Palo Alto Networks Q1 Earnings and Revenues Surpass Estimates

Palo Alto Networks PANW delivered first-quarter fiscal 2026 non-GAAP earnings of 93 cents per share, which beat the Zacks Consensus Estimate by 4.5%. The figure improved 19.2% year over year.

Palo Alto Networks’ earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with an average surprise of 5%.

PANW’s first-quarter fiscal 2026 revenues of $2.47 billion surpassed the Zacks Consensus Estimate by 0.52%. This compares to the year-ago revenues of $2.14 billion.

Palo Alto Networks’ Q1 2026 Details

Product revenues rose 22.6% year over year to $434 million, accounting for 17.5% of total revenues. Subscription and Support revenues, which represented 82.5% of total revenues, grew 14.3% year over year to $2.04 billion, driven by continued momentum across SASE, Software Firewalls, and XSIAM offerings.

Palo Alto Networks, Inc. Price, Consensus and EPS Surprise

Palo Alto Networks, Inc. price-consensus-eps-surprise-chart | Palo Alto Networks, Inc. Quote

PANW’s Remaining Performance Obligation stood at $15.5 billion, up 24% year over year. Meanwhile, Next-Generation Security annualized recurring revenues reached $5.85 billion, representing 29% year-over-year growth.

Non-GAAP gross profit grew to $1.90 billion, with the non-GAAP gross margin expanding to 76.9%, up 110 basis points sequentially. Non-GAAP operating income increased to $746 million, while the non-GAAP operating margin held strong at 30.2%, marking 40 bps of year-over-year contraction.

PANW’s Balance Sheet & Cash Flow

As of Oct. 31, 2025, Palo Alto Networks had $3.07 billion in cash and cash equivalents, up from $2.27 billion as of July 31, 2025.

The company generated $1.77 billion in operating cash flow and reported non-GAAP adjusted free cash flow of $1.71 billion in the first quarter of fiscal 2026, reflecting a 69.2% adjusted free cash flow margin.

Palo Alto Networks' FY26 Guidance

For fiscal 2026, Palo Alto Networks now expects revenues between $10.50 billion and $10.54 billion, revised from the previously announced target of $10.48-$10.53 billion. The Zacks Consensus Estimate for fiscal 2026 revenues is pegged at $10.42 billion, indicating a rise of 13%.

Remaining Performance Obligations are still projected in the range of $18.6-$18.7 billion, and Next-Gen Security ARR is forecasted between $7.00 billion and $7.10 billion, implying 26-27% annual growth. The company projects a non-GAAP operating margin of 29.5-30% and an adjusted free cash flow margin of 38-39%.

PANW’s non-GAAP earnings per share are expected in the band of $3.80-$3.90, based on 710-716 million diluted shares outstanding, which is an improvement from the previously announced earnings target of $3.75-$3.85 per share. The Zacks Consensus Estimate for fiscal 2026 earnings is pegged at $3.79, indicating a rise of 13.6%.

For the second quarter of fiscal 2026, Palo Alto Networks projects revenues between $2.57 billion and $2.59 billion, indicating 14-15% year-over-year growth. The Zacks Consensus Estimate for the second quarter of fiscal 2026 revenues is pegged at $2.57 billion, indicating a rise of 13.9%.

RPO is expected in the range of $15.75-$15.85 billion, and Next-Gen Security ARR is forecasted between $6.11 billion and $6.14 billion, suggesting 28% growth.

Non-GAAP earnings per share are projected in the range of 93 to 95 cents, indicating 15-17% year-over-year growth and using 711-715 million diluted shares. The Zacks Consensus Estimate for the second quarter of fiscal 2026 earnings is pegged at 92 cents, indicating a rise of 13.6%.

PANW’s Zacks Rank & Stocks to Consider

Currently, PANW carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader Zacks Computer and Technology sector are Semtech SMTC, Pure Storage Inc. PSTG and Docusign DOCU, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Semtech Corporation shares have gained 5.9% year to date. SMTC is scheduled to report third-quarter fiscal 2026 results on Nov. 24.

Shares of PSTG have risen 33.7% year to date. It is set to report third-quarter fiscal 2026 results on Dec. 2.

Shares of DOCU have declined 27.1% year to date. It is set to report third-quarter fiscal 2026 results on Dec. 4.

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