Palo Alto Networks Inc (PANW)
Profitability ratios
Return on sales
| Jul 31, 2025 | Jul 31, 2024 | Jul 31, 2023 | Jul 31, 2022 | Jul 31, 2021 | |
|---|---|---|---|---|---|
| Gross profit margin | 75.19% | 74.35% | 72.29% | 68.76% | 70.05% |
| Operating profit margin | 12.29% | 8.52% | 5.62% | -3.43% | -7.15% |
| Pretax margin | 17.30% | 12.31% | 8.22% | -3.77% | -10.93% |
| Net profit margin | 12.30% | 32.11% | 6.38% | -4.85% | -11.72% |
The profitability ratios for Palo Alto Networks Inc. demonstrate a notable trend of improvement over the period from July 2021 to July 2025.
The gross profit margin, which reflects the efficiency in production and sales, showed a decline from 70.05% in July 2021 to 68.76% in July 2022. However, subsequent years exhibited a consistent upward trend, reaching 72.29% in July 2023, then increasing further to 74.35% in July 2024, and culminating at 75.19% in July 2025. This progression indicates enhanced cost management and pricing strategies, resulting in higher gross profitability.
The operating profit margin transition from negative values in 2021 and 2022 (-7.15% and -3.43%, respectively) to positive figures in 2023 and beyond signifies operational improvements. By July 2023, the operating margin turned positive at 5.62%, further rising to 8.52% in July 2024, and reaching 12.29% in July 2025. This shift reflects better control over operational costs and increased operational efficiency.
Similarly, the pretax margin, which accounts for earnings before taxes, moved from negative margins of -10.93% in 2021 and -3.77% in 2022 to positive margins of 8.22% in 2023, 12.31% in 2024, and 17.30% in 2025. This progression further confirms the company's improving profitability before tax obligations.
The net profit margin also reflects significant positive change, from negative margins of -11.72% and -4.85% in 2021 and 2022, respectively, to a substantial rise to 6.38% in 2023. The margin peaked at 32.11% in July 2024, indicating a period of exceptional profitability, before declining to 12.30% in July 2025. While the decline in 2025 suggests some moderation, the overall trend from losses to strong profitability marks a substantial turnaround.
Overall, these ratios depict a company transitioning from unprofitable to increasingly profitable operations, with steady improvements in gross, operating, pretax, and net profit margins over the analyzed period.
Return on investment
| Jul 31, 2025 | Jul 31, 2024 | Jul 31, 2023 | Jul 31, 2022 | Jul 31, 2021 | |
|---|---|---|---|---|---|
| Operating return on assets (Operating ROA) | 4.81% | 3.42% | 2.67% | -1.54% | -2.97% |
| Return on assets (ROA) | 4.81% | 12.89% | 3.03% | -2.18% | -4.87% |
| Return on total capital | 0.00% | 19.21% | 33.56% | -89.05% | -40.20% |
| Return on equity (ROE) | 14.49% | 49.86% | 25.15% | -127.14% | -65.34% |
The analysis of Palo Alto Networks Inc.’s profitability ratios from July 31, 2021, through July 31, 2025, indicates a notable trend of significant improvement over the period.
Starting with the Operating Return on Assets (Operating ROA), the company experienced a turnaround from a negative value of -2.97% in July 2021 to a positive 2.67% in July 2023. This positive trajectory continued, reaching 3.42% in July 2024 and further increasing to 4.81% in July 2025. The shift from negative to positive indicates enhanced operational efficiency and profitability from core business activities.
Similarly, the Return on Assets (ROA) reflected an improvement, reversing from a negative -4.87% in July 2021 to 3.03% in July 2023. The substantial jump to 12.89% in July 2024 and maintaining at 4.81% in July 2025 underscores a strong recovery and improved utilization of assets to generate net income.
In terms of Return on Total Capital, the ratios initially exhibited a severe decline, moving from a negative -40.20% in July 2021 to an even more negative -89.05% in July 2022. However, a significant positive shift occurred thereafter, with the ratio reaching +33.56% in July 2023. Although it declined to 19.21% in July 2024 and then to zero in July 2025, the positive turn in 2023 indicates a period of effective capital deployment and profitability, despite the subsequent reduction suggesting possible capital restructuring or changes in operational leverage.
The Return on Equity (ROE) displayed a similarly volatile pattern, starting from a heavily negative -65.34% in July 2021 and worsening to -127.14% in July 2022, indicating significant losses relative to shareholders’ equity during that period. A considerable recovery occurred by July 2023, with ROE reaching 25.15%, followed by further increases to 49.86% in July 2024, before decreasing to 14.49% in July 2025. These figures point to a substantial turnaround in shareholder profitability, reflecting improved net income generation relative to equity, albeit with some fluctuation in the latter years.
Overall, the trend across these profitability ratios suggests a period of historical losses transitioning into consistent profits, driven by operational improvements and enhanced asset management. The substantial recovery in fiscal year 2023 marks a significant turning point, with continued positive momentum into 2024 and 2025, albeit with some variability.