Palo Alto Networks Inc., adjustment to net income (loss)

US$ in thousands

12 months ended:	Jul 31, 2023	Jul 31, 2022	Jul 31, 2021	Jul 31, 2020	Jul 31, 2019	Jul 31, 2018
Net income (loss) (as reported)	439,700)	(267,000)	(498,900)	(267,000)	(81,900)	(147,900)
Add: Change in unrealized gains (losses) on investments	(13,000)	(25,000)	(3,000)	1,000)	10,400)	(7,500)
Net income (loss) (adjusted)	426,700)	(292,000)	(501,900)	(266,000)	(71,500)	(155,400)

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Palo Alto Networks Inc., adjusted profitability ratios

	Jul 31, 2023	Jul 31, 2022	Jul 31, 2021	Jul 31, 2020	Jul 31, 2019	Jul 31, 2018
Net Profit Margin
Reported net profit margin	6.38%	-4.85%	-11.72%	-7.83%	-2.82%	-6.51%
Adjusted net profit margin	6.19%	-5.31%	-11.79%	-7.80%	-2.47%	-6.84%
Return on Equity (ROE)
Reported ROE	25.15%	-127.14%	-78.63%	-24.23%	-5.16%	-15.30%
Adjusted ROE	24.41%	-139.05%	-79.10%	-24.14%	-4.51%	-16.08%
Return on Assets (ROA)
Reported ROA	3.03%	-2.18%	-4.87%	-2.95%	-1.24%	-2.54%
Adjusted ROA	2.94%	-2.38%	-4.90%	-2.93%	-1.08%	-2.67%

Profitability ratio	Description	The company
Adjusted net profit margin	An indicator of profitability, calculated as adjusted net income divided by revenue.	Palo Alto Networks Inc. adjusted net profit margin ratio improved from 2021 to 2022 and from 2022 to 2023.
Adjusted ROE	A profitability ratio calculated as adjusted net income divided by shareholders’ equity.	Palo Alto Networks Inc. adjusted ROE deteriorated from 2021 to 2022 but then improved from 2022 to 2023 exceeding 2021 level.
Adjusted ROA	A profitability ratio calculated as adjusted net income divided by total assets.	Palo Alto Networks Inc. adjusted ROA improved from 2021 to 2022 and from 2022 to 2023.

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	Jul 31, 2023	Jul 31, 2022	Jul 31, 2021	Jul 31, 2020	Jul 31, 2019	Jul 31, 2018
As Reported
Selected Financial Data (US$ in thousands)
Net income (loss)	439,700)	(267,000)	(498,900)	(267,000)	(81,900)	(147,900)
Revenue	6,892,700)	5,501,500)	4,256,100)	3,408,400)	2,899,600)	2,273,100)
Profitability Ratio
Net profit margin¹	6.38%	-4.85%	-11.72%	-7.83%	-2.82%	-6.51%
Adjusted: Mark to Market Available-for-sale Securities
Selected Financial Data (US$ in thousands)
Adjusted net income (loss)	426,700)	(292,000)	(501,900)	(266,000)	(71,500)	(155,400)
Revenue	6,892,700)	5,501,500)	4,256,100)	3,408,400)	2,899,600)	2,273,100)
Profitability Ratio
Adjusted net profit margin²	6.19%	-5.31%	-11.79%	-7.80%	-2.47%	-6.84%

2023 Calculations

¹ Net profit margin = 100 × Net income (loss) ÷ Revenue
= 100 × 439,700 ÷ 6,892,700 = 6.38%

² Adjusted net profit margin = 100 × Adjusted net income (loss) ÷ Revenue
= 100 × 426,700 ÷ 6,892,700 = 6.19%

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Profitability ratio	Description	The company
Adjusted net profit margin	An indicator of profitability, calculated as adjusted net income divided by revenue.	Palo Alto Networks Inc. adjusted net profit margin ratio improved from 2021 to 2022 and from 2022 to 2023.

	Jul 31, 2023	Jul 31, 2022	Jul 31, 2021	Jul 31, 2020	Jul 31, 2019	Jul 31, 2018
As Reported
Selected Financial Data (US$ in thousands)
Net income (loss)	439,700)	(267,000)	(498,900)	(267,000)	(81,900)	(147,900)
Stockholders’ equity	1,748,400)	210,000)	634,500)	1,101,800)	1,586,300)	966,400)
Profitability Ratio
ROE¹	25.15%	-127.14%	-78.63%	-24.23%	-5.16%	-15.30%
Adjusted: Mark to Market Available-for-sale Securities
Selected Financial Data (US$ in thousands)
Adjusted net income (loss)	426,700)	(292,000)	(501,900)	(266,000)	(71,500)	(155,400)
Stockholders’ equity	1,748,400)	210,000)	634,500)	1,101,800)	1,586,300)	966,400)
Profitability Ratio
Adjusted ROE²	24.41%	-139.05%	-79.10%	-24.14%	-4.51%	-16.08%

2023 Calculations

¹ ROE = 100 × Net income (loss) ÷ Stockholders’ equity
= 100 × 439,700 ÷ 1,748,400 = 25.15%

² Adjusted ROE = 100 × Adjusted net income (loss) ÷ Stockholders’ equity
= 100 × 426,700 ÷ 1,748,400 = 24.41%

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Profitability ratio	Description	The company
Adjusted ROE	A profitability ratio calculated as adjusted net income divided by shareholders’ equity.	Palo Alto Networks Inc. adjusted ROE deteriorated from 2021 to 2022 but then improved from 2022 to 2023 exceeding 2021 level.

	Jul 31, 2023	Jul 31, 2022	Jul 31, 2021	Jul 31, 2020	Jul 31, 2019	Jul 31, 2018
As Reported
Selected Financial Data (US$ in thousands)
Net income (loss)	439,700)	(267,000)	(498,900)	(267,000)	(81,900)	(147,900)
Total assets	14,501,100)	12,253,600)	10,241,600)	9,065,400)	6,592,200)	5,823,000)
Profitability Ratio
ROA¹	3.03%	-2.18%	-4.87%	-2.95%	-1.24%	-2.54%
Adjusted: Mark to Market Available-for-sale Securities
Selected Financial Data (US$ in thousands)
Adjusted net income (loss)	426,700)	(292,000)	(501,900)	(266,000)	(71,500)	(155,400)
Total assets	14,501,100)	12,253,600)	10,241,600)	9,065,400)	6,592,200)	5,823,000)
Profitability Ratio
Adjusted ROA²	2.94%	-2.38%	-4.90%	-2.93%	-1.08%	-2.67%

2023 Calculations

¹ ROA = 100 × Net income (loss) ÷ Total assets
= 100 × 439,700 ÷ 14,501,100 = 3.03%

² Adjusted ROA = 100 × Adjusted net income (loss) ÷ Total assets
= 100 × 426,700 ÷ 14,501,100 = 2.94%

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Profitability ratio	Description	The company
Adjusted ROA	A profitability ratio calculated as adjusted net income divided by total assets.	Palo Alto Networks Inc. adjusted ROA improved from 2021 to 2022 and from 2022 to 2023.

Palo Alto Networks Inc. (NASDAQ:PANW)

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