Why Is Palo Alto (PANW) Up 10.9% Since Last Earnings Report?

Core Viewpoint - Palo Alto Networks has shown strong performance in its latest earnings report, with significant year-over-year growth in both earnings and revenues, leading to a positive outlook for the company moving forward [2][3][7]. Financial Performance - For Q4 fiscal 2025, Palo Alto Networks reported non-GAAP earnings of 95 cents per share, exceeding estimates by 7.9% and reflecting a 27% increase year-over-year [2]. - Revenues for the same quarter reached $2.54 billion, surpassing estimates by 1.6% and up from $2.19 billion a year ago [2]. - Product revenues increased by 19.4% year-over-year to $573.9 million, while Subscription and Support revenues grew by 14.8% to $1.96 billion, representing 77.4% of total revenues [3]. Deferred Revenues and Obligations - Deferred revenues at the end of Q4 were $6.30 billion, with Remaining Performance Obligations climbing to $15.8 billion, a 24% increase year-over-year [4]. Profitability Metrics - Non-GAAP gross profit rose to $1.92 billion, a 14.3% increase year-over-year, while the non-GAAP gross margin contracted by 100 basis points to 75.8% [5]. - Non-GAAP operating income increased by 30.6% to $768.2 million, with the non-GAAP operating margin improving by 340 basis points to 30.3% compared to the previous year [5]. Cash Flow and Balance Sheet - As of July 31, 2025, the company had $2.9 billion in cash and short-term investments, down from $3.3 billion as of April 30, 2025 [6]. - Operating cash flow generated was $1.02 billion, with non-GAAP adjusted free cash flow reported at $954.5 million for Q4 [6]. Future Guidance - For fiscal 2026, Palo Alto Networks expects revenues between $10.48 billion and $10.53 billion, with Remaining Performance Obligations projected at $18.6-$18.7 billion [7]. - The company anticipates non-GAAP earnings per share in the range of $3.75-$3.85, reflecting an 11.4% improvement from the consensus estimate for fiscal 2025 [8]. Industry Context - Palo Alto Networks is part of the Zacks Security industry, which has seen mixed performance. For instance, Fortinet, a competitor, reported a year-over-year revenue increase of 13.6% [14].