Palo Alto Networks Revenue Grew 34% to $3.41 Billion
Next-Generation Security ARR reached $9.10 billion after a 63% year-over-year increase in the fiscal fourth quarter.
Palo Alto Networks (PANW), the AI cybersecurity company, reported fiscal fourth-quarter revenue of $3.41 billion, up 34% from a year earlier, after 31% year-over-year growth in the immediately preceding quarter.
Next-Generation Security ARR, the annualized run rate of the company’s subscription and support portfolio, reached $9.10 billion, up 63% from a year earlier, after 60% year-over-year growth to $8.1 billion in the fiscal third quarter. Chairman and Chief Executive Officer Nikesh Arora said the company added nearly $1 billion of net new NGS ARR in the quarter and pointed to a $20 billion fiscal 2030 NGS ARR target.
Remaining performance obligations were $21.2 billion, up 34% from a year earlier, after 36% year-over-year growth to $18.4 billion in the prior quarter. Chief Financial Officer Dipak Golechha said the company exceeded its guidance across the board, citing strength across Network & AI Security, Cortex, and Idira.
GAAP operating income was $172 million, compared with a GAAP operating loss of $183 million in the fiscal third quarter. Non-GAAP operating income was $1.0 billion, compared with $814 million in the prior quarter. GAAP results included a $282 million net loss, or ($0.35) per share, after a $177 million GAAP net loss, or ($0.22) per share, in the fiscal third quarter. Non-GAAP net income was $853 million, or $1.02 per share, compared with $684 million, or $0.85 per share, in the prior quarter.
Net cash provided by operating activities was $1.4 billion, compared with $871 million in the fiscal third quarter. Adjusted free cash flow was $1.3 billion, compared with $910 million in the prior quarter. Adjusted free cash flow margin was 37.8% in the fiscal fourth quarter, compared with a trailing 12-month margin of 38.5% following the fiscal third quarter. For the full fiscal year 2026, adjusted free cash flow margin was 38.4%.
The company acquired Console, an AI-native platform for agentic workflows across enterprise operations, and said the deal will expand the role of Cortex across broader enterprise agentic transformation.
For the fiscal first quarter of 2027, Palo Alto Networks expects total revenue of $3.300 billion to $3.310 billion, representing year-over-year growth of 33% to 34%. That range is below the $3.345 billion to $3.355 billion outlook it issued after the fiscal third quarter. The company expects Next-Generation Security ARR of $9.54 billion to $9.56 billion, representing 63% year-over-year growth, and remaining performance obligations of $20.8 billion to $20.9 billion, representing 34% to 35% year-over-year growth. Diluted non-GAAP net income is expected at $0.96 to $0.98 per share, using 837 million to 844 million shares outstanding.
For fiscal year 2027, the company expects total revenue of $14.10 billion to $14.20 billion, representing 23% to 24% year-over-year growth. Next-Generation Security ARR is expected at $11.075 billion to $11.175 billion, representing 22% to 23% year-over-year growth, and remaining performance obligations at $25.2 billion to $25.4 billion, representing 19% to 20% year-over-year growth. Non-GAAP operating margin is expected at 29.5%, and adjusted free cash flow margin at 38.0%. Diluted non-GAAP net income is expected at $4.16 to $4.19 per share, using 844 million to 847 million shares outstanding. Golechha said the profitable growth framework continues to scale and that the company is confident in achieving a 40% adjusted free cash flow margin in fiscal 2028.