For the quarter ended October 2025, Palo Alto Networks (PANW) reported revenue of $2.47 billion, up 15.7% over the same period last year. EPS came in at $0.93, compared to $0.78 in the year-ago quarter.The reported revenue represents a surprise of +0.52% over the Zacks Consensus Estimate of $2.46 billion. With the consensus EPS estimate being $0.89, the EPS surprise was +4.49%.While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and how they compare to Wall Str ...

Market Overview - Market indexes finished in the green but at lower levels than the start of the trading session, with the Dow up +47 points (+0.10%), S&P 500 up +24 points (+0.38%), Nasdaq up +131 points (+0.59%), and Russell 2000 down -0.86 points (-0.04%) [1] Company Earnings Reports - NVIDIA and Palo Alto Networks reported earnings after the market close, with NVIDIA focusing on AI infrastructure and having a market cap of $4.5 trillion, while Palo Alto Networks is centered on cybersecurity [2] - Both companies exceeded earnings estimates, with NVIDIA reporting Q3 earnings of $1.30 per share (vs. $1.24 expected) and Palo Alto Networks at 94 cents per share (vs. 89 cents expected). Revenue figures were $57.0 billion for NVIDIA (a record high) and $2.50 billion for Palo Alto Networks [3] Revenue Growth and Performance - Palo Alto Networks experienced a revenue growth of +16% year over year, while NVIDIA achieved a remarkable +62% revenue growth from last year's Q3. NVIDIA's non-GAAP gross margins reached +73.6%, driven by strong performance in its Blackwell chips [4] - NVIDIA shares rose +4.5% following the earnings report, while Palo Alto Networks shares fell -3.0%. Despite Palo Alto's solid performance, its valuation at 54x earnings did not exceed expectations as dramatically as NVIDIA's results, which included a record $51.2 billion in its Data Center segment, reflecting +25% growth quarter over quarter and +66% year over year [5] Industry Positioning - Both companies are leaders in their respective technology sectors, representing significant growth in the 21st century. However, NVIDIA currently stands out as the dominant player in the market [6]

Financial Performance - Total revenue for the first quarter of fiscal 2026 was $2.5 billion, representing a year-over-year growth of 16% compared to $2.1 billion in the same period of fiscal 2025[92]. - Product revenue reached $434 million, accounting for 17.5% of total revenue, with a year-over-year growth of 23%[93]. - Subscription and support revenue grew to $2.0 billion, representing 82.5% of total revenue, with a year-over-year growth of 14%[93]. - Total revenue for the three months ended October 31, 2025, was $2,474 million, a 16% increase from $2,139 million in 2024[103]. - Product revenue increased by 23% to $434 million for the three months ended October 31, 2025, compared to $354 million in 2024[106]. - Subscription and support revenue rose by 14% to $2,040 million for the three months ended October 31, 2025, from $1,785 million in 2024[108]. - Gross profit for the three months ended October 31, 2025, was $1,836 million, with a gross margin of 74.2%, slightly up from 74.1% in 2024[116]. - Operating income for the three months ended October 31, 2025, was $309 million, representing 12.5% of total revenue, compared to 13.4% in 2024[103]. - Cash flow from operating activities was $1.771 billion, up from $1.510 billion year-over-year[99]. - Free cash flow (non-GAAP) for the quarter was $1.687 billion, compared to $1.466 billion in the same period last year[99]. Expenses and Costs - Cost of subscription and support revenue increased by 15% to $549 million for the three months ended October 31, 2025, from $479 million in 2024[114]. - Research and development expense increased to $528 million for the three months ended October 31, 2025, up 10% from $481 million in the same period in 2024, primarily due to increased personnel costs[120]. - Sales and marketing expense rose to $820 million for the three months ended October 31, 2025, a 14% increase from $720 million in the same period in 2024, driven by higher personnel costs[122]. - General and administrative expense surged to $179 million for the three months ended October 31, 2025, an 83% increase from $98 million in the same period in 2024, largely due to increased personnel costs and a partial release of litigation-related accrual[124]. - Interest expense decreased to $0 million for the three months ended October 31, 2025, down 100% from $1 million in the same period in 2024, due to the maturity of the 2025 Notes[126]. - Provision for income taxes rose to $78 million for the three months ended October 31, 2025, a 359% increase from $17 million in the same period in 2024, with an effective tax rate of 18.9%[130]. Cash and Investments - Total cash, cash equivalents, and investments reached $10.2 billion as of October 31, 2025, up from $8.5 billion on July 31, 2025[131]. - Cash provided by operating activities was $1.8 billion for the three months ended October 31, 2025, an increase of $261 million compared to the same period in 2024[141]. - The company has commitments to purchase products and services totaling $6.8 billion as of October 31, 2025[135]. Acquisitions and Future Plans - The company plans to acquire CyberArk Software Ltd., expected to close in the third quarter of fiscal 2026, enhancing its identity security capabilities[94]. - The acquisition of CyberArk is expected to close in the third quarter of fiscal 2026, with an equity value of approximately $25 billion[137]. Market and Economic Sensitivity - A hypothetical 100 basis point increase in interest rates would result in a $139 million decline in the fair market value of the investment portfolio[150]. - Conversely, a hypothetical 100 basis point decrease in interest rates would lead to a $142 million increase in the fair market value of the portfolio[150]. Other Financial Metrics - Next-Generation Security Annualized Recurring Revenue increased to $5.9 billion from $5.6 billion[99]. - Remaining performance obligations were reported at $15.5 billion, slightly down from $15.8 billion[99]. - Share-based compensation expense for the company is expected to be approximately $2.2 billion over a weighted-average period of 2.4 years[118]. - Other income, net increased to $103 million for the three months ended October 31, 2025, a 24% increase from $83 million in the same period in 2024, primarily due to higher interest income[128]. - The company has not made significant changes to its critical accounting estimates since the last report[147].

Core Insights - Palo Alto Networks reported Q1 FY2026 earnings that exceeded market expectations, with revenue of $2.47 billion, a 16% increase year-over-year, surpassing the expected $2.46 billion [1] - The company announced two significant strategic moves, including a $3.35 billion acquisition of cloud observability platform Chronosphere and a $25 billion acquisition of Israeli identity security company CyberArk [2] Financial Performance - Q1 revenue reached $2.47 billion, up from $2.1 billion in the same quarter last year, exceeding market expectations [1] - Net profit decreased to $334 million from $351 million year-over-year, with adjusted earnings per share of $0.93, above the expected $0.89 [1] - Annual recurring revenue (ARR) for next-generation security reached $5.9 billion, a 29% year-over-year increase, meeting guidance [1] - Operating margin improved to 30.2% from 28.8% year-over-year, indicating enhanced scale efficiency [1] - Free cash flow was $1.71 billion, with a margin of 69.2%, reflecting a year-over-year increase of 70 basis points [1] Future Guidance - The company provided positive guidance for Q2, expecting revenue between $2.57 billion and $2.59 billion, with a midpoint of $2.58 billion, aligning with market expectations [2] - Full-year revenue guidance was raised to a range of $10.5 billion to $10.54 billion, above the previous forecast of $10.51 billion, with an upward revision of operating margin guidance by 30 basis points [2] - Analysts noted that while the Q1 performance demonstrated strong execution, the full-year guidance reflects a cautious outlook and potential demand uncertainty [2] Strategic Moves - The acquisition of Chronosphere for $3.35 billion is expected to be completed in the second half of FY2026, aimed at enhancing the company's capabilities in cloud observability [2] - The ongoing acquisition of CyberArk for $25 billion is part of the company's strategy to address the rapid evolution of AI technology [2] Industry Context - The rise of AI has led to increasingly complex cyberattacks, while also driving innovation in security tools [3] - Palo Alto Networks has integrated AI deeply into its product line, launching automated AI agents to assist clients in defending against attacks [3]

Palo Alto Networks (NasdaqGS:PANW) Q1 2026 Earnings Call November 19, 2025 04:30 PM ET Company ParticipantsLee Klarich - Chief Product and Technology OfficerHamza Fodderwala - Senior Vice President Investor Relations and Strategic FinancePaul Liguori - VP and Production Support LeadNikesh Arora - Chairman and CEODipak Golechha - Executive Vice President and CFOFatima Boolani - Managing Director and Co‑Head of U.S. Software Equity ResearchConference Call ParticipantsPatrick Edwin Colville - Senior Equity Ana ...

Palo Alto Networks (NasdaqGS:PANW) Q1 2026 Earnings Call November 19, 2025 04:30 PM ET Company ParticipantsLee Klarich - Chief Product and Technology OfficerHamza Fodderwala - Senior Vice President Investor Relations and Strategic FinancePaul Liguori - VP and Production Support LeadNikesh Arora - Chairman and CEODipak Golechha - Executive Vice President and CFOFatima Boolani - Managing Director and Co‑Head of U.S. Software Equity ResearchConference Call ParticipantsPatrick Edwin Colville - Senior Equity Ana ...

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]

The deal came as Palo Alto Networks posted higher revenue in its latest quarter and raised its top-line view for the year. ...

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]