Palo Alto Networks (NASDAQ:PANW) said it exceeded its guidance across financial metrics in the fiscal fourth quarter, closing fiscal 2026 with accelerating bookings growth, record remaining performance obligations and continued expansion in its next-generation security businesses.
Chairman and Chief Executive Officer Nikesh Arora said the company’s results reflected adoption of its platformization strategy and heightened customer focus on cybersecurity as artificial intelligence expands the number and speed of potential threats. The company reported total remaining performance obligations, or RPO, of $21.2 billion, up 34% year over year, while Next-Generation Security annual recurring revenue reached $9.1 billion, up 63%.
Fourth-Quarter and Full-Year Performance
Chief Financial Officer Dipak Golechha said fourth-quarter revenue rose 34% to $3.41 billion. For fiscal 2026, revenue totaled $11.5 billion, an increase of 24% from the prior year. Growth was broad-based geographically, with revenue in the Americas up 33%, EMEA up 39% and JPAC up 34%, he said.
Current RPO reached $9.3 billion, also up 34%, as contract durations remained steady from a year earlier. Fourth-quarter non-GAAP operating margin was 29.6%, while full-year non-GAAP operating margin was 29.2%, an increase of 40 basis points.
The company reported fourth-quarter non-GAAP earnings per share of $1.02, above the high end of its guidance by $0.04. Adjusted free cash flow was $1.29 billion in the quarter, up 35% year over year. Full-year adjusted free cash flow was $4.41 billion, representing a 38.4% margin. Palo Alto Networks ended the fiscal year with $7.9 billion in cash equivalents and short-term investments.
Golechha said gross margin declined as the revenue mix shifted toward cloud and software-as-a-service products. Fourth-quarter gross margin was 74.8%, down 100 basis points, while full-year gross margin was 75.8%, down 60 basis points. The company expects cloud-hosting costs to grow faster than revenue in fiscal 2027 as cloud and SaaS become a larger share of its business. It also expects elevated memory and storage costs in its hardware operations, though hardware represents about 10% of total company revenue.
Platform Growth and Acquisition Integration
The company introduced revenue disclosures for three platforms: Network & AI Security, Cortex and Idira. Network & AI Security generated $8.35 billion in fiscal 2026 revenue, up 17%. Cortex revenue rose 25% to $1.92 billion.
Within Network & AI Security, the company said SASE bookings grew 40% during fiscal 2026. It displaced legacy vendors in nearly 100 accounts, representing more than $400 million in total contract value. Arora cited a $126 million agreement with a global telecommunications company, a $72 million deal with an IT service provider and a $53 million platformization agreement with a global payments platform.
Prisma AIRS surpassed $100 million in ARR within four quarters of general availability and has more than 800 customers, Arora said. XSIAM ended the year with more than $700 million in ARR, up 70%, and exceeded 1,000 customers. The company said customers using XSIAM have reduced mean time to respond to less than 10 minutes.
Palo Alto Networks also highlighted the performance of Chronosphere, which it acquired in the second quarter, and CyberArk, which it now refers to as Idira after closing the acquisition in early fiscal third quarter. Observability ARR more than doubled following the Chronosphere acquisition and exceeded $500 million. Arora said XSIAM contributed to 50% of net new Chronosphere customer logos during the quarter.
Idira produced $1.26 billion in fiscal 2026 revenue on a pro forma basis, growing 21%. Golechha said Idira bookings outpaced revenue in the fourth quarter. Arora said joint go-to-market efforts had generated more than 400 shared leads and more than 200 new logos from Palo Alto Networks’ installed base. Deals with total contract value above $5 million increased 50% year over year in the fourth quarter.
The company also announced that it closed its acquisition of Console during the quarter. Arora said Console’s team would join the Cortex organization to help develop AI-driven capabilities for IT and security operations. Palo Alto Networks also closed its acquisition of Embrace, which it plans to use to add real-user monitoring to its observability offering.
AI Security Focus and Fiscal 2027 Outlook
Arora described AI as a long-term cybersecurity tailwind, pointing to the emergence of autonomous agents, increasingly capable cyber models and wider deployment of open-weight and open-source AI architectures. He said these developments are increasing the need to secure machine identities, monitor larger volumes of telemetry and respond to threats at machine speed.
In response to analyst questions, Arora said acquisitions are not the company’s primary strategy but can be used to address emerging technology shifts when another company has developed capabilities that can be brought to customers faster. He also said customer modernization efforts generally take one to three years rather than one quarter, despite increasing interest in consolidating cybersecurity tools on larger platforms.
For the fiscal first quarter of 2027, Palo Alto Networks expects:
- NGS ARR of $9.54 billion to $9.56 billion, representing 63% growth.
- RPO of $20.8 billion to $20.9 billion, up 34% to 35%.
- Revenue of $3.30 billion to $3.31 billion, up 33% to 34%.
- Non-GAAP diluted EPS of $0.96 to $0.98.
For fiscal 2027, the company forecast NGS ARR of $11.075 billion to $11.175 billion, revenue of $14.1 billion to $14.2 billion and RPO of $25.2 billion to $25.4 billion. It expects non-GAAP operating margin of 29.5%, non-GAAP diluted EPS of $4.16 to $4.19 and adjusted free cash flow margin of 38%.
Golechha said the company remains on track toward its long-term targets of $20 billion in NGS ARR by fiscal 2030 and a 40% adjusted free cash flow margin by fiscal 2028.
About Palo Alto Networks (NASDAQ:PANW)
Palo Alto Networks (NASDAQ: PANW) is a cybersecurity company founded in 2005 and headquartered in Santa Clara, California. The firm develops a broad suite of security products and services designed to prevent successful cyberattacks and protect enterprise networks, clouds, and endpoints. Built around a platform strategy, its offerings target threat prevention, detection, response and governance across hybrid and multi-cloud environments.
The company’s product portfolio includes next‑generation firewalls as a core on‑premises capability, alongside cloud‑delivered security services and software for securing public and private clouds.
