Palo Alto Q3 FY7/25 Earnings Review

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Head Down, Getting on with it

By Hermit Warrior, a.k.a. Richard Iacuelli

There's little in the way of drama in cybersecurity earnings releases these days. Sure, we still hear occasional sparks and loud crashes relating to hacks of US Government servers, or how a ransomware attack disabled a leading UK retailer's on-line shopping systems for 3 weeks (ironically, likely a result of 'human error') but, as far as earnings reports go, it feels like the leading cybersecurity vendors have settled into what's shaping up to be a long distance endurance race, grinding out small advantages here and there, and hoping that, at some point, they can make a 'breakaway' from the pack.

Palo Alto Networks ($PANW) sure fits that narrative - except that there's something, almost lost in the sea of 'sameness', that hints at an edge. We'll explore this further after the headlines.

Revenue growth in Q3 accelerated marginally, hitting the guide, at 15%, with the guide for Q4 slightly lower at 14%. TTM EBITDA and unlevered free cashflow (UFCF) margins remained steady. Net cash continued to grow and now stands at around 90% of annual revenues (a similar ratio to Warren Buffet's Berkshire Hathaway - begging the question: what are they going to do with all that cash?).

All in all, a solid quarter - and not much to really distinguish it from, say, Fortinet's Q1 report (which you can reach here). So, you ask, where's the edge?