Common-Size Income Statement
Quarterly Data
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Palo Alto Networks Inc. pages available for free this week:
- Statement of Comprehensive Income
- Cash Flow Statement
- Analysis of Solvency Ratios
- Analysis of Short-term (Operating) Activity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Common Stock Valuation Ratios
- Operating Profit Margin since 2012
- Current Ratio since 2012
- Debt to Equity since 2012
- Aggregate Accruals
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Palo Alto Networks Inc., common-size consolidated income statement (quarterly data)
Based on: 10-K (reporting date: 2025-07-31), 10-Q (reporting date: 2025-04-30), 10-Q (reporting date: 2025-01-31), 10-Q (reporting date: 2024-10-31), 10-K (reporting date: 2024-07-31), 10-Q (reporting date: 2024-04-30), 10-Q (reporting date: 2024-01-31), 10-Q (reporting date: 2023-10-31), 10-K (reporting date: 2023-07-31), 10-Q (reporting date: 2023-04-30), 10-Q (reporting date: 2023-01-31), 10-Q (reporting date: 2022-10-31), 10-K (reporting date: 2022-07-31), 10-Q (reporting date: 2022-04-30), 10-Q (reporting date: 2022-01-31), 10-Q (reporting date: 2021-10-31), 10-K (reporting date: 2021-07-31), 10-Q (reporting date: 2021-04-30), 10-Q (reporting date: 2021-01-31), 10-Q (reporting date: 2020-10-31), 10-K (reporting date: 2020-07-31), 10-Q (reporting date: 2020-04-30), 10-Q (reporting date: 2020-01-31), 10-Q (reporting date: 2019-10-31).
- Revenue Composition
- Over the observed periods, the revenue mix shows a dominant share of subscription and support services, consistently around 70% to 83%, with a general increasing trend towards the later quarters. Product revenue as a percentage of total revenue has declined from approximately 30% in late 2019 to near 16%-22% in recent quarters, indicating a strategic or market shift favoring recurring revenue streams.
- Cost of Revenue
- The combined cost of revenue remains steady in the range of approximately 25% to 31%, with a slight decreasing trend in recent periods. Subscription and support cost components show a slight reduction as a percentage of revenue over time, likely contributing to a stabilization or improvement in gross margin.
- Gross Profit
- Gross profit margin reflects a generally stable to slightly improving trend, fluctuating between roughly 68% to 74%, with higher margins observed in the latest quarters. This improvement correlates with a decrease in cost of revenue, indicating enhanced operational efficiency or pricing power in the subscription and product segments.
- Operating Expenses
- Operating expenses as a percentage of revenue reveal a declining pattern, particularly noticeable from mid-2021 onward. Research and development expenses initially increased up to the early 2021 period, reaching nearly 29%, but subsequently decreased to closer to 20% by mid-2025. Sales and marketing expenses decreased from around 47% in late 2019 to approximately 32%-36% in recent quarters. General and administrative costs fluctuated, with a notable sharp increase around early 2024 but reverted to lower levels toward mid-2025. Overall, total operating expenses have decreased from near 79% to approximately 54% by late periods, reflecting improved cost management or operational scaling.
- Operating Income
- Operating income showed an improvement trend from negative values near -10% toward positive territory, exceeding 10% in many of the recent quarters and reaching close to 20% in late 2025. This improvement is attributable to both increased gross profit margins and reduced operating expenses as a percentage of revenue.
- Interest Expense and Other Income
- Interest expense has steadily declined as a percentage of revenue, falling from above 4% in early 2020 to nearly negligible amounts under 0.1% in the latest quarters. Other income has increased significantly, moving from low single digits to about 4%, favorably impacting net profitability.
- Income Before Taxes and Net Income
- Income before income taxes transitioned from negative values around -14% to positive and strong profitability exceeding 23% by the end of the period analyzed. Net income mirrored this trend, moving from losses over 13% to substantial gains above 16% to nearly 18% in the final periods, highlighting a marked improvement in overall financial performance. Noteworthy is the exceptionally high reported tax benefit in early 2024, distorting tax rate trends and net income temporarily.
- Summary
- Overall, the financial data reveals a company shifting towards higher-margin, recurring revenue streams with continuous improvements in gross profit and operating efficiency. Cost controls and reduced interest expenses have supported a strong rebound in operating income and net profitability. While fluctuations in general and administrative expenses and tax provisions occurred, the dominant trend is a sustained enhancement in profitability and financial health over the analyzed quarters.