Palo Alto Networks 2026 Q1 Earnings Beats Expectations with 15.7% Revenue Growth

Palo Alto Networks (PANW) reported its fiscal 2026 Q1 earnings on Nov 20, 2025, delivering revenue growth that exceeded expectations while navigating a slight decline in net income. The company outperformed on top-line metrics and raised full-year guidance, though shares faced short-term pressure amid strategic acquisitions.

Revenue

Product revenue stood at $434 million, while Subscription and support accounted for $2.04 billion. Together, they totaled $2.47 billion, a 15.7% increase from the previous year. This growth was driven by strong performance in platformization deals and SASE/SSE solutions.

Earnings/Net Income

Palo Alto Networks's EPS declined 9.3% to $0.49 in 2026 Q1 from $0.54 in 2025 Q1. Meanwhile, the company's net income declined to $334 million in 2026 Q1, down 4.8% from $351 million reported in 2025 Q1. While EPS declined, adjusted EPS of $0.93 exceeded the expected $0.89, showcasing strong performance despite the drop.

Post-Earnings Price Action Review

The stock price of Palo Alto Networks has dropped 6.59% during the latest trading day, has tumbled 9.62% during the most recent full trading week, and has tumbled 13.68% month-to-date. Analysts remain cautiously optimistic, with Bernstein raising its price target to $210 and Cantor Fitzgerald maintaining an Overweight rating. Despite short-term volatility, the company’s long-term strategic moves, including AI-driven innovations and platformization, continue to attract bullish sentiment.

CEO Commentary

Nikesh Arora, Chairman & CEO, highlighted Q1’s strong performance, exceeding guided metrics with 24% RPO growth, 29% NGS ARR growth, and 16% total revenue growth. He emphasized platformization as a key driver, citing $33M SASE and $100M XSIAM deals, and underscored AI’s transformative impact, noting the rise of autonomous AI attackers. Arora stressed the urgency of quantum readiness, announcing Orion’s quantum-risk inventory and fifth-gen firewalls. Strategic priorities included accelerating AI security via Prisma AIRS 2.0 and AgentiX, alongside acquisitions of CyberArk and Chronosphere to expand into identity and observability. The tone was optimistic, with Arora confident in achieving 40%+ free cash flow margins by FY2028 and raising FY2030 ARR targets to $20B, driven by platformization and AI/quantum innovation.

Guidance

Palo Alto Networks guided Q2 2026 NGS ARR to $6.11–6.14B (+28%), revenue to $2.57–2.59B (+14%), and non-GAAP EPS to $0.93–0.95 (+15–17%). For FY2026, NGS ARR is targeted at $7–7.1B (+26–27%), revenue at $10.5B–10.54B (+15–16%), and non-GAAP EPS at $3.79 (+15–17%).

Additional News

Palo Alto Networks announced a $3.35 billion acquisition of Chronosphere, a cloud observability platform, to expand its capabilities in AI-driven security and hybrid cloud environments. This strategic move aligns with the company’s focus on addressing the $32 billion total addressable market for observability. Additionally, the company partnered with IBM to launch a quantum-safe security solution, positioning itself for emerging threats in the quantum computing era. The acquisition of CyberArk, a leader in identity security, further strengthens Palo Alto’s platformization strategy, enhancing its offerings in identity and access management. These initiatives underscore the company’s commitment to innovation and market leadership in the AI and cybersecurity sectors.