Palo Alto Networks 2026 Q1 Earnings Revenue Surges 15.7% Despite EPS Decline

Palo Alto Networks (PANW) reported fiscal 2026 Q1 earnings on Nov 19, 2025, with revenue rising 15.7% year-over-year to $2.47 billion, exceeding estimates of $2.46 billion. The company provided in-line guidance for Q2 and FY2026, with revenue projected between $2.57–$2.59 billion and $10.50–$10.54 billion, respectively.

Revenue

Product revenue grew to $434 million, while subscription and support revenue accounted for the majority at $2.04 billion, contributing to the total revenue of $2.47 billion. This reflects strong demand for recurring security services and sustained hardware sales.

Earnings/Net Income

Palo Alto Networks’s EPS declined 9.3% to $0.49, and net income fell 4.8% to $334 million. Despite the EPS decline, the company’s robust revenue growth underscores its competitive positioning in the cybersecurity market.

Post-Earnings Price Action Review

The stock edged up 0.27% in the latest trading day but dropped 4.83% for the week and 5.63% month-to-date. A backtested strategy of buying shares after a revenue drop quarter-over-quarter and holding for 30 days showed a 109.2% total return over three years, including a 73.4% gain in PANW shares and a 35.8% dividend yield. This highlights the stock’s long-term resilience amid recent volatility.

CEO Commentary

CEO Nikesh Arora emphasized the company’s 24% RPO growth, 29% NGS ARR growth, and strategic acquisitions of CyberArk and Chronosphere. He highlighted platformization, AI security, and quantum readiness as key priorities, expressing confidence in Palo Alto’s ability to lead in the AI-driven security landscape.

Guidance

CFO Dipak Golechha outlined Q2 revenue guidance of $2.57–$2.59 billion and FY2026 revenue of $10.50–$10.54 billion. Adjusted EPS for Q2 is projected at $0.93–$0.95, with a 30.2% operating margin. The company aims for 40%+ adjusted free cash flow margins by FY2028.

Additional News

Palo Alto Networks announced a $3.35 billion acquisition of Chronosphere, a cloud-native observability platform, expected to close in late 2026. This follows the $25 billion CyberArk acquisition in July 2025, both aimed at expanding its AI and identity security capabilities. Additionally, Mark Goodburn joined the board, succeeding Mary Pat McCarthy, who retires on Jan 23, 2026. These moves underscore the company’s focus on innovation and leadership in the evolving cybersecurity landscape.