Palo Alto Networks, Inc.
Information Technology · Systems Software
Structural read: PANW is running the consolidation playbook in security - using NGFW installed-base lock-in to cross-sell Prisma (cloud) and Cortex (SOC AI) under multi-year platform deals. Next-gen security ARR (the disclosed subscription stack covering Prisma + Cortex) is the watch metric; product hardware revenue is the funding leg, not the growth story.
2B revenue with ~$5B NGS ARR - the mix shift is what justifies the multiple.
- Platformization deals (multi-product bundles) compounding NGS ARR > 30% y/y exit FY25
- Cortex XSIAM riding the AI-SOC replacement cycle vs $SPLK/legacy SIEM
- ~$13B+ RPO + 75%+ gross margins on subscription mix funding R&D + buybacks
- Net cash balance sheet; FCF margin > 35% gives optionality on tuck-ins
- Sticky enterprise install base - NGFW refresh + bundle attach lifts per-customer ACV
- Hardware product revenue flat-to-down; subscription transition optics noisy quarter-to-quarter
- Platformization discounts compress near-term billings - 2024 reset still in muscle memory
- Crowded SASE/cloud-sec field - $ZS, $NET, $CRWD overlap on different vectors
- Multiple already prices in mid-20s NGS ARR growth - slip = derate risk
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