Summary
Palo Alto Networks closed fiscal 2024 with fourth quarter revenue of $2.19 billion, up 12.1% from $1.95 billion a year earlier. Full year revenue was $8.03 billion, up 16.5% from $6.89 billion. The platformization push is showing up in the backlog and recurring book. Next-Generation Security ARR rose 43% to $4.2 billion, and remaining performance obligations ended the quarter at $12.70 billion, up 19.8% from $10.60 billion. The current portion of deferred revenue climbed 18.5% to $5.54 billion.
Profitability was more mixed. Gross profit grew 11.7% to $1.62 billion in the quarter, yet operating income slipped 6.0% to $238.40 million from $253.50 million. Operating margin fell to 10.9% from 13.0%, and gross margin eased 0.3 percentage points to 73.8%. Spending discipline is the open question heading into fiscal 2025.
The bottom line looked much better. Net income for the quarter rose 57.1% to $357.70 million from $227.70 million. For the full year, net income was $2.58 billion versus $439.70 million, and diluted earnings per share were $7.28 versus $1.28. Full year gross margin improved 2.1 percentage points to 74.3%, and full year operating margin rose 2.9 percentage points to 8.5%. On a non-GAAP basis, fourth quarter net income was $522.2 million, or $1.51 per diluted share, compared with $482.5 million, or $1.44 per diluted share, a year earlier. Non-GAAP operating margin for the quarter was 26.9%, down from 28.4%.
Cash generation held up. Operating cash flow for the quarter was $512.70 million, up 23.8% from $414.10 million, and full year operating cash flow was $3.26 billion, up 17.3%. Capital expenditures for the quarter were $47.40 million, up 27.4%. Free cash flow, a non-GAAP measure, came to $3.10 billion for the fiscal year. Billings were $10.21 billion for the year, up 11.0%, but management said billings will stop being a key financial metric starting in the first fiscal quarter of 2025.
The board added $500 million to the buyback authorization, taking the remaining amount to $1 billion, expiring December 31, 2025. In August 2024 the company completed its purchase of IBM's QRadar SaaS assets, part of a broader partnership meant to accelerate the Cortex XSIAM business. Fiscal 2024 also carried $204.4 million in litigation-related charges.
Guidance for the fiscal first quarter of 2025 calls for total revenue in a range of $2.10 billion to $2.13 billion, growth of 12% to 13%, and diluted non-GAAP net income per share of $1.47 to $1.49, growth of 7% to 8%. For the full fiscal year 2025, the outlook is total revenue in a range of $9.10 billion to $9.15 billion, growth of 13% to 14%, a non-GAAP operating margin of 27.5% to 28.0%, diluted non-GAAP net income per share of $6.18 to $6.31, growth of 9% to 11%, and an adjusted free cash flow margin of 37% to 38%. That full year outlook assumes the QRadar deal closes in the first fiscal quarter and includes its revenue contribution and ongoing expenses.
The risk list is familiar but real. Management cites worsening economic conditions, including inflation and higher interest rates, slower growth, foreign exchange swings, and supply chain disruption. It also flags the hostilities in Israel and the surrounding region, tensions between China and Taiwan and between the U.S. and China, competition, and the chance of defects or vulnerabilities in its products. Fiscal 2024 cash taxes were substantially higher because of the capitalization and amortization of research and development expenses under the Tax Cuts and Jobs Act, and management expects cash tax payments to keep rising.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q4 FY2024 | Q3 FY2024 | QoQ | Q4 FY2023 | YoY |
|---|---|---|---|---|---|
| Revenue | $2.19B | $1.98B | +10.3% | $1.95B | +12.1% |
| Gross profit | $1.62B | $1.47B | +9.8% | $1.45B | +11.7% |
| Gross margin | 73.8% | 74.1% | -0.3 pp | 74.0% | -0.3 pp |
| Research & development | $494.8M | $457.2M | +8.2% | $414.4M | +19.4% |
| Sales & marketing | $742.3M | $718.7M | +3.3% | $664.0M | +11.8% |
| General & administrative | $140.3M | $118.6M | +18.3% | $114.6M | +22.4% |
| Total operating expenses | $1.38B | $1.29B | +6.4% | $1.19B | +15.5% |
| Operating income (loss) | $238.4M | $176.7M | +34.9% | $253.5M | -6.0% |
| Operating margin | 10.9% | 8.9% | +2.0 pp | 13.0% | -2.1 pp |
| Net income (loss) | $357.7M | $278.8M | +28.3% | $227.7M | +57.1% |
| Net margin | 16.3% | 14.1% | +2.3 pp | 11.7% | +4.7 pp |
| Diluted EPS | $1.01 | $0.79 | +$0.22 | $0.67 | +$0.34 |
Risks
Global operations and revenue are exposed to unfavorable economic and geopolitical conditions, including inflation, higher interest rates, the Israel hostilities, and sanctions related to Russia's invasion of Ukraine. These factors could reduce sales, lengthen sales cycles, shorten subscription duration or value, increase component costs, and intensify price competition; fiscal 2024 revenue growth was 16.5% compared with 25.3% in fiscal 2023.
Growth depends on selling additional product, subscription, and support offerings to existing end-customers, especially large enterprises, as part of the platformization strategy. Large enterprise sales involve longer sales cycles, greater deployment complexity, and increased customer purchasing leverage, which could harm revenue if platformization efforts are not successful.
Substantially all revenue is generated through channel partners. In fiscal 2024, four distributors individually represented 10% or more of total revenue and 59.0% in aggregate; as of July 31, 2024, two distributors individually represented 10% or more of gross accounts receivable and 31.5% in aggregate. Failure of these partners to perform would limit sales and distribution.
The company is incorporating AI into many products, solutions, and business operations. AI algorithms may have flaws, training datasets may be insufficient or biased, and evolving regulations in jurisdictions such as the E.U. plus unresolved IP and data protection rules could lead to legal liability, reputational harm, increased computing costs, and third-party infringement claims.
The enterprise security market is intensely competitive, with large companies such as Cisco, Microsoft, and Alphabet, independent vendors such as Check Point, Fortinet, CrowdStrike, Zscaler, and Wiz, startups, and public cloud vendors. Competitors may bundle security features, sell at zero or negative margins, offer concessions, or leverage greater resources, which could pressure prices, revenue, and gross margins.
In April 2024, the company became aware of a command injection vulnerability in the GlobalProtect feature of certain PAN-OS software versions and engaged in customer outreach and remediation. Defects or vulnerabilities could harm reputation, cause delayed or lost revenue, increase warranty costs, and lead to litigation or regulatory inquiries.
On January 31, 2024, in the Centripetal Networks lawsuit, a jury returned a verdict of non-willful infringement with a lump sum of $151.5 million plus statutory interest, and the company accrued $184.4 million as of July 31, 2024. MD&A also cites $204.4 million in litigation-related charges in fiscal 2024.
The 2025 Notes are convertible effective August 1, 2024 through October 31, 2024; if all holders convert, the company would be obligated to pay the $1.0 billion principal amount in cash. Failure to repurchase or pay cash upon conversion could constitute a default, and the company may need third-party financing on unfavorable terms.
Beginning in fiscal 2023, the Tax Cuts and Jobs Act required capitalization and amortization of research and development expenses. As a result and with increased profitability, the company paid significantly more U.S. cash taxes during fiscal 2024 and expects cash tax payments to increase in future periods, which could reduce cash flow.
The company depends on manufacturing partners, primarily Flex, and limited component suppliers. U.S.-China tariffs have increased costs and led to price increases on hardware products, and supply shortages or logistics delays could disrupt product deliveries, increase costs, and cause lost sales.
SaaS KPIs
All quarters →Remaining performance obligation
Non-GAAP Operating Margin
Next-Generation Security ARR
Summary, forecast, risks and KPIs are extracted from Palo Alto Networks Inc's SEC filings for Q4 FY2024 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 2, 2026.