Palo Alto Networks Q3 Earnings and Revenues Surpass Estimates

Palo Alto Networks PANW delivered third-quarter fiscal 2025 non-GAAP earnings of 80 cents per share, which beat the Zacks Consensus Estimate by 3.9%. The figure improved 21.2% year over year.Palo Alto Networks’ earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with an average surprise of 18.2%.PANW’s third-quarter fiscal 2025 revenues of $2.29 billion surpassed the Zacks Consensus Estimate by 0.57%. This compares to year-ago revenues of $1.98 billion.PANW’s strong performance in the third quarter of fiscal 2025 can be attributed to a robust year-over-year rise in its Subscription & Support revenues, alongside a solid gain in Product revenues. Shares of Palo Alto Networks have gained 24.8%, outperforming the Zacks Security industry’s return of 10.7% in the past year.Palo Alto Networks, Inc. Price, Consensus and EPS Surprise Palo Alto Networks, Inc. price-consensus-eps-surprise-chart | Palo Alto Networks, Inc. QuotePalo Alto Networks’ Q3 2025 DetailsProduct revenues rose 15.8% year over year to $452.7 million, accounting for 19.8% of total revenues. Subscription and Support revenues, which represented 80.2% of total revenues, grew 15.2% to $1.84 billion, driven by continued momentum across Prisma and Cortex offerings.Deferred revenues at the end of the fiscal second quarter were $5.76 billion. Remaining performance obligation climbed to $13.5 billion, up 19% year over year. Meanwhile, Next-Generation Security annualized recurring revenues hit $5.09 billion, representing a 34% year-over-year increase and a 6% sequential rise.Non-GAAP gross profit rose to $1.74 billion, up 13% year-over-year, while the non-GAAP gross margin contracted 60 basis points to 76.0%. Non-GAAP operating income increased 23.5% to $627.1 million, though the non-GAAP operating margin improved 180 basis points to 27.4% compared to the year-ago period.PANW’s Balance Sheet & Cash FlowAs of April 30, 2025, Palo Alto Networks had $3.3 billion in cash, cash equivalents, and short-term investments, up from $2.23 billion as of Jan. 31, 2025.The company generated $628.7 million in operating cash flow and reported a non-GAAP adjusted free cash flow of $578.4 million in the third quarter of fiscal 2025.Palo Alto Networks Raises FY25 GuidanceFor fiscal 2025, Palo Alto Networks now expects revenues between $9.17 billion and $9.19 billion, compared with the earlier projected range of $9.14-$9.19 billion. The Zacks Consensus Estimate for fiscal 2025 revenues is pegged at $9.16 billion, indicating a rise of 14.2%. Remaining Performance Obligation is still projected in the range of $15.2-$15.3 billion. Next-Gen Security ARR is still estimated in the band of $5.52-$5.57 billion.PANW’s fiscal 2025 non-GAAP operating margin is now projected in the range of 28.2- 28.5% compared with the previous guidance of 28-28.5%. Its adjusted free cash flow margin is estimated in the range of 37.5-38%. The company expects non-GAAP earnings per share in the range of $3.26-$3.28. After a two-for-one stock split of PANW shares on Nov. 20, 2024, the outstanding share count is in the band of 700 million-708 million. The consensus mark for fiscal 2025 earnings is pinned at $2.49 per share, suggesting an improvement of 14.2%. The figure remained unchanged over the past 60 days.For the fourth quarter of fiscal 2025, PANW projects revenues between $2.49 billion and $2.51 billion, which suggests year-over-year growth of 14-15%. The Zacks Consensus Estimate for third-quarter fiscal 2025 revenues is pegged at $2.49 billion, indicating a rise of 13.8%. Remaining Performance Obligations are anticipated between $15.2 billion and $15.3 billion. Next-Gen Security ARR is expected in the band of $5.52-$5.57 billion.Non-GAAP earnings are projected in the range of 87-89 cents per share. The Zacks Consensus Estimate for non-GAAP earnings is pegged at 50 cents per share, unchanged over the past 60 days, indicating a year-over-year improvement of 17.14%. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)Zacks Rank and Stocks to ConsiderCurrently, PANW carries a Zacks Rank #3 (Hold).Amphenol APH, Juniper Networks JNPR and Upwork UPWK are some better-ranked stocks that investors can consider in the broader Zacks Computer & Technology sector. APH, JNPR and UPWK sport a Zacks Rank #1 (Strong Buy) each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.APH shares have gained 26.4% for the past year. The Zacks Consensus Estimate for APH’s full-year 2025 earnings is pegged at $2.62 per share, up by 4 cents over the past seven days, suggesting a growth of 38.6% from the year-ago quarter’s reported figure.JNPR shares have gained 4.8% in the past year. The Zacks Consensus Estimate for JNPR’s full-year fiscal 2025 earnings has been revised upward to $2.09 in the past 30 days, suggesting year-over-year growth of 21.5%.UPWK shares have gained 38% over the past year. The Zacks Consensus Estimate for UPWK’s full-year 2025 earnings is pegged at $1.14 per share, implying a rise of 9.62% from the year-ago quarter’s levels.Zacks Names #1 Semiconductor StockIt's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom.With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Amphenol Corporation (APH): Free Stock Analysis Report Juniper Networks, Inc. (JNPR): Free Stock Analysis Report Palo Alto Networks, Inc. (PANW): Free Stock Analysis Report Upwork Inc. (UPWK): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks