Can PANW's Platform Deals Drive Sustainable Double-Digit Growth?

Palo Alto Networks PANW finished fiscal 2025 with strong results, helped by more customers choosing its platforms. In the fourth quarter of fiscal 2025, the company saw a record number of large platform deals.

The platformization strategy involves getting customers to adopt multiple Palo Alto Networks’ products spanning across network, cloud, and security operations. Through this strategy, Palo Alto Networks is enabling larger customers to adopt its full security platform, while helping the company grow faster and secure bigger deals.

In the fourth quarter of fiscal 2025, customers with more than $20 million in Next Gen Security (“NGS”) Annual Recurring Revenue (ARR) saw a year-over-year surge of nearly 80%. Customers with more than $5 million and $10 million in ARR also increased about 50%. These gains show that large enterprises are consolidating security budgets with Palo Alto Networks.

PANW added $490 million in NGS ARR in the quarter, led by software firewalls, SASE and XSIAM. Management said retention rates are higher among customers who use multiple platforms. Some key customer wins during the fourth quarter include a global consulting firm signing a $100-million-plus contract, making it a $50-million ARR customer. A European bank signed a $60-million platform deal led by XSIAM and a U.S. insurer agreed to a $33-million multi-platform deal covering AI, cloud and network security.

The above-mentioned factors demonstrate how platform deals are helping Palo Alto Networks drive steady growth while building stronger customer relationships. As more firms consolidate their security tools, this trend could continue to support Palo Alto Networks’ double-digit growth in the coming year.

For fiscal 2026, the company expects revenue growth of 14%, while NGS ARR is expected to grow 26-27%. The Zacks Consensus Estimate for Palo Alto Networks’ fiscal 2026 total revenues is pegged at $10.42 billion, indicating a year-over-year increase of 13%.

How Competitors Fare Against PANW

Competitors like CrowdStrike CRWD and Zscaler ZS are also gaining ground through platform expansion and AI innovation.

CrowdStrike ended its second quarter of fiscal 2026 with $4.66 billion in ARR, reflecting 20% year-over-year growth. The robust increase was fueled by the growing adoption of CrowdStrike’s Falcon Flex subscription model.

Zscaler ended its third quarter of fiscal 2025 with $2.9 billion in ARR, reflecting 23% year-over-year growth. The robust rally was driven by Z-Flex and rapid traction across Zscaler’s three growth pillars — Zero Trust Everywhere, Data Security Everywhere and Agentic Operations.

PANW’s Price Performance, Valuation & Estimates

Shares of Palo Alto Networks have gained 20.8% year to date compared with the Zacks Security industry’s growth of 14.6%.

PANW YTD Price Return Performance

From a valuation standpoint, Palo Alto Networks trades at a forward price-to-sales ratio of 13.04X, slightly lower than the industry’s average of 13.23X.

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 13.5% and 13.2%, respectively. The estimates for fiscal 2026 have been revised upward over the past 30 days, while the estimates for 2027 earnings have been revised upward over the past 60 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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