Palo Alto Networks reported strong fiscal fourth-quarter 2026 results, with accelerating adoption of its next-generation cybersecurity platforms driving substantial growth in revenue, recurring revenue and cash generation.
Fourth-quarter revenue increased 34% year over year to $3.41 billion, compared with $2.54 billion in the prior-year period.
Next-Generation Security ARR increased 63% to $9.10 billion, while remaining performance obligations rose 34% to $21.2 billion. Management said the company added nearly $1 billion of net new NGS ARR during the fourth quarter alone.
For the full fiscal year, Palo Alto Networks generated $11.48 billion in revenue, compared with $9.22 billion in fiscal 2025, representing growth of approximately 25%. Subscription and support revenue reached $9.20 billion, up from $7.42 billion.
Fourth-quarter non-GAAP operating income surpassed $1 billion, increasing from $768 million a year earlier.
Non-GAAP net income increased to $853 million from $673 million, while diluted non-GAAP EPS rose to $1.02 from $0.95.
The company also produced strong cash generation.
Net cash provided by operating activities increased to $1.4 billion from $1.0 billion in the prior-year quarter, while adjusted free cash flow increased to $1.3 billion from $954 million.
Palo Alto Networks finished fiscal 2026 with an adjusted free cash flow margin of 38.4%, supporting management’s longer-term goal of reaching a 40% adjusted free cash flow margin in fiscal 2028.
On a GAAP basis, fourth-quarter operating income was $172 million and the company recorded a net loss of $282 million, or $0.35 per diluted share. Its non-GAAP reconciliation included items such as share-based compensation, acquisition-related expenses, amortization of acquired intangible assets and a $524 million change in the fair value of convertible senior notes and capped calls.
Palo Alto Networks also announced the acquisition of Console, an AI-native platform designed to enable agentic workflows across enterprise operations.
The company plans to use Console to extend its Cortex platform beyond security operations and further into enterprise agentic transformation.
Management provided a strong outlook for fiscal 2027.
For the first quarter, Palo Alto Networks expects Next-Generation Security ARR of $9.54 billion to $9.56 billion, representing 63% year-over-year growth.
First-quarter revenue is expected to reach $3.30 billion to $3.31 billion, representing growth of 33% to 34%, with diluted non-GAAP EPS of $0.96 to $0.98.
For fiscal 2027, Palo Alto Networks expects Next-Generation Security ARR of $11.075 billion to $11.175 billion, up 22% to 23%.
Full-year revenue is projected at $14.10 billion to $14.20 billion, representing growth of 23% to 24%.
The company is also targeting a 29.5% non-GAAP operating margin, diluted non-GAAP EPS of $4.16 to $4.19 and an adjusted free cash flow margin of 38%.
The results reinforce Palo Alto Networks’ increasing focus on platform consolidation and AI-driven cybersecurity as enterprises seek to manage a more complicated threat environment while reducing fragmented security infrastructure.
KEY QUOTES:
“We delivered a strong Q4 to close out the year, adding nearly $1 billion of Net New NGS ARR in a single quarter. The latest advancements in AI are elevating cybersecurity to the top of the CIO priority list, and will serve as durable tailwinds as we progress towards our $20 billion FY30 NGS ARR target.”
Nikesh Arora, Chairman and Chief Executive Officer of Palo Alto Networks
“We delivered a strong finish to a record year and exceeded our guidance across the board, fueled by strength across our Network & AI Security, Cortex, and Idira platforms. Our profitable growth framework continues to scale effectively, reinforcing our confidence in achieving 40% adjusted free cash flow margin in FY28.”
Dipak Golechha, Chief Financial Officer of Palo Alto Networks
