Palo Alto Networks, Inc. stock research
FY2025 Q1
Palo Alto Networks (PANW) Gross Margin — Quarter Ended Oct 31, 2024
In the current quarter, revenue decreased from the prior quarter but increased from the same quarter last year. Gross profit remained stable sequentially and grew year-over-year, while cost of revenue declined sequentially but rose year-over-year. Gross margin improved slightly from the prior quarter but weakened compared to the same quarter one year earlier.
Gross margin takeaway
Quarter ended Oct 31, 2024 · FY2025 Q1
In the current quarter, revenue decreased from the prior quarter but increased from the same quarter last year. Gross profit remained stable sequentially and grew year-over-year, while cost of revenue declined sequentially but rose year-over-year. Gross margin improved slightly from the prior quarter but weakened compared to the same quarter one year earlier.
- The strongest observable driver of gross margin is the change in cost of revenue relative to revenue. Sequentially, cost of revenue declined more than revenue, supporting margin improvement. Year-over-year, cost of revenue increased at a faster pace than revenue, leading to margin contraction.
- Compared to the immediately preceding quarter, gross margin was higher. Compared to the same quarter one year earlier, gross margin was lower.
Gross margin snapshot
The selected quarter's reported revenue, gross profit, direct costs, and margin comparisons.
Gross margin
74.1%
Gross profit
$1.6B
Revenue
$2.1B
Cost of revenue
$554.0M
Quarter-over-quarter change
+0.3 pts
Year-over-year change
-0.7 pts
Quarterly gross margin trend
A four-quarter view of the revenue and direct-cost bridge behind gross margin.
| Period | Revenue | Gross profit | Cost of revenue | Gross margin |
|---|---|---|---|---|
| Jan 31, 2024 | $2.0B | $1.5B | $499.1M | 74.7% |
| Apr 30, 2024 | $2.0B | $1.5B | $513.6M | 74.1% |
| Jul 31, 2024 | $2.2B | $1.6B | $573.7M | 73.8% |
| Oct 31, 2024 | $2.1B | $1.6B | $554.0M | 74.1% |
Quarterly comparisons
Compare the selected margin with the preceding quarter and the same fiscal quarter one year earlier.
Previous-quarter change
Jul 31, 2024
+0.3 pts
Year-over-year change
Oct 31, 2023
-0.7 pts
What the margin says
Filing-constrained interpretation of margin direction, comparisons, and what to monitor next.
The strongest observable driver of gross margin is the change in cost of revenue relative to revenue. Sequentially, cost of revenue declined more than revenue, supporting margin improvement. Year-over-year, cost of revenue increased at a faster pace than revenue, leading to margin contraction.
Compared to the immediately preceding quarter, gross margin was higher. Compared to the same quarter one year earlier, gross margin was lower.
Monitor the trend in cost of revenue as a proportion of revenue, given its divergent movement relative to revenue across the two comparison periods.