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PANW, Palo Alto Networks Inc.

Palo Alto Networks, Inc. is a global cybersecurity provider and our vision is a world where each day is safer and more secure than the one before.

Our cybersecurity platforms and services help secure enterprise users, networks, clouds, and endpoints by delivering comprehensive cybersecurity backed by artificial intelligence ("AI") and automation.

A key element of our strategy is to help our customers simplify their security architectures through consolidating disparate point products.

Latest annual: FY2025 10-K

PANW · Palo Alto Networks Inc.

The business

What it sells, where the money comes from, the kind of company it is.

Revenue · FY2025

$9.2B

+14.9% YoY · 22% 5-yr CAGR

Vital signs · TTM, with 5-yr average

Revenue $10.6B 5-yr avg $6.8B

Gross margin 72% 5-yr avg 72%

Operating margin 9.6% 5-yr avg 3.4%

ROIC 2% 5-yr avg 5%

Owner-earnings margin 36% 5-yr avg 36%

Free cash flow margin 36% 5-yr avg 36%

The business in brief

read the 10-K →

What this business is and what moves its needle, from its own SEC filings.

What it is: Revenue is Subscription (54%), Support (27%) and Products (20%).
What moves the needle: Operating margin has reached 13% at its best but run negative through the cycle (median −4.6%) on a 72% gross margin — so the question is which reading is truer: whether the median was pulled below zero by one-off charges, by the cycle, or by spending it is still growing into, and whether it settles back at a profit. Stock-based pay runs about 19% of sales, a real and recurring claim on owners that the GAAP margin understates. On its own account, the filing leans hardest on pricing power & competition, set against the numbers in what the filing emphasizes, below.
Is it a good business?: Return on capital has rarely cleared the cost of capital (median −10%, above 15% in 2 of 10 years). By owner earnings: roughly 38% of revenue reaches owners as cash, consistently. This is price-taker territory, where the balance sheet and the cycle matter more than any multiple; the rest is in the 10-K.

Every line is arithmetic on the company's filings, shown in full in the sections below.

Where the money comes from

read the 10-K →

Revenue spreads across 3 lines, the largest Subscription at 54%.

Revenue by product line, FY2025

Subscription54%$5.0B
Support27%$2.4B
Products20%$1.8B

By geographyUnited States63%EMEA21%Asia Pacific12%Other Americas5%

From the segment footnote of the company's own 10-K. Shares are of total revenue; the profit bar shows each segment's share of segment operating profit, before unallocated corporate costs.

The record

Ten years of arithmetic, read across the cycle.

The record, 2016–2025

realized figures from each filing · older years to the left

2016’16	2017’17	2018’18	2019’19	2020’20	2021’21	2022’22	2023’23	2024’24	2025’25	TTMTTMApr 2026
											Income statement
$1.4B	$1.8B	$2.3B	$2.9B	$3.4B	$4.3B	$5.5B	$6.9B	$8.0B	$9.2B	$10.6B	RevenueRevenue
73%	73%	72%	72%	71%	70%	69%	72%	74%	73%	72%	Gross marginGross mgn
10%	11%	11%	9%	9%	9%	7%	6%	8%	5%	7%	SG&A / revenueSG&A/rev
21%	20%	18%	19%	23%	27%	26%	23%	23%	22%	21%	R&D / revenueR&D/rev
($157M)	($166M)	($104M)	($54M)	($179M)	($304M)	($189M)	$387M	$684M	$1.2B	$1.0B	Operating incomeOp. inc.
−11.4%	−9.4%	−4.6%	−1.9%	−5.3%	−7.1%	−3.4%	5.6%	8.5%	13.5%	9.6%	Operating marginOp. mgn
($193M)	($203M)	($122M)	($82M)	($267M)	($499M)	($267M)	$440M	$2.6B	$1.1B	$843M	Net incomeNet inc.
—	—	—	—	—	—	—	22%	—	29%	40%	Effective tax rateTax rate
											Cash flow & returns
$659M	$869M	$1.0B	$1.1B	$1.0B	$1.5B	$2.0B	$2.8B	$3.3B	$3.7B	$4.2B	Operating cash flowOp. cash
$43M	$60M	$96M	$154M	$206M	$260M	$283M	$282M	$283M	$343M	$598M	DepreciationDeprec.
$416M	$538M	$567M	$416M	$438M	$847M	$958M	$981M	($679M)	$944M	$1.1B	Working capital & otherWC & other
$73M	$163M	$112M	$131M	$214M	$116M	$193M	$146M	$157M	$246M	$423M	CapexCapex
5.3%	9.3%	4.9%	4.5%	6.3%	2.7%	3.5%	2.1%	2.0%	2.7%	4.0%	Capex / revenueCapex/rev
$616M	$809M	$926M	$924M	$821M	$1.4B	$1.8B	$2.6B	$3.1B	$3.5B	$3.8B	Owner earningsOwner earn.
44.7%	46.1%	40.7%	31.9%	24.1%	32.6%	32.6%	38.2%	38.6%	37.6%	35.8%	Owner earnings marginOE mgn
$586M	$705M	$926M	$924M	$821M	$1.4B	$1.8B	$2.6B	$3.1B	$3.5B	$3.8B	Free cash flowFCF
42.5%	40.2%	40.7%	31.9%	24.1%	32.6%	32.6%	38.2%	38.6%	37.6%	35.8%	Free cash flow marginFCF mgn
$0	$91M	$374M	$774M	$584M	$777M	$37M	$205M	$611M	$1.1B	$5.1B	AcquisitionsAcquis.
$0	$411M	$259M	$330M	$1.2B	$1.2B	$892M	$273M	$567M	$0	—	BuybacksBuybacks
-19%	-24%	-14%	-2%	-12%	-12%	-8%	12%	19%	16%	2%	ROICROIC
-22%	-27%	-11%	-5%	-24%	-79%	-127%	25%	50%	14%	3%	Return on equityROE
−22%	−27%	−11%	−5%	−24%	−79%	−127%	25%	50%	14%	3%	Retained to equityRetained/eq
											Balance sheet
$1.9B	$2.2B	$4.0B	$2.8B	$3.7B	$2.9B	$3.6B	$2.4B	$2.6B	$2.9B	$3.7B	Cash & investmentsCash+inv
$349M	$432M	$467M	$582M	$1.0B	$1.2B	$2.1B	$2.5B	$2.6B	$3.0B	$2.9B	ReceivablesReceiv.
—	—	—	—	—	—	—	—	$116M	$113M	$113M	InventoryInvent.
$30M	$36M	$49M	$73M	$64M	$57M	$128M	$132M	$116M	$232M	$293M	Accounts payablePayables
$319M	$397M	$418M	$509M	$974M	$1.2B	$2.0B	$2.3B	$2.6B	$2.8B	$2.7B	Operating working capitalOper. WC
$1.8B	$2.0B	$4.1B	$3.7B	$5.1B	$4.6B	$6.4B	$6.0B	$6.8B	$7.5B	$7.7B	Current assetsCur. assets
$847M	$1.2B	$2.1B	$2.1B	$2.7B	$5.1B	$8.3B	$7.7B	$7.7B	$8.0B	$9.0B	Current liabilitiesCur. liab.
2.1×	1.6×	2.0×	1.8×	1.9×	0.9×	0.8×	0.8×	0.9×	0.9×	0.9×	Current ratioCurr. ratio
$164M	$239M	$523M	$1.4B	$1.8B	$2.7B	$2.7B	$2.9B	$3.4B	$4.6B	$21.9B	GoodwillGoodwill
$2.9B	$3.4B	$5.9B	$6.6B	$9.1B	$10.2B	$12.3B	$14.5B	$20.0B	$23.6B	$46.3B	Total assetsAssets
$500M	$525M	$1.9B	$1.4B	$3.1B	$3.2B	$3.7B	$2.0B	—	—	$2.0B	Total debtDebt
($1.4B)	($1.6B)	($2.0B)	($1.4B)	($664M)	$325M	$42M	($399M)	—	—	($1.7B)	Net debt / (cash)Net debt
-6.7×	-6.8×	-3.5×	-0.6×	-2.0×	-1.9×	-6.9×	14.2×	82.4×	414.3×	—	Interest coverageInt. cov.
$895M	$760M	$1.2B	$1.6B	$1.1B	$635M	$210M	$1.7B	$5.2B	$7.8B	$27.7B	Shareholders’ equityEquity
28.5%	27.0%	21.8%	19.6%	19.3%	21.0%	18.4%	15.6%	13.4%	14.0%	15.7%	Stock comp / revenueSBC/rev
											Per share
261M	272M	275M	284M	291M	289M	296M	685M	708M	709M	744M	Shares out (diluted)Shares
$5.28	$6.46	$8.26	$10.23	$11.72	$14.72	$18.61	$10.07	$11.34	$13.00	$14.26	Revenue / shareRev/sh
$-0.74	$-0.75	$-0.44	$-0.29	$-0.92	$-1.73	$-0.90	$0.64	$3.64	$1.60	$1.13	EPS (diluted)EPS
$2.36	$2.98	$3.37	$3.26	$2.83	$4.80	$6.06	$3.84	$4.38	$4.89	$5.10	Owner earnings / shareOE/sh
$2.24	$2.60	$3.37	$3.26	$2.83	$4.80	$6.06	$3.84	$4.38	$4.89	$5.10	Free cash flow / shareFCF/sh
$0.28	$0.60	$0.41	$0.46	$0.74	$0.40	$0.65	$0.21	$0.22	$0.35	$0.57	Cap. spending / shareCapex/sh
$3.42	$2.79	$4.22	$5.60	$3.79	$2.19	$0.71	$2.55	$7.30	$11.03	$37.19	Book value / shareBVPS

Share counts before 2021 are restated ×3 for a stock split, so per-share figures sit on one basis.

The diluted share count moved ×2.32 into 2023 — shares issued, not a split the totals corroborate — and the per-share figures carry the counts as filed.

Per-share growththe realized rate an owner's share compounded

	9-yr	5-yr
Revenue / share	+10.5%/yr	+2.1%/yr
Owner earnings / share	+8.5%/yr	+11.6%/yr
Capital spending / share	+2.5%/yr	−14.0%/yr
Book value / share	+13.9%/yr	+23.8%/yr

The record, charted

FY2016–2025

Each measure over its full record; the current point and the worst year marked. Share counts on the current split basis.

Share count

709Mpeak FY2025

ROIC

16%low FY2017

Gross margin

73%low FY2022

Owner earnings vs. net income

Owner earningsNet income

The accountant's number, and the cash an owner can take; the gap is the tell.

$3.5Bowner earningsvs.$1.1Bnet incomelow FY2016

Where the cash went

ReinvestBuybacksDividendsAcquisitionsRetainedBeyond op. cash

Each year's outlays against its operating cash: the mix, and how it drifts. The hatched cap is spending beyond that year's operating cash — financed from the balance sheet or borrowing, not operations.

FY2016FY2025

Owner-earnings bridge

FY2021–FY2025cash-flow statement, SEC EDGAR →

Net income is the accountant's number; owner earnings is the cash an owner could take out. The walk between them, off the cash-flow statement, and whether the gap is widening or holding.

In fiscal 2025 the business turned $1.1B of profit into $3.5B of owner earnings: more cash than the profit line showed, after the non-cash charges and the capital it put back in.

Reported net income$1.1B

Owner earnings$3.5B · 38% of revenue

	FY2025	FY2024	FY2023	FY2022	FY2021
Reported net income	$1.1B	$2.6B	$440M	($267M)	($499M)
Depreciation & amortizationnon-cash charge added back	+$343M	+$283M	+$282M	+$283M	+$260M
Stock-based compensationreal costnon-cash, but a real cost	+$1.3B	+$1.1B	+$1.1B	+$1.0B	+$895M
Working capital & othertiming of cash in and out, other non-cash items	+$944M	−$679M	+$981M	+$958M	+$847M
Cash from operations	$3.7B	$3.3B	$2.8B	$2.0B	$1.5B
Capital expenditurecash put back in to keep running and to grow	−$246M	−$157M	−$146M	−$193M	−$116M
Owner earnings	$3.5B	$3.1B	$2.6B	$1.8B	$1.4B
Owner-earnings marginowner earnings ÷ revenue	38%	39%	38%	33%	33%

Owner earnings is the cash an owner could pull out without starving the business: operating cash less the capital it must spend to hold its position . The cash-flow statement also adds stock comp back as non-cash, but it is a real cost paid in shares; counted as the expense it is (less $1.3B), owner earnings is nearer $2.2B.

Maintenance capex is estimated as depreciation where a growing business invests above it; free cash flow is the figure the scorecard's free-cash margin reads.

III

Quality & stewardship

Returns, the balance sheet, capital allocation, and pay.

Owner’s Scorecard

FY2025 10-K · source on SEC EDGAR →

Will it survive?

Can it pay its interest? 414.3×

Comfortable

Operating income $1.2B ÷ interest expense $3M

What this means
Operating profit covers interest with the kind of margin Graham wanted for a defensive holding. Necessary, not sufficient, it says solvent, not cheap.
How heavy is the debt, net of cash? +$912M

Net cash

Cash $2.3B + ST investments $635M − debt $2.0B

What this means
Cash and short-term investments exceed every dollar of debt by $912M, on net the company owes nothing, and can act from strength when others can't. It also holds $548M in longer-dated marketable securities; counting those, it sits at net cash of $1.5B. Net debt is the leverage figure that matters: the cash is already set against the debt. Strategic or illiquid investments aren't counted here.
How long is cash tied up? 100d

Long (60+ days)

DSO 117 + DIO 17 − DPO 35 days

What this means
Days cash is tied up between paying suppliers and collecting from customers. Lower is better; a long cycle means growth itself eats cash.

Is it a good business?

Return on invested capital -12%

Below average through the cycle

10-yr median, range -24%–19%; 12% latest = NOPAT $883M ÷ invested capital $7.5B

Industry peers: median 18%

What this means
The rate the business earns on the money tied up in it, Buffett's north star, because over time a stock tracks the ROIC beneath it. Above ~15% sustained hints at a moat; a return below the cost of capital (~8%) erodes value as a business grows rather than building it — the test Buffett weighs most. The headline is the median of the last 10 years (it ran 12% most recently), so one peak or trough year doesn't set the verdict. Asset-light businesses (R&D expensed, little capital) read artificially high, pair this with Owner Earnings.
Owner-earnings margin 38%

High through the cycle

10-yr median margin, range 24%–46%; latest $3.5B = operating cash $3.7B − maintenance capex $246M

Industry peers: median 11%

What this means
What an owner could take out without starving the business: operating cash less the maintenance capital it must spend to hold its position — Buffett's owner earnings. That's 38% of revenue this year, a 38% median across 10 years. Treating stock comp as the real expense it is (less $1.3B of SBC) leaves $2.2B.
Are earnings backed by cash? 3.28×

Cash-backed

Cash from ops $3.7B ÷ net income $1.1B

What this means
How much of reported profit showed up as operating cash. Above 1× is reassuring; well below suggests earnings lean on accruals. One year is noisy, growth and working-capital swings distort it, and this is operating cash, not free cash. Watch the multi-year trend.

How is the cash used?

Where do the earnings go? 0%

Reinvests most of it

Dividends + buybacks $0 ÷ Owner Earnings $3.5B

What this means
Of $3.5B Owner Earnings, $0 (0%) went back to shareholders, $0 dividends, $0 buybacks. Returning most of it is the mark of a mature business with little left to reinvest at a high return; reinvesting most could mean a long runway, or empire-building. The split doesn't say which; the return earned on it (see ROIC) does.
Investing or harvesting? 0.72×

Harvesting

Capex $246M ÷ depreciation $343M

What this means
Descriptive, not a grade. Above ~1× means investing faster than assets wear out (growth, or, sustained for years, today's earnings carrying less depreciation than tomorrow's will). Below means spending less than it's wearing out (efficiency, or a melting asset base). The ratio won't tell you which; the filings will.

Graham’s defensive tests · 1 of 5 met

Graham’s numerical criteria for the defensive investor (The Intelligent Investor, ch. 14), run on the filings. A floor of safety, not a buy signal; many fine modern businesses fail his strictest liquidity rules by design.

Adequate size Pass

Revenue ≥ $2B · $9.2B

What this means
Big enough to weather a storm. Graham's 1972 floor was ~$100M of sales (≈ $700M today); we use a $2B revenue line as a conservative modern stand-in.
Strong liquidity Miss

Current ratio ≥ 2× · 0.94×

What this means
Current assets at least twice current liabilities, near-term bills covered without touching the business. Strict by design: many cash-rich modern firms run leaner and miss it, holding their cushion in longer-dated securities.
Conservative debt Miss

Debt ≤ working capital · $2.0B vs ($465M) WC

What this means
Graham's rule that borrowings not exceed net current assets. Capital-heavy and buyback-heavy firms routinely fail it, read it next to interest coverage, not alone.
Earnings stability Miss

A profit every year (10-yr record) · 7 loss years

What this means
Graham wanted earnings in each of the past ten years, the stability a defensive owner leans on.
Dividend record Miss

Uninterrupted dividends · none paid

What this means
An unbroken dividend was Graham's mark of durability. He wanted twenty years; the filings show about ten, and a single suspension breaks the streak. Non-payers, many fine modern compounders, fall outside his defensive net by design.
Earnings growth —

Earnings +33% over the record · —

What this means
Earnings were negative early in the record, a growth rate isn't meaningful.
Moderate price —

P/E ≤ 15 and P/E × P/B ≤ 22.5 · decided by the price

What this means
Graham's valuation gate, the wall he kept between a sound business and a sound investment. Three-year average earnings are $1.70/share (latest year $1.39), the averaged base the calculator's gate runs on, and book value is $9.60/share. Enter a price in “What the price implies” just below for the P/E, P/B, and whether it clears. But this is the rule Buffett outgrew: there's no hard P/E law, and a wonderful business can deserve a far richer multiple if the thesis holds, treat it as the bargain-hunter's floor, not a verdict on the price.

Durability & moat, 2016–2025

Whether the record’s returns held, and what the capital reinvested earned.

Profitable years 3 of 10

What this means
Lost money in 7 year(s), look at what happened there before trusting the average.
Return on capital ≥ 15% 0 of 8 yrs

What this means
A moat shows up as a high return on invested capital that holds year after year, not one good vintage.
Operating margin −8% → 9% (3-yr avg ends)

In the filing’s words The record and the words agree: the margin widened and the filing attributes the gain to its own pricing, not volume alone.

What this means
Through the cycle the operating margin widened — about −8% early to 9% lately, median −5% — pricing power intact or improving.
Reinvestment, incremental ROIC 48%

What this means
Every extra dollar the business reinvested came back at a high incremental return — the lens GBM read for a moat that reinvests rather than merely harvests. The record and the 10-K are where you check whether the rate holds.
Owner earnings growth +19%/yr

What this means
Owner earnings grew about 19% a year over the record.
Worst year 2016 · −11.4% op. margin

What this means
Operations went underwater in 2016, understand why before trusting the good years.
How management talks about it Promotional

What this means
The record is compounding, but the filing leans on a promoter’s vocabulary rather than the per-share, return-on-capital terms an owner uses. The results back the talk here; the register is still worth noting.

Does AI threaten the moat?

Low contestability

The moat is physical, regulated or balance-sheet-funded, the kind AI cuts costs within but does not contest.

In its own filing Named as a competitive risk

Its FY2025 10-K names artificial intelligence as a competitive threat.

“In addition, new and enhanced technologies, including AI and machine learning, continue to increase our competition.”

AI is unlikely to contest a moat that is physical, regulated or balance-sheet-funded; here it reads more as a cost tool than a threat, and the company is using it that way.

Read from the filing's own risk factors, paired with the industry's structure under its SIC code; the durability is read above, the price below.

All figures as filed; the source filing is linked above.

Current Position

as of the latest quarter, Apr 30, 2026

Can the business pay what it owes this year, off the freshest balance sheet: the quality of the assets, the debt actually coming due, and what a low ratio means here.

Current assets$7.7B

Cash & short-term investments$3.1B
Receivables$2.9B
Inventory$113M
Other current assets$1.6B

Current liabilities$9.0B

Accounts payable$293M
Other current liabilities$8.7B

Current ratio0.86×all current assets ÷ what's due · Graham looked for 2×

Quick ratio0.84×stricter: inventory excluded

Cash ratio0.35×strictest: cash alone against what's due

Working capital($1.3B)the cushion left after near-term bills

Revenue, latest quarter vs. a year ago+31.1%the freshest read on whether the business is still growing

Current ratio, recent quarters0.9× → 0.9×

Deeper floors

Tangible book value($1.5B)equity stripped of goodwill & intangibles

Net current asset value($10.9B)Graham's net-net: current assets less all liabilities

Debt incl. operating leases$2.8B$798M of it operating leases; with finance leases, “total fixed claims” below reaches $2.4B (annual-report basis)

Deferred revenue$13.6Bcustomer cash collected before delivery; operating float

From the company's latest filing.

Lease obligations

the lease note, SEC EDGAR →

Debt by another name. What the business owes on the property, aircraft, stores and equipment it rents rather than owns is a fixed claim due on a schedule; added back to the debt, it is the true leverage. That ladder, and what it adds to the debt on the page above.

'26$99M

'27$95M

'28$94M

'29$48M

'30$45M

later$112M

Lease payments by year, scaled to the largest; “later” is everything beyond year five, shown apart. These are the contractual cash payments, before the interest the filing imputes back out to the balance-sheet liability.

Due in the next 12 months$99Ma fixed cash payment, owed whether or not the business has a good year

Total lease payments$494Mevery year plus the tail, undiscounted: the full cash the leases will take

On the balance sheet$417Mthe present value of those payments, the recognised lease liability

True leverage: debt plus leases

On-balance-sheet debt$2.0B

Lease obligations (present value)$417M

Total fixed claims on the business$2.4B

Counting the leases the way Buffett does, the fixed claims on this business come to $2.4B, of which the leases are 17%. The lease wall above and the debt schedule together are the calendar of what must be paid, and when.

Lease ladder read from the ASC 842 tags in the company’s Jul 31, 2025 annual report and reconciled: the yearly buckets sum to the undiscounted total, which less the imputed interest equals the balance-sheet liability; a ladder that doesn’t tie out is withheld.

How the cash was used, 2016–2025

Over the record, the business generated $17.9B of operating cash; how management split it reads as a balanced allocator, splitting cash between the business, owners, and the balance sheet.

Reinvested$1.6B · 9%
Buybacks$5.1B · 29%
Retained (debt / cash)$11.2B · 63%

Returned to owners$5.1B
31% of the owner earnings the business produced over the span, $0 as dividends and $5.1B as buybacks.
Average price paid for buybacks$111.90
Across the years where the filing reports a share count, 43M shares were bought for $4.8B, about $111.90 each. Year to year the price paid ranged from $41.52 (2017) to $443.74 (2020), and 2020, near the top of that range, was also its heaviest buyback year ($1.2B).
Net change in share count184.7%
The diluted count rose from 261M to 744M: issuance (stock pay, deals) outran any buybacks, so owners were diluted on net.
Dividend record—
No dividend line was reported in the filing data over the span; the record here neither confirms nor rules out a payout.

Buybacks are gross of stock issued to staff; the share-count line above is the net of that, the figure that decides whether owners gained. The average price paid blends a year of purchases (and any accelerated repurchase), so it is close, not exact. The record of where the cash went and on what terms.

Acquisitions & goodwill

from the balance sheet & the 10-year cash-flow record

Goodwill grows only when a company acquires and falls only when it concedes it overpaid. The size of that bet, the cash put into buying rather than building, and how much has already been written off.

Goodwill & intangibles$5.3B23% of all assets; the premium carried on the balance sheet for businesses acquired

Against book equity58%goodwill is this share of book equity; the rest is the company’s own retained and paid-in capital

Cash spent acquiring$4.5Bover 10 years buying other businesses, against $1.6B of capital spent building

None written down over the record; the goodwill is still carried at full cost. That is the deals holding their value on the books so far; whether they keep doing so is the test an owner watches, since the write-down, when it comes, is the admission the price was too high.

Goodwill, acquired intangibles and equity from the latest balance sheet; acquisition spend and write-downs summed across the 10-year record, from the company's own filings.

Management, ownership & pay

read the proxy →

From the proxy: how much of the business the people running it own, and how they are paid, beside what the business earned for its owners in the same years.

Fiscal year	Chief executive	Pay, as filed	“Actually paid”	Owner earnings
2021	Nikesh Arora	$23.3M	$219.7M	$1.4B
2022	Nikesh Arora	$10.4M	$208.5M	$1.8B
2023	Nikesh Arora	$151.4M	$266.4M	$2.6B
2024	Nikesh Arora	$58.0M	$105.3M	$3.1B
2025	Nikesh Arora	$99.7M	$267.5M	$3.5B

Both pay figures are the company’s own, from the pay-versus-performance table its proxy statement files. “As filed” is the Summary Compensation Table total: salary, bonus, and equity awards at their value on the day of grant. “Actually paid” is the SEC’s prescribed recalculation, which re-marks those equity awards to what they became as they vested; it can swing far above or below the filed figure in either direction, and negative years occur. Owner earnings are the whole business's, from the record above, for the same fiscal years.

Insider ownership1.4%
The stake all directors and executive officers hold together, per the 2025 proxy: skin in the game, the first thing Munger reads.
CEO pay ratio442:1
What the chief earns for every dollar the median employee makes, per the 2025 proxy. A high ratio alone settles nothing; some businesses are genuinely top-heavy in scarce skill. A runaway figure is where Buffett starts asking whether the board is doing its job.
Stock-based compensation$1.3B
The slice of the business handed to employees in shares this year, 14% of revenue, equal to 104% of operating profit. Buffett's oldest accounting fight: this is compensation, compensation is an expense, real whether or not the headline earnings admit it. One trap: the cash-flow statement adds SBC back, so the operating cash, and the owner earnings drawn from it, are flattered by exactly this amount; counted as the cost it is, what an owner keeps is lower.

Inverting the record

Invert: instead of why Palo Alto Networks Inc. is a good business, the question is what would make owning it a mistake, and whether those marks are in the record. Disconfirming tests across 2016–2025.

2 of the 6 tests turned up something to look into; the other 4 came back clean.

Look hereIs it less profitable than it was?38.1% vs 43.8%
The owner-earnings margin averaged 43.8% early in the record and 38.1% across the last three years, and the latest year has not recovered. Ask the filing whether that is a structural drift or a cyclical trough — price, mix, cost, or a competitor — and whether it is permanent.
Look hereDid the share count rise anyway?184.7%
Diluted shares grew 184.7% over 2016–2025, even as the company spent $5.1B on buybacks. The repurchases were outrun by issuance — to staff, in a raise, or in a deal — and the filing says which; owners' slice still shrank. Read the buyback line beside this one, not on its own.

And these came back clean

Did debt outgrow the business?
Did reported profit become cash?
Did receivables and inventory outpace sales?
Are "one-time" charges a yearly habit?

Each test is read from the filings and is noisy alone; a flag can mark a cyclical trough or a year of heavy investment as easily as a problem. The filing says which.

Peers, Technology Hardware

The same industry, side by side on owner economics. Each figure is a through-cycle median, so a peak or trough year can’t distort it; the group median at the foot is the line to read each against.

Company	Revenue	Gross margin	Op. margin	ROIC	Owner earn. margin
WDCWestern Digital Corporation	$9.5B	28%	7.2%	6%	4%
PANWPalo Alto Networks Inc.	$9.2B	72%	-4.0%	-10%	38%
STXSeagate Technology Holdings PLC	$9.1B	28%	13.2%	29%	11%
ANETArista Networks Inc.	$9.0B	64%	32.4%	33%	33%
SNDKSandisk Corporation	$7.4B	16%	-18.7%	-11%	-7%
XRXXerox Holdings Corporation	$7.0B	—	-0.4%	-2%	8%
FTNTFortinet Inc.	$6.8B	77%	20.5%	—	36%
LOGILogitech International S.A.	$4.8B	71%	11.9%	63%	12%
Group median	—	64%	9.5%	6%	12%

The price

What a price has to assume.

What the price implies

reverse-DCF

Type today's close and see the owner-earnings growth you'd have to believe to justify it, beside what Palo Alto Networks Inc. has delivered.

Today’s price $

Through the cycle, Palo Alto Networks Inc. earns about $3.5B on its 37.9% median owner-earnings margin. This year’s 37.6% margin runs in line with that. Normalize, below, values the price on that through-cycle figure rather than the latest year.

Base Normalize · through-cycle ($3.5B) Net of stock comp (−$1.7B) Steady-state · maintenance capex ($4.0B)

—

The assumptions Required return 9% Years of high growth 10 Terminal growth 2.5%

9.0% = the 4.55% 10-year Treasury (Jul 15, 2026) + 4.45 points of equity premium. The rate you require is yours to set.

Enter a price above to run it.

Implied by the price—

Owner-earnings growth · ’21→’25+20%/yr

Owner-earnings growth · ’16→’25+20%/yr

Owner-earnings yield—

P/E (3-yr earnings ’23–’25)—

P/B—

Graham’s price gate—

Graham capped the multiple at 15×; Buffett and Munger let that rule go: a wonderful business can deserve 50× if the thesis holds. The gate marks the bargain-hunter's floor.

Against a high-grade bond: Graham’s yardstick bond yield%

Prefilled with the 10-year Treasury (4.55%, as of Jul 15, 2026). Edit it for today’s exact figure, or a AAA corporate yield.

Graham measured a stock against the bond you could own instead, the heart of his margin of safety. Enter a price above to weigh the owner-earnings yield against this bond.

Free cash flow $3.8B on 815M shares outstanding, per the 10-Q cover, as of 2026-05-26; net cash $1.7B. The base is the latest year by default; Normalize values it on the through-cycle median owner-earnings margin (to avoid paying on a peak year). Net of stock comp treats option pay as the expense it is. Capex ($423M) runs well above depreciation ($598M), so this is a build-out; Steady-state swaps total capex for maintenance (≈ depreciation), lifting the base to about $4.0B, the cash it would throw off if it stopped expanding. The dials set the multiple a growth belief justifies; the price, and every dollar on this page, is yours.

Weigh PANW against another business →

The owners of PANW: the meeting and the votes →

Cite: Owner Scorecard, "Palo Alto Networks Inc. (PANW), the owner's record," https://ownerscorecard.com/c/PANW, data as of 2026-07-09.

Manual order: ← PANL its page in the Manual PAR →

Industry order: ← P the Technology Hardware chapter PAR →