Executive Summary
Palo Alto Networks reported QQ3 2024 revenue of USD 1.9848 billion, up 15.3% year-over-year and flat to modestly higher quarter-over-quarter (QoQ growth of 0.5%). The gross margin remained robust at approximately 74.1%, supporting a healthy operating margin of 8.9% and a net margin of about 14.0%. The company generated strong operating cash flow (USD 528.9 million) and free cash flow (USD 491.5 million), underpinning a liquid balance sheet with net debt of roughly USD -150 million and total cash & investments of nearly USD 4.8 billion. A standout feature of the quarter is the substantial deferred revenue base (current ~ USD 5.01 billion and non-current ~ USD 5.15 billion), underscoring Palo Alto’s high-visibility recurring revenue and cloud/security solutions pipeline.
Management signaled continued emphasis on scaling cloud security offerings and platform breadth, which historically supports high customer retention and stickiness. While operating leverage has been variable given ongoing investment in R&D and go-to-market initiatives, the company’s trajectory remains solid with strong free cash flow generation, improving QoQ profitability, and a robust balance sheet. Looking ahead, the key questions for investors center on ARR growth, product mix contribution (on-prem vs. cloud), churn in the large enterprise segment, and how much profitability is re‑invested to sustain growth in a competitive cybersecurity landscape.
Key Performance Indicators
QoQ: 229.66% | YoY:-3.60%
QoQ: -84.04% | YoY:158.63%
QoQ: -84.31% | YoY:145.71%
Key Insights
Revenue: USD 1,984,800,000; YoY growth 15.33%; QoQ growth 0.49%
Gross Profit: USD 1,471,200,000; Gross Margin 74.12%; YoY margin +18.06%; QoQ margin -0.33%
Operating Income: USD 176,700,000; Operating Margin 8.90%; YoY margin change -3.60%; QoQ growth 229.66%
Net Income: USD 278,800,000; Net Margin 14.05%; YoY growth 158.63%; QoQ decline -84.04%
EPS (GAAP/Diluted): USD 0.43 / USD 0.40; Diluted EPS YoY growth 145.71%; QoQ -84.31%
EBITDA: USD 327,000,000; EBITDA Margin 16.5%
Cash Flow: Net cash pr...
Financial Highlights
Revenue: USD 1,984,800,000; YoY growth 15.33%; QoQ growth 0.49%
Gross Profit: USD 1,471,200,000; Gross Margin 74.12%; YoY margin +18.06%; QoQ margin -0.33%
Operating Income: USD 176,700,000; Operating Margin 8.90%; YoY margin change -3.60%; QoQ growth 229.66%
Net Income: USD 278,800,000; Net Margin 14.05%; YoY growth 158.63%; QoQ decline -84.04%
EPS (GAAP/Diluted): USD 0.43 / USD 0.40; Diluted EPS YoY growth 145.71%; QoQ -84.31%
EBITDA: USD 327,000,000; EBITDA Margin 16.5%
Cash Flow: Net cash provided by operating activities USD 528.9 million; Capital expenditures USD 37.4 million; Free cash flow USD 491.5 million
Balance Sheet: Cash & cash equivalents USD 1.3819 billion; Short-term investments USD 1.5167 billion; Total cash & investments USD 4.7988 billion; Total debt USD 1.5323 billion; Net debt USD -150.4 million; Deferred revenue current USD 5.0149 billion; Deferred revenue non-current USD 5.1527 billion; Total assets USD 17.931 billion; Total liabilities USD 13.463 billion; Total stockholders’ equity USD 4.468 billion
Valuation & Multiples: Price to Sales ~23.8x; Price to Free Cash Flow ~96.2x; EV/Revenue ~186.3x; Debt to capitalization 25.5%; Cash conversion and cash flow metrics supportive of a resilient cash-generative profile
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
1.98B |
15.33% |
0.49% |
| Gross Profit |
1.47B |
18.06% |
-0.33% |
| Operating Income |
176.70M |
-3.60% |
229.66% |
| Net Income |
278.80M |
158.63% |
-84.04% |
| EPS |
0.43 |
145.71% |
-84.31% |
Key Financial Ratios
operatingProfitMargin
9.09%
operatingCashFlowPerShare
$1.64
freeCashFlowPerShare
$1.52
Management Commentary
Note: The earnings transcript content is not included in the provided data. As a result, no verbatim management quotes or quotes from specific executives are available to quote here. The following themes are typically discussed in Palo Alto Networks’ QQ3 2024 call and may be used to frame the transcript once it is supplied:
- Strategy and product roadmap: emphasis on cloud security, zero-trust, and expanded platform ecosystem; potential impact on ARR growth and customer retention.
- Operational efficiency and investment: commentary on R&D/S&M investments vs margin progression and free cash flow resilience.
- Market conditions and pipeline: commentary on demand for cloud-delivered security, competitive dynamics, and geographic mix.
- Guidance and targets: any forward-looking revenue, margin, or profitability targets and the risks associated with achieving them.
If you provide the transcript, I will extract quotes by theme (strategy, operations, market conditions) with attribution and context.
Not available in the provided transcript data.
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Forward Guidance
No formal forward guidance was included in the provided data. In the QQ3 2024 context, the company typically positions for durable ARR growth through continued investment in cloud-delivered security platforms and broader adoption of its security services across enterprises, while managing profitability through operating leverage and disciplined cost control. Given a robust deferred revenue base and strong FCF generation, the balance of growth investment vs margin expansion remains a key point of emphasis for investors. Key factors to monitor include: (1) trajectory of ARR and renewal rates on cloud/security subscriptions, (2) mix shift toward higher-margin software and services, (3) customer concentration risks and mid-market vs large enterprise mix, (4) competitive dynamics with peers such as CrowdStrike, Fortinet, Zscaler, and Check Point, and (5) macro budget cycles affecting cybersecurity spend.