Palo Alto Networks Inc (PANW)
Return on total capital
| Jul 31, 2025 | Apr 30, 2025 | Jan 31, 2025 | Oct 31, 2024 | Jul 31, 2024 | Apr 30, 2024 | Jan 31, 2024 | Oct 31, 2023 | Jul 31, 2023 | Apr 30, 2023 | Jan 31, 2023 | Oct 31, 2022 | Jul 31, 2022 | Apr 30, 2022 | Jan 31, 2022 | Oct 31, 2021 | Jul 31, 2021 | Apr 30, 2021 | Jan 31, 2021 | Oct 31, 2020 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 1,005,700 | 1,321,500 | 1,263,200 | 1,075,000 | 990,200 | 989,900 | 876,000 | 828,400 | 583,300 | 290,200 | 105,700 | -59,700 | -185,200 | -268,500 | -333,600 | -348,600 | -305,800 | -261,900 | -199,500 | -150,800 |
| Long-term debt | US$ in thousands | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
| Total stockholders’ equity | US$ in thousands | 7,824,400 | 7,230,500 | 6,375,300 | 5,911,800 | 5,169,700 | 4,467,800 | 4,357,200 | 2,170,500 | 1,748,400 | 1,232,400 | 729,000 | 508,000 | 210,000 | 337,600 | 117,800 | 518,900 | 763,600 | 997,200 | 1,198,500 | 747,000 |
| Return on total capital | 12.85% | 18.28% | 19.81% | 18.18% | 19.15% | 22.16% | 20.10% | 38.17% | 33.36% | 23.55% | 14.50% | -11.75% | -88.19% | -79.53% | -283.19% | -67.18% | -40.05% | -26.26% | -16.65% | -20.19% |
July 31, 2025 calculation
Return on total capital = EBIT (ttm) ÷ (Long-term debt + Total stockholders’ equity)
= $1,005,700K ÷ ($—K + $7,824,400K)
= 12.85%
The analysis of Palo Alto Networks Inc.'s return on total capital (ROTC) over the specified period reveals a notable trajectory characterized by significant fluctuations. In the earliest data points, from October 2020 through October 2021, the company exhibited persistently negative ROTC values, with the decline reaching a deep nadir of -283.19% as of January 31, 2022. Such extreme negative figures indicate substantial inefficiencies in generating profits relative to the total capital employed, potentially attributable to high operating losses or high levels of leverage during that period.
Following this trough, a marked improvement is observed starting in January 2023, when the ROTC turns positive at 14.50%, signaling a shift toward more effective capital utilization and potentially improved operational performance or restructuring efforts. The positive trend continues through the subsequent quarters: 23.55% in April 2023, 33.36% in July 2023, and peaking at 38.17% on October 31, 2023. This progression indicates a phase of robust capital earnings efficiency, suggesting that the company is leveraging its capital more effectively to generate profits.
Subsequently, the ROTC demonstrates some variability yet remains positive, with readings such as 20.10% in January 2024, marginally decreasing to 18.18% on October 31, 2024, and maintaining a generally stable performance with slight fluctuations. The figures for the first half of 2025 indicate a continued albeit modest positive ROTC, with a slight decline to 12.85% as of July 31, 2025.
Overall, the data depicts a transition from a period of chronic negative ROTC, reflecting poor capital profitability or high cost burdens, toward a phase of positive and improving returns, indicative of enhanced operational efficiency and value creation for shareholders. The trend underscores significant operational improvements in recent periods, although the variability suggests that the company continues to face fluctuations in its ability to consistently generate returns on its total capital.