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A Look at Palo Alto Networks’ Key Metrics


Jun. 21 2019, Updated 12:01 p.m. ET

Customer base

Network security remains a top priority for most enterprises, helping Palo Alto Networks (PANW) easily expand its customer base. In the last quarter, PANW said it had signed an eight-figure deal with a US government agency. This deal was among the largest in company history and drove its product revenue in the third quarter. PANW also managed to expand contracts by over $5 million with ten existing customers.

PANW also recently introduced its domain name server security service. Though it hasn’t disclosed any numbers for this vertical, the company is optimistic about achieving robust growth.

PANW has increased its customer base at an impressive rate. At the end of the third quarter of fiscal 2011, PANW had 3,500 customers. This figure rose to 24,000 at the end of the third quarter of fiscal 2015, and it now stands at 62,000.

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Billings and revenue growth

Significant growth in PANW’s customer base has driven its revenue and billings higher. PANW’s billings rose from $771 million in fiscal 2014 to $2.85 billion in fiscal 2018. In the first nine months of fiscal 2019, its billings rose 22.1% to $2.43 billion.

PANW is now shifting to a subscription-based model, which will mean a greater stream of recurring sales. PANW’s subscription revenue rose at a compound annual growth rate of 58.0% between fiscal 2014 and fiscal 2018. Its subscription revenue rose from $123 million to $758 million in the period.

Operating leverage

An increase in revenue has meant that PANW has also been able to expand its bottom line. Its operating margin expanded from 11.6% in fiscal 2014 to 21.9% in fiscal 2018. Its operating profit also increased from $70 million in fiscal 2014 to $499 million in fiscal 2018, indicating high operating leverage.


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