Latest quarter
Palo Alto Networks reported Q4 FY2026 revenue of $3.4 billion, up 34.5% from Q4 FY2025. The available materials do not provide the quarter’s consensus or a consensus comparison for adjusted EPS, so Palo Alto Networks did not provide a basis here to state whether either measure beat, missed or matched the consensus.
The company reported diluted EPS of −$0.35, compared with $0.36 a year earlier. Palo Alto Networks said its Q4 revenue growth reflected broad strength across its platforms, while its fiscal-2026 filing attributed annual revenue growth to adoption of its portfolio and contributions from acquisitions.
Gross margin was 67.6%, versus 73.2% a year earlier, and operating margin was 5.04%, versus 19.6%. The filing said higher cloud-hosting costs, acquired-intangible amortization and personnel costs contributed to higher costs for subscription and support offerings. Palo Alto Networks reported free cash flow of $1.3 billion, up 34.3% year over year.
| Q4 FY2026 | Q4 FY2025 | Change | |
|---|---|---|---|
| Revenue | $3.4 billion | $2.5 billion | 34.5% |
| Diluted EPS | −$0.35 | $0.36 | −197.2% |
| Gross margin | 67.6% | 73.2% | −5.7 percentage points |
| Operating margin | 5.04% | 19.6% | −14.6 percentage points |
| Free cash flow | $1.3 billion | $934.0 million | 34.3% |
What management said on the call
Nikesh Arora said Q4 bookings momentum accelerated for a second consecutive quarter and attributed the company’s results to platformization adoption and customer demand to strengthen cybersecurity defenses as AI changes the security landscape. He said the company ended fiscal 2026 with remaining performance obligations of $21.2 billion and next-generation security ARR of $9.1 billion.
Arora said customers are discussing modernization and platformization because they want to identify and respond to vulnerabilities more quickly. He told analysts that customer deployment decisions take time because companies evaluate their environments, conduct proofs of concept and fit cybersecurity projects alongside other priorities. He said Palo Alto Networks offers staggered payments, contract alignment and deployment ahead of existing-vendor replacement to support platformization, but did not quantify the effect of those arrangements on future results.
Arora said the company closed its CyberArk and Chronosphere acquisitions in fiscal 2026, and said their businesses were gaining traction within Palo Alto Networks’ platform architecture. Asked about CyberArk, he said the company had focused first on maintaining and accelerating its momentum, while working on cost synergies and product expansion. He also said Palo Alto Networks closed acquisitions of Embrace and Console, with Embrace intended to add real-user monitoring to its observability platform.
Dipak Golechha said Q4 gross margin was affected by a mix shift toward faster-growing SaaS offerings, which had not reached their gross-margin maturity. He said Palo Alto Networks expects cloud-hosting costs to grow faster than revenue in fiscal 2027 as cloud and SaaS become a larger share of revenue, while memory and storage costs are also expected to rise in the hardware business. Golechha said the company is using supplier relationships and selective pricing actions for hardware, and expects operating leverage and acquisition synergies to more than offset higher cost of goods sold in fiscal 2027.
When analysts asked about guidance, Arora said Palo Alto Networks considers consensus alongside business plans and expected execution; Golechha said the company also evaluates pipeline, traction, resource requirements and territory planning. Arora did not quantify the contribution of AI-related demand to the outlook.
Guidance
Palo Alto Networks guided for Q1 FY2027 revenue of $3.3 billion to $3.3 billion, next-generation security ARR of $9.5 billion to $9.6 billion, remaining performance obligations of $20.8 billion to $20.9 billion, and non-GAAP EPS of $0.96 to $0.98. For FY2027, the company expects revenue of $14.1 billion to $14.2 billion, next-generation security ARR of $11.1 billion to $11.2 billion, remaining performance obligations of $25.2 billion to $25.4 billion, non-GAAP operating margin of 29.5%, non-GAAP EPS of $4.16 to $4.19 and adjusted free-cash-flow margin of 38.0%. The provided materials do not state a previous guidance range for comparison or identify guidance the company stopped giving.
| Metric | For | Guide | Previous guide | Change |
|---|---|---|---|---|
| Free cash flow growth, Adjusted | FY2027 | 38.0% | — | New |
| Units, non-GAAP | FY2027 | 844,000,000–847,000,000 | — | — |
| EPS, non-GAAP | FY2027 | $4.16–$4.19 | — | — |
| Operating margin, non-GAAP | FY2027 | 29.5% | — | New |
| Revenue | FY2027 | $14.1 billion–$14.2 billion | — | New |
| Backlog, Remaining Performance Obligations | FY2027 | $25.2 billion–$25.4 billion | — | New |
| Revenue, Next Generation Security Arr | FY2027 | $11.1 billion–$11.2 billion | — | New |
| Units, non-GAAP | Q1 FY2027 | 837,000,000–844,000,000 | — | — |
| EPS, non-GAAP | Q1 FY2027 | $0.96–$0.98 | — | — |
| Revenue | Q1 FY2027 | $3.3 billion–$3.3 billion | — | New |
| Backlog, Remaining Performance Obligations | Q1 FY2027 | $20.8 billion–$20.9 billion | — | New |
| Revenue, Next Generation Security Arr | Q1 FY2027 | $9.5 billion–$9.6 billion | — | New |
| EPS | Q1 FY2027 | $0.96–$0.98 | — | New |
| Free cash flow growth | FY2027 | 38.0% | — | New |
| EPS | FY2027 | $4.16–$4.19 | — | New |
| Operating margin | FY2027 | 29.5% | — | New |