Executive Summary
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.
Key Performance Indicators
Key Insights
Revenue: $2.289B in QQ3 2025, YoY +15.3%, QoQ +1.4%; Gross Profit: $1.6697B, Gross Margin 72.94%, YoY +13.49%, QoQ +0.69%; Operating Income: $218.8M, Operating Margin 9.56%, YoY +23.83%, QoQ -8.99%; Net Income: $262.1M, Net Margin 11.45%, YoY -5.99%, QoQ -1.95%; EPS (diluted): $0.37, YoY -9.30%, QoQ -4.88%; EBITDA: $399.3M, EBITDA Margin ~17.44%; Free Cash Flow: $560.4M; Cash Flow from Operations: $628.7M; Cash at End of Period: $2.395B; Total Debt: $806M; Net Debt: -$1.577B; Cash & Equivale...
Financial Highlights
Revenue: $2.289B in QQ3 2025, YoY +15.3%, QoQ +1.4%; Gross Profit: $1.6697B, Gross Margin 72.94%, YoY +13.49%, QoQ +0.69%; Operating Income: $218.8M, Operating Margin 9.56%, YoY +23.83%, QoQ -8.99%; Net Income: $262.1M, Net Margin 11.45%, YoY -5.99%, QoQ -1.95%; EPS (diluted): $0.37, YoY -9.30%, QoQ -4.88%; EBITDA: $399.3M, EBITDA Margin ~17.44%; Free Cash Flow: $560.4M; Cash Flow from Operations: $628.7M; Cash at End of Period: $2.395B; Total Debt: $806M; Net Debt: -$1.577B; Cash & Equivalents: $2.383B; Short-Term Investments: $916.8M; Total Current Assets: $6.899B; Total Assets: $22.0028B; Total Liabilities: $14.7723B; Shareholders’ Equity: $7.2305B; Revenue multiple (P/S): 54.32x; Earnings multiple (P/E): 118.59x; Enterprise Value Multiple: 311.36x.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
2.29B |
15.33% |
1.40% |
| Gross Profit |
1.67B |
13.49% |
0.69% |
| Operating Income |
218.80M |
23.83% |
-8.99% |
| Net Income |
262.10M |
-5.99% |
-1.95% |
| EPS |
0.39 |
-9.30% |
-4.88% |
Key Financial Ratios
operatingProfitMargin
9.56%
priceEarningsRatio
118.59
Management Commentary
No earnings call transcript data is provided in the prompt. Consequently, no management quotes or theme-by-theme highlights from the QQ3 2025 call can be extracted. If transcript Access is supplied, a themes-based synthesis (strategy, operations, market conditions) with direct quotes will be added.
Forward Guidance
No explicit forward-looking guidance was disclosed in the provided QQ3 2025 filing. Investors should monitor management commentary in upcoming filings and earnings calls for any updates on bookings, ARR growth, cross-sell velocity across product lines (threat prevention, cloud security, SASE, identity), and commentary on macro sensitivity. In the interim, the company’s strong FCF generation and net cash position provide runway for investments in product development and strategic initiatives while potentially supporting disciplined capital returns should management choose to allocate capital differently.