Mirror Review
May 21st, 2025
- Palo Alto Networks (NASDAQ: PANW), a global cybersecurity leader, recently announced its fiscal third-quarter 2025 financial results, ending April 30, 2025.
- The company reported earnings and revenue that surpassed analyst expectations; however, its gross margin was slightly below estimates, contributing to a minor dip in the stock’s after-hours trading.
- This report provides a comprehensive overview of the Palo Alto Networks Q3 2025 Results, offering key insights into its performance and future outlook.
Key Insights On The Palo Alto Networks Q3 2025 Results
Palo Alto Networks had a busy quarter, and here’s a look at how they performed:
- Revenue & Earnings:
Palo Alto brought in $2.3 billion in total revenue, which was a nice beat over the $2.28 billion that financial experts predicted.
This also means they grew by 15% compared to the $2.0 billion they made in the same period last year, showing they’re still growing steadily.
For every share of the company, Palo Alto made $0.80 profit, which was also higher than the $0.77 experts had forecasted.
- Net Income (Overall Profit):
Using strict accounting rules (GAAP Net Income), Palo Alto’s profit was $262.1 million, or $0.37 per share. This was a slight dip from last year.
However, their Non-GAAP Net Income looked much stronger at $0.6 billion, or $0.80 per share. This is a good jump from $0.5 billion, or $0.66 per share, in Q3 2024.
- Gross Profit Margin:
This is the profit made after covering the direct costs of their products and services. It was 76%, just a tiny bit below the 77.2% estimate. This slight miss actually made a bit of a ripple.
- Booming Next-Gen Security (NGS):
Palo Alto’s newer, advanced security services, known as “Next-Generation Security,” are really taking off.
The annual recurring revenue (ARR) from these services — which is the money they expect to get regularly — hit $5.1 billion.
This shows incredibly strong demand and that their shift to newer cloud-based security products is paying off. In fact, NGS ARR rose by an impressive 34% year over year!
- Future Money Already Committed (RPO):
Think of Remaining Performance Obligation (RPO) as the amount of money customers have promised to spend with Palo Alto Networks in the future for services they haven’t received yet.
This grew by 19% to $13.5 billion, which is a great sign for the company’s future earnings potential.
- Capital Expenditures: This came in at $68.3 million, slightly less than the expected $70.8 million, suggesting they’re managing their costs efficiently.
- Stock Price Reaction: Even with most results being good, the company’s stock price dipped by 4% after hours. This was mainly because their gross profit margin was slightly lower than anticipated, which sometimes makes investors a little nervous.
Statements From The Management:
Palo Alto’s executives sounded very positive about their current plans and how they’re performing.
Nikesh Arora, the CEO of Palo Alto, highlighted their “platformization strategy.” This means they’re working to bring all their different security tools together into one easy-to-use platform.
He excitedly shared, “In Q3, we continued to make progress on our platformization strategy and achieved an important milestone in crossing $5 billion in Next-Gen Security ARR.”
He also added that because of their size and wide range of products, they are a top choice for companies looking to simplify their cybersecurity by using fewer providers.
Dipak Golechha, the Chief Financial Officer, emphasized their smart financial management.
He noted, “We again delivered strong top-line results within our profitable growth framework, as we continue to see our business scale well across the P&L.”
He’s looking forward to reaching their goals as the fiscal year 2025 comes to a close.
What to Expect for the Next Three Months (Fiscal Fourth Quarter 2025)
- Next-Generation Security “ARR” (Annual Recurring Revenue):
ARR is essentially how much ongoing income Palo Alto expects from their advanced security services. They predict it will be between $5.52 billion and $5.57 billion. That’s a big jump, showing a 31% to 32% increase compared to last year.
- Remaining Performance Obligation (RPO):
Think of RPO as the money customers have committed to spend with Palo Alto Networks in the future, even if they haven’t paid it yet. They expect this to be between $15.2 billion and $15.3 billion, an increase of 19% to 20% from last year.
- Total Money Coming In (Revenue):
Palo Alto Networks expects to bring in between $2.49 billion and $2.51 billion in revenue for Q4 2025. This means they’re growing their overall business by 14% to 15% compared to the same time last year.
- Profit Per Share:
Palo Alto is forecasting a profit of $0.87 to $0.89 per share. This is actually a bit better than what financial experts were expecting ($0.86), which is good news for investors. This calculation is based on about 704 million to 707 million shares of the company.
What to Expect for the Entire Fiscal Year 2025
Palo Alto Networks is largely sticking to the same strong targets for the full year:
- Next-Generation Security ARR & RPO:
Just like their Q4 predictions, they’re aiming for $5.52 billion to $5.57 billion in Next-Generation Security ARR (31% to 32% growth) and $15.2 billion to $15.3 billion for Remaining Performance Obligation (19% to 20% growth).
- Revenue:
For the whole year, Palo Alto has anticipated bringing in between $9.17 billion and $9.19 billion, representing a 14% increase from last year.
- Operating Profit Margin:
This is a measure of profit made from core operations, expecting it to be between 28.2% and 28.5%.
- Profit Per Share:
For the full year, Palo Alto predicts a profit of $3.26 to $3.28 per share, based on roughly 700 million to 708 million shares.
In a Nutshell: A Strong Position and Bright Future
The Palo Alto Networks Q3 2025 Results, combined with these future predictions, show a company that’s doing a great job in the ever-changing world of cybersecurity.
Even with a minor dip in their overall profit margin on products, their significant growth in revenue, impressive achievements in their Next-Generation Security business, and their hopeful outlook for the future all highlight their strong standing in the market and how well they’re executing their plans.
As Palo Alto Networks continues to focus on bringing all its security products onto one unified platform and growing profitably, everyone from investors to industry watchers will be keenly observing how they perform in the coming months.
