Palo Alto Networks Q2 Earnings and Revenues Surpass Estimates

Palo Alto Networks PANW delivered second-quarter fiscal 2026 non-GAAP earnings of $1.03 per share, which beat the Zacks Consensus Estimate by 10.8%. The figure improved 27.2% year over year.

Palo Alto Networks’ earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with an average surprise of 6.8%.

PANW’s second-quarter fiscal 2026 revenues of $2.59 billion surpassed the Zacks Consensus Estimate by 0.50%. This compares to the year-ago revenues of $2.26 billion.

Palo Alto Networks’ Q2 2026 Details

Product revenues rose 22.1% year over year to $514 million, accounting for 19.8% of total revenues. Subscription and Support revenues, which represented 80.2% of total revenues, grew 13.3% year over year to $2.08 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 $16 billion, up 23% year over year. Next-Generation Security annualized recurring revenues reached $6.33 billion, representing 33% year-over-year growth.

Non-GAAP gross profit grew to $1.98 billion, with the non-GAAP gross margin at 76.1%. Non-GAAP operating income increased to $785 million, while the non-GAAP operating margin held strong at 30.3%, marking continued profitability strength.

PANW’s Balance Sheet & Cash Flow

As of Jan. 31, 2026, Palo Alto Networks had $4.54 billion in cash and cash equivalents and short-term investments.

The company generated $3.75 billion in trailing 12-month adjusted free cash flow, reflecting strong cash generation in the second quarter of fiscal 2026.

PANW’s FY26 Guidance

For fiscal 2026, Palo Alto Networks now expects revenues in the range of $11.28 billion to $11.31 billion, suggesting year-over-year growth of 22-23%. The Zacks Consensus Estimate for fiscal 2026 revenues is pegged at $10.5 billion.

Remaining Performance Obligations are projected to be in the range of $20.2-$20.3 billion, while Next-Gen Security ARR is forecasted between $8.52 billion and $8.62 billion, implying 53-54% annual growth. The company projects a non-GAAP operating margin in the range of 28.5% to 29.0% and an adjusted free cash flow margin of 37%.

PANW’s non-GAAP earnings per share are expected in the band of $3.65 to $3.70. The Zacks Consensus Estimate for fiscal 2026 earnings is pegged at $3.94.

For the third quarter of fiscal 2026, Palo Alto Networks projects revenues between $2.941 billion and $2.945 billion, indicating year-over-year growth of 28% to 29%. The Zacks Consensus Estimate for the third quarter of fiscal 2026 revenues is pegged at $2.60 billion.

Remaining Performance Obligations are expected in the range of $17.85 billion to $17.95 billion, and Next-Gen Security ARR is forecasted between $7.94 billion and $7.96 billion, suggesting 56% growth.

Non-GAAP earnings per share for the fiscal third quarter are projected in the range of 78 cents to 80 cents. The Zacks Consensus Estimate for the third quarter of fiscal 2026 earnings is pegged at 91 cents.

Zacks Rank and Stocks to Consider

Palo Alto Networks carries a Zacks Rank #4 (Sell) at present.

Here are some better-ranked stocks from the Zacks Computer and Technology sector.

Amphenol APH carries a Zacks Rank #2 (Buy) at present. Amphenol shares have gained 112.8% in the past 12-month period. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Analog Devices ADI carries a Zacks Rank #2 at present. Analog Devices’ shares have surged 39.7% in the trailing 12-month period.

Applied Optoelectronics AAOI carries a Zacks Rank #2 at present. Applied Optoelectronics shares have surged 60.7% in the trailing 12-month period.

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