Palo Alto Networks cuts annual profit forecast as deal costs bite, shares fall

Core Viewpoint - Palo Alto Networks has reduced its annual profit forecast due to increased costs from recent acquisitions aimed at enhancing AI capabilities, resulting in a 7% drop in shares during extended trading [1] Financial Performance - The company reported acquisition-related costs of $24 million in Q2, up from $10 million a year earlier [1] - Revenue for Q2 rose 15% to $2.59 billion, aligning with estimates [1] - Adjusted profit per share for Q2 was $1.03, surpassing estimates of 94 cents [1] Profit Forecast - The adjusted profit per share forecast for fiscal 2026 has been lowered to $3.65 to $3.70, down from the previous forecast of $3.80 to $3.90 [1] Revenue Forecast - Palo Alto raised its annual revenue forecast to between $11.28 billion and $11.31 billion, compared to earlier expectations of $10.50 billion to $10.54 billion [1] - The forecast for Q3 revenue is approximately $2.94 billion to $2.95 billion, exceeding analysts' average estimate of $2.60 billion [1] Acquisitions - The company announced the acquisition of Israeli cybersecurity startup Koi, following the purchase of CyberArk Software and Chronosphere [1] - The acquisitions are intended to expand the total addressable market and address AI-driven cyber threats [1]