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]

Q1 Fiscal Year 2026 Earnings Call November 19, 2025 © 2025 Palo Alto Networks, Inc. All rights reserved. Proprietary and confidential information. Safe Harbor This presentation contains "forward-looking" statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. All statements other than statements of historical or current facts, including, without limitation, statements regarding the cybersecurity threat landscape, our platformization strategy and related progre ...

Core Insights - The adoption of AI agents in enterprises is experiencing significant growth, with production numbers expected to reach 1.3 billion by 2028 [1] Group 1 - The article highlights the importance of enabling customers to safely adopt AI agents across their enterprises while addressing security concerns [1]

Core Insights - Palo Alto Networks, Inc. (PANW) shares have increased by 23.4% over the past three months, outperforming the Zacks Security industry's growth of 15.8% [1][9] - The company is well-positioned to benefit from the expanding global cybersecurity market, projected to grow from $193.73 billion in 2024 to $562.77 billion by 2032 [5] - The company's innovation in AI, automation, and cloud security is enhancing its competitive edge [6] Company Performance - Palo Alto Networks has seen strong adoption of its AI-powered platforms, such as Cortex XSIAM and Prisma AIRS, which are driving multi-product deal growth [9] - The company reported that Cortex XSIAM is its fastest-growing product, with around 400 customers and an average annual recurring revenue (ARR) per customer exceeding $1 million [8] - A significant deal was closed with a leading European bank for over $60 million, which included the adoption of XSIAM [10] Market Trends - The demand for advanced cybersecurity solutions is increasing as enterprises prioritize multi-layered security platforms [5] - The company's Prisma Access Browser is contributing to strong growth in its Secure Access Service Edge (SASE) business, with SASE ARR rising 35% year over year [12] - The Prisma Access Browser is expected to become a key security layer as more work transitions to the cloud and AI tools are integrated into workplaces [13] Financial Outlook - The Zacks Consensus Estimate for Palo Alto Networks' fiscal 2026 total revenues is $10.42 billion, indicating a year-over-year increase of 17.5% [15] - The company is trading at a lower price-to-sales (P/S) multiple of 13.14X compared to the industry average of 13.45X, making it an attractive investment opportunity [19][22] Conclusion - The company is recommended as a buy due to its leadership in AI-driven cybersecurity solutions and reasonable valuation, which offers downside protection [23]

Core Insights - Palo Alto Networks, Inc. (PANW) is a global leader in cybersecurity with a market cap of $145.2 billion, providing AI-powered solutions for network, cloud, and operational security [1] Financial Performance - Analysts anticipate PANW to report an EPS of $0.50 for fiscal Q1 2026, reflecting a 22% increase from $0.41 in the same quarter last year [2] - For fiscal 2026, the expected EPS is $2.13, indicating a 29.9% growth from $1.64 in fiscal 2024 [3] Stock Performance - Over the past 52 weeks, PANW shares have increased by 20.2%, outperforming the S&P 500 Index's return of 18.4%, but lagging behind the Technology Select Sector SPDR Fund's 29.8% surge [4] - Following the Q4 2025 results announcement, PANW shares rose by 3.1% after reporting an adjusted EPS of $0.95 and revenue of $2.54 billion, along with a fiscal 2026 revenue forecast of $10.48 billion to $10.53 billion [5] Analyst Ratings - The consensus rating for PANW stock is "Moderate Buy," with 33 out of 48 analysts recommending "Strong Buy," three "Moderate Buys," 11 "Holds," and one "Strong Sell" [6] - The stock is currently trading above the average analyst price target of $218.26 [6]

Core Insights - Palo Alto Networks, Inc. (PANW) shares have gained 19.5% year to date, underperforming the Zacks Security industry's growth of 20.6% [1][7] - The company is experiencing a slowdown in sales growth, with revenue growth rates in the mid-teen percentage range, down from mid-20s in fiscal 2023 [3][4] - The forecast for fiscal 2026 indicates full-year revenue growth of 14%, with revenues expected to be in the range of $10.475-$10.525 billion [4][7] Financial Performance - In the fourth quarter of fiscal 2025, revenues grew 16% year over year, but the Zacks Consensus Estimate for fiscal 2026 and 2027 suggests revenue growth will remain in the mid-teen percentage range [4][5] - The Zacks Consensus Estimate for the current quarter is $2.46 billion, with year-over-year growth estimated at 15.08% [5] Next-Generation Security (NGS) Growth - NGS annual recurring revenue (ARR) growth has been slowing, with six consecutive quarters of deceleration; fiscal 2026 NGS ARR is expected to be in the range of $7.00-$7.10 billion, indicating a slowdown to 26-27% growth compared to previous years [8][9] - Despite the slowdown, the demand for cloud security and AI-powered solutions remains high [8] Market Position and Opportunities - The global cybersecurity market is projected to grow from $193.73 billion in 2024 to $562.77 billion by 2032, providing a significant addressable market for Palo Alto Networks [9] - The company is leveraging AI innovations, such as Cortex XSIAM and Prisma AIRS, to enhance its competitive position and drive long-term growth [10][11] Strategic Initiatives - The pending acquisition of CyberArk is expected to strengthen Palo Alto Networks' capabilities in identity-driven threat protection, an area where it currently lacks scale [15] - The company has reported strong adoption of its products, with Cortex XSIAM being the fastest-growing product in its history and significant deals closed, including a $60 million-plus deal with a leading European bank [12][14] Valuation - Palo Alto Networks trades at a price-to-sales (P/S) multiple of 13.21X, which is in line with the industry average but lower than some peers like CyberArk and CrowdStrike [16][19] - The reasonable valuation offers some downside protection, making PANW an attractive long-term hold for investors seeking exposure to cybersecurity growth [21]

Core Insights - Palo Alto Networks, Inc. (NASDAQ:PANW) is recognized as one of the best quality stocks to buy according to hedge funds, driven by hedge fund interest and significant profit margins [1] - Tigress Financial Partners initiated coverage on Palo Alto Networks with a Buy rating and a price target of $245, highlighting the company's growth in AI-powered security solutions and strong platform adoption [2] - The company's recent fourth-quarter fiscal 2025 sales growth of 15.8% year over year exceeded analyst forecasts, driven by demand for SASE, XSIAM, and virtual firewall solutions [3] Company Performance - Palo Alto Networks is well-positioned to capitalize on the increasing global demand for cybersecurity, influenced by sophisticated cyber threats, rapid digital transformation, cloud migration, and the adoption of generative AI [3] - The company offers a range of cybersecurity solutions across various regions, including Prisma Access, Strata Cloud Manager, and Prisma AIRS, to safeguard AI ecosystems [4] Market Position - The emphasis on strategic investments in research and development, acquisitions, and careful capital allocation supports the robust growth in the subscription-based Next-Generation Security business [2] - Despite the positive outlook for Palo Alto Networks, there are suggestions that certain AI stocks may offer greater upside potential with less downside risk [5]

Core Insights - Palo Alto Networks (PANW) is enhancing its platform with the introduction of Prisma AIRS, an AI runtime security product aimed at protecting AI applications, models, and data as enterprises increasingly adopt AI tools [1][10] - The company anticipates new attack surfaces emerging from the use of generative AI, necessitating solutions like Prisma AIRS to provide visibility, data loss prevention, and compliance safeguards [2][4] Company Performance - In Q4 of fiscal 2025, Palo Alto Networks reported AI-related Annual Recurring Revenues (ARR) of $545 million, which is 2.5 times higher than the same quarter last year [3][10] - The company aims to achieve a long-term goal of $15 billion in ARR by fiscal 2030, with Prisma AIRS expected to play a crucial role in this strategy [5][10] - The Zacks Consensus Estimate for Palo Alto Networks' total revenues in fiscal 2026 is $10.43 billion, reflecting a year-over-year increase of 13.1% [5] Competitive Landscape - Competitors such as CrowdStrike and Zscaler are also expanding their platforms and innovating with AI, with CrowdStrike reporting $4.66 billion in ARR, a 20% year-over-year growth, and Zscaler reporting $2.9 billion in ARR, reflecting 23% year-over-year growth [6][7] Valuation and Estimates - Palo Alto Networks trades at a forward price-to-sales ratio of 12.71X, slightly below the industry's average of 13.06X [12] - The Zacks Consensus Estimate for fiscal 2026 and 2027 earnings indicates year-over-year growth of 13.2% and 13.4%, respectively, with upward revisions in estimates over the past 30 to 60 days [15]