Palo Alto Networks IncPANW

Palo Alto Networks Inc Earnings Per Share Disclosure

10-KFiled Aug 29, 20252 min read
Net Income Per Share
Basic net income per share is computed by dividing net income by basic weighted-average shares outstanding during the period. Diluted net income per share is computed by dividing net income by diluted weighted-average shares outstanding during the period giving effect to all potentially dilutive securities to the extent they are dilutive. We compute the dilutive effect of shares issuable upon conversion of our convertible senior notes using the if-converted method, and the dilutive effect of warrants related to the issuance of convertible senior notes and equity awards under our employee equity incentive plans using the treasury stock method.
The following table presents the computation of basic and diluted net income per share of common stock (in millions, except per share data):
 Year Ended July 31,
 202520242023
Net income
$1,133.9 $2,577.6 $439.7 
Weighted-average shares used to compute net income per share, basic
662.5 638.5 606.4
Weighted-average effect of potentially dilutive securities:
Convertible senior notes7.3 20.7 35.7 
Warrants related to the issuance of convertible senior notes25.4 25.6 18.6 
Employee equity incentive plans14.1 23.1 23.8 
Weighted-average shares used to compute net income per share, diluted
709.3 707.9 684.5
Net income per share, basic
$1.71 $4.04 $0.73 
Net income per share, diluted
$1.60 $3.64 $0.64 
The following securities were excluded from the computation of diluted net income per share of common stock as their effect would have been antidilutive or issuance of such shares is contingent upon the satisfaction of certain conditions which were not satisfied by the end of the applicable period (in millions):
Year Ended July 31,
202520242023
Employee equity incentive plans3.4 4.7 7.7 

About Earnings Per Share Disclosures

The earnings per share disclosure breaks down the calculation from net income to both basic and diluted EPS, revealing the full impact of a company's capital structure on per-share economics. The reconciliation between basic and diluted share counts exposes how many stock options, RSUs, convertible securities, and warrants are potentially dilutive to existing shareholders.

Key signals: a widening gap between basic and diluted shares indicates growing dilution from equity compensation or convertible instruments. Anti-dilutive securities excluded from the diluted calculation deserve attention — they represent latent dilution that will materialize if the stock price rises. Watch for the effect of share buybacks on per-share metrics: EPS growth driven primarily by repurchases rather than income growth signals weakening fundamentals. Compare year-over-year changes in the diluted share count against equity compensation expense to assess whether management is effectively managing dilution.

Other Available Disclosures

Income TaxesRevenueFair ValuePP&EGoodwill & IntangiblesLeasesSegmentsDebtCommitmentsStock CompensationNew StandardsPay vs Performance