PANW Bets on Cortex XSIAM: Is This the Next Growth Engine?

Palo Alto Networks’ (PANW) security operations platform, Extended Security Intelligence and Automation Management (“XSIAM”), is seeing strong growth and could become an important factor behind the company’s future growth. On it fourth-quarter fiscal 2025 earnings call, management described Cortex XSIAM as the fastest-growing product in its history.

Palo Alto Networks ended the fourth quarter with about 400 customers being deployed on XSIAM with average annual recurring revenue (ARR) per customer of more than $1 million. Moreover, around 25% of these customers were Global 2000 companies, which signifies strong adoption among large enterprises.

Palo Alto Networks also added new modules, such as Exposure Management, to XSIAM during the fourth quarter. This will now help organisations to identify and fix security gaps before an attack happens, and provide customers with more use cases, supporting the company’s plan to offer multiple security tools on one platform. The company also reported a net retention rate of about 120% for platform customers, with near-zero churn, creating a strong base for upselling products like XSIAM.

Palo Alto Networks also closed a large deal in the fourth quarter. A leading European bank signed a $60 million-plus deal, which included adopting XSIAM. The bank wanted to reduce security complexity and manage costs, and as a result, the customer now uses three Palo Alto Networks platforms.

In the fourth quarter, more than 60% of XSIAM customers reported a mean time to respond of under 10 minutes, which highlights the benefits of Palo Alto Networks’ security operations platform. As XSIAM continues to scale, it can very well position itself as key part of Palo Alto Networks’ growth strategy. The company’s sustained focus on introducing advanced solutions is likely to help it carry the momentum of double-digit revenue growth. The Zacks Consensus Estimate for fiscal 2026 and 2027 indicates revenue growth of around 13%.

How Competitors Fare Against PANW

Competitors like CrowdStrike (CRWD) and SentinelOne (S) are also gaining ground through platform expansion and AI innovation.

CrowdStrike armed Falcon Next-Gen SIEM with features like fast search, AI integration, a cloud-native offering with scalability of up to one petabyte of data ingestion per day. The company, during its first-quarter fiscal 2026 earnings release, reported that its Next-Gen SIEM ARR grew more than 100% on a year-over-year basis.

Though comparatively a small competitor, SentinelOne posted first-quarter fiscal 2026 year-over-year growth of 24% in its ARR. The growth was fueled by the rising adoption of SentinelOne’s AI-first Singularity platform and Purple AI.

PANW’s Price Performance, Valuation and Estimates

Shares of Palo Alto Networks have gained 1.4% year to date compared with the Security industry’s growth of 8.8%.

PANW YTD Price Return Performance

From a valuation standpoint, Palo Alto Networks trades at a forward price-to-sales ratio of 11.7X, slightly lower than the industry’s average of 12.11X.

PANW Forward 12-Month P/S Ratio

The Zacks Consensus Estimate for Palo Alto Networks’ fiscal 2026 and 2027 earnings implies year-over-year growth of 9.9% and 14.5%, respectively. The estimates for fiscal 2026 and 2027 earnings have been revised upward over the past seven days.

Palo Alto Networks currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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