Palo Alto Networks Inc (0KF5.L) Q3 2025 Earnings Report

Palo Alto Networks reported a solid QQ3 2025, with revenue of $2.289 billion, up 15.3% year over year and 1.4% quarter over quarter. The mix produced a gross margin of 72.9% and an operating margin of 9.56%, supporting a healthy operating income of $218.8 million and a net income of $262.1 million (EPS diluted $0.37). Free cash flow totaled $560.4 million, contributing to a strong balance sheet with substantial liquidity: cash and cash equivalents of $2.383 billion and total cash and short-term investments of $3.300 billion, yielding a net cash position (net debt) of approximately -$1.578 billion. The company continues to invest in R&D ( ~$494.5 million in QQ3) to advance its cybersecurity platform, including threat intelligence, cloud security, and multi-cloud capabilities, reinforcing its competitive moat in a growing addressable market. Notwithstanding the robust results, the stock remains richly valued, trading at elevated multiples (P/S ~54x, P/E ~119x) which implies upside is contingent on sustained ARR growth and expansion of high-margin software services.