Financial Data and Key Metrics Changes - Remaining Performance Obligation (RPO) grew 24% year-over-year to $15.5 billion, indicating strong long-term revenue predictability [24] - Next-Generation Security (NGS) Annual Recurring Revenue (ARR) reached $5.85 billion, up 29% year-over-year, exceeding guidance [24] - Total revenue for Q1 was $2.47 billion, representing a 16% increase, surpassing the high end of guidance [25] - Diluted non-GAAP EPS was $0.93, exceeding guidance, with adjusted free cash flow of $1.7 billion, up 17% [30] Business Line Data and Key Metrics Changes - SASE ARR grew 34% year-over-year, surpassing $1.3 billion, making the company the fastest-growing SASE provider at scale [8] - Product revenue increased by 23% year-over-year, with 44% of trailing 12-month product revenue coming from software form factors, up from 38% [25] - Software firewalls saw significant growth, with nearly half of product revenues driven by software [9] Market Data and Key Metrics Changes - The Americas region grew 14%, EMEA increased by 18%, and JPAC grew by 22%, indicating broad-based strength across all major markets [26] - The company has approximately 6,800 SASE customers, including one-third of the Fortune 500 [8] Company Strategy and Development Direction - The company is focusing on platformization to address the evolving threat landscape, emphasizing the need for unified security solutions [6] - The acquisition of CyberArk and Kronosphere is expected to enhance identity security and observability capabilities, respectively [21][22] - The company aims to achieve $20 billion in NGS ARR by fiscal year 2030, raising expectations from a previous target of $15 billion [21] Management's Comments on Operating Environment and Future Outlook - Management highlighted the urgency for real-time visibility and security due to the evolving threat landscape, particularly with the rise of AI-driven attacks [5] - The company is optimistic about the future, expecting continued growth in software firewalls and strong demand for AI security solutions [10][21] - Management reiterated a commitment to maintaining a free cash flow margin of at least 37% for fiscal year 2026, with a target of 40%+ by 2028 [32] Other Important Information - The company launched Prisma AIRS 2.0, a comprehensive platform for AI security, and is integrating Protect AI into its offerings [10] - The company is also focusing on quantum readiness, with plans to deliver a complete quantum-safe strategy [12][14] Q&A Session Summary Question: How is the company ensuring success in the AI and quantum future? - Management emphasized the importance of network inspection and the sustained demand for bit inspection technologies, which will not diminish with the rise of AI and quantum [36] Question: What is the company's perspective on the convergence of security and observability? - Management noted that Kronosphere's capabilities in observability are crucial for securing large-scale AI deployments and that they see significant potential in this area [41][44] Question: How does the company plan to manage the integration of CyberArk and Kronosphere? - Management indicated that both acquisitions will be managed to maintain their operational independence while leveraging synergies where possible [52] Question: What are the expectations for AI adoption among customers? - Management observed that while AI adoption is still in early stages, there is a growing urgency for security measures to keep pace with AI deployments [55]

Core Insights - The deal was announced alongside Palo Alto Networks reporting higher revenue in its latest quarter [1] - The company has raised its top-line view for the year, indicating positive growth expectations [1] Financial Performance - Palo Alto Networks posted increased revenue in the latest quarter [1] - The company has adjusted its revenue outlook upwards for the year, reflecting confidence in continued growth [1]

Core Insights - The cybersecurity company's stock has underperformed compared to the S&P 500 this year, indicating potential ongoing challenges for the company [1] Company Performance - The latest results suggest that the company's stock may continue to lag behind the broader market index [1]

Core Insights - Palo Alto Networks exceeded Wall Street's fiscal first-quarter revenue estimates but experienced a decline in net income, leading to a stock drop of approximately 3% [1] Financial Performance - Revenues increased by 16% year-over-year, reaching $2.47 billion compared to $2.1 billion a year ago [1][5] - Net income decreased to $334 million, or 47 cents per share, down from $351 million, or 49 cents per share in the previous year [1] - Adjusted earnings per share were reported at 93 cents, surpassing the expected 89 cents [5] Guidance and Expectations - For the second quarter, Palo Alto Networks guided revenues between $2.57 billion and $2.59 billion, aligning with the midpoint estimate of $2.58 billion [2] - The company anticipates full-year revenues between $10.50 billion and $10.54 billion, slightly above the $10.51 billion estimate [2] Capital Expenditures and Backlog - Capital expenditures for the period were significantly higher than expected at $84 million, compared to the StreetAccount estimate of $58.1 million [2] - Remaining purchase obligations, which indicate backlog, increased to $15.5 billion, exceeding the estimate of $15.43 billion [2] Acquisitions - Palo Alto Networks announced the acquisition of cloud observability platform Chronosphere for a total value of $3.35 billion [3] - The company has been actively pursuing acquisitions, including a recent announcement to acquire Israeli identity security firm CyberArk for $25 billion [3] Industry Trends - The rise of artificial intelligence has led to more sophisticated cyberattacks, prompting Palo Alto Networks to integrate AI into its tools and launch automated AI agents to enhance security measures [4]

Core Insights - Proactive provides fast, accessible, and actionable business and finance news content to a global investment audience [2] - The company focuses on medium and small-cap markets while also covering blue-chip companies and broader investment stories [3] - Proactive's news team delivers insights across various sectors including biotech, mining, oil and gas, and emerging technologies [3] Technology Adoption - Proactive is committed to adopting technology to enhance its content creation and workflow processes [4] - The company utilizes automation and software tools, including generative AI, while ensuring all content is edited and authored by humans [5]

Q1 Fiscal Year 2026 Highlights - Palo Alto Networks' Q1'26 Remaining Performance Obligation (RPO) reached $15.5 billion, a 24% year-over-year increase[9] - Next-Generation Security Annual Recurring Revenue (NGS ARR) for Q1'26 was $5.85 billion, up 29% year-over-year[9] - Q1'26 revenue totaled $2.47 billion, representing a 16% year-over-year growth[9] - The company's Q1'26 non-GAAP operating margin was 30.2%, a 140 bps increase year-over-year[9] - Q1'26 non-GAAP EPS was $0.93, a 19% increase year-over-year[9] - Adjusted Free Cash Flow for Q1'26 was $1.71 billion, a 17% year-over-year increase, with an Adjusted FCF Margin of 69.2%[9] Strategic Initiatives and Acquisitions - Palo Alto Networks is acquiring Chronosphere for $3.35 billion in cash and replacement awards[46] - Chronosphere has over $160 million in ARR, growing triple digits year-over-year as of September 2025[36, 46] - The acquisition of CyberArk is on track for Q3 close, reaffirming the FY'28 Adjusted Free Cash Flow Margin target of 40%+[26, 28] SASE and AI Security - SASE ARR exceeded $1.3 billion, growing 34% year-over-year[15] - Palo Alto Networks has approximately 6,800 SASE customers, an 18% year-over-year increase[15, 59]

Core Viewpoint - Palo Alto Networks announced the acquisition of Chronosphere, a cloud management and monitoring company, for $3.35 billion [1] Company Summary - The acquisition aims to enhance Palo Alto's capabilities in cloud management and monitoring, indicating a strategic move to strengthen its position in the cloud services market [1] Industry Summary - This acquisition reflects the growing trend in the technology sector where companies are increasingly investing in cloud management solutions to meet rising demand for cloud services [1]

By Juby Babu (Reuters) -Palo Alto Networks said on Wednesday it will buy cloud management and monitoring company Chronosphere for $3.35 ​billion, as the cybersecurity firm looks to strengthen its AI offerings. The Santa ‌Clara, California-based company plans to integrate Chronosphere with Cortex AgentiX platform, allowing use of its AI ‌agents on the cloud management firm's data to detect performance issues and autonomously investigate their root cause. Palo Alto will pay the deal amount in cash and new ...

Financial Performance - Total revenue for fiscal Q1 2026 increased by 16% year over year to $2.5 billion, compared to $2.1 billion in fiscal Q1 2025[2] - Non-GAAP net income for fiscal Q1 2026 was $662 million, or $0.93 per diluted share, up from $545 million, or $0.78 per diluted share in fiscal Q1 2025[3] - GAAP operating income for the three months ended October 31, 2025, was $309 million, an increase from $286 million in the same period of 2024[28] - Non-GAAP operating income rose to $746 million, compared to $616 million year-over-year, reflecting a non-GAAP operating margin of 30.2%, up from 28.8%[28] - GAAP net income decreased to $334 million from $351 million year-over-year, while non-GAAP net income increased to $662 million from $545 million[28] Revenue Guidance - The company expects total revenue for fiscal Q2 2026 to be in the range of $2.57 billion to $2.59 billion, representing year-over-year growth of 14% to 15%[9] - Guidance for Next-Generation Security ARR for fiscal year 2026 is projected to be between $7.00 billion and $7.10 billion, indicating year-over-year growth of 26% to 27%[9] Cash Flow and Margins - Adjusted free cash flow margin is expected to be in the range of 38% to 39% for fiscal year 2026[9] - Operating margin for fiscal Q1 2026 was over 30%, with a target of achieving over 40% adjusted free cash flow margin by FY'28[4] Assets and Liabilities - Cash and cash equivalents increased to $3,066 million as of October 31, 2025, up from $2,269 million at July 31, 2025[31] - Total current assets decreased slightly to $7,310 million from $7,523 million[31] - Total liabilities decreased to $14,871 million from $15,752 million, indicating improved financial health[31] - Stockholders' equity increased to $8,665 million from $7,824 million, reflecting a strong retained earnings growth from $2,484 million to $2,818 million[31] - Deferred revenue decreased to $6,132 million from $6,302 million, indicating a potential shift in revenue recognition[31] Strategic Initiatives - The company announced its intent to acquire Chronosphere, enhancing its capabilities in observability for the data center era[4] - The company appointed Mark Goodburn to the board of directors and announced the retirement of Mary Pat McCarthy effective January 23, 2026[5] Shareholder Information - The weighted-average shares used to compute diluted GAAP net income per share remained stable at 709 million[28] - The company reported share-based compensation-related charges of $387 million for the latest quarter, up from $315 million in the previous year[28] Performance Obligations - Next-Generation Security ARR grew by 29% year over year to $5.9 billion[5] - Remaining performance obligation increased by 24% year over year to $15.5 billion[5]

Core Viewpoint - Palo Alto Networks has announced its acquisition of Chronosphere for $3.35 billion, aiming to enhance its capabilities in providing real-time observability and remediation solutions for AI-native companies [5]. Group 1: Acquisition Details - The acquisition will be paid in cash and replacement equity awards, with adjustments subject to customary closing conditions and regulatory approvals [5]. - Chronosphere reported an annual recurring revenue (ARR) of over $160 million as of September 2025, with triple-digit year-over-year growth [5]. Group 2: Strategic Importance - The combination of Chronosphere's observability platform and Palo Alto Networks' AgentiX will transform observability from passive monitoring to autonomous remediation, addressing the critical data demands of the AI era [3][4]. - Chronosphere is recognized as a Leader in the 2025 Gartner Magic Quadrant for Observability Platforms, indicating its strong position in the market [4]. Group 3: Market Context - The growth of AI applications necessitates constant uptime and resilience, making real-time observability essential for success [2]. - Chronosphere's architecture is designed to handle vast cloud data volumes efficiently, which is crucial for modern AI workloads [2].