Palo Alto Networks delivered an impressive earnings report for the second quarter of 2025, exceeding expectations on both revenue and earnings. The company continues to expand its footprint in cybersecurity with strong growth across platforms and geographies. Here are the key takeaways from the earnings call:
1. Strong Financial Performance & Upgraded Guidance
Palo Alto Networks outperformed expectations in Q2 2025, showcasing robust growth in revenue and earnings per share (EPS). With solid performance across all three geographic regions, the company raised its operating margin and EPS guidance for the full fiscal year, demonstrating confidence in its continued expansion.
2. Platformization Strategy Gains Momentum
Palo Alto Networks strategy of platformization is proving to be a major success. The company added 75 new platformized customers in Q2, a significant jump from 45 in the same quarter last year. In total, over 1,150 of its top 5,000 customers have now adopted multiple platforms, with Cortex seeing a threefold increase in platformized customers.
3. Large Deal Growth Accelerates
The company reported significant expansion in large-scale deals:
- 74 accounts closed transactions over $500K in Q2, marking a 25% YoY increase.
- 32 accounts had transactions over $10 million, a rise of more than 50%.
These numbers signal increased confidence in Palo Alto Networks offerings among enterprise customers.
4. Network Security Leadership & Firewall Demand
Palo Alto Networks remains a leader in network security, particularly with its software firewalls. Software-based solutions, including Secure Access Service Edge (SASE), now account for approximately two-thirds of the company’s firewall and platform bookings, growing 1.5x faster than the overall firewall business.
5. SASE: The Fastest Growing Network Security Segment
SASE continues to be Palo Alto Networks fastest-growing network security form factor, with:
- Customer growth exceeding 20%.
- Bookings growth surpassing 50%.
- Over 5,600 customers and 23 million individual seats.
New SASE modules, such as ADEM, CASB, and Prisma Access browser, are also gaining traction.
6. Cortex Cloud: A Game-Changer for Cloud Security
The introduction of Cortex Cloud marks a significant milestone in cloud security. This new platform integrates Prisma Cloud with CDR capabilities, providing end-to-end security for Security Operations Centers (SOCs). Both Cortex and Prisma Cloud saw approximately 50% bookings growth in Q2.
7. AI-Driven Security Enhancements
AI is playing a transformative role in Palo Alto Networks business. The company highlighted:
- AI-driven automation in security operations.
- The launch of API-based AI runtime security capabilities.
- The increasing use of AI by customers to bolster cybersecurity defenses and operational efficiency.
AI as a Threat
Palo Alto Networks acknowledges that bad actors are using AI to accelerate attacks, create custom payloads, iterate on malicious scripts, and conduct reconnaissance on target organizations. This understanding is driving their focus on securing AI environments.
AI for Automation and Efficiency
Palo Alto Networks uses AI to automate security operations, stitch together large volumes of data, and provide near real-time analysis and remediation. They are leveraging AI to reduce the time it takes to resolve customer support cases and are deploying copilot tools for developers.
- An internally developed support copilot is used in 85% of network security cases and has reduced case resolution time by approximately 50%.
- AI-based initiatives are helping to reduce contract labor by about 50% by the end of fiscal year 2025.
Platformization for AI
Palo Alto Networks emphasizes the need for a unified platform to effectively leverage AI in security. They believe that a platform approach allows for the harmonization of data, which is essential for AI to have context and stop threats.
- Customers with platformized solutions detect and contain security incidents faster.
- The company’s platformization strategy is designed to enable the use of AI-powered security capabilities by harmonizing data across the network.
- The more platforms they sell, the more opportunities they create to build and deploy AI-powered security agents.
Securing AI
Palo Alto Networks is developing solutions to secure AI applications and agents.
- They have released an API-based AI runtime security capability to secure AI applications directly, without needing to intercept traffic.
- They are securing AI agents, recognizing that these non-human users need the same level of security as human users or applications.
- They provide controls over how users interact with AI-based applications, including managing uploads, downloads, and sharing.
- Palo Alto Networks is also developing AI firewalls.
AI in Cloud Security
Palo Alto Networks uses AI in cloud security for proactive real-time detection and remediation. They focus on configurations before they reach production and on using AI in production to prioritize, detect, and remediate threats. They also integrate code security and cloud posture capabilities for a more comprehensive approach.
- The company believes that the best outcome for customers is achieved when all aspects of the cloud are connected.
Agentic AI
Palo Alto Networks is preparing for the rise of agentic AI, focusing on securing the AI portion of agentic platforms, combining it with identity and machine-to-machine communication security.
- They expect to build agentic detection, remediation, and management within their XSIAM capabilities.
- They recognize that the security foundation for agentic platforms involves not just identity, but also securing the AI environment itself.
Data Security
Palo Alto Networks recognizes that data security is increasingly important in the age of AI.
- They emphasize that customers need to unshackle their data from disparate legacy systems and open up broader access in the cloud.
- They highlight the importance of data security posture management, noting their acquisition of DIG is proving pre-signed.
- They can provide comprehensive data protection to secure sensitive data, secrets, and intellectual property.
Final Thoughts
Palo Alto Networks’ Q2 2025 earnings call demonstrated strong execution across key growth areas, including platform adoption, large enterprise deals, and AI-driven security advancements. With robust financials, an upgraded outlook, and continued innovation in cloud and AI security, Palo Alto Networks is well-positioned for long-term success in the evolving cybersecurity landscape.
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