PANW changes
Pick any two versions below to diff them.
- Price
- $330.89
- Discount category
- Pricey
- Next earnings
- 2026-11-18
- Next earnings is estimate
- No
- Company name
- Palo Alto Networks
- Sector
- Cybersecurity software
- About
- Palo Alto Networks sells cybersecurity products and services to companies and governments. Its platforms cover network security, such as firewalls and secure access, cloud security, security operations (Cortex), AI security (Prisma AIRS), identity security and observability. In fiscal 2026 it bought CyberArk, an identity security company, and Chronosphere, an observability company, and it bought four smaller companies in 2026. It has more than 70,000 customers. Revenue was $11.48 billion in fiscal 2026, and subscription and support revenue was 80.1% of it. Next-Generation Security ARR, the yearly value of its newer products, was $9.10 billion at July 31, 2026. Its fiscal year ends on July 31.
- Thesis
- The market doubts that Palo Alto Networks can turn its large 2026 purchases into steady organic growth and higher profit. It paid about $21.1 billion for CyberArk and $3.0 billion for Chronosphere in early 2026, and it bought four smaller companies. These deals raised Next-Generation Security ARR 63% to $9.10 billion at July 31, 2026, but much of that growth came from the purchases. GAAP operating income fell to $695 million in fiscal 2026 from $1,243 million, because of amortization, integration costs and share-based compensation. In February 2026, the company lowered its fiscal 2026 non-GAAP EPS guidance to include CyberArk. Investors also ask whether the security tools of cloud providers and new AI tools can take part of the market. For the gap to close, three things must be true. Next-Generation Security ARR must reach the fiscal 2027 guidance of $11.075 billion to $11.175 billion, or growth of 22% to 23% with the purchases in the base. The non-GAAP operating margin must reach the guided 29.5% and the adjusted free cash flow margin the guided 38.0% in fiscal 2027, on the way to the 40% target for fiscal 2028. Identity and observability sales must grow on the platform, which shows that the purchases add value. The Q1 fiscal 2027 report on November 18, 2026 is the first test, and the full fiscal 2027 results in about September 2027 give the full evidence. If these checks pass, the gap can close over the next four to six quarters. The main reason it may not close is slower organic growth that the purchases now hide.
- Risks
- The company must integrate CyberArk and Chronosphere, its two largest purchases. From the purchase dates to July 31, 2026, the two companies added $930 million of revenue and an operating loss of $797 million. If identity and observability sales do not grow on the platform, the purchases can lower returns and cause goodwill impairments. Competition is strong. Cloud providers add their own security tools, and other platforms compete for the same budgets. New AI tools can change how companies find and stop attacks. Slower growth of Next-Generation Security ARR would show this. Share-based compensation-related charges were $1.71 billion in fiscal 2026, or about 15% of revenue. Shares outstanding rose to 818 million on August 31, 2026 from 668 million a year earlier, mainly because of the stock paid for CyberArk. The CyberArk purchase made the company's operations in Israel much larger. Conflict in the Middle East can disrupt work there. The 0% convertible notes due 2030 can convert because the share price is above the conversion price of about $211.24. The company pays the principal in cash, and changes in the fair value of the notes and capped calls cause large non-cash gains and losses in GAAP results.
- Balance sheet
- Cash: $3.1B Debt: $1.1B Net cash: $2.0B Undrawn credit line: $400M, to April 2028 Debt due within 12 months: $0.0M Last debt due: 2030 Palo Alto Networks has little debt. Its only debt is the 0% convertible senior notes due June 15, 2030, which it took over with CyberArk. The principal was $1.1 billion at July 31, 2026, after holders converted $153 million of notes for $160 million of cash in May 2026. The company carries the notes at fair value, which was $1.8 billion, because the share price was above the conversion price of about $211.24. At conversion, it pays the principal in cash and can pay the rest in cash or shares, and capped calls with cap prices of about $287 to $291 lower the dilution. Cash is cash and short-term investments of $3.07 billion at July 31, 2026, and the company also had long-term investments of $4.84 billion. The $400 million revolving credit facility, which matures on April 13, 2028, was undrawn. Adjusted free cash flow was $4.41 billion in fiscal 2026. The company paid about $2.3 billion of cash for CyberArk, $2.8 billion for Chronosphere and $1.0 billion for its own shares in fiscal 2026, and about $500 million for Console in September 2026. $1.0 billion of buyback authorization was left at July 31, 2026, and it expires on December 31, 2026. As of 2026-07-31.
- Checkpoints
- Nov 18, 2026: Q1 fiscal 2027 results: ARR after the purchases. Pending. Watch: Next-Generation Security ARR at or above the guided $9.54 billion to $9.56 billion and a confirmed or higher fiscal 2027 guidance pass; ARR below the range or lower fiscal 2027 guidance fail. 2028: Fiscal 2028 free cash flow margin target. Pending. Watch: An adjusted free cash flow margin of 40% in fiscal 2028 with ARR growth near 20% passes; a margin below 38% or much slower growth fails.
- Recent events
- 2026-11-03: Palo Alto Networks said that it will report Q1 fiscal 2027 results after the market closes on November 18, 2026, with a webcast at 4:30 p.m. ET. 2026-09-01: Palo Alto Networks reported Q4 fiscal 2026 results. Revenue grew 34% to $3.41 billion, Next-Generation Security ARR grew 63% to $9.10 billion and remaining performance obligations grew 34% to $21.2 billion. The GAAP net loss was $282 million, including a $524 million loss from the change in fair value of the convertible notes and capped calls from CyberArk. Non-GAAP EPS was $1.02. For fiscal 2026, revenue was $11.48 billion and the adjusted free cash flow margin was 38.4%. For fiscal 2027, the company guides revenue of $14.10 billion to $14.20 billion and non-GAAP EPS of $4.16 to $4.19. On the same day, it completed the purchase of Console, an AI agent platform, for about $500 million in cash. 2026-08-27: Palo Alto Networks completed the purchase of Embrace, a real user monitoring company, for its observability platform. 2026-06-02: Palo Alto Networks reported Q3 fiscal 2026 results. Revenue grew 31% to $3.0 billion, including $388 million from CyberArk and Chronosphere. Next-Generation Security ARR grew 60% to $8.1 billion, including $1.6 billion from the two companies. Non-GAAP EPS was $0.85. It raised its fiscal 2026 guidance to revenue of $11.415 billion to $11.425 billion and non-GAAP EPS of $3.77 to $3.79. 2026-04-14: Palo Alto Networks completed the purchase of Koi Security, an endpoint security company for AI agents, for $231 million. On May 29, 2026, it also completed the purchase of Portkey, an AI gateway company. 2026-03-10: The board approved an additional $1.0 billion of share buybacks, to December 31, 2026. The company had bought about 6.8 million shares for $1.0 billion on February 20 and 24, 2026, at an average price of $147.69. 2026-02-17: Palo Alto Networks reported Q2 fiscal 2026 results. Revenue grew 15% to $2.59 billion, Next-Generation Security ARR grew 33% to $6.3 billion and non-GAAP EPS was $1.03. It changed its fiscal 2026 guidance to include CyberArk and Chronosphere: revenue rose to $11.28 billion to $11.31 billion, but non-GAAP EPS fell to $3.65 to $3.70 from $3.80 to $3.90. 2026-02-11: Palo Alto Networks completed the purchase of CyberArk. CyberArk shareholders received $45.00 in cash and 2.2005 Palo Alto Networks shares for each share, for a total of $21.1 billion. The company took over CyberArk's $1.25 billion of 0% convertible notes due 2030. 2026-01-29: Palo Alto Networks completed the purchase of Chronosphere, an observability company, for $3.0 billion, mostly in cash.