Analysis of Property, Plant and Equipment
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Palo Alto Networks Inc. pages available for free this week:
- Analysis of Short-term (Operating) Activity Ratios
- Analysis of Long-term (Investment) Activity Ratios
- Common Stock Valuation Ratios
- Enterprise Value (EV)
- Price to FCFE (P/FCFE)
- Return on Equity (ROE) since 2012
- Current Ratio since 2012
- Price to Operating Profit (P/OP) since 2012
- Price to Sales (P/S) since 2012
- Analysis of Revenues
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Property, Plant and Equipment Disclosure
Palo Alto Networks Inc., balance sheet: property, plant and equipment
US$ in thousands
Based on: 10-K (reporting date: 2024-07-31), 10-K (reporting date: 2023-07-31), 10-K (reporting date: 2022-07-31), 10-K (reporting date: 2021-07-31), 10-K (reporting date: 2020-07-31), 10-K (reporting date: 2019-07-31).
- Computers, equipment, and software
- The value of computers, equipment, and software has shown a consistent upward trend from 264,100 thousand US dollars in 2019 to 466,000 thousand US dollars in 2024. This reflects steady investment and growth in this category over the six-year period.
- Leasehold improvements
- Leasehold improvements increased gradually from 204,800 thousand US dollars in 2019 to 274,000 thousand US dollars in 2024. The growth was more moderate compared to computers and equipment, indicating ongoing but controlled enhancements of leasehold assets.
- Land
- Land values were not reported in 2019 but appeared at 49,600 thousand US dollars in 2020, remaining stable through 2021, then increased significantly to 87,200 thousand US dollars from 2022 onward. This step-up suggests acquisition or revaluation occurred around 2022.
- Demonstration units
- The value of demonstration units has fluctuated mildly, starting at 40,700 thousand US dollars in 2019, peaking at 46,900 thousand US dollars in 2023, and slightly decreasing to 44,400 thousand US dollars in 2024. Overall, it exhibits a relatively stable pattern with minor variations.
- Furniture and fixtures
- Furniture and fixtures exhibited steady growth from 30,600 thousand US dollars in 2019 to 48,700 thousand US dollars in 2024, representing consistent capital investment in physical office or operational assets.
- Property and equipment, gross
- The gross property and equipment value increased substantially from 540,200 thousand US dollars in 2019 to 920,300 thousand US dollars in 2024. This significant growth reflects ongoing asset additions and expansions across all included categories.
- Accumulated depreciation
- Accumulated depreciation consistently rose from -244,200 thousand US dollars in 2019 to -559,200 thousand US dollars in 2024. The increasing magnitude of depreciation aligns with the growth and aging of the asset base, suggesting systematic allocation of asset cost over time.
- Property and equipment, net
- The net property and equipment value increased from 296,000 thousand US dollars in 2019 to 361,100 thousand US dollars in 2024, though with some fluctuations. Notably, there was a decrease in 2021 to 318,400 thousand US dollars before rising again. This pattern indicates that while gross assets grew steadily, depreciation and asset disposals or impairments may have moderated net asset growth in some periods.
Asset Age Ratios (Summary)
Palo Alto Networks Inc., asset age ratios
Based on: 10-K (reporting date: 2024-07-31), 10-K (reporting date: 2023-07-31), 10-K (reporting date: 2022-07-31), 10-K (reporting date: 2021-07-31), 10-K (reporting date: 2020-07-31), 10-K (reporting date: 2019-07-31).
- Average Age Ratio
- The average age ratio has shown a consistent upward trend over the observed periods, rising from 45.21% in July 2019 to 67.12% in July 2024. This indicates that the company's property, plant, and equipment portfolio is aging progressively year over year, suggesting a slower pace of asset turnover or acquisition of newer assets relative to the aging stock.
- Estimated Total Useful Life
- The estimated total useful life has increased from 6 years in 2019 and 2020, to 7 years in 2021, then further to 8 years in 2022 and 2023, reaching 10 years in 2024. This extension in the estimated useful life suggests a reassessment of asset longevity, possibly reflecting improvements in the quality or maintenance of assets, or revisions in depreciation policies.
- Estimated Age, Time Elapsed Since Purchase
- The estimated age of assets has grown steadily from 3 years in 2019 and 2020 to 7 years in 2024. This is consistent with the aging profile indicated by the average age ratio, confirming that the company's asset base is becoming older over time.
- Estimated Remaining Life
- Despite changes in asset age and total useful life, the estimated remaining life has remained constant at 3 years throughout the entire period. This stability suggests that the increase in total useful life has been proportionally matched by the increase in asset age, maintaining a steady remaining useful life expectation.
Average Age
Based on: 10-K (reporting date: 2024-07-31), 10-K (reporting date: 2023-07-31), 10-K (reporting date: 2022-07-31), 10-K (reporting date: 2021-07-31), 10-K (reporting date: 2020-07-31), 10-K (reporting date: 2019-07-31).
2024 Calculations
1 Average age = 100 × Accumulated depreciation ÷ (Property and equipment, gross – Land)
= 100 × ÷ ( – ) =
- Property and Equipment, Gross
- The gross value of property and equipment shows a consistent upward trend from 540,200 thousand US dollars in 2019 to 920,300 thousand US dollars in 2024. This steady increase suggests ongoing investments or acquisitions in fixed assets over the period analyzed.
- Accumulated Depreciation
- Accumulated depreciation has also increased steadily from 244,200 thousand US dollars in 2019 to 559,200 thousand US dollars in 2024. The growth in accumulated depreciation aligns with the increasing gross property and equipment values, indicating a consistent application of depreciation over the assets' useful lives.
- Land
- The value of land was recorded starting in 2020 at 49,600 thousand US dollars and remained constant at 87,200 thousand US dollars from 2022 onwards. The jump in land value between 2021 and 2022 suggests either acquisition of new land or revaluation at that time, with no subsequent changes through 2024.
- Average Age Ratio
- The average age ratio, representing the extent of asset aging relative to their useful life, shows a continuous increase from 45.21% in 2019 to 67.12% in 2024. This rising trend indicates that the fixed asset base is aging, which may imply increasing maintenance costs or future needs for asset replacement or renewal.
Estimated Total Useful Life
Based on: 10-K (reporting date: 2024-07-31), 10-K (reporting date: 2023-07-31), 10-K (reporting date: 2022-07-31), 10-K (reporting date: 2021-07-31), 10-K (reporting date: 2020-07-31), 10-K (reporting date: 2019-07-31).
2024 Calculations
1 Estimated total useful life = (Property and equipment, gross – Land) ÷ Depreciation expense
= ( – ) ÷ =
- Property and Equipment, Gross
- The gross value of property and equipment demonstrated a consistent upward trend over the observed periods. Starting at $540,200 thousand in 2019, the amount increased substantially each year, reaching $920,300 thousand by 2024. This reflects a continuous investment and expansion in fixed assets.
- Land
- Land value data is available from 2020 onwards, remaining constant at $49,600 thousand for 2020 and 2021, then increasing significantly to $87,200 thousand from 2022 through 2024. This suggests a land acquisition or revaluation occurring between 2021 and 2022, with no subsequent changes afterward.
- Depreciation Expense
- Depreciation expense increased from $86,200 thousand in 2019 to a peak of $96,000 thousand in 2020, followed by slight decreases and fluctuations. Specifically, it decreased to $94,200 thousand in 2021, further to $92,800 thousand in 2022, increased slightly to $95,900 thousand in 2023, and then decreased more notably to $85,100 thousand in 2024. This pattern may reflect changes in asset composition, useful life estimates, or amortization policy adjustments.
- Estimated Total Useful Life
- The estimated useful life of assets increased steadily from 6 years in 2019 and 2020 to 7 years in 2021, then to 8 years in 2022 and 2023, and finally to 10 years in 2024. This lengthening of asset life estimates generally leads to a slower depreciation rate, which likely contributes to the observed recent decline in depreciation expense despite growing gross assets.
Estimated Age, Time Elapsed since Purchase
Based on: 10-K (reporting date: 2024-07-31), 10-K (reporting date: 2023-07-31), 10-K (reporting date: 2022-07-31), 10-K (reporting date: 2021-07-31), 10-K (reporting date: 2020-07-31), 10-K (reporting date: 2019-07-31).
2024 Calculations
1 Time elapsed since purchase = Accumulated depreciation ÷ Depreciation expense
= ÷ =
- Accumulated Depreciation
- The accumulated depreciation shows a consistent upward trend over the six-year period. Starting at $244,200 thousand in 2019, it increased each year, reaching $559,200 thousand in 2024. This steady rise reflects ongoing depreciation of property, plant, and equipment assets and indicates the aging and usage of these assets over time.
- Depreciation Expense
- Depreciation expense fluctuated somewhat during the period examined. It increased from $86,200 thousand in 2019 to a peak of $96,000 thousand in 2020. Following this, the expense slightly declined and remained relatively stable around the low to mid $90,000 thousand range through 2022 and 2023 before decreasing to $85,100 thousand in 2024. This pattern suggests that while depreciation expense generally reflects a consistent allocation of asset cost, there may have been changes in asset composition or depreciation methods affecting the yearly figures.
- Time Elapsed Since Purchase
- The time elapsed since purchase increased steadily by one year annually, progressing from 3 years in 2019 to 7 years in 2024. This linear increase aligns with the natural aging of the asset base and supports the observed growth in accumulated depreciation over the period.
- Overall Observations
- The data reveals a typical pattern of asset aging with increasing accumulated depreciation over time. Depreciation expense, while generally stable, shows slight variation that might correspond to changes in asset purchases or disposals, or adjustments in accounting estimates. The increase in time elapsed since purchase matches the gradual increase in accumulated depreciation, indicating that the asset portfolio is aging rather than being significantly renewed with newer assets in this timeframe.
Estimated Remaining Life
Based on: 10-K (reporting date: 2024-07-31), 10-K (reporting date: 2023-07-31), 10-K (reporting date: 2022-07-31), 10-K (reporting date: 2021-07-31), 10-K (reporting date: 2020-07-31), 10-K (reporting date: 2019-07-31).
2024 Calculations
1 Estimated remaining life = (Property and equipment, net – Land) ÷ Depreciation expense
= ( – ) ÷ =
- Property and Equipment, Net
- The net value of property and equipment shows a fluctuating trend over the observed periods. Starting at 296,000 thousand US dollars in July 2019, the value increased significantly to 348,100 thousand US dollars in July 2020. However, it declined to 318,400 thousand US dollars in July 2021 before rising again to 357,800 thousand US dollars in July 2022. The value slightly decreased to 354,500 thousand US dollars in July 2023 and then increased marginally to 361,100 thousand US dollars in July 2024. Overall, the net property and equipment value exhibits variability but demonstrates a general upward trend from the initial to the final period.
- Land
- Land values were not reported in July 2019 but appeared at 49,600 thousand US dollars in July 2020 and remained constant through July 2021. A notable increase occurred in July 2022, with land value rising to 87,200 thousand US dollars, after which it stayed stable through July 2024. This suggests a significant acquisition or revaluation of land assets in the second half of the period under review.
- Depreciation Expense
- Depreciation expense shows relative stability, albeit with minor fluctuations. The expense increased from 86,200 thousand US dollars in July 2019 to 96,000 thousand US dollars in July 2020. It then slightly decreased to 94,200 thousand US dollars in July 2021 and continued a gradual decline to 92,800 thousand US dollars in July 2022. The expense rose again to 95,900 thousand US dollars in July 2023, followed by a substantial decrease to 85,100 thousand US dollars in July 2024. This pattern may reflect changes in asset acquisition, depreciation methods, or asset impairments.
- Estimated Remaining Life
- The estimated remaining life of the property and equipment consistently remained at 3 years throughout all periods, indicating stability in the asset lifespan assessment and depreciation scheduling.