Q2 2025 Palo Alto Networks Inc Earnings Call Transcript
Key Points
- Palo Alto Networks Inc (PANW) outperformed both top and bottom-line expectations for Q2 2025, with strong revenue and operating margin results.
- The company saw broad growth across its portfolio, with significant contributions from large international deals and strong performance in SASE, software firewalls, and XIM.
- Efficiency initiatives, including AI contributions, have allowed PANW to raise its operating margin and EPS guidance for the year.
- The company achieved a 37% growth in NGS ARR, driven by strength across advanced subscriptions, SASE, and Cortex.
- Palo Alto Networks Inc (PANW) has made significant progress in its platformization strategy, with a notable increase in large platformization deals and customer adoption.
- Gross margins were slightly down due to the impact of newer SaaS offerings and one-time inventory costs.
- There was a noted decline in net new ARR growth over the last two quarters, despite positive trends in large platformization deals.
- The company faces challenges in managing deferred payments, which have increased significantly over the past few years.
- Some of the newer SaaS offerings have yet to achieve scale, impacting overall profitability.
- The transition to deferred payments in larger transactions poses a challenge in balancing cash flow optimization.
(video playing)
Good day everyone and welcome to Palo Alto Network's second quarter 2025 earnings conference call. I'm Walter Pritchard, Senior Vice President of Investor Relations and Corporate Development. Please note that this call is being recorded today, Thursday, February 13, 2025 at 1:30 PM Pacific Time.
With me on today's call to discuss second quarter results are Nikesh Arora, our Chairman and Chief Executive Officer; and Dipak Golechha, our Chief Financial Officer. Following our prepared remarks, Lee Klarich, our Chief Product Officer, will join us for the question-and-answer portion.
You can find the press release and other information to supplement today's discussion on our website at investors.paloaltonetworks.com. While there, please click on the link for quarterly results to find the Q2 '25 supplemental information and the Q2 '25 earnings presentation.
During the course of today's call, we will make forward-looking statements and projections
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