Palo Alto Networks reported fiscal fourth-quarter earnings that topped estimates while revenue met Wall Street targets. The cybersecurity firm's fiscal 2026 guidance for Palo Alto stock came in above expectations, sending shares up.
Palo Alto reported earnings after the market close on Monday.
Bank of America analyst Tal Liani upgraded Palo Alto stock to buy from neutral amid strong fiscal Q4 results.
"At a high level, the company's strategy appears to be working well, with 1400 platform deals, and software is driving up growth, accounting now for 56% of product revenues versus 44% last year," Liani said in a report
At Deutsche Bank, analyst Brad Zelnick said in a report: "Newly initiated fiscal 2026 guidance exceeded expectations on every metric, including total revenue for which the street was bracing for a miss."
In the Palo Alto earnings report, fiscal Q4 profit rose 27% to 95 cents on an adjusted basis.
Further, revenue for Palo Alto climbed 16% to $2.5 billion, including acquisitions. Analysts had expected earnings of 89 cents a share on sales of $2.5 billion.
'Platformization' Jelling?
"The primary driver of success this quarter was the company's platformization strategy based on the value proposition of improved security (not lower cost) that again yielded multiple eight-figure deals as customers continue to embrace the strategy," said William Blair analyst Jonathan Ho in a report. "Palo Alto is also undergoing a shift in firewall mix toward software delivered form factors while hardware-based firewall results were in line with expectations."
Chief Executive Nikesh Arora last year unveiled a cloud platform strategy to drive growth.
In fiscal Q4, annual recurring revenue (ARR) from subscription-based cloud computing products rose 32% to $5.6 billion, topping estimates of $5.551 billion.
"The strength was seemingly broad based and driven by large strategic customer commitments including a record 150 net new platformizations in the quarter," added Zelnick. "Seasonally, this is what an enterprise fiscal Q4 is supposed to look like, and it stands in contrast to recent results from on-calendar peers."
Rival Fortinetreported underwhelming second quarter results.
Palo Alto Stock: CyberArk Deal
For fiscal 2026, the cybersecurity firm said it expects revenue in a range of $10.47 billion to $10.52 billion versus consensus estimates of $10.423 billion.
On the stock market today, PANW stock rose 3.1% to close at 181.56, bucking a sell-off in the Nasdaq composite. Shares had retreated about 3% in 2025 heading into the Palo Alto earnings report.
Palo Alto stock pulled back in July after the company announced the $25 billion acquisition of CyberArk. The CyberArk deal had raised questions over Palo Alto's organic growth.
"The punchline is that we believe (fiscal Q4) and the outlook demonstrate the proposed CyberArk acquisition is coming from a position of strength, debunking the organic weakness concern," said RBC Capital analyst Matthew Hedberg in a report.
In addition, Palo Alto announced the retirement of co-founder and Chief Technology Officer Nir Zuk. Chief Product Officer Lee Klarich will become the new CTO.
RPO A Key Financial Metric
Palo Alto has de-emphasized billings guidance, a sales growth metric, and has provided an outlook for remaining performance obligations instead. RPO is the total value of contracted revenue that a company has not yet recognized as revenue on its financial statements.
In fiscal Q4, RPO rose 24% to $15.8 billion, topping estimates of $15.26 billion. In fiscal 2026, Palo Alto said it expects RPO of $18.65 billion, above estimates of $18.12 billion.
Palo Alto said it expects subscription ARR of over $7 billion in fiscal 2026, versus estimates of $6.94 billion.
Meanwhile, Palo Alto has expanded from its roots in firewall network appliances through acquisitions. Firewall appliances protect computer networks by blocking online intrusions and monitoring web-based apps.
Palo Alto Stock Technical Ratings
Further, Palo Alto has built a broad cloud-based security platform that spans security operations center management, endpoint security tools and Secure Access Service Edge, or SASE. CyberArk would add an identity security platform. That deal is expected to close in 2026.
Palo Alto stock holds an IBD Composite Rating of 66 out of 99, according to IBD Stock Checkup.
Meanwhile, PANW stock has an Accumulation/Distribution Rating of D, according to IBD MarketSurge analysis. That rating analyzes price and volume changes in a stock over the past 13 weeks of trading.
Follow Reinhardt Krause on X, formerly Twitter, @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing.
