Palo Alto Networks 2026 Q1 Earnings Beats Revenue Estimates, EPS Declines

Palo Alto Networks (PANW) reported Q1 2026 earnings on November 19, 2025, with revenue of $2.47 billion, surpassing expectations by 15.7% year-over-year. The company raised its full-year revenue guidance to $10.50–$10.54 billion, reflecting confidence in sustained growth. However, EPS fell 9.3% to $0.49, below the prior year’s $0.54, signaling margin pressures.

Revenue

Revenue growth was driven by strong performance across segments. Product revenue stood at $434 million, while Subscription and support contributed $2.04 billion, culminating in a total revenue of $2.47 billion. The results exceeded analyst estimates, highlighting resilience in enterprise demand for cybersecurity solutions.

Earnings/Net Income

Palo Alto’s net income declined to $334 million in Q1 2026, a 4.8% drop from $351 million in Q1 2025. Earnings per share (EPS) fell 9.3% year-over-year to $0.49, reflecting increased operational costs. Despite the EPS decline, the net income reduction was relatively modest, indicating stable profitability.

Post-Earnings Price Action Review

The stock edged up 0.27% on the day of the report but dropped 4.83% weekly and 5.63% month-to-date, reflecting mixed investor sentiment. A long-term strategy of buying shares after a revenue drop quarter-over-quarter and holding for 30 days showed robust returns: a 109.8% cumulative gain over three years, averaging 33.2% annually. This underscores the stock’s potential for recovery despite short-term volatility.

CEO Commentary

Nikesh Arora highlighted Q1’s success, citing 24% RPO growth and 29% NGS ARR increase. He emphasized strategic acquisitions of CyberArk and Chronosphere to expand into identity and observability, alongside AI-driven security innovations. Arora raised ARR targets to $20 billion by FY30, signaling long-term ambition.

Guidance

For Q2 2026, Palo Alto projects revenue of $2.57–$2.59 billion, with adjusted EPS of $0.93–$0.95. Full-year 2026 revenue guidance was raised to $10.50–$10.54 billion, reflecting confidence in market expansion and platformization strategies.

Additional News

Palo Alto announced the $3.35 billion acquisition of Chronosphere, a cloud-native observability platform, to enhance AI and quantum-ready security solutions. The deal, expected to close by late 2026, adds over $160 million in ARR. The company also appointed Mark Goodburn to its board and announced Mary Pat McCarthy’s retirement in January 2026. Additionally, Palo Alto partnered with IBM to develop quantum-safe security solutions, addressing emerging threats in the AI era. These moves underscore its focus on expanding its total addressable market and leading in next-generation cybersecurity.