290.0

287.1

315.1

343.3

Acquisition-related costs(1)

7.4

-

-

7.3

2.8

3.5

15.1

9.7

Amortization expense of acquired intangible assets

25.3

24.7

24.5

27.9

32.9

33.7

40.7

43.8

Litigation-related charges(2)

1.8

1.7

1.8

178.6

5.5

25.6

(41.2)

3.2

Non-cash charges related to convertible notes(3)

1.8

1.5

1.0

1.1

0.8

0.6

0.5

0.3

Non-GAAP income before income taxes

$

460.8

$

618.5

$

597.7

$

647.2

$

583.2

$

669.5

$

698.8

$

725.1

GAAP provision for (benefit from) income taxes

$

23.2

$

88.8

$

88.4

$(1,611.4)

$

(27.6)

$

(38.7)

$

17.9

$

57.5

Income tax and other tax adjustments(4)

78.2

47.2

43.0

1,753.9

155.9

186.0

136.0

101.9

Non-GAAP provision for income taxes

$

101.4

$

136.0

$

131.4

$

142.5

$

128.3

$

147.3

$

153.9

$

159.4

Non-GAAP effective tax rate

22.0 %

22.0 %

22.0 %

22.0 %

22.0 %

22.0 %

22.0 %

22.0 %

  1. Consists of acquisition transaction costs, share-based compensation related to the cash settlement of certain equity awards, change in fair value of contingent consideration liability, and costs to terminate certain employment, operating lease, and other contracts of the acquired companies.
  2. Consists of the amortization of intellectual property licenses and covenant not to sue. Also includes a legal contingency charge (credit) in Q2'24 through Q2'25, and a litigation settlement charge in Q4'24.
  3. Consists of non-cash interest expense for amortization of debt issuance costs related to our convertible senior notes.
  4. Consists of income tax adjustments related to our long-term non-GAAP effective tax rate of 22%. In Q2'24 through Q4'24, it included a tax benefit from a release of our valuation allowance on U.S. federal, U.S. states other than California, and United Kingdom deferred tax assets.

5

Palo Alto Networks, Inc.

GAAP to Non-GAAP Reconciliations and Disaggregation of Revenue by Type - Fiscal Quarters (Continued) (In millions, except percentages and per share amounts)

Q323

Q423

Q124

Q224

Q324

Q424

Q125

Q225

GAAP net income

$

107.8

$

227.7

$

194.2

$ 1,746.9

$

278.8

$

357.7

$

350.7

$

267.3

Share-based compensation-related charges

293.5

274.1

287.8

296.8

290.0

287.1

315.1

343.3

Acquisition-related costs(1)

7.4

-

-

7.3

2.8

3.5

15.1

9.7

Amortization expense of acquired intangible assets

25.3

24.7

24.5

27.9

32.9

33.7

40.7

43.8

Litigation-related charges(2)

1.8

1.7

1.8

178.6

5.5

25.6

(41.2)

3.2

Non-cash charges related to convertible notes(3)

1.8

1.5

1.0

1.1

0.8

0.6

0.5

0.3

Income tax and other tax adjustments(4)

(78.2)

(47.2)

(43.0)

(1,753.9)

(155.9)

(186.0)

(136.0)

(101.9)

Non-GAAP net income

$

359.4

$

482.5

$

466.3

$

504.7

$

454.9

$

522.2

$

544.9

$

565.7

GAAP net income per share, diluted

$

0.16

$

0.32

$

0.28

$

2.44

$

0.39

$

0.51

$

0.49

$

0.38

Share-based compensation-related charges

0.45

0.44

0.43

0.44

0.43

0.41

0.46

0.50

Acquisition-related costs(1)

0.01

0.00

0.00

0.01

0.00

0.00

0.02

0.01

Amortization expense of acquired intangible assets

0.04

0.03

0.04

0.04

0.05

0.05

0.06

0.06

Litigation-related charges(2)

0.00

0.00

0.00

0.25

0.01

0.04

(0.06)

0.00

Non-cash charges related to convertible notes(3)

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

Income tax and other tax adjustments(4)

(0.11)

(0.07)

(0.06)

(2.45)

(0.22)

(0.26)

(0.19)

(0.14)

Non-GAAP net income per share, diluted

$

0.55

$

0.72

$

0.69

$

0.73

$

0.66

$

0.75

$

0.78

$

0.81

GAAP weighted-average shares used to compute

689.4

709.0

699.6

715.0

709.3

707.8

709.0

709.0

net income per share, diluted

Weighted-average anti-dilutive impact of note

hedge agreements

(38.5)

(38.6)

(23.2)

(25.9)

(19.1)

(14.7)

(11.8)

(8.7)

Non-GAAP weighted-average shares used to

650.9

670.4

676.4

689.1

690.2

693.1

697.2

700.3

compute net income per share, diluted

  1. Consists of acquisition transaction costs, share-based compensation related to the cash settlement of certain equity awards, change in fair value of contingent consideration liability, and costs to terminate certain employment, operating lease, and other contracts of the acquired companies.
  2. Consists of the amortization of intellectual property licenses and covenant not to sue. Also includes a legal contingency charge (credit) in Q2'24 through Q2'25, and a litigation settlement charge in Q4'24.
  3. Consists of non-cash interest expense for amortization of debt issuance costs related to our convertible senior notes.
  4. Consists of income tax adjustments related to our long-term non-GAAP effective tax rate of 22%. In Q2'24 through Q4'24, it included a tax benefit from a release of our valuation allowance on U.S. federal, U.S. states other than California, and United Kingdom deferred tax assets.

6

Palo Alto Networks, Inc.

GAAP to Non-GAAP Reconciliations and Disaggregation of Revenue by Type - Fiscal Quarters (Continued) (In millions, except percentages and per share amounts)

Q323

Q423

Q124

Q224

Q324

Q424

Q125

Q225

Net cash provided by operating activities

$

432.1

$

414.1

$

1,526.0

$

690.0

$

528.9

$

512.7

$

1,509.6

$

556.9

Less: purchases of property, equipment, and

31.2

37.2

36.8

35.2

37.4

47.4

44.1

47.5

other assets

Free cash flow (non-GAAP)

$

400.9

$

376.9

$

1,489.2

$

654.8

$

491.5

$

465.3

$

1,465.5

$

509.4

Add: cash payment related to tax settlement

-

10.9

-

-

-

-

-

-

Add: litigation-related payment(1)

-

-

-

-

-

20.0

-

-

Adjusted free cash flow (non-GAAP)

$

400.9

$

387.8

$

1,489.2

$

654.8

$

491.5

$

485.3

$

1,465.5

$

509.4

Net cash provided by (used in) investing activities

$

87.9

$

362.6

$

(129.0)

$(1,325.5)

$

113.1

$

(168.5)

$

(543.8)

$

(380.8)

Net cash provided by (used in) financing activities

$

128.2

$(1,634.8)

$

(41.8)

$

(72.6)

$(1,049.4)

$

(179.3)

$

(219.7)

$

(232.2)

Free cash flow margin (non-GAAP)

23.3 %

19.3 %

79.3 %

33.2 %

24.8 %

21.3 %

68.5 %

22.6 %

Adjusted free cash flow margin (non-GAAP)

23.3 %

19.9 %

79.3 %

33.2 %

24.8 %

22.2 %

68.5 %

22.6 %

Disaggregation of Revenue by Type

Revenue:

Product

$

388.1

$

507.4

$

341.1

$

390.7

$

391.0

$

480.5

$

353.8

$

421.5

Subscription and support

Subscription

838.1

917.9

988.3

1,027.1

1,045.6

1,127.5

1,191.8

1,233.2

Support

494.7

528.0

548.7

557.3

548.2

581.5

593.2

602.7

Total subscription and support

1,332.8

1,445.9

1,537.0

1,584.4

1,593.8

1,709.0

1,785.0

1,835.9

Total revenue

$

1,720.9

$

1,953.3

$

1,878.1

$

1,975.1

$

1,984.8

$

2,189.5

$

2,138.8

$

2,257.4

  1. Consists of a one-time payment in Q4'24 to settle a litigation-related matter.

7

Palo Alto Networks, Inc.

Other Key Metrics - Fiscal Quarters (In billions, except percentages)

Q323

Q423

Q124

Q224

Q324

Q424

Q125

Q225

Next-Generation Security Annualized Recurring

$

2.57

$

2.95

$

3.23

$

3.49

$

3.79

$

4.22

$

4.52

$

4.78

Revenue(1)

Next-Generation Security Annualized Recurring

60 %

56 %

53 %

50 %

47 %

43 %

40 %

37 %

Revenue year-over-year percentage increase

Remaining performance obligations

$

9.2

$

10.6

$

10.4

$

10.8

$

11.3

$

12.7

$

12.6

$

13.0

Remaining performance obligations year-over-

35 %

30 %

26 %

22 %

23 %

20 %

20 %

21 %

year percentage increase

  1. Our Next-Generation Security Annualized Recurring Revenue ("NGS ARR") represents the annualized allocated revenue of all active contracts as of the final day of the reporting period for Prisma and Cortex offerings inclusive of the VM-Series and related services, and certain cloud-delivered security services. Beginning Q1'25, NGS ARR includes revenue attributable to QRadar software as a service contracts.

8

Palo Alto Networks, Inc.

Condensed Consolidated Balance Sheets - Fiscal Quarters (In millions)

Q323

Q423

Q124

Q224

Q324

Q424

Q125

Q225

Assets

Current assets:

Cash and cash equivalents

$

1,992.9

$

1,135.3

$

2,491.4

$

1,782.5

$

1,373.7

$

1,535.2

$

2,282.8

$

2,226.3

Short-term investments

1,965.3

1,254.7

1,402.4

1,588.5

1,516.7

1,043.6

1,108.2

1,006.6

Accounts receivable, net

1,443.6

2,463.2

1,413.0

1,896.3

1,715.4

2,618.6

1,132.9

1,495.5

Short-term financing receivables, net

245.2

388.8

445.9

445.5

572.3

725.9

805.1

754.9

Short-term deferred contract costs

317.3

339.2

328.7

328.0

337.0

369.0

367.6

376.1

Prepaid expenses and other current assets

449.3

466.8

396.2

405.9

403.7

557.4

546.1

480.4

Total current assets

6,413.6

6,048.0

6,477.6

6,446.7

5,918.8

6,849.7

6,242.7

6,339.8

Property and equipment, net

341.7

354.5

352.6

352.3

350.3

361.1

361.0

358.2

Operating lease right-of-use assets

248.3

263.3

274.3

355.8

369.7

385.9

389.0

372.9

Long-term investments

2,709.8

3,047.9

2,988.9

3,619.6

3,504.4

4,173.2

4,119.7

4,559.8

Long-term financing receivables, net

390.4

653.3

639.8

639.9

882.5

1,182.1

1,092.2

1,163.8

Long-term deferred contract costs

503.6

547.1

515.4

504.6

511.2

562.0

531.9

523.4

Goodwill

2,926.8

2,926.8

2,926.8

3,372.7

3,372.7

3,350.1

4,050.8

4,050.8

Intangible assets, net

340.6

315.4

290.5

440.1

407.9

374.9

809.6

771.4

Deferred tax assets

19.8

23.1

25.4

2,234.3

2,291.9

2,399.0

2,397.5

2,446.9

Other assets

275.9

321.7

317.2

326.0

321.4

352.9

380.2

364.7

Total assets

$

14,170.5

$

14,501.1

$

14,808.5

$

18,292.0

$

17,930.8

$

19,990.9

$

20,374.6

$

20,951.7

Liabilities and stockholders' equity

Current liabilities:

Accounts payable

$

91.6

$

132.3

$

131.8

$

178.8

$

108.9

$

116.3

$

211.6

$

149.3

Accrued compensation

344.7

548.3

331.4

452.6

385.9

554.7

354.5

491.6

Accrued and other liabilities

376.1

390.8

371.5

394.2

412.6

506.7

683.1

777.6

Deferred revenue

4,146.7

4,674.6

4,732.0

4,918.1

5,014.9

5,541.1

5,507.7

5,599.9

Convertible senior notes, net

3,682.1

1,991.5

1,946.7

1,821.8

1,162.5

963.9

645.8

533.8

Total current liabilities

8,641.2

7,737.5

7,513.4

7,765.5

7,084.8

7,682.7

7,402.7

7,552.2

Long-term deferred revenue

3,942.9

4,621.8

4,710.8

4,900.3

5,152.7

5,939.4

5,585.9

5,662.5

Deferred tax liabilities

17.6

28.1

30.1

588.5

503.0

387.7

250.8

116.1

Long-term operating lease liabilities

264.5

279.2

275.8

362.7

369.8

380.5

379.6

363.0

Other long-term liabilities

71.9

86.1

107.9

317.8

352.7

430.9

843.8

882.6

Total liabilities

12,938.1

12,752.7

12,638.0

13,934.8

13,463.0

14,821.2

14,462.8

14,576.4

Stockholders' equity:

Preferred stock

-

-

-

-

-

-

-

-

Common stock and additional paid-in capital

2,708.2

3,019.0

3,296.7

3,650.0

3,530.7

3,821.1

4,214.9

4,421.0

Accumulated other comprehensive loss

(20.7)

(43.2)

(93.0)

(6.5)

(55.4)

(1.6)

(4.0)

(13.9)

Retained earnings (accumulated deficit)

(1,455.1)

(1,227.4)

(1,033.2)

713.7

992.5

1,350.2

1,700.9

1,968.2

Total stockholders' equity

1,232.4

1,748.4

2,170.5

4,357.2

4,467.8

5,169.7

5,911.8

6,375.3

Total liabilities and stockholders' equity

$

14,170.5

$

14,501.1

$

14,808.5

$

18,292.0

$

17,930.8

$

19,990.9

$

20,374.6

$

20,951.7

9

Palo Alto Networks, Inc.

Condensed Consolidated Statements of Cash Flows - Fiscal Quarters (In millions)

Q323

Q423

Q124

Q224

Q324

Q424

Q125

Q225

Cash flows from operating activities

Net income

$

107.8

$ 227.7

$ 194.2

$1,746.9

$ 278.8

$ 357.7

$

350.7

$ 267.3

Adjustments to reconcile net income to net cash provided by operating

activities:

Share-based compensation for equity-based awards

271.0

254.2

271.0

272.0

263.5

268.9

294.3

320.5

Deferred income taxes

2.8

7.2

(0.3)

(1,691.0)

(127.0)

(215.4)

(137.4)

(179.4)

Depreciation and amortization

72.3

69.3

64.3

68.6

74.3

76.1

83.9

87.6

Amortization of deferred contract costs

101.4

116.0

105.5

108.9

110.3

121.3

110.4

114.6

Amortization of debt issuance costs

1.8

1.4

1.0

1.1

0.8

0.6

0.5

0.3

Change in fair value of contingent consideration liability

-

-

-

-

-

-

6.3

9.7

Reduction of operating lease right-of-use assets

12.1

13.2

12.4

13.7

14.6

14.6

16.0

16.0

Amortization of investment premiums, net of accretion of purchase

(20.1)

(17.8)

(14.7)

(16.2)

(15.6)

(13.6)

(15.0)

(10.8)

discounts

Changes in operating assets and liabilities, net of effects of

acquisitions:

Accounts receivable, net

(165.3)

(1,019.6)

1,050.2

(482.2)

180.9

(903.2)

1,485.7

(362.6)

Financing receivables, net

(245.7)

(406.5)

(43.6)

0.3

(369.4)

(453.2)

10.7

(21.4)

Deferred contract costs

(97.6)

(181.4)

(63.3)

(96.0)

(125.9)

(204.1)

(78.9)

(114.6)

Prepaid expenses and other assets

(91.0)

(101.2)

54.0

(8.1)

1.3

(181.3)

(3.6)

92.5

Accounts payable

(37.0)

37.3

(0.4)

47.7

(67.8)

5.5

96.8

(63.4)

Accrued compensation

(50.9)

203.6

(216.9)

118.6

(66.7)

168.8

(200.2)

137.1

Accrued and other liabilities

35.2

3.9

(33.8)

233.6

27.6

157.1

(94.0)

94.7

Deferred revenue

535.3

1,206.8

146.4

372.1

349.2

1,312.9

(416.6)

168.8

Net cash provided by operating activities

432.1

414.1

1,526.0

690.0

528.9

512.7

1,509.6

556.9

Cash flows from investing activities

Purchases of investments

(742.1)

(999.0)

(854.7)

(1,156.7)

(475.1)

(1,064.8)

(660.0)

(1,072.1)

Proceeds from sales of investments

375.4

90.9

304.6

126.6

69.6

455.4

291.3

353.6

Proceeds from maturities of investments

504.7

1,307.9

457.9

350.4

556.0

488.3

369.0

384.7

Business acquisitions, net of cash and restricted cash acquired

(18.9)

-

-

(610.6)

-

-

(500.0)

0.5

Purchases of property, equipment, and other assets

(31.2)

(37.2)

(36.8)

(35.2)

(37.4)

(47.4)

(44.1)

(47.5)

Net cash provided by (used in) investing activities

87.9

362.6

(129.0)

(1,325.5)

113.1

(168.5)

(543.8)

(380.8)

Cash flows from financing activities

Repayments of convertible senior notes

-

(1,692.0)

(46.0)

(126.3)

(661.8)

(199.6)

(319.0)

(112.4)

Repurchases of common stock

-

-

(66.7)

-

(500.0)

-

-

-

Proceeds from sales of shares through employee equity incentive plans

130.3

60.1

86.4

57.5

115.8

24.2

120.7

36.6

Payments for taxes related to net share settlement of equity awards

(2.1)

(2.9)

(15.5)

(3.8)

(3.4)

(3.9)

(21.4)

(156.4)

Net cash provided by (used in) financing activities

128.2

(1,634.8)

(41.8)

(72.6)

(1,049.4)

(179.3)

(219.7)

(232.2)

Net increase (decrease) in cash, cash equivalents, and restricted cash

648.2

(858.1)

1,355.2

(708.1)

(407.4)

164.9

746.1

(56.1)

Cash, cash equivalents, and restricted cash - beginning of period

1,352.1

2,000.3

1,142.2

2,497.4

1,789.3

1,381.9

1,546.8

2,292.9

Cash, cash equivalents, and restricted cash - end of period

$

2,000.3

$1,142.2

$2,497.4

$1,789.3

$1,381.9

$1,546.8

$

2,292.9

$2,236.8

Reconciliation of cash, cash equivalents, and restricted cash to the

condensed consolidated balance sheets

Cash and cash equivalents

$

1,992.9

$1,135.3

$2,491.4

$1,782.5

$1,373.7

$1,535.2

$

2,282.8

$2,226.3

Restricted cash included in prepaid expenses and other current assets

7.4

6.9

6.0

6.3

8.2

11.6

10.1

10.5

Restricted cash included in other assets

-

-

-

0.5

-

-

-

-

Total cash, cash equivalents, and restricted cash

$

2,000.3

$1,142.2

$2,497.4

$1,789.3

$1,381.9

$1,546.8

$

2,292.9

$2,236.8

10

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Palo Alto Networks Inc. published this content on February 13, 2025, and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on February 13, 2025 at 21:22:35.298.