In this podcast, Motley Fool analysts Emily Flippen, Sanmeet Deo, and David Meier evaluate how industries and businesses adapt even when the landscape changes.

They talk about:

  • Palo Alto's strong fourth-quarter report.
  • How the landscape of shoe fashion has changed.
  • Housing headwinds.

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A full transcript is below.

This podcast was recorded on August 19, 2025.

Emily Flippen: Today on Motley Fool Money, Palo Alto Networks is bracing investors. Home Builders are sweetening deals, and footwear brands are rewriting the playbook. I'm Emily Flippen, and today, I'm joined by analysts Sanmeet Deo and Dave Meier, and we'll be discussing a few industries and businesses that are being forced to adapt to the changing world around them. To start, of course, we have to talk about cybersecurity. Now, cybersecurity stocks have been on the front lines of both innovation as well as investor scrutiny. The world has moved increasingly to the cloud, and the industry has been forced to reimagine what security looks like in this new world. Palo Alto Networks just dropped its fourth quarter results, and based on the headline numbers, it'd be easy to almost forget the checkered history that this company has with this level of innovation. Just last year, the business launched a new platform strategy that involved vendor consolidation, even giving away its product for free. Now that obviously spooked investors, but here we are just a handful of quarters later, and it seems to be paying off with business accelerating. Dave, this space has been hot. It's been crowded, but Palo Alto Networks report didn't happen in a vacuum. Ford Net, checkpoint, and even legacy players like Cisco have all tried to find their own niche and security. With a continued move toward these off premise solutions, how should investors read this quarter?

David Meier: I think they should take away that bundling works. If you look at the quarter, sales were up higher than expected. Margins are expanding. More and more people are doing what Palo Alto calls platformization. Now, we're not going to get into what the details are there, but basically, it's folks buying more than one of their products and that's happening. That's actually accelerating. Larger businesses, enterprise level businesses are saying, You know what? It's actually great for us to have a one stop shop because that sales to large businesses are increasing at higher rates and the deal sizes are going up. In a fragmented world, basically, Palo Alto's strategy, which they put in place many years ago, to create a platform where you can come and pick what you want, that's really starting to pay off.

Emily Flippen: They were kind of late to that game, though. Lots of other companies have moved to the same platform strategy. They want to be the one stop shop. No longer, is it just good enough to be a firewall provider. You have to provide full edge to edge security. When you look at the industry, do you think this is the industry where you just buy a bucket of companies because the strategy is similar across all of them, or is there value in picking the best names?

Sanmeet Deo: For someone not as technically inclined as me when it comes to cybersecurity, for me, personally, I'd rather own maybe, like, a basket 2-3 stocks. Some of the bigger players that I know that are doing well. Palo Alto has done well for a long time. They were very impressive CEO, as we've been discussing, offline. But it's an important area that I think with the growing technology needs in AI and Cloud computing and all the different technologies that we're using, cybersecurity is definitely an important place to have something in your portfolio.

David Meier: Along those lines, I think one of the things that we all need to recognize is one is the bad actors are not going away, and in fact, they're innovating very quickly in order to create the threats that companies like Palo Alto and other competitors want to negate. One of the things that at least if you believe the Palo Alto data, and I don't have any reason not to, is the threat vector along the AI lines, meaning the more we interact with agents, the more opportunities there are to create threat vectors. That is actually providing growth on the outside, and internally, the company is bringing AI capabilities across all the services on its platform. Basically, it's an AI race. Who on the outside is going to create the threat vectors, and who on the inside is going to protect you against them? Basically, that's built in demand and built in growth for the future. Sad to say, but that's actually how it works.

Sanmeet Deo: Cyber threats are a growth industry, so you can't invest in the cyber threat companies, so you got to invest in the ones that are protecting against those things, and they got to be growing, too.

Emily Flippen: I think the edge that existed with these Cloud native platforms has increasingly gone away because even the legacy players have gotten out here, the cats out of the bag. They've all made the adjustment. Now it's a matter of proving that you have a product that is simply superior to that of your competitors. It's not a matter if you need security, it's how you're going to implement it.

David Meier: I will say this. The one thing that CEO Aurora Nikesh Arora said was, it's not about how well you protect, it's about how quickly you can find, identify, and neutralize the threat. That's actually the thing that they're being measured on now.

Emily Flippen: Up next we're moving from firewalls to footwear. Shoes are having their own moment with brands stepping into new partnerships, styles, and even new markets. Stick with us.

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Emily Flippen: Shoe industry has seen its own landscape change pretty dramatically in the last few years. Gone are the days of sneakers dominating the market. Things like identities, partnerships and performance are all taking the spotlight. New brands like On Holdings have taken market share. They just posted yet another quarter of double digit growth, and at the same time, Crocs is teaming up with the NFL ahead of earning season, and Nike is seeking to claw its way back toward growth through a renewed relationship with footlocker. Sanmeet, the whole shoe game feels like it's shifting here. What do these moves tell us about how consumers view the industry and who could be the ultimate winner?

Sanmeet Deo: Shoes have basically all even athletic shoes have essentially become fashion accessories. It used to be back in the day, we'd buy a shoe for running, buy a shoe for basketball, buy a shoe for utility purposes, whatever we needed for walking. Now, the shoes are being used for sometimes all of those things, but mostly for fashion, mostly for casual wear. The pandemic really shifted things where we're using shoes for a lifestyle approach. A company like AoN has really taken that and making very fresh, clean, authentic designs that are really resonating with younger people and also the athletes, but also the leisure athletes, the people that might be using them for dual purposes where they might be running with them, or they might be walking with them. Then you have also like the shoe companies like Crocs that Ugly is in when it comes to crocs. If you never like they're not going away anytime soon because if you have kids, all the kids are wearing crocks. They have multiple pairs. You can add Jibbit to them. You can do all kind. It's a way to express their identity, especially for kids and younger people that you haven't had in other shoes. Now, with Crocs recently signing with the NFL to have a partnership with them, to be able to have your own favorite team crocks with their own favorite with your own Jibbits for those teams. It's really become a matter of expressing your identity, fashion, comfort all wrapped up into one. Now, Nike has been a very popular brand for a very long time. The dominant brand, when it comes to athletic apparel shoes, running shoes is what they grew up on and they were always fashionable, as well. You have your Jordans that now are actually being used even more in like fashion sense, instead of just basketball. But they lost their way. They didn't keep up with some of the trends and the cool styles. They shifted a little too hard into the direct to consumer channel. Going away from some of their wholesale partnerships with footlocker and other companies. Now they're getting back to that because they did struggle with sales and margins, and then they're also at risk with tariffs and whatnot, but they're making a comeback. They're strengthening their partnerships again, focusing on what they need to do with their wholesale channels as well as their direct channels and freshening up their identity and their portfolio of shoes.

David Meier: I'm actually surprised Crocs didn't do this a while ago. Because if you think about it, like, it's going to be hard to, let's say, have a crocss specifically for an individual athlete. But across a league, like, I have to wonder if this was in the works and maybe it got bogged down in negotiations or something. But think about it this way. What if they did it with the NBA? Because you could imagine players on the sidelines, maybe you're out, maybe you're taking a break, maybe during warm up you come out with your crocks and you are supporting the team. I'm a little surprised that wasn't done earlier. I will also say this. I take a little bit of umbrage against what you said about footwear and fashion. It's always been here. They've always tried to create a fashion piece of it. But that said, it is amazing how many different types of lifestyles that shoes are becoming a part of. For example, my daughter's in residency. She cannot live without her UFOs, which are crock competitors, as well as her Hoka. It is amazing in the medical world how being on your feet all day, something and I think we're all are in agreement here. The Hoka is an ugly shoe. There is nothing fashion conscious about that, but it performs well. It does what those people need, and they're willing to pay for it. I will say this one last thing. I've had an argument with our colleague, Seth Jason, who's a huge runner. He keeps telling me, I can't believe, why do people like On holdings? Why do people like on shoes? I never see them out on the trail when I run. I'm like, Dude, you're like, running 100 miles at a time. Finally, he said the other day, I saw my first pair out in the wild, and I'm like, great. That's awesome that those types of athletes are looking for him because I will say, here in Polly's Island, among the older crowd of which I am slowly getting there, on shoes are everywhere. Everybody wears them around. I think it's because there's a little bit of fashion, a little bit of comfort, and that's the name of the game. If you're a shoe company, you got to figure out how to address all those things in one product in order to meet the demand of your demographic.

Emily Flippen: Well, for me, it comes down to what actually is innovation versus reaction. I rewind to just a handful of years ago when Nike made their decision to largely pull out of third party retailers and go straight direct to consumer with the intention of protecting their brand image to prevent themselves from becoming the next Under Armour, for instance. At the time, that felt like innovation. That felt really inspired and it's a little ironic now to see Nike almost walking that decision back. Not that direct to consumer isn't important to them, but they're realizing that distribution was always part of their value chain. At this moment, their market share is being eaten by companies like On Holdings. Whatever reason, whether that be brand prestige or performance, seems to be rising in levels of popularity. And I do think that An has pushed forward an actual real innovation with technology, right? Their light spray, which could localize distribution is something really interesting. For me, when I look at a business like Crocks tying this all full circle, I cannot, for the life of me understand whether or not this deal is innovation or reaction. I think licensing is smart for crock, but it's always been on the fattier side of shoes. And there's some part of me that can't feel like we're just pre 2008 right before the Croc crash.

Sanmeet Deo: Well, you got to think of the kids because they love their sports teams. They want to represent those. My son has some Texas Longhorns crocs. I'm sure they had to strike up a deal with some of the big universities like that to have those.

Emily Flippen: Putting you both on the spot here unexpectedly, if you have to choose between adding on holdings, crock or Nike, or let's also add footlocker in there, as well, to your portfolio today, is there one that's standing out to you?

Sanmeet Deo: Well, I'll go first. I currently own on holdings, so I would continue to add on to on because they're just doing some impressive things with innovation and really capturing the market.

David Meier: I agree. I think the challenge for Nike and we're seeing them throw their weight around a little bit with getting back into the prominent displays at Foot Locker, in my opinion, that comes from the direct relationship that they have strong relationship that they have with Dick's Sporting Goods. But they still have a long row to hoe. I think right now on has the momentum. They have not only performance, but there's fashion, and it cuts across all demographics. What I mean is from the youngest to the oldest, they're selling their shoes across that entire range of ages.

Emily Flippen: I'm inclined to agree with you both, but for the sake of playing devil's advocate, I do feel like I need to point out how cheap Nike looks on a relative basis if they're able to craft this turnaround that I think management is leaning toward and distribution is a part of that, but I do think this is a brand that has not lost its attractiveness. While On might be the up and coming, exciting new player today, there is something nice and stable about knowing that Nike's brand is still retaining value that probably is going under appreciated by the market today. Up next, we're moving over to housing, an industry that like shoes, is hitting a speed bump. We'll see you after the break.

A report out from Reuters yesterday noted that US Home Builder sentiment has dropped to its lowest level in nearly three years. Higher interest rates, lower affordability, and consumer hesitation seem to all be weighing on the sector. Dave, we've seen builders, like, throw in everything but the kitchen sink to try to motivate buyers. After years of it being a seller's market, it seems like buyers now have the cards, but confidence is still sinking. Affordability is at all time lows. What should investors make of this?

David Meier: I actually think investors should there's a lot to be made of this. Not only should we think about individually about the sector, the home building sector, if they're still throwing everything it out at it, which means typically they don't lower price. That's one place having bought a few new homes, that's one place that they don't negotiate, but they will give you add ons. They will give you rate buy downs and things like that. If those don't aren't effective, and they actually start reducing prices, which some anecdotal data might suggest that they are. That's bad from a margin standpoint because you're already trying to say, hey, in order to get this sale, I'm willing to squeeze margins, and now I'm willing to squeeze margins even further. I would say there's a little bit of caution in the sector itself. As an investor, be wary. Make sure that you are looking at the highest quality Builders, one that comes to mind is Dream Finder Homes. The ticker symbol is DFH. They do a good job of making sure that the markets that they build in are solid and they've been able to translate that into good performance, stock not withstanding right now. The other thing we need to be a little bit careful about is the overall economy, because if these homebuilders slow down, actually they employ a lot of people within the economy. If we see them slow down and they start laying off people, that makes the job numbers difficult. Who knows what can happen from there? There's a lot to be tied into this number, this Home Builder sentiment number because it's really a leading indicator of not only the industry that they play in, but the economy overall.

Emily Flippen: This is one of those industries that, I rewind back to just a few years ago, and I would say the same thing then that I'm saying today, which is that whenever I see sentiment like this really low for industries or businesses that have really, in my opinion a long term need to exist the need for housing in the United States. To me, I think to myself, well, this is a short term Headwinds long term opportunity, but it's still been a really tough few years for homebuilders, even despite the fact that I think the skepticism has been around, and of course, a lot of that has to do with interest rates. But Sanmeet, when you look at this industry, what stands out to you? Because for me, I view opportunity, but at the same time, I've viewed opportunity for years now and it has not manifested into shareholder returns.

Sanmeet Deo: The thing that sticks in my mind, because I do think a lot about the consumers, just the affordability. The affordability of homes just does not seem sustainable. It's just gotten too expensive. Even if you lower rates, your interest rate will be low, but you're still paying that on a very high mortgage. Those housing prices, especially in high demand areas, are not really coming down. There's younger people just not buying because they can't afford to coming out of college or coming out of business schools or graduate schools, and they can't buy what's going to get them to be able to buy. That affordability thing always sticks in my head of how does that problem get solved?

David Meier: The one good thing is that a lot of the homebuilders, their balance sheets are much stronger than when we had the housing crisis. There's not as much leverage in the system. There's not as much leverage on their balance sheets. They're doing a good job of spending capital wisely, trying to have asset light businesses where they don't necessarily own the land, but they have rights to it and things like that. There might be a little bit of turbulence here. But at some point, the prices of these Home Builders could get to a point where they become very attractive, even if there's again some volatility in the sector overall. I give a lot of managements credit for playing the game differently based on what happened in the 2005, 2006, 2007 time frame.

Emily Flippen: I'm not sure who will be the innovative leader here in housing, but one thing is clear to maybe it's off this conversation. They need a little bit of innovation here to, you know, prevent their industry from entering some sort of segment down phase here, on a more permanent basis. But one thing is clear, whether you're looking at housing or cybersecurity or shoes, industry changes. If you don't change along with it, you're probably going to die. Dave, Sanmeet, thank you both so much for joining.

David Meier: Thank you.

Sanmeet Deo: Thank you.

Emily Flippen: As always, people on the program may have interest in the stocks they talked about and the Motley Fool may have formal recommendations for or against. Don't buy or sell stocks based solely on what you hear. All personal finance content follows Motley Fool editorial standards, and it's not approved by advertisers. Advertisements are sponsored content and provide for informational purposes only. To see our full advertising disclosure, please check out our show notes. For Sanmeet Deo, Dave Meier, and the entire Motley Fool Money team, I'm Emily Flippen. We'll see you tomorrow.