Palo Alto Networks — Fiscal 2026 Earnings Summary

Financial Performance

• Total revenue for Q4 FY2026 grew 34% year-over-year to $3.41 billion; full-year FY2026 revenue was $11.48 billion.
• Next-Generation Security ARR grew 63% year-over-year to $9.10 billion in Q4 FY2026.
• Remaining performance obligations grew 34% year-over-year to $21.2 billion in Q4 FY2026.
• GAAP operating income for Q4 FY2026 was $172 million, down from $497 million in Q4 FY2025; Non-GAAP operating income was $1.0 billion, up from $768 million.
• GAAP net loss for Q4 FY2026 was $282 million ($0.35 per diluted share), compared to GAAP net income of $254 million ($0.36 per diluted share) in Q4 FY2025.
• Non-GAAP net income for Q4 FY2026 was $853 million ($1.02 per diluted share), up from $673 million ($0.95 per diluted share) in Q4 FY2025.
• Net cash provided by operating activities for Q4 FY2026 was $1.4 billion, up from $1.0 billion in Q4 FY2025.
• Adjusted free cash flow for Q4 FY2026 was $1.3 billion, up from $954 million in Q4 FY2025; full-year FY2026 adjusted free cash flow margin was 38.4%.

Guidance and Future Outlook

• Q1 FY2027 revenue guidance is $3.300 billion to $3.310 billion, representing 33% to 34% year-over-year growth.
• Q1 FY2027 Next-Generation Security ARR guidance is $9.54 billion to $9.56 billion, representing 63% year-over-year growth.
• Q1 FY2027 Diluted non-GAAP net income per share guidance is $0.96 to $0.98.
• Full-year FY2027 revenue guidance is $14.10 billion to $14.20 billion, representing 23% to 24% year-over-year growth.
• Full-year FY2027 Next-Generation Security ARR guidance is $11.075 billion to $11.175 billion, representing 22% to 23% year-over-year growth.
• Full-year FY2027 Remaining performance obligations guidance is $25.2 billion to $25.4 billion, representing 19% to 20% year-over-year growth.
• Full-year FY2027 Non-GAAP operating margin guidance is 29.5%.
• Full-year FY2027 Diluted non-GAAP net income per share guidance is $4.16 to $4.19.
• Full-year FY2027 Adjusted free cash flow margin guidance is 38.0%.
• Management targets achieving a 40% adjusted free cash flow margin in FY2028.
• Management stated a long-term goal of reaching $20 billion in FY30 NGS ARR.

Business Segments and Product Lines

• Growth was fueled by strength across Network & AI Security, Cortex, and Idira platforms.
• Palo Alto Networks acquired Console, an AI-native platform enabling agentic workflows across enterprise operations, to expand the Cortex platform's role in enterprise agentic transformation.

Market and Competitive Landscape

• Management noted that AI advancements are elevating cybersecurity to the top of the CIO priority list, serving as durable tailwinds.
• The company is trusted by over 70,000 customers.

Risks and Challenges

• Forward-looking statements involve risks including unfavorable economic and market conditions, uncertain geopolitical environments, and intense competition.
• Specific risks include competition from cloud infrastructure providers offering native security capabilities, risks associated with the evolving definition of the identity security market, and customer trends toward vendor consolidation.
• Risks also include reliance on channel partners, potential decreases in sales prices, and challenges associated with sales to government entities.
• Operational risks include reliance on third-party cloud service providers, manufacturing partners, and limited sources of supply.
• Financial risks include fluctuations in foreign currency exchange rates, risks related to convertible senior notes, and potential tax liabilities.

Management Commentary and Tone

• Nikesh Arora, Chairman and CEO, described the Q4 as strong, noting the addition of nearly $1 billion of Net New NGS ARR in a single quarter.
• Dipak Golechha, CFO, stated the company exceeded guidance across the board and expressed confidence in achieving 40% adjusted free cash flow margin in FY28.
• Management characterized the year as a record year with a strong finish.

Other Key Points

• The acquisition of Console expands the Cortex platform's capabilities in enterprise agentic transformation.
• The company hosts a video webcast for analysts and investors to discuss results and outlook.
• Non-GAAP financial measures exclude share-based compensation, acquisition-related costs, amortization of acquired intangibles, litigation charges, and non-cash charges related to convertible notes.
• The company does not provide GAAP guidance for operating margin, net income, or net cash provided by operating activities due to the uncertainty of reconciling items.