Palo Alto Networks Inc. (NASDAQ:PANW)

Receivables Turnover

The receivables turnover ratio shows significant fluctuations over the observed periods. Starting around 4.98 in late 2018, it rose to a peak of 6.04 by early 2019, then declined to 3.29 in late 2019. Subsequently, the ratio exhibits variability, peaking again at 5.65 in early 2021 and then declining to its lowest point of 2.57 in late 2021. After this low, there is a gradual recovery with some oscillations, including a notable peak of 7.32 in early 2025, followed by a slight decline to 4.55 by mid-2025. These variations suggest variability in how efficiently the company collects receivables, with periods of both higher and lower collection efficiency.

Payables Turnover

The payables turnover ratio maintains relatively high values throughout the periods, with intermittent peaks and troughs. Initially, it hovered around 11 to 12 in late 2018 and early 2019, then increased substantially to 15.76 and further to 17.72 in mid-2019. The ratio reached its highest observed value at 25.37 in early 2021, indicating rapid payment of payables at that time. Subsequently, it declined, with oscillations between approximately 10 and 20 in the following periods. The overall trend shows the company's variable pace of settling its payables, alternating between extended and faster payment cycles.

Working Capital Turnover

Working capital turnover data is incomplete but indicates some volatility. Values range from 1.4 to 4.81 in the limited periods available, with a notable increase to 4.81 in mid-2019, suggesting improved utilization of working capital during that timeframe. The absence of data in several periods limits comprehensive trend analysis.

Average Receivable Collection Period

The average receivable collection period exhibits notable volatility, reflecting varying efficiency in converting receivables into cash. Early periods show collection days generally between 60 and 75 days. There is a marked increase to over 100 days multiple times throughout the dataset, peaking at 142 days in late 2021, signaling slower collections. Afterward, the period fluctuates, with intermittent declines to around 50 days in early 2025, indicating improved collection efficiency in more recent periods.

Average Payables Payment Period

The average payables payment period shows a relatively stable pattern with minor fluctuations. It generally ranges between 14 and 36 days, with occasional increases to around 30 or more days, for example, in late 2024 and into early 2025. The relatively low and stable number of days suggests the company tends to pay its suppliers promptly, albeit with some periods of extended payment terms.

The analysis of the quarterly financial data reveals notable trends in revenue, accounts receivable, and receivables turnover over the observed period.

Revenue

There is a clear upward trajectory in revenue from October 31, 2018, through to April 30, 2025, with values increasing from approximately $656 million to over $2.28 billion. This consistent growth suggests a strong expansion in the company’s sales or service delivery capabilities over the years. Despite some fluctuations in the quarterly figures, the overall trend is positive, highlighted by significant revenue increases particularly from early 2021 onward. This indicates successful scaling or market penetration during this timeframe.

Accounts Receivable, Net of Allowance for Credit Losses

The accounts receivable balance exhibits considerable variability throughout the periods examined. Starting at $382.3 million in late 2018, receivables increase substantially with pronounced spikes occurring around mid-2020 and mid-2022, reaching peaks exceeding $2 billion. These fluctuations suggest changes in credit terms, sales volume, or collection effectiveness. The periodic peaks may indicate delayed collections or larger volume sales on credit. Notably, the most significant increases in receivables occur simultaneously with rising revenues, which is consistent with scaling operations but raises considerations regarding cash flow management.

Receivables Turnover Ratio

The receivables turnover ratio, available for many quarters, shows considerable variation, generally ranging between approximately 2.5 and 7.3. Higher ratios imply faster collection of receivables, while lower values suggest slower cash inflows. Periods with low turnover correspond with high accounts receivable balances, confirming the possible collection challenges or extended credit terms during these times. For example, ratios fall to around 2.5 to 3 during quarters with elevated receivables, indicating slower collections relative to sales. Conversely, spikes in turnover ratio suggest improved receivables management or shortening collection cycles.

In summary, the data illustrates strong revenue growth accompanied by increasing and fluctuating accounts receivable levels. The variances in the receivables turnover ratio indicate inconsistent collection efficiency, which may warrant further monitoring and potential operational adjustments to optimize cash conversion cycles as the company expands.

Cost of Revenue

The cost of revenue displays a consistent upward trend from October 2018 through July 2024, increasing from approximately $183.5 million to over $619 million. There are some fluctuations, such as a slight decrease from July 2022 to October 2022 and again from October 2023 to January 2024, but the overall pattern indicates steady growth in the costs associated with generating revenue. This rise suggests expanding operational scale or increased expenses related to revenue-producing activities.

Accounts Payable

Accounts payable figures show notable volatility over the observed period. Starting at $43 million in October 2018, the metric generally increases but with significant fluctuations, including sharp rises and falls. For instance, after a dip to $27.9 million in January 2019, balances rise to $120.4 million by January 2022, then oscillate between around $90 million to over $230 million in the subsequent quarters. This variability may reflect changes in the company’s payment policies, supplier terms, or operational dynamics affecting liabilities.

Payables Turnover Ratio

The payables turnover ratio, indicative of how quickly the company pays off its suppliers, exhibits varying levels over time. Starting data from April 2019 shows a ratio near 11, followed by increases reaching peak values above 25 in early 2021. Afterward, the ratio fluctuates significantly, dropping to below 10 in some quarters such as April 2024 and showing periodic spikes. These movements reflect inconsistent payment pacing—periods of faster turnover followed by slower payments, which potentially impact cash management efficiency.

Overall Insights

The cost of revenue's growth highlights expanded business activities, while the erratic accounts payable patterns suggest changes in supplier credit utilization or payment scheduling. Fluctuations in the payables turnover ratio further underscore varying payment behavior, which may be reactive to operational cash flow requirements or strategic financial planning. Careful monitoring of accounts payable management could optimize working capital and strengthen supplier relationships.

Working Capital

Working capital demonstrates considerable volatility over the observed periods. Initially, it decreased from 1,999,500 thousand USD in October 2018 to a low point of 678,300 thousand USD in April 2020, followed by a significant increase to 2,437,500 thousand USD in July 2020. Subsequent quarters reveal persistent negative working capital values beginning in January 2021, reaching a peak negative value of -3,069,300 thousand USD in January 2023. More recent quarters continue to show negative levels, though with some fluctuations, remaining below -800,000 thousand USD through April 2025.

Revenue

Revenue presents a strong upward trend throughout the entire period. Starting at 656,000 thousand USD in October 2018, revenue increased almost consistently each quarter, with minor seasonal variations. Notably, significant growth occurred after mid-2020, with revenue surpassing 2,000,000 thousand USD from July 2023 onward, reaching a peak of 2,289,000 thousand USD by April 2025. This indicates sustained business expansion and increasing sales performance over the analyzed timeframe.

Working Capital Turnover Ratio

The working capital turnover ratio is provided unevenly and only for specific periods. Notably, it was 1.8 in July 2019, 1.89 in October 2019, 1.8 again in January 2020, and spiked to 4.81 in April 2020, coinciding with the low working capital figure. The ratio then dropped to 1.4 in July 2020 and rose to 2.15 in October 2020, with a later value of 3.52 recorded in January 2021. The irregularity and sparsity of these data points limit comprehensive trend analysis, but the spikes suggest periods of increased efficiency in using working capital relative to revenue during 2019-2021.

Overall Analysis

The data illustrates a company experiencing consistent revenue growth while simultaneously facing challenges in maintaining positive working capital since early 2021. The shift to negative working capital may indicate increased liabilities or higher current obligations relative to current assets. Despite this, the continuing rise in revenue signals operational expansion. The working capital turnover ratio peaks during periods of negative or very low working capital, indicating intensified use of limited working capital resources to generate revenue. This dynamic may point to strategic decisions affecting liquidity and operational financing during the analyzed intervals.

The receivables turnover ratio and average receivable collection period exhibit fluctuating trends over the analyzed quarters. Initially, the receivables turnover ratio shows an increase from 4.98 to 6.04 before declining gradually to 3.29 in the quarter ending October 31, 2019. Subsequently, it experiences a recovery phase, reaching values around 5.61 in January 2022 followed by intermittent declines and rises, with a notable peak of 7.32 in January 2025 before slightly retreating to 4.55 by April 2025.

Correspondingly, the average receivable collection period displays an inverse pattern to the turnover ratio, consistent with the expected relationship between these two metrics. Beginning near 73 days, the period decreases to 60 days early on, then elongates substantially, peaking at 111 days in October 2019 and reaching as high as 142 days in October 2022. After these peaks, the collection period shows some improvement but remains variable, ending with a shorter period of 80 days in April 2025 following a brief decline to 50 days in January 2025.

Receivables Turnover Ratio

Demonstrates cyclical movements with peaks indicating periods of more efficient collections and troughs indicating slower turnover. The peak in early 2025 suggests a substantial improvement in the speed of receivables turnover compared to prior quarters.

Average Receivable Collection Period

Varies inversely with the turnover ratio, with longer collection periods indicating potential challenges in receivables management or client payment delays during certain quarters. The notable spikes suggest periods where cash flow from receivables might have been under pressure.

Overall, the data reveals periods of both improvement and deterioration in receivables management efficiency. The high variability in both metrics suggests sensitivity to operational or market conditions affecting collection processes. Though there are improvements toward the end of the period analyzed, the trends highlight the importance of continuous monitoring and potential focus on strategies to stabilize and shorten the receivable collection cycle.

Payables Turnover Ratio

The payables turnover ratio exhibits significant variability over the observed periods. Starting from a value of 11.03 in October 2019, it generally trends upward, reaching multiple peaks such as 25.37 in January 2021 and 20.69 in April 2023. However, there are also notable declines to values near or below 11, particularly in January 2024 (10.93), April 2025 (9.99), and around October 2024 (10.12). Overall, the ratio demonstrates fluctuating payment behavior, with intervals of faster payables turnover interspersed with periods of slower turnover.

Average Payables Payment Period (in days)

The average payables payment period inversely corresponds to changes in the payables turnover ratio and ranges primarily between 14 and 37 days. The period decreases from 33 days in October 2019 to as low as 14 days in January 2021, indicating quicker payment cycles during that time frame. Subsequent fluctuations are evident, with longer payment periods appearing intermittently, including a peak of 37 days in April 2025. These shifts suggest adjustments in the company's payment policies or cash management strategies over time, reflecting alternating phases of accelerated and delayed payments to suppliers.

Overall Insights

The data reveals a pattern of cyclical fluctuations in payables management, with the company alternating between periods of accelerated payments (higher turnover ratio, lower payment days) and slower payments (lower turnover ratio, higher payment days). This behavior may suggest deliberate cash flow optimization efforts or responses to changing operational or market conditions. The variability indicates that payables management is dynamic rather than stable over the analyzed period.