PANW · Forward model · Bear case

The Bear case, 20 quarters out

Each segment is projected from its own operating driver, rolled up into consolidated cash flow, and discounted back to a fair value per share. The assumptions below are editable — change them and every number on this page moves with them.

REPORTING BOUNDARY. PANW is a single operating and reportable segment. Revenue is disaggregated only by type - Product, Subscription, Support - and by geography, and the three-way split reconciles exactly to reported total revenue in all eight disclosed quarters (2024 Q4 through 2026 Q3), which is the vertical shape used here. A Network Security / Cortex / Identity split was deliberately NOT built: management stated on the Q3 FY2026 call that segment-level revenue across those three platforms begins in fiscal 2027, and the only sizing offered today is an approximation on a call that network security is about 70% of revenue. Building three platform verticals from that would have manufactured two of them. Expect this vertical shape to be replaced once FY2027 segment disclosure begins. WHAT IS DISCLOSED. Every historical value in all three verticals is reported, none estimated. NGS ARR, RPO, current RPO, platformizations, net revenue retention and the acquired-versus-organic reconciliations are all disclosed, as are all company-level opex, cash flow, balance sheet and guidance figures. WHAT IS ASSUMED. PANW publishes no opex or operating income by revenue line and no gross margin for Support separately from Subscription, so all three verticals carry the same company-level economics rather than an invented split. The basis EBITDA margin of 44.1% is the disclosed 27.1% non-GAAP operating margin plus the disclosed 17.0%-of-revenue stock-based compensation, i.e. a cash operating margin; the 46.0% terminal is the brief's assumed 33% terminal non-GAAP operating margin plus roughly 13 points of SBC as acquisition awards vest out. The 15% tax rate is derived, not the 22% headline: PANW's long-term non-GAAP rate of 22% applied to non-GAAP pre-tax income is about 6.4% of revenue, which is 15.6% of this model's pre-tax margin. HOW TO READ THE FCF LINE. This model's free cash flow is EBITDA less capex less tax. It does NOT include the deferred-revenue and working-capital inflow that PANW's own adjusted free cash flow measure captures, so it prints roughly three to four points below the company's figure: FY2028 lands at 35.8% here against the reaffirmed 40% adjusted-FCF-margin target, and the terminal four quarters print 36.3%. Read the target as met, not missed. SEASONALITY. PANW's fiscal year ends 31 July, so the spec's Q1 is August-October and Q4 is May-July - the fiscal year-end selling quarter. All three verticals carry seasonality; the derivations, the factors and the window-to-window spreads are stated in each vertical's notes. The first projected quarter, 2026 Q4, prints $3.35B against management's 2 June 2026 guide of $3.345-3.355B, which is the only external check available on this model's shape and it is a guide, not a consensus - no sell-side estimate was used to calibrate any driver. BASIS WARNING. CyberArk closed on 11 February 2026, ten days into fiscal Q3, so the $388M of acquired revenue in the basis quarter is not a full quarter and Q4 FY2026 carries the first full one. Year-over-year comparisons from 2026 Q3 through 2027 Q2 mix acquired revenue on the current side against organic-only on the prior side; clean like-for-like comparisons resume at 2027 Q3.

Where each case comes from

From cash flow to fair value

The projected path

Every row is projected. A year-over-year change is shown only where the quarter it compares against exists — an em dash means there is no comparable quarter, not a flat year.

Model revisions

Assumptions are marked to reality as each quarter prints. Every change is appended here, with the fair value the model produced at the time, so the model's own history stays visible.