The Firewall and the Installed BaseNarrow moat

Palo Alto Networks (PANW) — moat facet

Palo Alto's firewalls hold years of customers' security rules, and that is why four dollars of recurring revenue follow every dollar of product.

Palo Alto's installed base of firewalls is the foundation of its moat, even as the firewall itself becomes a smaller part of revenue. The company began with a next-generation firewall in 20051, and product revenue grew from $492.7 million in fiscal 20152 to $2,280 million in fiscal 20263.

Revenue mix, fiscal 2026 ($M)Hardware, about 10% of revenue — 10%Other product, incl. software firewalls — 10%Subscription and support — 80%Palo Alto FY2026 10-K; hardware share from the Q4 FY2026 call, amount calculated
Subscriptions are more than half of revenue.

The real money is what comes after the firewall. In fiscal 2026 Palo Alto sold $6,239 million of subscriptions and $2,961 million of support4, about $4.04 of recurring revenue for each dollar of product5. Subscription and support revenue was 80.1% of total revenue, growing 24%6.

The switching cost is concrete. A firewall holds years of accumulated security rules; replacing it means rebuilding them, retesting them and accepting the risk of mistakes in the path of all the company's traffic. That is why customers renew subscriptions and support on equipment they already own, and why they are receptive when the same vendor offers the next product.

The base has moved with the customer. Software firewalls, sold through the AWS, Azure, Google Cloud and Oracle marketplaces7, grew ARR 29% in the fourth quarter8, carrying the rules into the cloud.

The weaknesses are costs and competition. Gross margin fell from 74.3% in fiscal 2024 to 70.4% in fiscal 20269, partly on acquisitions and partly on hardware costs that management expects to keep rising10. The last independent market-share figure found for this page, IDC's for the fourth quarter of 2022, had Palo Alto level with Fortinet11.

The installed base is also spread across the world. In fiscal 2026 Palo Alto earned $7,108 million in the United States, $2,428 million in Europe, the Middle East and Africa, and $1,373 million in Asia Pacific and Japan12, and all three regions grew between 24% and 27%13. A firewall installed in any of them generates subscriptions and support in the same way.

The product line grew unevenly through the decade. It fell about 2.9% in fiscal 2020 and grew about 1.6% in fiscal 202414, the two years when either the market or Palo Alto's own strategy paused hardware sales. In every other year it grew at least 5%.

The installed base is a genuine moat, narrower than the platform story implies because the firewall market has a strong, cheaper rival. Support revenue is the measure of the base itself: $2,961 million in fiscal 202615; support falling in any year would mean customers are retiring Palo Alto equipment rather than renewing it.

Moat trajectory: Holding steady

Recurring revenue 80.1% of total; gross margin down to 70.4%.

The number that tests this moat
Reported
Support revenue, full year
$2,961M (FY2026), +21%

The maintenance paid on the installed base; a decline in any year would mean equipment is being retired.

Source: Palo Alto Networks Form 10-K, FY2026 ↗
Aspects of the moat
DIG DEEPER 01
Built on the Next-Generation Firewall
Palo Alto's firewall has shrunk from half its revenue to a fifth, but it remains the door through which customers enter.
DIG DEEPER 02
Hardware at Ten Percent of Revenue
Hardware is only about a tenth of Palo Alto's revenue, but it anchors the software sold on top and carries the cost pressure from memory and tariffs.
DIG DEEPER 03
Four Dollars of Service for Every Dollar of Product
Palo Alto sells about four dollars of subscriptions and support for every dollar of hardware and software, up from less than one dollar in 2015.
DIG DEEPER 04
Software Firewalls in the Cloud Marketplaces
Palo Alto made its firewall portable into the public clouds, so the security rules customers built over years move with them.
⚠ Threats to the moat
⚠ THREAT 01
Gross Margin Down Four Points
Palo Alto's gross margin has fallen four points in two years, mostly from acquisition accounting and partly from hardware costs.
⚠ THREAT 02
Three Patent Suits and a $151 Million Accrual
Palo Alto has accrued $151 million for one patent verdict and fights others, the cost of equipment in so many networks.
References
  1. ReportedThe company began with a next-generation firewall in 2005, and product revenue grew from $492.7 million in fiscal 2015 to $2,280 million in fiscal 2026.
    Palo Alto Networks press release on the retirement of founder Nir Zuk and the appointment of Lee Klarich as CTO and director, Form 8-K exhibit 99.2. — August 2025 · publ. 18 August 2025 · source ↗
  2. ReportedThe company began with a next-generation firewall in 2005, and product revenue grew from $492.7 million in fiscal 2015 to $2,280 million in fiscal 2026.
    Palo Alto Networks Form 10-K for fiscal 2017 - revenue by type and geography for fiscal 2015-2017 and restated fiscal 2015-2016 results. — FY2017 · publ. September 2017 · source ↗
  3. ReportedThe company began with a next-generation firewall in 2005, and product revenue grew from $492.7 million in fiscal 2015 to $2,280 million in fiscal 2026.
    Palo Alto Networks Form 10-K for fiscal 2026 (year ended 31 July 2026) - Item 1 business and Item 7 MD&A: platforms, customers, channels, employees, revenue by type and geography. — FY2026 · publ. 10 September 2026 · source ↗
  4. ReportedIn fiscal 2026 Palo Alto sold $6,239 million of subscriptions and $2,961 million of support, about $4.04 of recurring revenue for each dollar of product.
    Palo Alto Networks Form 10-K for fiscal 2026 (year ended 31 July 2026) - Item 1 business and Item 7 MD&A: platforms, customers, channels, employees, revenue by type and geography. — FY2026 · publ. 10 September 2026 · source ↗
  5. Moat Explorer calcIn fiscal 2026 Palo Alto sold $6,239 million of subscriptions and $2,961 million of support, about $4.04 of recurring revenue for each dollar of product.
    Moat Explorer calculation from Palo Alto Networks' reported figures ($ millions unless stated; fiscal years end 31 July). Growth: revenue FY2026 11,480 / 9,221.5 - 1 = 24.5%; FY2025 9,221.5 / 8,027.5 - 1 = 14.9%; FY2024 8,027.5 / 6,892.7 - 1 = 16.5%; FY2023 25.3%; FY2022 29.3%; FY2021 24.9%; FY2020 17.5%; FY2024 to FY2026 11,480 / 8,027.5 - 1 = 43%; compound FY2015-FY2026 (11,480 / 928.1)^(1/11) - 1 = 25.7%, about 26%. By type FY2026: product 2,280 / 1,801.9 - 1 = 26.5%; subscription 6,239 / 4,974.4 - 1 = 25.4%; support 2,961 / 2,445.2 - 1 = 21.1%. Product FY2025 12.4%, FY2024 1,603.3 / 1,578.4 - 1 = 1.6%, FY2020 1,064.2 / 1,096.2 - 1 = -2.9%. Subscription FY2017 53.7%, FY2019 36.2%, FY2021 35.1%, FY2023 31.4%, FY2024 25.6%, FY2025 18.8%. Support FY2022 29.3%, FY2023 23.7%, FY2024 13.0%, FY2025 9.4%. Compound FY2015-FY2026: subscription (6,239 / 212.7)^(1/11) - 1 = 36.0%; support (2,961 / 222.7)^(1/11) - 1 = 26.5%; product (2,280 / 492.7)^(1/11) - 1 = 14.9%. Product outgrew subscription in FY2026 (26.5% against 25.4%), which it did not in any year FY2016-FY2025. Organic: FY2026 (11,480 - 930) / 9,221 - 1 = 14.4%; Q4 acquisition revenue 930 - 388 = 542; Q4 (3,410 - 542) / 2,536 - 1 = 13.1%, about 13%; pro forma 12,312 / 10,486 - 1 = 17.4%; FY2027 guidance 14.15 / 12.312 - 1 = 14.9%, about 15%. Margins: gross margin FY2026 8,077 / 11,480 = 70.4% (FY2025 6,769.9 / 9,221.5 = 73.4%; FY2024 5,968.3 / 8,027.5 = 74.3%); Q4 GAAP 2,304 / 3,410 = 67.6%. Product gross margin (2,280 - 568) / 2,280 = 75.1% (FY2025 (1,801.9 - 413) / 1,801.9 = 77.1%); subscription and support (9,200 - 2,835) / 9,200 = 69.2% (FY2025 (7,419.6 - 2,038) / 7,419.6 = 72.5%). Operating margin 695 / 11,480 = 6.1% (FY2025 1,242.9 / 9,221.5 = 13.5%); non-GAAP 3,356 / 11,480 = 29.2% (FY2025 2,652 / 9,221.5 = 28.8%); Q4 non-GAAP 1,011 / 3,410 = 29.6%; gap 3,356 - 695 = 2,661. R&D 2,552 / 11,480 = 22.2%; sales and marketing 3,931 / 11,480 = 34.2%; capital expenditure 440 / 11,480 = 3.8%. Tax 229 / (307 + 229 = 536) = 42.7%. Mix: product share 492.7 / 928.1 = 53.1% (FY2015), 2,280 / 11,480 = 19.9% (FY2026); subscription 212.7 / 928.1 = 22.9%, 6,239 / 11,480 = 54.3%; support 222.7 / 928.1 = 24.0%, 2,961 / 11,480 = 25.8%; one point of share 1% x 11,480 = 115. Recurring share 435.4 / 928.1 = 46.9% (FY2015), 1,393.8 / 2,273.6 = 61.3% (FY2018), 3,135.8 / 4,256.1 = 73.7% (FY2021), 6,424.2 / 8,027.5 = 80.0% (FY2024). Subscription and support per dollar of product 435.4 / 492.7 = 0.88 (FY2015), 1,393.8 / 879.8 = 1.58 (FY2018), 3,135.8 / 1,120.3 = 2.80 (FY2021), 6,424.2 / 1,603.3 = 4.01 (FY2024), 9,200 / 2,280 = 4.04 (FY2026). Hardware about 10% x 11,480 = about 1,150, about 50% of product. NGS ARR 9.10 / 11.48 = 79% of revenue. United States 7,108 / 11,480 = 61.9% (FY2016 901.8 / 1,378.5 = 65.4%). Q4 share of year 3,410 / 11,480 = 29.7%, about 30%. Prisma AIRS ARR 100 / 11,480 = under 1%. ARR and RPO: Q3 acquired ARR 1.6 / 8.1 = 20%, about a fifth; Q3 organic 8.1 - 1.6 = 6.5; Q3 acquired RPO 1.8 / 18.4 = 10%; FY2023 NGS ARR 4.2 / 1.43 = about 2.9; FY2025 growth 5.6 / 4.2 - 1 = 33%; Q1 FY2027 net new 9.54 - 9.10 = 0.44 to 9.56 - 9.10 = 0.46 billion; FY2030 target (20 / 9.1)^(1/4) - 1 = 21.8% a year; RPO / revenue 21.2 / 11.48 = 1.85; RPO due in 12 months 1.7 / 3.1 = 55% (FY2019), 2.2 / 4.3 = 51% (FY2020), 3.1 / 5.9 = 53% (FY2021), 4.1 / 8.2 = 50% (FY2022), 5.1 / 10.6 = 48% (FY2023), 5.9 / 12.7 = 46% (FY2024), 7.0 / 15.8 = 44% (FY2025), 9.3 / 21.2 = 44% (FY2026); RPO beyond 12 months 21.2 - 9.3 = 11.9 billion; Idira guidance 1.5 / 1.26 - 1 = 19%; Network and AI Security FY2025 8.35 / 1.17 = about 7.14 billion. Revenue from prior deferred 6.2 / 5.5 - 1 = 13%. Cash, deferred revenue and stock pay: free cash flow margin 4,113 / 11,480 = 35.8%; share-based compensation (cash flow) 1,774 / 11,480 = 15.5%; 1,774 / 1,295 - 1 = 37%; 1,774 / 4,113 = 43%; free cash flow after stock pay 4,113 - 1,774 = 2,339, 2,339 / 11,480 = 20.4%, 2,339 / 306,540 = 0.76%; free cash flow 4,113 / 306,540 = 1.3% and 4,113 / 27,492 = 15%. Stock pay share of revenue FY2016 392.8 / 1,378.5 = 28.5%, FY2020 658.4 / 3,408.4 = 19.3%, FY2024 1,076 / 8,027.5 = 13.4%, FY2025 1,295 / 9,221.5 = 14.0%. 10-K share-based compensation 1,815 / 1,079 - 1 = 68%. Equity plan (26.1 + 24.3) / 818 = 6%. Net cash 2,514 + 557 + 4,835 - 1,774 = 6,132; cash and investments 2,514 + 557 + 4,835 = 7,906, about 7.9 billion. Deferred revenue 1,582.1 + 1,306.6 = 2,888.7 (FY2019); 2,741.9 + 2,282.1 = 5,024.0 (FY2021); 4,674.6 + 4,621.8 = 9,296.4 (FY2023); 6,302.2 + 6,449.7 = 12,751.9 (FY2025); 7,747 + 7,009 = 14,756 (FY2026); 14,756 / 11,480 = 1.29 times; 2,888.7 / 2,899.6 = about one year (FY2019); growth 14,756 / 12,751.9 - 1 = 15.7%; excluding CyberArk (14,756 - 776) / 12,751.9 - 1 = 9.6%. Billings FY2025 9,221.5 + (12,751.9 - 11,480.5) = 10,493, 10,493 / 10,208.1 - 1 = 2.8%; FY2026 11,480 + (14,756 - 12,752) - 776 = about 12,708, 12,708 / 10,493 - 1 = 21%; February 2024 guidance cut 10.7 - 10.1 = 0.6 billion. Acquisitions: fiscal 2019 378.1 + 474.2 + 158.2 + 292.9 + 82.7 + 36.8 + 103.1 = 1,526; fiscal 2020 144.1 + 66.4 = 210.5; fiscal 2021 797.2 + 227.7 + 156.9 + 27.0 = 1,209; fiscal 2024 255.4 + 458.6 = 714; fiscal 2025 1,143 + 635 = 1,778; fiscal 2026 2,951 + 21,061 + 231 + 117 = 24,360, about 24.4 billion; all twenty-two FY2019-FY2026 including Cider 198.3 = 29,996, about 30.0 billion; FY2026 against FY2019-FY2025 24,360 / 5,636 = 4.3 times; after year end 325 + 500 = 825; AI security 635 + 231 + 117 = 983. CyberArk shares 18,488 / 112 = about 165 a share; 25,000 - 21,061 = about 3.9 billion; 112 x 374.74 = about 42.0 billion; 112 / 818 = 14%. Chronosphere 2,951 / 160 = about 18 times ARR. Goodwill and intangibles (22,010 + 7,017) / 48,460 = 60%; other assets 48,460 - 29,027 = 19,433. Headcount 21,921 - 4,223 = 17,698, 17,698 / 16,068 - 1 = 10%. Revenue per employee 928.1 / 2,637 = 0.35; 9,221.5 / 16,068 = 0.57; 11,480 / 21,921 = 0.52. Convertible loss Q1-Q3 562 - 524 = 38. Distributors: FY2019 31.8 + 22.1 + 10.7 + 10.0 = 74.6%; FY2021 33.2 + 12.2 + 10.6 = 56.0%; FY2023 25.0 + 12.8 + 11.9 = 49.7%; FY2024 21.2 + 13.2 + 13.2 + 11.4 = 59.0%; FY2025 18.8 + 14.4 + 11.0 = 44.2%; FY2026 15 + 15 = 30%; largest 34.4% (FY2020) to 15% (FY2026); receivables FY2019 29.9 + 18.9 + 14.2 = 63.0%. Valuation: market value over fiscal revenue at calendar year-end 15.13 / 0.928 = 16.3 (2015), 11.47 / 1.3785 = 8.3 (2016), 42.19 / 5.5015 = 7.7 (2022), 92.98 / 6.8927 = 13.5 (2023), 119.40 / 8.0275 = 14.9 (2024), 128.39 / 9.2215 = 13.9 (2025); 306.54 / 11.48 = 26.7; 306.54 / 0.307 = 998; 374.74 / 3.84 = 97.6; market value against Fortinet 306.54 / 130.12 = 2.4, against CrowdStrike 306.54 / 267.43 = 1.15; analyst target 395.70 / 374.74 - 1 = 6% - growth rates and margins. — FY2015-FY2027 · publ. September 2026 · source ↗
    Method: Arithmetic on figures reported in Palo Alto Networks' Forms 10-K and results releases, the Q4 FY2026 earnings call and market data; operands shown in the source line.
  6. ReportedSubscription and support revenue was 80.1% of total revenue, growing 24%.
    Palo Alto Networks Form 10-K for fiscal 2026 (year ended 31 July 2026) - Item 1 business and Item 7 MD&A: platforms, customers, channels, employees, revenue by type and geography. — FY2026 · publ. 10 September 2026 · source ↗
  7. ReportedSoftware firewalls, sold through the AWS, Azure, Google Cloud and Oracle marketplaces, grew ARR 29% in the fourth quarter, carrying the rules into the cloud.
    Palo Alto Networks Form 10-K for fiscal 2026 (year ended 31 July 2026) - Item 1 business and Item 7 MD&A: platforms, customers, channels, employees, revenue by type and geography. — FY2026 · publ. 10 September 2026 · source ↗
  8. ReportedSoftware firewalls, sold through the AWS, Azure, Google Cloud and Oracle marketplaces, grew ARR 29% in the fourth quarter, carrying the rules into the cloud.
    Palo Alto Networks fourth-quarter fiscal 2026 earnings call transcript (Motley Fool) - platform revenue, platformized cohort retention, large deals and fiscal 2027 modelling points. — Q4 FY2026 · publ. 1 September 2026 · source ↗
  9. Moat Explorer calcGross margin fell from 74.3% in fiscal 2024 to 70.4% in fiscal 2026, partly on acquisitions and partly on hardware costs that management expects to keep rising.
    Moat Explorer calculation from Palo Alto Networks' reported figures ($ millions unless stated; fiscal years end 31 July). Growth: revenue FY2026 11,480 / 9,221.5 - 1 = 24.5%; FY2025 9,221.5 / 8,027.5 - 1 = 14.9%; FY2024 8,027.5 / 6,892.7 - 1 = 16.5%; FY2023 25.3%; FY2022 29.3%; FY2021 24.9%; FY2020 17.5%; FY2024 to FY2026 11,480 / 8,027.5 - 1 = 43%; compound FY2015-FY2026 (11,480 / 928.1)^(1/11) - 1 = 25.7%, about 26%. By type FY2026: product 2,280 / 1,801.9 - 1 = 26.5%; subscription 6,239 / 4,974.4 - 1 = 25.4%; support 2,961 / 2,445.2 - 1 = 21.1%. Product FY2025 12.4%, FY2024 1,603.3 / 1,578.4 - 1 = 1.6%, FY2020 1,064.2 / 1,096.2 - 1 = -2.9%. Subscription FY2017 53.7%, FY2019 36.2%, FY2021 35.1%, FY2023 31.4%, FY2024 25.6%, FY2025 18.8%. Support FY2022 29.3%, FY2023 23.7%, FY2024 13.0%, FY2025 9.4%. Compound FY2015-FY2026: subscription (6,239 / 212.7)^(1/11) - 1 = 36.0%; support (2,961 / 222.7)^(1/11) - 1 = 26.5%; product (2,280 / 492.7)^(1/11) - 1 = 14.9%. Product outgrew subscription in FY2026 (26.5% against 25.4%), which it did not in any year FY2016-FY2025. Organic: FY2026 (11,480 - 930) / 9,221 - 1 = 14.4%; Q4 acquisition revenue 930 - 388 = 542; Q4 (3,410 - 542) / 2,536 - 1 = 13.1%, about 13%; pro forma 12,312 / 10,486 - 1 = 17.4%; FY2027 guidance 14.15 / 12.312 - 1 = 14.9%, about 15%. Margins: gross margin FY2026 8,077 / 11,480 = 70.4% (FY2025 6,769.9 / 9,221.5 = 73.4%; FY2024 5,968.3 / 8,027.5 = 74.3%); Q4 GAAP 2,304 / 3,410 = 67.6%. Product gross margin (2,280 - 568) / 2,280 = 75.1% (FY2025 (1,801.9 - 413) / 1,801.9 = 77.1%); subscription and support (9,200 - 2,835) / 9,200 = 69.2% (FY2025 (7,419.6 - 2,038) / 7,419.6 = 72.5%). Operating margin 695 / 11,480 = 6.1% (FY2025 1,242.9 / 9,221.5 = 13.5%); non-GAAP 3,356 / 11,480 = 29.2% (FY2025 2,652 / 9,221.5 = 28.8%); Q4 non-GAAP 1,011 / 3,410 = 29.6%; gap 3,356 - 695 = 2,661. R&D 2,552 / 11,480 = 22.2%; sales and marketing 3,931 / 11,480 = 34.2%; capital expenditure 440 / 11,480 = 3.8%. Tax 229 / (307 + 229 = 536) = 42.7%. Mix: product share 492.7 / 928.1 = 53.1% (FY2015), 2,280 / 11,480 = 19.9% (FY2026); subscription 212.7 / 928.1 = 22.9%, 6,239 / 11,480 = 54.3%; support 222.7 / 928.1 = 24.0%, 2,961 / 11,480 = 25.8%; one point of share 1% x 11,480 = 115. Recurring share 435.4 / 928.1 = 46.9% (FY2015), 1,393.8 / 2,273.6 = 61.3% (FY2018), 3,135.8 / 4,256.1 = 73.7% (FY2021), 6,424.2 / 8,027.5 = 80.0% (FY2024). Subscription and support per dollar of product 435.4 / 492.7 = 0.88 (FY2015), 1,393.8 / 879.8 = 1.58 (FY2018), 3,135.8 / 1,120.3 = 2.80 (FY2021), 6,424.2 / 1,603.3 = 4.01 (FY2024), 9,200 / 2,280 = 4.04 (FY2026). Hardware about 10% x 11,480 = about 1,150, about 50% of product. NGS ARR 9.10 / 11.48 = 79% of revenue. United States 7,108 / 11,480 = 61.9% (FY2016 901.8 / 1,378.5 = 65.4%). Q4 share of year 3,410 / 11,480 = 29.7%, about 30%. Prisma AIRS ARR 100 / 11,480 = under 1%. ARR and RPO: Q3 acquired ARR 1.6 / 8.1 = 20%, about a fifth; Q3 organic 8.1 - 1.6 = 6.5; Q3 acquired RPO 1.8 / 18.4 = 10%; FY2023 NGS ARR 4.2 / 1.43 = about 2.9; FY2025 growth 5.6 / 4.2 - 1 = 33%; Q1 FY2027 net new 9.54 - 9.10 = 0.44 to 9.56 - 9.10 = 0.46 billion; FY2030 target (20 / 9.1)^(1/4) - 1 = 21.8% a year; RPO / revenue 21.2 / 11.48 = 1.85; RPO due in 12 months 1.7 / 3.1 = 55% (FY2019), 2.2 / 4.3 = 51% (FY2020), 3.1 / 5.9 = 53% (FY2021), 4.1 / 8.2 = 50% (FY2022), 5.1 / 10.6 = 48% (FY2023), 5.9 / 12.7 = 46% (FY2024), 7.0 / 15.8 = 44% (FY2025), 9.3 / 21.2 = 44% (FY2026); RPO beyond 12 months 21.2 - 9.3 = 11.9 billion; Idira guidance 1.5 / 1.26 - 1 = 19%; Network and AI Security FY2025 8.35 / 1.17 = about 7.14 billion. Revenue from prior deferred 6.2 / 5.5 - 1 = 13%. Cash, deferred revenue and stock pay: free cash flow margin 4,113 / 11,480 = 35.8%; share-based compensation (cash flow) 1,774 / 11,480 = 15.5%; 1,774 / 1,295 - 1 = 37%; 1,774 / 4,113 = 43%; free cash flow after stock pay 4,113 - 1,774 = 2,339, 2,339 / 11,480 = 20.4%, 2,339 / 306,540 = 0.76%; free cash flow 4,113 / 306,540 = 1.3% and 4,113 / 27,492 = 15%. Stock pay share of revenue FY2016 392.8 / 1,378.5 = 28.5%, FY2020 658.4 / 3,408.4 = 19.3%, FY2024 1,076 / 8,027.5 = 13.4%, FY2025 1,295 / 9,221.5 = 14.0%. 10-K share-based compensation 1,815 / 1,079 - 1 = 68%. Equity plan (26.1 + 24.3) / 818 = 6%. Net cash 2,514 + 557 + 4,835 - 1,774 = 6,132; cash and investments 2,514 + 557 + 4,835 = 7,906, about 7.9 billion. Deferred revenue 1,582.1 + 1,306.6 = 2,888.7 (FY2019); 2,741.9 + 2,282.1 = 5,024.0 (FY2021); 4,674.6 + 4,621.8 = 9,296.4 (FY2023); 6,302.2 + 6,449.7 = 12,751.9 (FY2025); 7,747 + 7,009 = 14,756 (FY2026); 14,756 / 11,480 = 1.29 times; 2,888.7 / 2,899.6 = about one year (FY2019); growth 14,756 / 12,751.9 - 1 = 15.7%; excluding CyberArk (14,756 - 776) / 12,751.9 - 1 = 9.6%. Billings FY2025 9,221.5 + (12,751.9 - 11,480.5) = 10,493, 10,493 / 10,208.1 - 1 = 2.8%; FY2026 11,480 + (14,756 - 12,752) - 776 = about 12,708, 12,708 / 10,493 - 1 = 21%; February 2024 guidance cut 10.7 - 10.1 = 0.6 billion. Acquisitions: fiscal 2019 378.1 + 474.2 + 158.2 + 292.9 + 82.7 + 36.8 + 103.1 = 1,526; fiscal 2020 144.1 + 66.4 = 210.5; fiscal 2021 797.2 + 227.7 + 156.9 + 27.0 = 1,209; fiscal 2024 255.4 + 458.6 = 714; fiscal 2025 1,143 + 635 = 1,778; fiscal 2026 2,951 + 21,061 + 231 + 117 = 24,360, about 24.4 billion; all twenty-two FY2019-FY2026 including Cider 198.3 = 29,996, about 30.0 billion; FY2026 against FY2019-FY2025 24,360 / 5,636 = 4.3 times; after year end 325 + 500 = 825; AI security 635 + 231 + 117 = 983. CyberArk shares 18,488 / 112 = about 165 a share; 25,000 - 21,061 = about 3.9 billion; 112 x 374.74 = about 42.0 billion; 112 / 818 = 14%. Chronosphere 2,951 / 160 = about 18 times ARR. Goodwill and intangibles (22,010 + 7,017) / 48,460 = 60%; other assets 48,460 - 29,027 = 19,433. Headcount 21,921 - 4,223 = 17,698, 17,698 / 16,068 - 1 = 10%. Revenue per employee 928.1 / 2,637 = 0.35; 9,221.5 / 16,068 = 0.57; 11,480 / 21,921 = 0.52. Convertible loss Q1-Q3 562 - 524 = 38. Distributors: FY2019 31.8 + 22.1 + 10.7 + 10.0 = 74.6%; FY2021 33.2 + 12.2 + 10.6 = 56.0%; FY2023 25.0 + 12.8 + 11.9 = 49.7%; FY2024 21.2 + 13.2 + 13.2 + 11.4 = 59.0%; FY2025 18.8 + 14.4 + 11.0 = 44.2%; FY2026 15 + 15 = 30%; largest 34.4% (FY2020) to 15% (FY2026); receivables FY2019 29.9 + 18.9 + 14.2 = 63.0%. Valuation: market value over fiscal revenue at calendar year-end 15.13 / 0.928 = 16.3 (2015), 11.47 / 1.3785 = 8.3 (2016), 42.19 / 5.5015 = 7.7 (2022), 92.98 / 6.8927 = 13.5 (2023), 119.40 / 8.0275 = 14.9 (2024), 128.39 / 9.2215 = 13.9 (2025); 306.54 / 11.48 = 26.7; 306.54 / 0.307 = 998; 374.74 / 3.84 = 97.6; market value against Fortinet 306.54 / 130.12 = 2.4, against CrowdStrike 306.54 / 267.43 = 1.15; analyst target 395.70 / 374.74 - 1 = 6% - valuation, cash flow, stock pay, deferred revenue, billings and acquisitions. — FY2015-FY2027 · publ. September 2026 · source ↗
    Method: Arithmetic on figures reported in Palo Alto Networks' Forms 10-K and results releases, the Q4 FY2026 earnings call and market data; operands shown in the source line.
  10. ReportedGross margin fell from 74.3% in fiscal 2024 to 70.4% in fiscal 2026, partly on acquisitions and partly on hardware costs that management expects to keep rising.
    Palo Alto Networks fourth-quarter fiscal 2026 earnings call transcript (Motley Fool) - platform revenue, platformized cohort retention, large deals and fiscal 2027 modelling points. — Q4 FY2026 · publ. 1 September 2026 · source ↗
  11. Third-party estimateThe last independent market-share figure found for this page, IDC's for the fourth quarter of 2022, had Palo Alto level with Fortinet.
    SDxCentral on the IDC security appliance tracker for the fourth quarter of 2022 - Palo Alto Networks $973 million and 15.9% share, Fortinet $967 million and 15.8%. — Q4 2022 · publ. 2023 · source ↗
  12. ReportedIn fiscal 2026 Palo Alto earned $7,108 million in the United States, $2,428 million in Europe, the Middle East and Africa, and $1,373 million in Asia Pacific and Japan, and all three regions grew between 24% and 27%.
    Palo Alto Networks Form 10-K for fiscal 2026 (year ended 31 July 2026) - Item 1 business and Item 7 MD&A: platforms, customers, channels, employees, revenue by type and geography. — FY2026 · publ. 10 September 2026 · source ↗
  13. ReportedIn fiscal 2026 Palo Alto earned $7,108 million in the United States, $2,428 million in Europe, the Middle East and Africa, and $1,373 million in Asia Pacific and Japan, and all three regions grew between 24% and 27%.
    Palo Alto Networks Form 10-K for fiscal 2026 (year ended 31 July 2026) - Item 1 business and Item 7 MD&A: platforms, customers, channels, employees, revenue by type and geography. — FY2026 · publ. 10 September 2026 · source ↗
  14. Moat Explorer calcIt fell about 2.9% in fiscal 2020 and grew about 1.6% in fiscal 2024, the two years when either the market or Palo Alto's own strategy paused hardware sales.
    Moat Explorer calculation from Palo Alto Networks' reported figures ($ millions unless stated; fiscal years end 31 July). Growth: revenue FY2026 11,480 / 9,221.5 - 1 = 24.5%; FY2025 9,221.5 / 8,027.5 - 1 = 14.9%; FY2024 8,027.5 / 6,892.7 - 1 = 16.5%; FY2023 25.3%; FY2022 29.3%; FY2021 24.9%; FY2020 17.5%; FY2024 to FY2026 11,480 / 8,027.5 - 1 = 43%; compound FY2015-FY2026 (11,480 / 928.1)^(1/11) - 1 = 25.7%, about 26%. By type FY2026: product 2,280 / 1,801.9 - 1 = 26.5%; subscription 6,239 / 4,974.4 - 1 = 25.4%; support 2,961 / 2,445.2 - 1 = 21.1%. Product FY2025 12.4%, FY2024 1,603.3 / 1,578.4 - 1 = 1.6%, FY2020 1,064.2 / 1,096.2 - 1 = -2.9%. Subscription FY2017 53.7%, FY2019 36.2%, FY2021 35.1%, FY2023 31.4%, FY2024 25.6%, FY2025 18.8%. Support FY2022 29.3%, FY2023 23.7%, FY2024 13.0%, FY2025 9.4%. Compound FY2015-FY2026: subscription (6,239 / 212.7)^(1/11) - 1 = 36.0%; support (2,961 / 222.7)^(1/11) - 1 = 26.5%; product (2,280 / 492.7)^(1/11) - 1 = 14.9%. Product outgrew subscription in FY2026 (26.5% against 25.4%), which it did not in any year FY2016-FY2025. Organic: FY2026 (11,480 - 930) / 9,221 - 1 = 14.4%; Q4 acquisition revenue 930 - 388 = 542; Q4 (3,410 - 542) / 2,536 - 1 = 13.1%, about 13%; pro forma 12,312 / 10,486 - 1 = 17.4%; FY2027 guidance 14.15 / 12.312 - 1 = 14.9%, about 15%. Margins: gross margin FY2026 8,077 / 11,480 = 70.4% (FY2025 6,769.9 / 9,221.5 = 73.4%; FY2024 5,968.3 / 8,027.5 = 74.3%); Q4 GAAP 2,304 / 3,410 = 67.6%. Product gross margin (2,280 - 568) / 2,280 = 75.1% (FY2025 (1,801.9 - 413) / 1,801.9 = 77.1%); subscription and support (9,200 - 2,835) / 9,200 = 69.2% (FY2025 (7,419.6 - 2,038) / 7,419.6 = 72.5%). Operating margin 695 / 11,480 = 6.1% (FY2025 1,242.9 / 9,221.5 = 13.5%); non-GAAP 3,356 / 11,480 = 29.2% (FY2025 2,652 / 9,221.5 = 28.8%); Q4 non-GAAP 1,011 / 3,410 = 29.6%; gap 3,356 - 695 = 2,661. R&D 2,552 / 11,480 = 22.2%; sales and marketing 3,931 / 11,480 = 34.2%; capital expenditure 440 / 11,480 = 3.8%. Tax 229 / (307 + 229 = 536) = 42.7%. Mix: product share 492.7 / 928.1 = 53.1% (FY2015), 2,280 / 11,480 = 19.9% (FY2026); subscription 212.7 / 928.1 = 22.9%, 6,239 / 11,480 = 54.3%; support 222.7 / 928.1 = 24.0%, 2,961 / 11,480 = 25.8%; one point of share 1% x 11,480 = 115. Recurring share 435.4 / 928.1 = 46.9% (FY2015), 1,393.8 / 2,273.6 = 61.3% (FY2018), 3,135.8 / 4,256.1 = 73.7% (FY2021), 6,424.2 / 8,027.5 = 80.0% (FY2024). Subscription and support per dollar of product 435.4 / 492.7 = 0.88 (FY2015), 1,393.8 / 879.8 = 1.58 (FY2018), 3,135.8 / 1,120.3 = 2.80 (FY2021), 6,424.2 / 1,603.3 = 4.01 (FY2024), 9,200 / 2,280 = 4.04 (FY2026). Hardware about 10% x 11,480 = about 1,150, about 50% of product. NGS ARR 9.10 / 11.48 = 79% of revenue. United States 7,108 / 11,480 = 61.9% (FY2016 901.8 / 1,378.5 = 65.4%). Q4 share of year 3,410 / 11,480 = 29.7%, about 30%. Prisma AIRS ARR 100 / 11,480 = under 1%. ARR and RPO: Q3 acquired ARR 1.6 / 8.1 = 20%, about a fifth; Q3 organic 8.1 - 1.6 = 6.5; Q3 acquired RPO 1.8 / 18.4 = 10%; FY2023 NGS ARR 4.2 / 1.43 = about 2.9; FY2025 growth 5.6 / 4.2 - 1 = 33%; Q1 FY2027 net new 9.54 - 9.10 = 0.44 to 9.56 - 9.10 = 0.46 billion; FY2030 target (20 / 9.1)^(1/4) - 1 = 21.8% a year; RPO / revenue 21.2 / 11.48 = 1.85; RPO due in 12 months 1.7 / 3.1 = 55% (FY2019), 2.2 / 4.3 = 51% (FY2020), 3.1 / 5.9 = 53% (FY2021), 4.1 / 8.2 = 50% (FY2022), 5.1 / 10.6 = 48% (FY2023), 5.9 / 12.7 = 46% (FY2024), 7.0 / 15.8 = 44% (FY2025), 9.3 / 21.2 = 44% (FY2026); RPO beyond 12 months 21.2 - 9.3 = 11.9 billion; Idira guidance 1.5 / 1.26 - 1 = 19%; Network and AI Security FY2025 8.35 / 1.17 = about 7.14 billion. Revenue from prior deferred 6.2 / 5.5 - 1 = 13%. Cash, deferred revenue and stock pay: free cash flow margin 4,113 / 11,480 = 35.8%; share-based compensation (cash flow) 1,774 / 11,480 = 15.5%; 1,774 / 1,295 - 1 = 37%; 1,774 / 4,113 = 43%; free cash flow after stock pay 4,113 - 1,774 = 2,339, 2,339 / 11,480 = 20.4%, 2,339 / 306,540 = 0.76%; free cash flow 4,113 / 306,540 = 1.3% and 4,113 / 27,492 = 15%. Stock pay share of revenue FY2016 392.8 / 1,378.5 = 28.5%, FY2020 658.4 / 3,408.4 = 19.3%, FY2024 1,076 / 8,027.5 = 13.4%, FY2025 1,295 / 9,221.5 = 14.0%. 10-K share-based compensation 1,815 / 1,079 - 1 = 68%. Equity plan (26.1 + 24.3) / 818 = 6%. Net cash 2,514 + 557 + 4,835 - 1,774 = 6,132; cash and investments 2,514 + 557 + 4,835 = 7,906, about 7.9 billion. Deferred revenue 1,582.1 + 1,306.6 = 2,888.7 (FY2019); 2,741.9 + 2,282.1 = 5,024.0 (FY2021); 4,674.6 + 4,621.8 = 9,296.4 (FY2023); 6,302.2 + 6,449.7 = 12,751.9 (FY2025); 7,747 + 7,009 = 14,756 (FY2026); 14,756 / 11,480 = 1.29 times; 2,888.7 / 2,899.6 = about one year (FY2019); growth 14,756 / 12,751.9 - 1 = 15.7%; excluding CyberArk (14,756 - 776) / 12,751.9 - 1 = 9.6%. Billings FY2025 9,221.5 + (12,751.9 - 11,480.5) = 10,493, 10,493 / 10,208.1 - 1 = 2.8%; FY2026 11,480 + (14,756 - 12,752) - 776 = about 12,708, 12,708 / 10,493 - 1 = 21%; February 2024 guidance cut 10.7 - 10.1 = 0.6 billion. Acquisitions: fiscal 2019 378.1 + 474.2 + 158.2 + 292.9 + 82.7 + 36.8 + 103.1 = 1,526; fiscal 2020 144.1 + 66.4 = 210.5; fiscal 2021 797.2 + 227.7 + 156.9 + 27.0 = 1,209; fiscal 2024 255.4 + 458.6 = 714; fiscal 2025 1,143 + 635 = 1,778; fiscal 2026 2,951 + 21,061 + 231 + 117 = 24,360, about 24.4 billion; all twenty-two FY2019-FY2026 including Cider 198.3 = 29,996, about 30.0 billion; FY2026 against FY2019-FY2025 24,360 / 5,636 = 4.3 times; after year end 325 + 500 = 825; AI security 635 + 231 + 117 = 983. CyberArk shares 18,488 / 112 = about 165 a share; 25,000 - 21,061 = about 3.9 billion; 112 x 374.74 = about 42.0 billion; 112 / 818 = 14%. Chronosphere 2,951 / 160 = about 18 times ARR. Goodwill and intangibles (22,010 + 7,017) / 48,460 = 60%; other assets 48,460 - 29,027 = 19,433. Headcount 21,921 - 4,223 = 17,698, 17,698 / 16,068 - 1 = 10%. Revenue per employee 928.1 / 2,637 = 0.35; 9,221.5 / 16,068 = 0.57; 11,480 / 21,921 = 0.52. Convertible loss Q1-Q3 562 - 524 = 38. Distributors: FY2019 31.8 + 22.1 + 10.7 + 10.0 = 74.6%; FY2021 33.2 + 12.2 + 10.6 = 56.0%; FY2023 25.0 + 12.8 + 11.9 = 49.7%; FY2024 21.2 + 13.2 + 13.2 + 11.4 = 59.0%; FY2025 18.8 + 14.4 + 11.0 = 44.2%; FY2026 15 + 15 = 30%; largest 34.4% (FY2020) to 15% (FY2026); receivables FY2019 29.9 + 18.9 + 14.2 = 63.0%. Valuation: market value over fiscal revenue at calendar year-end 15.13 / 0.928 = 16.3 (2015), 11.47 / 1.3785 = 8.3 (2016), 42.19 / 5.5015 = 7.7 (2022), 92.98 / 6.8927 = 13.5 (2023), 119.40 / 8.0275 = 14.9 (2024), 128.39 / 9.2215 = 13.9 (2025); 306.54 / 11.48 = 26.7; 306.54 / 0.307 = 998; 374.74 / 3.84 = 97.6; market value against Fortinet 306.54 / 130.12 = 2.4, against CrowdStrike 306.54 / 267.43 = 1.15; analyst target 395.70 / 374.74 - 1 = 6% - growth rates and margins. — FY2015-FY2027 · publ. September 2026 · source ↗
    Method: Arithmetic on figures reported in Palo Alto Networks' Forms 10-K and results releases, the Q4 FY2026 earnings call and market data; operands shown in the source line.
  15. ReportedSupport revenue is the measure of the base itself: $2,961 million in fiscal 2026; support falling in any year would mean customers are retiring Palo Alto equipment rather than renewing it.
    Palo Alto Networks Form 10-K for fiscal 2026 (year ended 31 July 2026) - Item 1 business and Item 7 MD&A: platforms, customers, channels, employees, revenue by type and geography. — FY2026 · publ. 10 September 2026 · source ↗
Sources
Generated September 26, 2026