Common-Size Income Statement
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- Common-Size Balance Sheet: Assets
- Analysis of Profitability Ratios
- Analysis of Liquidity Ratios
- Analysis of Geographic Areas
- Enterprise Value to FCFF (EV/FCFF)
- Present Value of Free Cash Flow to Equity (FCFE)
- 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
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).
- Revenue Composition Trends
- The proportion of revenue derived from products has shown a consistent decline over the analyzed periods, decreasing from 37.81% in 2019 to 19.97% in 2024. Conversely, subscription and support revenues have increased steadily, rising from 62.19% in 2019 to 80.03% in 2024. This shift indicates a strategic move towards recurring revenue streams.
- Cost of Revenue and Gross Margin
- The cost of revenue as a percentage of total revenue increased from 27.88% in 2019 to a peak of 31.24% in 2022, before declining to 25.65% by 2024. Gross profit margin reflected this dynamic, initially declining from 72.12% in 2019 to 68.76% in 2022, then improving to 74.35% in 2024. This suggests improvements in cost management or changes in revenue mix positively impacted profitability at the gross margin level in recent years.
- Operating Expenses
- Research and development expenses as a percentage of revenue increased from 18.61% in 2019 to a peak of 26.79% in 2021, followed by a steady reduction to 22.54% in 2024. Sales and marketing expenses have trended downward consistently from 46.35% in 2019 to 34.81% in 2024. General and administrative expenses have fluctuated, decreasing from 9.03% in 2019 to 6.5% in 2022 before increasing again to 8.48% in 2024. Overall, total operating expenses decreased from 73.99% in 2019 to 65.83% in 2024, indicating an improvement in operational efficiency.
- Operating Income and Profitability
- Operating income (loss) as a share of revenue showed substantial improvement over the period. The company experienced negative operating income margins from 2019 through 2022, with the nadir in 2021 at -7.15%. Starting in 2023, operating income turned positive, reaching 8.52% by 2024. This signals a turnaround to operating profitability mostly driven by decreasing operating expenses and improved gross margins.
- Interest and Other Income/Expense
- Interest expense declined significantly from 2.89% of revenue in 2019 to only 0.1% in 2024, indicating reduced debt service costs or improved financing structure. Interest income remained relatively low but increased from 2.41% in 2019 to 3.96% in 2024. Foreign currency exchange effects were negligible and fluctuated close to zero throughout the periods. Other income (net), comprised mainly of miscellaneous items, showed variability but improved from a negative or near zero position in early years to 3.9% of revenue in 2024.
- Income Before Taxes and Net Income
- Income before income taxes demonstrated a similar trend to operating income, moving from negative margins as low as -10.93% in 2021 to a positive margin of 12.31% in 2024. The provision for income taxes was relatively small and negative in earlier years, with an outlier large positive benefit of 19.8% in 2024, suggesting a significant tax benefit or credit in that year. Consequently, net income margins followed suit, moving from losses of -11.72% in 2021 to a substantial profit margin of 32.11% in 2024, marking a strong overall financial performance improvement in the most recent year.