Palo Alto Networks Inc. (NASDAQ:PANW)

The receivables turnover exhibited moderate fluctuations over the analyzed periods. Starting at 3.29 in 2020, it increased slightly to 3.43 in 2021, followed by a notable decline to 2.57 in 2022. Subsequently, there was a gradual improvement through 2023 to 2025, reaching 3.11. This trend indicates some variability in the company's efficiency at collecting receivables, with a dip observed in 2022 but signs of recovery afterward.

In contrast, the payables turnover displayed considerable volatility. It rose sharply from 15.72 in 2020 to a high point of 22.41 in 2021, then declined significantly to 13.43 in 2022. The ratio experienced moderate increases to 17.71 in 2024, but then decreased again to 10.56 in 2025. This pattern suggests inconsistent payment practices, with a tendency toward slower turnover of payables in the most recent year.

The working capital turnover was only available for the initial period (2020) at 1.4 and is missing for subsequent years, providing limited insight into the overall trend for this metric.

The average receivable collection period corroborates the receivables turnover observations. It decreased slightly from 111 days in 2020 to 106 days in 2021, indicating improved collection efficiency. However, there was a considerable increase to 142 days in 2022, followed by gradual reductions to 117 days by 2025. This pattern reflects a temporary slowdown in collections during 2022 but subsequent improvements.

The average payables payment period mirrored the volatility noted in payables turnover. Starting at 23 days in 2020, it shortened to 16 days in 2021, indicating quicker payments. Then it lengthened to 27 days in 2022 and fluctuated in the following years, ending at 35 days in 2025. This suggests an increasing tendency to extend payment terms or delay payments in the later periods, particularly evidenced by the rise to 35 days in the final year reviewed.

Overall, the data indicates that the company experienced variability in cash conversion cycles, especially concerning the collection of receivables and payment of payables. The mid-period deterioration followed by partial recovery in receivables collection efficiency, alongside increasing payables payments duration towards the end of the period, could have implications on liquidity and working capital management strategies.

Revenue

Revenue demonstrates a consistent upward trend over the observed periods, increasing from 3,408,400 thousand USD in 2020 to 9,221,500 thousand USD in 2025. This reflects a strong growth trajectory with the most significant annual increase occurring between 2021 and 2022, where revenue rose by approximately 29.2%. The growth rate remains robust though slightly moderating towards 2024 and 2025.

Accounts Receivable, Net

The net accounts receivable balance exhibited a notable rise from 1,037,100 thousand USD in 2020 to 2,965,000 thousand USD in 2025, nearly tripling over the six-year horizon. This substantial increase indicates an expansion in credit sales or an extension of payment terms. The largest yearly increments appear between 2021 and 2022, consistent with the spike in revenue, though the growth rate of receivables tends to decelerate slightly in later years.

Receivables Turnover

The receivables turnover ratio shows fluctuations during the period. Initially, it improves marginally from 3.29 in 2020 to 3.43 in 2021, indicating a slightly faster collection of receivables relative to sales. However, there is a sharp decline to 2.57 in 2022, suggesting a slower collections cycle at that time. Subsequently, the turnover ratio partially recovers, reaching 3.11 by 2025. These movements could reflect changes in credit policies or shifting customer payment behaviors.

Overall Analysis

The data indicates strong revenue growth accompanied by a proportional increase in accounts receivable balances. The temporary dip in receivables turnover in 2022 suggests a period of less efficient collection, which is an aspect that improved gradually thereafter. Continuous monitoring of receivables management practices is advisable to ensure sustained cash flow alongside revenue expansion.

The analysis of the annual financial data reveals several notable trends in the cost structure and payables management over the considered periods.

Cost of Revenue

There is a consistent upward trend in the cost of revenue from 2020 to 2025. The figures increase from 999,500 thousand US dollars in 2020 to 2,451,600 thousand US dollars in 2025. This represents a significant growth, more than doubling over the span of six years. The increase is relatively steady, indicating an expansion in the scale of operations or rising costs associated with generating revenue.

Accounts Payable

Accounts payable demonstrates variability across the periods. Starting at 63,600 thousand US dollars in 2020, it decreases slightly in 2021, then jumps sharply to 128,000 thousand US dollars in 2022 and continues to fluctuate, reaching a high of 232,200 thousand US dollars in 2025. This suggests changes in supplier credit terms, payment policies, or purchasing volumes impacting short-term liabilities.

Payables Turnover Ratio

The payables turnover ratio shows considerable fluctuation, indicating varying efficiency in managing accounts payable. The ratio peaks at 22.41 in 2021, reflecting rapid payments to suppliers that year. However, it trends downward to 10.56 by 2025, which could imply slower payment practices or longer credit terms being utilized. Such variability may affect cash flow management and relationships with suppliers.

Overall, the cost of revenue increases substantially, while accounts payable and its turnover ratio exhibit volatility. The declining payables turnover ratio towards the later years suggests the company might be taking longer to settle its payables, which could impact its liquidity and supplier relationships if prolonged. These patterns warrant monitoring to ensure sustainable operational efficiency and financial health.

Working Capital

The working capital exhibits a notable downward trend, shifting from a positive $2,437,500 thousand in the year ending July 31, 2020, to significant negative values in the following years. Starting from a negative $469,400 thousand in 2021, it further declines to negative $1,891,400 thousand in 2022, with subsequent negative values observed in 2023 ($1,689,500 thousand), 2024 ($833,000 thousand), and 2025 ($465,200 thousand). This indicates increasing short-term liabilities exceeding current assets over the period, although the magnitude of the negative working capital decreases slightly in the latter years.

Revenue

The revenue demonstrates a strong and consistent upward trajectory over the entire timeframe. It increased from $3,408,400 thousand in 2020 to $4,256,100 thousand in 2021, reaching $5,501,500 thousand in 2022. This growth continues with revenues of $6,892,700 thousand in 2023, $8,027,500 thousand in 2024, and $9,221,500 thousand in 2025. The continuous growth rate suggests robust sales performance and market expansion.

Working Capital Turnover

The working capital turnover ratio is only available for 2020, recorded at 1.4. Due to the absence of data for the subsequent years, it is not possible to analyze trends or insights regarding the efficiency with which the company uses its working capital to generate revenue in later periods.

Summary and Insights

While the revenue trend indicates strong and sustained growth, the working capital figures reveal a deteriorating liquidity position, with working capital moving from positive to negative values early in the period and remaining negative thereafter, albeit with gradual improvement after 2022. This situation may reflect increasing short-term liabilities or a strategic shift in working capital management. The absence of working capital turnover data for the majority of the years limits comprehensive efficiency analysis. Overall, the data suggests that revenue growth is robust but could be accompanied by potential liquidity and operational risks related to working capital management.

Receivables Turnover

The receivables turnover ratio showed a mixed trend over the period analyzed. It started at 3.29 in 2020 and experienced a slight increase to 3.43 in 2021. However, it then declined to 2.57 in 2022, indicating a slower collection of receivables. This was followed by a moderate recovery to 2.80 in 2023 and further improvements to 3.07 in 2024 and 3.11 in 2025. Overall, while there was an initial dip in efficiency in 2022, the company seems to have been improving its ability to collect receivables more frequently in recent years.

Average Receivable Collection Period

The average receivable collection period exhibited an inverse pattern relative to the receivables turnover. It started relatively high at 111 days in 2020 and improved to 106 days in 2021, indicating faster collection. This was followed by a significant increase to 142 days in 2022, signalling a deterioration in collection efficiency. Subsequently, there was a steady decrease to 130 days in 2023, then to 119 days in 2024, and further to 117 days in 2025. The reduction in the collection period in the final years reflects a recovery and enhanced cash collection process.

Overall Analysis

The data reflects a clear disruption in receivables management around 2022, as evidenced by the sharp drop in receivables turnover and the increase in the average collection period. Following this period, there has been a consistent improvement in both metrics, suggesting successful efforts to accelerate collections and improve working capital efficiency. The recent values approaching historical levels from 2020 and 2021 suggest a return to more effective receivables management.

The analysis of the payables metrics over the examined periods reveals notable fluctuations in the management of payables at the company. The payables turnover ratio exhibits considerable volatility, beginning at 15.72 in 2020, rising sharply to 22.41 in 2021, then declining to a low of 13.43 in 2022. Subsequent periods show a modest rebound to 14.43 in 2023, an increase to 17.71 in 2024, followed by a decline to 10.56 in 2025. These variations suggest irregularity in the company's rate of paying off its suppliers throughout the years.

Correspondingly, the average payables payment period, expressed in number of days, inversely reflects the turnover ratio trends. This metric shortens from 23 days in 2020 to 16 days in 2021, indicating faster payment cycles. However, it then lengthens to 27 days in 2022 and slightly decreases to 25 days in 2023. The payment period shortens again to 21 days in 2024 but then extends significantly to 35 days in 2025. The increase in the payment period in 2025 may indicate a strategic decision to extend payment terms or potential liquidity constraints leading to slower payments.

Payables turnover ratio trends

High variability with peaks in 2021 followed by declines, suggesting fluctuating payment efficiency.

Average payables payment period patterns

Generally inverse to turnover ratio, signaling changing payment speeds with an overall tendency toward slower payments in recent years.

Implications

The fluctuations and recent elongation in payment periods could impact supplier relationships and may reflect changes in working capital management or operational cash flow strategies.