Palo Alto Networks Inc. (NASDAQ:PANW)

Receivables Turnover

The receivables turnover ratio exhibits considerable volatility over the analyzed quarters, fluctuating between lows around 2.57 and highs exceeding 7. The ratio notably declined during mid-2021 and mid-2023 periods, indicating slower collection efficiency during those times. However, sharp increases followed these declines, particularly at the end of 2024 and mid-2025, suggesting periods of improved receivables management or accelerated cash collections.

Payables Turnover

The payables turnover ratio shows fluctuating trends with values ranging roughly from 9.99 to 25.37. Earlier quarters reflected relatively higher turnover ratios, indicating quicker payment to suppliers. This turnover declined in several stretches, such as mid-2021 and early 2024, signaling longer payment periods or extended credit terms. Variability throughout the timeline reflects inconsistent payables management or possibly changing negotiation terms with vendors.

Working Capital Turnover

Data for working capital turnover is sparse, with only limited periods reported. Available values show an increase from 2.15 to 3.52 early in the timeline, but subsequent quarters lack data, limiting trend analysis. The initial rising trend may imply improved efficiency in utilizing working capital during the documented quarters.

Average Receivable Collection Period

The average receivable collection period is marked by significant fluctuations, spanning from a low of around 50 days to a peak exceeding 140 days. Certain periods, notably mid-2021 and mid-2023, indicate substantial increases in collection days, signaling possible delays or challenges in customer payments. Conversely, periods towards the end of 2024 and mid-2025 reflect reduced collection periods, indicating more efficient receivables management or improved customer payment behaviors.

Average Payables Payment Period

The average payables payment period also demonstrates variability, ranging primarily between 14 and 37 days. While earlier quarters reflect shorter payment cycles, certain quarters in 2022 and 2024 show extended payment periods. These variations suggest shifting payment strategies, possibly aimed at managing cash flow or renegotiating supplier terms.

Summary

Overall, the financial ratios display considerable oscillations over the examined period, signaling dynamic changes in cash conversion cycles. Both receivables and payables turnovers fluctuate, reflecting varied efficiency in collection and payment processes. Periods of extended collection and payment days indicate potential cash flow management challenges or strategic adjustments. The irregularity in working capital turnover data restricts comprehensive assessment but hints at early improvements. Continuous monitoring and consistent improvements in these metrics could enhance operational liquidity and financial stability.

Revenue Trends

The revenue demonstrates an overall upward trajectory across the reported quarters, increasing from $946 million in October 2020 to $2,474 million by October 2025. The growth is generally consistent, with some periods showing stronger increases such as between July 2021 ($1,219 million) and July 2023 ($1,953 million), as well as a noticeable jump toward the end of the timeline from April 2025 ($2,289 million) to October 2025 ($2,474 million). Occasional minor declines or stabilization are observed, for example between October 2023 ($1,878 million) and April 2024 ($1,985 million), but the overall pattern is one of consistent revenue growth.

Accounts Receivable, Net Trends

Accounts receivable figures fluctuate significantly over the period. The values start at $676 million in October 2020 and exhibit marked volatility, with sharp increases such as from $1,241 million in April 2022 to $2,143 million by July 2022, followed by decreases back to $1,238 million by October 2022. Later quarters similarly show spikes, for example $2,619 million in July 2024 and $2,965 million in July 2025, interspersed with substantial declines in the immediately following quarters. This volatility suggests varying collection periods or changes in credit policies or customer payment behaviors over time.

Receivables Turnover Ratio Trends

The receivables turnover ratio exhibits a pattern of fluctuation corresponding inversely to the accounts receivable balances. High turnover ratios (above 5.0) are often observed when accounts receivable are lower, indicating quicker collection periods, such as 7.32 in January 2025 and 7.12 in October 2025. Conversely, lower turnover ratios (around or below 3.0) are noted during quarters with large receivables balances, like 2.57 in July 2022 and 2.8 in July 2023, reflecting slower collections. The ratio generally oscillates between these ranges, implying periodic shifts in how efficiently receivables are managed or collected.

Overall Insights

The company's revenue growth is consistent and positive, reflecting expanding operations or market demand. However, the accounts receivable volatility paired with fluctuating turnover ratios suggests challenges in receivables management or shifts in credit terms extended to customers. The inverse relationship between receivables balances and turnover ratios highlights potential timing or cyclical effects in receivables collections. Close attention to receivables management efficiency could improve cash flow stability and reduce potential credit risk, complementing the strong revenue expansion.

The cost of revenue demonstrates a consistent upward trend over the observed quarters. Starting at $278 million in late 2020, it rises steadily with intermittent minor fluctuations, reaching $679 million by the third quarter of 2025. This indicates a growing expense base related to the company's revenue generation activities, which may reflect either increasing sales volume or rising costs per unit of revenue.

Accounts payable display a more volatile pattern compared to the cost of revenue. Initially, this liability fluctuates between $45 million and $132 million in 2021 and 2022, with occasional spikes, such as $179 million in early 2024 and $212 million in late 2024. Toward the end of the period, accounts payable remain relatively elevated, suggesting variability in payment cycles or supplier credit terms impacting the company's short-term obligations.

The payables turnover ratio, which reflects how quickly the company pays off its suppliers relative to its cost of goods sold, shows considerable variation throughout the time frame. Early values indicate a high turnover ratio around 22 to 25, implying prompt payment practices. However, there is a general decline to lower turnover ratios around 10 to 15 in later periods, especially notable in 2024 and 2025. This downward trend suggests that the company is taking longer to settle its payables, consistent with the increased and more volatile accounts payable balances.

Overall, the data convey a scenario where cost of revenue steadily increases, potentially driven by business expansion or cost factors, while accounts payable and payables turnover ratios indicate a loosening of payment discipline or changing credit arrangements with suppliers over time.

Cost of Revenue Trend

Consistent increase from $278 million to $679 million over five years.

Accounts Payable Behavior

Fluctuates significantly with occasional spikes, indicating variability in short-term liabilities.

Payables Turnover Ratio

Declines from early high levels (~22-25) to lower levels (~10-15), reflecting slower payment cycles.

Interpretation

The company experiences rising costs and extends the period of supplier payments, possibly reflecting strategic or operational shifts in working capital management.

Working Capital

The working capital figures exhibit significant volatility over the observed periods. Early in the dataset, working capital experiences fluctuations, alternating between positive and negative values, but beginning in late 2020 and continuing through 2025, there is a predominance of negative working capital values. The declines reach a nadir around the periods ending January 2023 and October 2023, followed by a gradual recovery trend starting from early 2024 onward. Despite this recovery, working capital remains negative in the majority of recent periods, suggesting tight short-term liquidity conditions or major investment or operational financing decisions influencing current asset and liability balances.

Revenue

Revenue demonstrates a steady and consistent upward trend throughout the entire timeline. Beginning near $946 million and rising to a high above $2.5 billion, the growth trajectory indicates strong sales performance and market expansion. Minor oscillations are noticeable in certain quarters, but overall, the trajectory is positive, with nearly every period outpacing the previous one. This steady growth signals effective demand generation and possibly successful product or service adoption, contributing to increasing top-line strength.

Working Capital Turnover

The working capital turnover ratio is only sporadically reported, with values available at the start of the timeline with 2.15 and then a notable increase to 3.52. This suggests an initially efficient use of working capital relative to revenue generation. However, the lack of consistent ratio data in subsequent quarters limits a comprehensive assessment of how changes in working capital levels have impacted operational efficiency and asset utilization over time.

Overall Insights

The juxtaposition of improving revenue against largely negative and volatile working capital presents a complex operational picture. While revenue growth is robust and sustained, the recurring negative working capital could imply an aggressive strategy to finance growth through payables or short-term obligations, or challenges in managing current assets effectively. The observed recovery in working capital in recent periods may indicate initiatives to stabilize liquidity positions. Enhanced data on turnover ratios and other liquidity metrics would aid in a full evaluation of operational efficiency and financial health.

Receivables Turnover Ratio

The receivables turnover ratio shows notable fluctuations over the observed periods. Initially, it remains around the mid-5 range, peaking at 5.65 and 5.61 in early 2021 before experiencing a sharp decline to a low near 2.57 in mid-2022. This decline indicates slower collection efficiency during that period. Subsequently, the ratio recovers in a somewhat cyclical pattern, reaching highs near 7.32 and 7.12 in late 2024 and mid-2025, suggesting periods of more effective receivables management. However, intermittent drops to around 3.1 or slightly above indicate persistent variability in collection effectiveness across quarters.

Average Receivable Collection Period

The average receivable collection period inversely reflects the trends observed in turnover. The collection period ranges from a low around 50 days to a high exceeding 140 days. Early periods show moderate collection times near 65 to 70 days, followed by a significant increase exceeding 130 days in mid-2022, indicating a slowdown in receivables collection. Although some quarters register improvement with days falling back near 50 to 64, the overall pattern remains irregular with recurring spikes above 100 days, highlighting inconsistent collection efficiency throughout the timeline.

Insights on Receivables Management

The data reveals considerable volatility in receivables management. Periods of high turnover ratio correspond with low collection days, reflecting efficient credit and collection policies. Conversely, several quarters depict weaker performance with longer collection periods and lower turnover ratios, which may suggest challenges in credit control or customer payment behavior. The cyclical nature of these metrics could indicate external factors affecting receivables or internal operational changes impacting collection effectiveness. Continuous monitoring and investigation into the causes of these fluctuations would be beneficial to stabilize cash flow from receivables.

Payables Turnover

The payables turnover ratio demonstrates a fluctuating pattern over the observed periods. Initially, it started relatively high around 21.85 and peaked at 25.37 early in the timeline. However, it then experienced notable declines and rebounds, dropping as low as 9.99 in one of the later periods. There is no consistent upward or downward trend, indicating variability in how quickly the company is paying its suppliers. The fluctuations suggest changes in payment strategies or supplier terms across quarters, with a tendency toward slower payment in the more recent periods compared to the earlier ones.

Average Payables Payment Period

The average payables payment period inversely complements the payables turnover ratio, showing the number of days taken to pay suppliers. Initially, the payment period was shorter, fluctuating between 14 to 25 days in the early periods. This period lengthened over time, with values exceeding 30 days in some of the more recent quarters, peaking at 37 days. Such an increase reflects a slower payment cycle, indicating that the company may be extending its payment terms or delaying payments to optimize cash flow. The variability corresponds closely with the changes observed in the payables turnover ratio, confirming that payment practices have become more extended and inconsistent across several quarters.