Cash Flow Statement

The cash flow statement provides information about a company cash receipts and cash payments during an accounting period, showing how these cash flows link the ending cash balance to the beginning balance shown on the company balance sheet.

The cash flow statement consists of three parts: cash flows provided by (used in) operating activities, cash flows provided by (used in) investing activities, and cash flows provided by (used in) financing activities.

Palo Alto Networks Inc., consolidated cash flow statement

US$ in thousands

12 months ended:	Jul 31, 2024	Jul 31, 2023	Jul 31, 2022	Jul 31, 2021	Jul 31, 2020	Jul 31, 2019
Net income (loss)	2,577,600)	439,700)	(267,000)	(498,900)	(267,000)	(81,900)
Share-based compensation for equity-based awards	1,075,400)	1,074,500)	1,011,100)	894,500)	658,400)	567,700)
Deferred income taxes	(2,033,700)	12,500)	(3,100)	—)	—)	—)
Depreciation and amortization	283,300)	282,200)	282,600)	260,400)	206,100)	153,800)
(Gain) loss related to facility exit	—)	—)	—)	—)	(3,100)	7,000)
Amortization of deferred contract costs	446,000)	413,400)	362,100)	298,000)	254,400)	223,800)
Amortization of debt issuance costs	3,500)	6,700)	7,200)	142,900)	73,900)	70,200)
Reduction of operating lease right-of-use assets	55,300)	49,900)	54,400)	44,500)	47,400)	—)
Amortization of investment premiums, net of accretion of purchase discounts	(60,100)	(52,200)	13,500)	13,100)	(6,200)	(17,500)
Loss on conversions of convertible senior notes	—)	—)	—)	—)	—)	2,600)
Repayments of convertible senior notes attributable to debt discount	—)	—)	—)	(100)	—)	(97,600)
Accounts receivable, net	(154,300)	(320,300)	(902,000)	(172,400)	(435,600)	(108,700)
Financing receivables, net	(865,900)	(738,700)	(30,100)	(272,600)	—)	—)
Deferred contract costs	(489,300)	(431,900)	(458,800)	(440,800)	(407,400)	(361,100)
Prepaid expenses and other assets	(134,100)	(270,600)	(110,000)	(26,500)	(1,600)	28,600)
Accounts payable	(15,000)	1,000)	69,300)	(11,800)	(12,800)	32,300)
Accrued compensation	3,800)	84,400)	30,400)	105,100)	75,700)	66,800)
Accrued and other liabilities	384,500)	(74,800)	(44,900)	(28,500)	(39,800)	(20,600)
Deferred revenue	2,180,600)	2,301,700)	1,970,000)	1,196,100)	893,300)	590,200)
Changes in operating assets and liabilities, net of effects of acquisitions	910,300)	550,800)	523,900)	348,600)	71,800)	227,500)
Adjustments to reconcile net income (loss) to net cash provided by operating activities	680,000)	2,337,800)	2,251,700)	2,001,900)	1,302,700)	1,137,500)
Net cash provided by operating activities	3,257,600)	2,777,500)	1,984,700)	1,503,000)	1,035,700)	1,055,600)
Purchases of investments	(3,551,300)	(5,460,400)	(2,271,700)	(1,958,900)	(1,180,800)	(2,984,600)
Proceeds from sales of investments	956,200)	965,900)	449,200)	131,100)	314,000)	6,500)
Proceeds from maturities of investments	1,852,600)	2,811,500)	1,118,900)	1,240,500)	1,952,700)	2,057,100)
Business acquisitions, net of cash and restricted cash acquired	(610,600)	(204,500)	(37,000)	(777,300)	(583,500)	(773,700)
Purchases of property, equipment, and other assets	(156,800)	(146,300)	(192,800)	(116,000)	(214,400)	(131,200)
Net cash (used in) provided by investing activities	(1,509,900)	(2,033,800)	(933,400)	(1,480,600)	288,000)	(1,825,900)
Repayments of convertible senior notes	(1,033,700)	(1,692,000)	(600)	(900)	—)	(477,400)
Payments for debt issuance costs	—)	—)	—)	(200)	—)	(3,700)
Proceeds from borrowings on convertible senior notes, net	—)	—)	—)	—)	1,979,100)	—)
Proceeds from issuance of warrants	—)	—)	—)	—)	202,800)	—)
Purchase of note hedges	—)	—)	—)	—)	(370,800)	—)
Repurchases of common stock	(566,700)	(272,700)	(892,300)	(1,178,100)	(1,198,100)	(330,000)
Proceeds from sales of shares through employee equity incentive plans	283,900)	258,800)	136,600)	104,000)	84,000)	71,700)
Payments for taxes related to net share settlement of equity awards	(26,600)	(20,400)	(50,300)	(28,800)	(22,700)	(33,200)
Payment of deferred consideration related to prior year business acquisition	—)	—)	—)	—)	(1,300)	(1,300)
Net cash provided by (used in) financing activities	(1,343,100)	(1,726,300)	(806,600)	(1,104,000)	673,000)	(773,900)
Net increase (decrease) in cash, cash equivalents, and restricted cash	404,600)	(982,600)	244,700)	(1,081,600)	1,996,700)	(1,544,200)
Cash, cash equivalents, and restricted cash, beginning of period	1,142,200)	2,124,800)	1,880,100)	2,961,700)	965,000)	2,509,200)
Cash, cash equivalents, and restricted cash, end of period	1,546,800)	1,142,200)	2,124,800)	1,880,100)	2,961,700)	965,000)

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).

Net income (loss): The company experienced significant net losses from 2019 through 2021, with the largest loss recorded in 2021 at approximately $498.9 million. In 2022, the net income remained negative but improved relative to 2021. A notable turnaround is observed in 2023 and 2024, with positive net income of $439.7 million and $2.58 billion respectively, indicating a strong recovery and profitability improvement.
Share-based compensation: Share-based compensation expenses increased steadily from $567.7 million in 2019 to over $1 billion by 2022, after which the amounts remained relatively stable around $1.07 billion in 2023 and 2024. This suggests ongoing significant equity-based incentives as part of employee compensation.
Deferred income taxes: Deferred income taxes data are sparse until 2022, where a minor negative adjustment is shown. In 2024, there is a substantial negative figure of approximately $2 billion, indicating possible tax asset write-downs or adjustments impacting the financial statements.
Depreciation and amortization: Depreciation and amortization expenses rose consistently from $153.8 million in 2019 to approximately $283.3 million by 2024, reflecting increasing capitalization of assets and their systematic allocation over the periods.
Amortization of deferred contract costs: This amortization also showed an increasing trend, growing from $223.8 million in 2019 to $446 million by 2024, indicative of growing deferred revenue or contract-related assets being expensed over time.
Accounts receivable, net: Accounts receivable showed volatility, with significant negative changes especially in 2020 and 2022 suggestive of an increase in receivables, which may impact liquidity. However, in 2024, the net negative effect decreases, indicating better collection or management of receivables.
Financing receivables, net: Data available from 2021 onwards show consistent net outflows related to financing receivables, peaking in 2024 at over $865 million, possibly reflecting increased lending activity or related asset growth requiring management attention.
Deferred contract costs: Deferred contract costs consistently increased over the entire period, reaching nearly $490 million negative in 2024, which aligns with the growing deferred revenue balances and reflects capitalization of contract acquisition costs.
Deferred revenue: Deferred revenue presented a strong upward trend from $590 million in 2019 to around $2.18 billion in 2024, indicating substantial growth in customer prepayments or multi-period billings, which may positively impact future revenues.
Net cash provided by operating activities: Operating cash flow improved steadily over the years, from $1.06 billion in 2019 to $3.26 billion in 2024, demonstrating strong cash generation capability despite earlier net losses, driven by working capital management and adjusted net income.
Net cash provided by (used in) investing activities: Investing activities showed large cash outflows, particularly notable in 2023 with over $2 billion used, driven by purchases of investments and acquisitions, indicating aggressive investment for growth despite negative cash flow impacts.
Net cash provided by (used in) financing activities: Financing activities fluctuated, showing inflow in 2020 but predominantly cash outflows in other years, reaching $1.34 billion outflow in 2024 mainly due to repayments of convertible notes and share repurchases, indicating deleveraging and shareholder return strategies.
Cash, cash equivalents, and restricted cash: The cash position fluctuated significantly across periods, with substantial decreases in some years (2019 and 2023) followed by increases in others (2020, 2022, 2024), reflecting the combined effects of operational cash flow, investing, and financing activities.
Overall summary: The company demonstrated a clear turnaround from net losses to robust net income in recent years, supported by steady growth in deferred revenue and operating cash flows. Investment activities indicate an aggressive growth strategy through acquisitions and asset purchases. Financing cash flows reflect active management of capital structure including debt repayments and share repurchases. While share-based compensation remains a significant and growing expense, the improvement in profitability and cash generation marks enhanced operational efficiency and financial health.

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Palo Alto Networks Inc. (NASDAQ:PANW)

Cash Flow Statement