Income Statement

The income statement presents information on the financial results of a company business activities over a period of time. The income statement communicates how much revenue the company generated during a period and what cost it incurred in connection with generating that revenue.

Palo Alto Networks Inc., consolidated income statement

US$ in millions

12 months ended:	Jul 31, 2026	Jul 31, 2025	Jul 31, 2024	Jul 31, 2023	Jul 31, 2022	Jul 31, 2021
Product	2,280)	1,802)	1,603)	1,578)	1,363)	1,120)
Subscription and support	9,200)	7,420)	6,424)	5,314)	4,138)	3,136)
Revenue	11,480)	9,222)	8,028)	6,893)	5,502)	4,256)
Product	(568)	(413)	(348)	(418)	(456)	(309)
Subscription and support	(2,835)	(2,038)	(1,711)	(1,491)	(1,263)	(966)
Cost of revenue	(3,403)	(2,452)	(2,059)	(1,910)	(1,719)	(1,275)
Gross profit	8,077)	6,770)	5,968)	4,983)	3,783)	2,981)
Research and development	(2,552)	(1,984)	(1,809)	(1,604)	(1,418)	(1,140)
Sales and marketing	(3,931)	(3,100)	(2,795)	(2,544)	(2,149)	(1,754)
General and administrative	(899)	(443)	(681)	(448)	(405)	(391)
Operating expenses	(7,382)	(5,527)	(5,284)	(4,596)	(3,972)	(3,285)
Operating income (loss)	695)	1,243)	684)	387)	(189)	(304)
Interest income	374)	364)	318)	224)	16)	9)
Interest expense	—)	(3)	(8)	(27)	(27)	(163)
Foreign currency exchange gains (losses), net	(35)	(33)	—)	(8)	2)	(5)
Change in fair value of convertible senior notes	(620)	—)	—)	—)	—)	—)
Change in fair value of Capped Calls	58)	—)	—)	—)	—)	—)
Other, net	64)	25)	(5)	(10)	(8)	(1)
Other income (expense), net	(159)	353)	304)	179)	(18)	(161)
Income (loss) before income taxes	536)	1,596)	988)	566)	(207)	(465)
(Provision for) benefit from income taxes	(229)	(462)	1,589)	(127)	(60)	(34)
Net income (loss)	307)	1,134)	2,578)	440)	(267)	(499)

Based on: 10-K (reporting date: 2026-07-31), 10-K (reporting date: 2025-07-31), 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).

Revenue demonstrates a consistent upward trajectory over the analyzed period, increasing from US$ 4,256 million in 2021 to US$ 11,480 million by 2026. A significant structural shift in revenue composition is observed, with subscription and support revenue growing from approximately 73.7% of total revenue in 2021 to 80.1% in 2026. Product revenue continues to grow in absolute terms but represents a diminishing share of the overall revenue mix, indicating a strategic transition toward a recurring revenue model.

Gross Profitability and Margins: Gross profit grew from US$ 2,981 million in 2021 to US$ 8,077 million in 2026. The gross margin remained remarkably stable, hovering around 70% throughout the period, suggesting that the cost of revenue has scaled proportionally with the growth in sales.
Operating Expense Trends: Operating expenses increased from US$ 3,285 million in 2021 to US$ 7,382 million in 2026. Sales and marketing expenses represent the largest component of these costs, scaling from US$ 1,754 million to US$ 3,931 million. Research and development spending also rose steadily, reflecting continued investment in product innovation. General and administrative expenses showed more volatility, peaking in 2026 at US$ 899 million.
Operating Income Evolution: The company transitioned from operating losses in 2021 and 2022 to consistent operating profitability starting in 2023. Operating income peaked in 2025 at US$ 1,243 million before declining to US$ 695 million in 2026. This decline in the final year is primarily attributed to a significant increase in operating expenses, particularly in sales, marketing, and general administration.
Non-Operating Items and Net Income Volatility: Net income exhibits high volatility due to non-operational factors. A notable spike occurred in 2024, where net income reached US$ 2,578 million, largely driven by a substantial tax benefit of US$ 1,589 million. Conversely, the 2026 net income of US$ 307 million was negatively impacted by a US$ 620 million charge related to the change in fair value of convertible senior notes. Interest income shows a strong positive trend, rising from US$ 9 million in 2021 to US$ 374 million in 2026, while interest expenses have effectively been eliminated.

Overall, the financial trend indicates a company successfully scaling its top-line growth through a shift toward subscriptions while achieving operational leverage. However, bottom-line results remain susceptible to significant fluctuations resulting from tax adjustments and fair value accounting for financial instruments.

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Palo Alto Networks Inc. (NASDAQ:PANW)

Income Statement