Palo Alto Networks' SASE ARR Tops $1.3B: Can the Momentum Continue?

Palo Alto Networks (PANW) reported another strong quarter for its Secured Access Service Edge (SASE) business in the first quarter of fiscal 2026. SASE annual recurring revenues (ARR) grew 34% year over year and crossed $1.3 billion. This makes SASE one of the company’s fastest-growing product areas. The company now has about 6,800 SASE customers, including nearly one-third of the Fortune 500.

Moreover, the management stated that Palo Alto Networks is currently the fastest-growing SASE vendor at scale. Growth is mainly coming from customers who want to reduce the number of security tools they use. Many organizations are moving away from older SASE products that do not provide a full view of their networks, cloud workloads, and remote users. During the quarter, a large U.S. cabinet agency signed a $33 million SASE deal covering 60,000 seats after replacing its existing provider.

Palo Alto Networks is also seeing early demand for secure browsers. As companies use more AI tools, secure browsing is becoming more important. The company sold more than 7.5 million secure browser licenses, and bookings grew almost four times compared with last year. This adds another layer to its SASE platform.

Palo Alto Networks benefits from a wide product portfolio and a large customer base. It can also cross-sell SASE to customers already using its other products. Competition in the SASE market is still high, but current numbers show steady demand and ongoing interest in platform-based security. The Zacks Consensus Estimate for PANW’s fiscal 2026 total revenues is pegged at $10.42 billion, indicating a year-over-year increase of 13%.

How Competitors Fare Against PANW

Zscaler (ZS) and Fortinet (FTNT) are key rivals to Palo Alto Networks in the SASE space.

Zscaler is also expanding into browser-based security. ZS offers cloud-native secure access through its ZIA and ZPA platforms. In the fourth quarter of fiscal 2025, Zscaler saw continued demand from customers replacing legacy VPNs with its zero-trust architecture.

Fortinet is growing fast, driven by the rising adoption of its FortiSASE platform. During the third quarter of 2025, Fortinet’s Unified SASE ARR grew 13% year over year. Fortinet stands out by delivering all core SASE capabilities within a single operating system. Fortinet also offers Sovereign SASE, a tailored solution for large enterprises and service providers that require full on-premises or in-country control of their data.

PANW’s Price Performance, Valuation & Estimates

Shares of Palo Alto Networks have gained 1.8% year to date compared with the Zacks Security industry’s growth of 17.6%.

PANW YTD Price Return Performance

From a valuation standpoint, Palo Alto Networks trades at a forward price-to-sales ratio of 12.61X compared with the industry’s average of 12.65X.

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 13.1%, respectively. The estimates for fiscal 2026 and 2027 have both remained unchanged over the past 60 days.

Palo Alto Networks currently carries a Zacks Rank #2 (Buy). 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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