Palo Alto Networks delivered a solid Q2 FY2025, with revenue of $2.26 billion, up 14% year over year and 5.6% quarter over quarter, aided by broad-based strength across geographies and platforms. The company highlighted meaningful progress on its platformization strategy, reporting approximately 75 new platformizations in the quarter (bringing total platformizations to over 1,150 across the top 5,000 customers) and noting substantial multi-platform adoption including Cortex and Prisma Cloud. Net income of $267 million and non-GAAP diluted EPS of $0.41 accompanied a GAAP EPS of $0.38, underscoring a performance that exceeded guidance on the top line while absorbing some near-term gross margin headwinds from newer SaaS offerings and a one-time hardware inventory write-off.
Management signaled that the growth engine remains its AI-enabled platform approach, with the firm emphasizing that AI features and platform harmonization across network security, cloud security, and security analytics are central to future profitability. The company raised full-year guidance for FY2025, projecting NGS ARR of $5.52–$5.57 billion (up 31–32%), revenue of $9.14–$9.19 billion, and adjusted free cash flow margin of 37–38%. A key part of the earnings narrative is the transition toward more deferred-payment arrangements, which enhances visibility into free cash flow while supporting large, multi-year platform deals. The management reiterated confidence in maintaining operating margin expansion through scale, efficiency gains, and AI-driven cost discipline.
Looking ahead, PANW is positioning Cortex Cloud and Prisma Cloud as core growth vectors, with Cortex Cloud described as the industry’s first end-to-end cloud security platform that deeply integrates into the SOC. Management cited IBM as a meaningful partner driving Cortex adoption and highlighted a robust large-deal pipeline across regions. Investors should monitor ARR progression, the cadence of large platform deals, the unfolding benefits from AI-driven automation, the durability of free cash flow margins in a transitioning hardware-to-software mix, and the impact of deferred payments on quarterly cash generation.