Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
Profitability Ratios (Summary)
Palo Alto Networks Inc., profitability 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).
- Gross Profit Margin
- The gross profit margin remained relatively stable from 2019 to 2022, with a gradual decline from 72.12% to 68.76%. However, it experienced a positive reversal in 2023 and 2024, increasing to 72.29% and further to 74.35%, indicating enhanced efficiency in core production or service delivery costs over the most recent periods.
- Operating Profit Margin
- The operating profit margin exhibited a negative trend from 2019 through 2021, deteriorating from -1.87% to a low of -7.15%, reflecting increasing operational challenges or higher expenses relative to revenue. This trend reversed starting 2022, improving markedly to positive territory with 5.62% in 2023 and further to 8.52% in 2024, suggesting improved operational control and profitability.
- Net Profit Margin
- The net profit margin mirrored the operating margin's trend but with more pronounced fluctuations. It declined sharply from -2.82% in 2019 to -11.72% in 2021. Subsequently, the margin improved significantly, entering positive territory at 6.38% in 2023 and soaring to 32.11% in 2024, indicating a substantial turnaround in overall profitability and possibly the impact of non-operating gains or cost management strategies.
- Return on Equity (ROE)
- ROE demonstrated significant volatility with initially negative and worsening performance from -5.16% in 2019 to a deep negative of -127.14% in 2022. The negative values suggest losses relative to shareholder equity during those years. From 2023 onward, ROE recovered sharply to a positive 25.15% and further to 49.86% in 2024, reflecting a strong rebound in generating returns for shareholders.
- Return on Assets (ROA)
- ROA followed a similar declining pattern initially, dropping from -1.24% in 2019 to -4.87% in 2021, then improving to -2.18% in 2022. The metric turned positive by 2023 at 3.03% and improved markedly to 12.89% in 2024. This suggests that asset utilization efficiency increased considerably in the most recent years, contributing to profitability.
Return on Sales
Return on Investment
Gross Profit Margin
Palo Alto Networks Inc., gross profit margin calculation, comparison to benchmarks
| Jul 31, 2024 | Jul 31, 2023 | Jul 31, 2022 | Jul 31, 2021 | Jul 31, 2020 | Jul 31, 2019 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Gross profit | 5,968,300) | 4,983,000) | 3,782,800) | 2,981,200) | 2,408,900) | 2,091,200) | |
| Revenue | 8,027,500) | 6,892,700) | 5,501,500) | 4,256,100) | 3,408,400) | 2,899,600) | |
| Profitability Ratio | |||||||
| Gross profit margin1 | 74.35% | 72.29% | 68.76% | 70.05% | 70.68% | 72.12% | |
| Benchmarks | |||||||
| Gross Profit Margin, Competitors2 | |||||||
| Accenture PLC | 32.61% | 32.34% | 31.99% | 32.38% | 31.53% | 30.81% | |
| Adobe Inc. | 89.04% | 87.87% | 87.70% | 88.18% | 86.62% | 85.03% | |
| Cadence Design Systems Inc. | 86.05% | 89.36% | 89.57% | 89.73% | 88.61% | — | |
| CrowdStrike Holdings Inc. | 75.27% | 73.17% | 73.60% | 73.75% | 70.58% | — | |
| International Business Machines Corp. | 56.65% | 55.45% | 54.00% | 54.90% | 48.32% | — | |
| Intuit Inc. | 78.72% | 78.13% | 81.09% | 82.53% | 82.05% | 82.80% | |
| Microsoft Corp. | 69.76% | 68.92% | 68.40% | 68.93% | 67.78% | 65.90% | |
| Oracle Corp. | 71.41% | 72.85% | 79.08% | 80.59% | 79.68% | — | |
| Palantir Technologies Inc. | 80.25% | 80.62% | 78.56% | 77.99% | 67.74% | — | |
| Salesforce Inc. | 75.50% | 73.34% | 73.48% | 74.41% | 75.23% | — | |
| ServiceNow Inc. | 79.18% | 78.59% | 78.29% | 77.05% | 78.16% | — | |
| Synopsys Inc. | 79.68% | 79.08% | 79.07% | 79.50% | 78.44% | 77.60% | |
| Workday Inc. | 75.60% | 72.41% | 72.21% | 72.25% | 70.63% | — | |
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).
1 2024 Calculation
Gross profit margin = 100 × Gross profit ÷ Revenue
= 100 × 5,968,300 ÷ 8,027,500 = 74.35%
2 Click competitor name to see calculations.
The financial data over the six-year period reveals a consistent upward trajectory in both revenue and gross profit, indicating overall growth in the company's core business operations.
- Revenue
- Revenue has demonstrated strong growth from approximately $2.9 billion in 2019 to over $8 billion in 2024. This represents nearly a threefold increase, with year-over-year growth accelerating notably after 2020. The largest absolute increments are observed in the periods from 2021 onward, reflecting expanded business scale or market penetration.
- Gross Profit
- Gross profit has similarly increased substantially, from around $2.1 billion in 2019 to nearly $6 billion by 2024. The growth in gross profit mirrors the revenue trend, supporting the notion of effective cost management or improved pricing strategies, as gross profit rises proportionately and even outpaces revenue growth in certain years.
- Gross Profit Margin
- The gross profit margin experienced some fluctuations, beginning at 72.12% in 2019 and slightly declining to a low near 68.76% in 2022. However, margins improved significantly in the subsequent years, reaching a peak of 74.35% in 2024. This upward margin trend in recent years suggests enhanced operational efficiency or favorable product mix changes contributing to higher profitability per unit of revenue.
Overall, the data indicate strong and sustained growth coupled with improving profitability ratios in the latter years, which is a positive sign of the company’s financial health and operational effectiveness.
Operating Profit Margin
Palo Alto Networks Inc., operating profit margin calculation, comparison to benchmarks
| Jul 31, 2024 | Jul 31, 2023 | Jul 31, 2022 | Jul 31, 2021 | Jul 31, 2020 | Jul 31, 2019 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Operating income (loss) | 683,900) | 387,300) | (188,800) | (304,100) | (179,000) | (54,100) | |
| Revenue | 8,027,500) | 6,892,700) | 5,501,500) | 4,256,100) | 3,408,400) | 2,899,600) | |
| Profitability Ratio | |||||||
| Operating profit margin1 | 8.52% | 5.62% | -3.43% | -7.15% | -5.25% | -1.87% | |
| Benchmarks | |||||||
| Operating Profit Margin, Competitors2 | |||||||
| Accenture PLC | 14.79% | 13.74% | 15.21% | 15.08% | 14.69% | 14.59% | |
| Adobe Inc. | 31.35% | 34.26% | 34.64% | 36.76% | 32.93% | 29.25% | |
| Cadence Design Systems Inc. | 29.10% | 30.59% | 30.15% | 26.07% | 24.06% | — | |
| CrowdStrike Holdings Inc. | -0.07% | -8.48% | -9.82% | -10.58% | -30.34% | — | |
| International Business Machines Corp. | 14.95% | 15.17% | 13.50% | 11.97% | 9.22% | — | |
| Intuit Inc. | 22.29% | 21.86% | 20.20% | 25.95% | 28.34% | 27.33% | |
| Microsoft Corp. | 44.64% | 41.77% | 42.06% | 41.59% | 37.03% | 34.14% | |
| Oracle Corp. | 28.99% | 26.21% | 25.74% | 37.58% | 35.57% | — | |
| Palantir Technologies Inc. | 10.83% | 5.39% | -8.46% | -26.66% | -107.41% | — | |
| Salesforce Inc. | 14.38% | 3.29% | 2.07% | 2.14% | 1.74% | — | |
| ServiceNow Inc. | 12.42% | 8.49% | 4.90% | 4.36% | 4.40% | — | |
| Synopsys Inc. | 22.13% | 21.72% | 22.87% | 17.48% | 16.83% | 15.48% | |
| Workday Inc. | 2.52% | -3.57% | -2.27% | -5.76% | -13.85% | — | |
| Operating Profit Margin, Sector | |||||||
| Software & Services | 30.37% | 27.38% | 27.37% | 28.17% | 24.17% | — | |
| Operating Profit Margin, Industry | |||||||
| Information Technology | 26.60% | 24.47% | 26.42% | 26.71% | 22.69% | — | |
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).
1 2024 Calculation
Operating profit margin = 100 × Operating income (loss) ÷ Revenue
= 100 × 683,900 ÷ 8,027,500 = 8.52%
2 Click competitor name to see calculations.
The financial data indicates significant changes in the company's operating performance and revenue over the analyzed periods. Revenue shows a consistent upward trajectory, increasing from approximately 2.9 billion US dollars in July 2019 to over 8 billion US dollars by July 2024. This steady growth suggests expanding business operations and market penetration.
Operating income reflects a noteworthy recovery trend. Initially, the company experienced operating losses, which deepened from about -54.1 million US dollars in 2019 to -304.1 million in 2021. Following this period, operating losses reduced considerably in 2022 to approximately -188.8 million US dollars, before turning into positive figures in 2023 and further increasing in 2024, reaching 387.3 million and 683.9 million US dollars respectively. This progression indicates a successful shift towards profitability.
The operating profit margin corroborates the above observations. It remained negative from 2019 through 2022, with the largest negative margin in 2021 at -7.15%. Starting in 2023, the margin turned positive, recording 5.62% and improving further to 8.52% in 2024. This improvement signifies enhanced operational efficiency and better cost management relative to revenue.
- Revenue Growth
- Consistent and strong growth across all periods, more than doubling over five years.
- Operating Income (Loss)
- Initially negative and declining until 2021, followed by a marked recovery and eventual profitability in 2023 and 2024.
- Operating Profit Margin
- Negative margins until 2022, improving to positive margins in the last two years, indicating improved operational effectiveness.
Net Profit Margin
Palo Alto Networks Inc., net profit margin calculation, comparison to benchmarks
| Jul 31, 2024 | Jul 31, 2023 | Jul 31, 2022 | Jul 31, 2021 | Jul 31, 2020 | Jul 31, 2019 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Net income (loss) | 2,577,600) | 439,700) | (267,000) | (498,900) | (267,000) | (81,900) | |
| Revenue | 8,027,500) | 6,892,700) | 5,501,500) | 4,256,100) | 3,408,400) | 2,899,600) | |
| Profitability Ratio | |||||||
| Net profit margin1 | 32.11% | 6.38% | -4.85% | -11.72% | -7.83% | -2.82% | |
| Benchmarks | |||||||
| Net Profit Margin, Competitors2 | |||||||
| Accenture PLC | 11.19% | 10.72% | 11.17% | 11.69% | 11.52% | 11.06% | |
| Adobe Inc. | 25.85% | 27.97% | 27.01% | 30.55% | 40.88% | 26.42% | |
| Cadence Design Systems Inc. | 22.74% | 25.46% | 23.84% | 23.29% | 22.02% | — | |
| CrowdStrike Holdings Inc. | 2.92% | -8.18% | -16.18% | -10.59% | -29.45% | — | |
| International Business Machines Corp. | 9.60% | 12.13% | 2.71% | 10.01% | 7.59% | — | |
| Intuit Inc. | 18.19% | 16.59% | 16.23% | 21.41% | 23.78% | 22.95% | |
| Microsoft Corp. | 35.96% | 34.15% | 36.69% | 36.45% | 30.96% | 31.18% | |
| Oracle Corp. | 19.76% | 17.02% | 15.83% | 33.96% | 25.94% | — | |
| Palantir Technologies Inc. | 16.13% | 9.43% | -19.61% | -33.75% | -106.75% | — | |
| Salesforce Inc. | 11.87% | 0.66% | 5.45% | 19.16% | 0.74% | — | |
| ServiceNow Inc. | 12.97% | 19.30% | 4.49% | 3.90% | 2.62% | — | |
| Synopsys Inc. | 36.94% | 21.05% | 19.38% | 18.02% | 18.03% | 15.84% | |
| Workday Inc. | 19.02% | -5.90% | 0.57% | -6.54% | -13.25% | — | |
| Net Profit Margin, Sector | |||||||
| Software & Services | 24.72% | 21.93% | 21.70% | 25.29% | 20.06% | — | |
| Net Profit Margin, Industry | |||||||
| Information Technology | 20.72% | 20.39% | 22.45% | 23.61% | 19.67% | — | |
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).
1 2024 Calculation
Net profit margin = 100 × Net income (loss) ÷ Revenue
= 100 × 2,577,600 ÷ 8,027,500 = 32.11%
2 Click competitor name to see calculations.
- Revenue
- Revenue has shown a consistent upward trend over the analyzed period. It increased steadily from approximately 2.9 billion USD in 2019 to over 8 billion USD in 2024, reflecting sustained growth in the company's top line.
- Net Income (Loss)
- Net income exhibited volatility, with losses recorded from 2019 through 2022, reaching the largest loss of approximately 499 million USD in 2021. A notable turnaround occurred in 2023, with the company reporting positive net income of around 440 million USD, which further improved dramatically to approximately 2.58 billion USD in 2024. This indicates a significant improvement in profitability after several years of losses.
- Net Profit Margin
- The net profit margin followed a pattern consistent with net income trends. It was negative throughout the initial four years, hitting its lowest point at -11.72% in 2021, corresponding to the highest net loss. Starting in 2023, the margin turned positive, reaching 6.38%, and then increased sharply to 32.11% in 2024. This reflects a substantial enhancement in operational efficiency and/or cost management resulting in high profitability in the most recent period.
Return on Equity (ROE)
Palo Alto Networks Inc., ROE calculation, comparison to benchmarks
| Jul 31, 2024 | Jul 31, 2023 | Jul 31, 2022 | Jul 31, 2021 | Jul 31, 2020 | Jul 31, 2019 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Net income (loss) | 2,577,600) | 439,700) | (267,000) | (498,900) | (267,000) | (81,900) | |
| Stockholders’ equity | 5,169,700) | 1,748,400) | 210,000) | 634,500) | 1,101,800) | 1,586,300) | |
| Profitability Ratio | |||||||
| ROE1 | 49.86% | 25.15% | -127.14% | -78.63% | -24.23% | -5.16% | |
| Benchmarks | |||||||
| ROE, Competitors2 | |||||||
| Accenture PLC | 25.68% | 26.75% | 31.11% | 30.25% | 30.05% | 33.17% | |
| Adobe Inc. | 39.42% | 32.86% | 33.85% | 32.59% | 39.66% | 28.03% | |
| Cadence Design Systems Inc. | 22.58% | 30.58% | 30.93% | 25.39% | 23.69% | — | |
| CrowdStrike Holdings Inc. | 3.88% | -12.52% | -22.89% | -10.64% | -19.10% | — | |
| International Business Machines Corp. | 22.06% | 33.29% | 7.47% | 30.38% | 27.14% | — | |
| Intuit Inc. | 16.07% | 13.81% | 12.57% | 20.89% | 35.76% | 41.53% | |
| Microsoft Corp. | 32.83% | 35.09% | 43.68% | 43.15% | 37.43% | 38.35% | |
| Oracle Corp. | 120.26% | 792.45% | — | 262.43% | 83.94% | — | |
| Palantir Technologies Inc. | 9.24% | 6.04% | -14.57% | -22.71% | -76.61% | — | |
| Salesforce Inc. | 6.93% | 0.36% | 2.48% | 9.81% | 0.37% | — | |
| ServiceNow Inc. | 14.83% | 22.69% | 6.46% | 6.22% | 4.18% | — | |
| Synopsys Inc. | 25.17% | 20.01% | 17.85% | 14.31% | 13.54% | 13.04% | |
| Workday Inc. | 17.09% | -6.57% | 0.65% | -8.62% | -19.33% | — | |
| ROE, Sector | |||||||
| Software & Services | 28.54% | 28.47% | 31.01% | 36.18% | 30.32% | — | |
| ROE, Industry | |||||||
| Information Technology | 29.38% | 31.90% | 39.03% | 42.37% | 35.70% | — | |
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).
1 2024 Calculation
ROE = 100 × Net income (loss) ÷ Stockholders’ equity
= 100 × 2,577,600 ÷ 5,169,700 = 49.86%
2 Click competitor name to see calculations.
The financial data over the six-year period reveals significant volatility and substantial shifts in profitability and equity measures.
- Net Income (Loss)
-
From July 31, 2019, through July 31, 2022, net income remained negative, indicating persistent losses over four consecutive years. The losses escalated sharply, peaking at a loss of $498.9 million in 2021. However, a notable turnaround occurred from 2022 onwards, with the company achieving a positive net income of $439.7 million in 2023, followed by a substantial increase to $2.5776 billion in 2024. This transition from significant losses to substantial profitability suggests a marked improvement in operational performance or revenue growth, alongside effective cost management or other transformative business actions.
- Stockholders’ Equity
-
Stockholders’ equity exhibited a declining trend from $1.5863 billion in 2019 to a low of $210 million in 2022. This decline aligns with the period of escalating net losses, which likely eroded equity value. From 2022 to 2024, equity experienced a pronounced recovery, surging to $5.1697 billion. This strong increase in equity corresponds with the restoration of profitability and potentially reflects successful capital raises, retained earnings accumulation, or asset revaluation.
- Return on Equity (ROE)
-
ROE trends mirrored those observed in net income and equity. The company reported negative returns on equity for four consecutive years, worsening to -127.14% in 2022, indicative of steep losses relative to the diminished equity base. From 2023 onward, ROE reversed dramatically, reaching 25.15% in 2023 and nearly doubling to 49.86% in 2024. This indicates highly effective utilization of shareholder equity to generate profits in the recent periods.
Overall, the data reflects a period of substantial financial distress followed by a strong recovery in both profitability and equity value. The improvements in net income and ROE in the latest years suggest that the company has likely undergone significant operational or strategic changes leading to enhanced financial health and shareholder value creation.
Return on Assets (ROA)
Palo Alto Networks Inc., ROA calculation, comparison to benchmarks
| Jul 31, 2024 | Jul 31, 2023 | Jul 31, 2022 | Jul 31, 2021 | Jul 31, 2020 | Jul 31, 2019 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Net income (loss) | 2,577,600) | 439,700) | (267,000) | (498,900) | (267,000) | (81,900) | |
| Total assets | 19,990,900) | 14,501,100) | 12,253,600) | 10,241,600) | 9,065,400) | 6,592,200) | |
| Profitability Ratio | |||||||
| ROA1 | 12.89% | 3.03% | -2.18% | -4.87% | -2.95% | -1.24% | |
| Benchmarks | |||||||
| ROA, Competitors2 | |||||||
| Accenture PLC | 12.99% | 13.41% | 14.55% | 13.68% | 13.78% | 16.04% | |
| Adobe Inc. | 18.39% | 18.23% | 17.51% | 17.70% | 21.66% | 14.22% | |
| Cadence Design Systems Inc. | 11.76% | 18.36% | 16.53% | 15.87% | 14.95% | — | |
| CrowdStrike Holdings Inc. | 1.34% | -3.65% | -6.49% | -3.39% | -10.09% | — | |
| International Business Machines Corp. | 4.39% | 5.55% | 1.29% | 4.35% | 3.58% | — | |
| Intuit Inc. | 9.22% | 8.58% | 7.45% | 13.29% | 16.70% | 24.78% | |
| Microsoft Corp. | 17.21% | 17.56% | 19.94% | 18.36% | 14.70% | 13.69% | |
| Oracle Corp. | 7.42% | 6.33% | 6.15% | 10.48% | 8.78% | — | |
| Palantir Technologies Inc. | 7.29% | 4.64% | -10.80% | -16.02% | -43.35% | — | |
| Salesforce Inc. | 4.14% | 0.21% | 1.52% | 6.14% | 0.23% | — | |
| ServiceNow Inc. | 6.99% | 9.96% | 2.44% | 2.13% | 1.36% | — | |
| Synopsys Inc. | 17.31% | 11.90% | 10.45% | 8.66% | 8.27% | 8.31% | |
| Workday Inc. | 8.39% | -2.72% | 0.28% | -3.24% | -7.05% | — | |
| ROA, Sector | |||||||
| Software & Services | 12.16% | 11.18% | 11.39% | 12.27% | 9.67% | — | |
| ROA, Industry | |||||||
| Information Technology | 11.99% | 12.51% | 14.57% | 14.66% | 11.45% | — | |
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).
1 2024 Calculation
ROA = 100 × Net income (loss) ÷ Total assets
= 100 × 2,577,600 ÷ 19,990,900 = 12.89%
2 Click competitor name to see calculations.
The financial data reveals a significant evolution in profitability and asset utilization over the examined periods. Initially, the entity experienced considerable net losses, with negative net income figures reported from 2019 through 2022. The loss peaked in fiscal year 2021 at approximately $498.9 million, indicating challenges in operational or market conditions during that timeframe.
From 2023 onward, the organization transitioned into profitability, reporting a net income of $439.7 million and substantially improving further to $2.5776 billion by 2024. This notable turnaround suggests effective strategic adjustments or favorable market developments contributing to enhanced earnings.
Total assets exhibited a continuous growth trajectory across all fiscal years analyzed. The asset base expanded from around $6.6 billion in 2019 to nearly $20 billion by 2024. This rising asset trend indicates investment in resources poised to support operational capacity and future growth initiatives.
Return on Assets (ROA) also reflected the income trend, where negative values in initial years aligned with net losses and dissatisfaction in asset profitability. ROA started at -1.24% in 2019, worsening to -4.87% in 2021, followed by gradual recovery and ultimately reaching a positive 3.03% in 2023. By 2024, ROA surged to 12.89%, marking a strong increase in the efficiency with which the company employs its assets to generate profits.
- Net Income (Loss)
- Initially negative, with the largest loss in 2021, followed by a sharp shift to profitability in 2023 and a substantial increase in 2024.
- Total Assets
- Consistently increased year-over-year, nearly tripling over the six-year period, reflecting ongoing asset accumulation.
- Return on Assets (ROA)
- Negative ROA in early years corresponded to losses, transitioning to positive territory in 2023 with rapid improvement in 2024, indicating enhanced asset efficiency.
In summary, the data indicates a period of initial financial difficulty leading to losses, followed by a robust recovery phase characterized by growing assets and markedly improved profitability and operational efficiency by the latest fiscal year.