Palo Alto Networks reported fiscal first‑quarter 2026 results that surpassed expectations, with revenue reaching $2.47 billion—an increase of 16% from the $2.10 billion earned in the same period a year earlier. The company’s adjusted earnings per share of $0.93 beat the consensus estimate of $0.89, a $0.04 or 4.5% lift that reflects disciplined cost management and a favorable mix of high‑margin subscription and support contracts.
Revenue growth was driven primarily by a 15% rise in subscription and support revenue, which grew to $1.78 billion from $1.53 billion a year ago, and a 22.6% increase in product revenue, which climbed to $0.69 billion from $0.55 billion. The stronger product mix, fueled by demand for next‑generation security (NGS) solutions, offset modest headwinds in legacy product lines.
Operating margin expanded to a non‑GAAP 30.2%, up from 27.5% a year earlier, as the company leveraged scale and pricing power in its high‑margin subscription business. The margin improvement, combined with a $0.04 EPS beat, underscores the effectiveness of Palo Alto’s platformization strategy and its ability to convert revenue growth into profitability.
The company reported NGS annual recurring revenue of $5.9 billion, up 29% from $4.60 billion a year earlier, confirming the rapid adoption of its integrated security platform. Subscription and support revenue grew 15% year‑over‑year, while product revenue rose 22.6%, reflecting strong demand for AI‑driven security capabilities.
Palo Alto Networks raised its full‑year revenue outlook to $10.50 billion–$10.54 billion, a 14% increase from the prior guidance of $9.17 billion–$9.19 billion. The company reaffirmed its adjusted free‑cash‑flow margin guidance of 37.5%–38% and projected Q2 revenue of $2.58 billion with EPS of $0.93–$0.95. Management cited continued demand for AI‑enabled security and the integration of Chronosphere’s observability platform as key drivers of the outlook.
The acquisition of Chronosphere for $3.35 billion was highlighted as a strategic move to enhance data‑driven security for AI workloads. Board changes included the appointment of Mark Goodburn and the retirement of long‑time director Mary Pat McCarthy. While the earnings beat was welcomed, investors reacted cautiously to the guidance, which was viewed as largely in line with expectations, tempering enthusiasm for the company’s high valuation multiples.
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