fiscal fourth quarter and fiscal year 2026
Filed Sep 1, 2026Palo Alto Networks Reports Fiscal Fourth Quarter and Fiscal Year 2026 Financial Results
Fiscal fourth-quarter revenue grew 34% year over year to $3.41 billion, Next-Generation Security ARR grew 63% to $9.10 billion, and adjusted free cash flow reached $1.3 billion. Non-GAAP operating income and non-GAAP net income increased, while GAAP results were affected by other expense, acquisition-related costs, acquired-intangible amortization, and changes in fair value of convertible senior notes and capped calls.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| Total revenue, fiscal fourth quarter 2026GAAP | $ 3,410 million | – | 34% |
| Total revenue, fiscal year 2026GAAP | $ 11,480 million | – | – |
| Product revenue, fiscal fourth quarter 2026GAAP | $ 738 million | – | – |
| Subscription and support revenue, fiscal fourth quarter 2026GAAP | $ 2,672 million | – | – |
| Product revenue, fiscal year 2026GAAP | $ 2,280 million | – | – |
| Subscription and support revenue, fiscal year 2026GAAP | $ 9,200 million | – | – |
| Total gross profit, fiscal fourth quarter 2026GAAP | $ 2,304 million | – | – |
| Total gross profit, fiscal year 2026GAAP | $ 8,077 million | – | – |
| Total operating expenses, fiscal fourth quarter 2026GAAP | $ 2,132 million | – | – |
| Total operating expenses, fiscal year 2026GAAP | $ 7,382 million | – | – |
| GAAP operating income, fiscal fourth quarter 2026GAAP | $ 172 million | – | – |
| Non-GAAP operating income, fiscal fourth quarter 2026non-GAAP | $ 1,011 million | – | – |
| GAAP operating income, fiscal year 2026GAAP | $ 695 million | – | – |
| Non-GAAP operating income, fiscal year 2026non-GAAP | $ 3,356 million | – | – |
| GAAP net income (loss), fiscal fourth quarter 2026GAAP | $ (282) million | – | – |
| Non-GAAP net income, fiscal fourth quarter 2026non-GAAP | $ 853 million | – | – |
| GAAP diluted net income (loss) per share, fiscal fourth quarter 2026GAAP | $ (0.35) | – | – |
| Non-GAAP diluted net income per share, fiscal fourth quarter 2026non-GAAP | $ 1.02 | – | – |
| GAAP net income, fiscal year 2026GAAP | $ 307 million | – | – |
| Non-GAAP net income, fiscal year 2026non-GAAP | $ 2,931 million | – | – |
| GAAP diluted net income per share, fiscal year 2026GAAP | $ 0.40 | – | – |
| Non-GAAP diluted net income per share, fiscal year 2026non-GAAP | $ 3.84 | – | – |
| Next-Generation Security ARR, fiscal fourth quarter 2026other | $9.10 billion | – | 63% |
| Remaining performance obligations, fiscal fourth quarter 2026other | $21.2 billion | – | 34% |
| Net cash provided by operating activities, fiscal fourth quarter 2026GAAP | $ 1,357 million | – | – |
| Free cash flow, fiscal fourth quarter 2026non-GAAP | $ 1,254 million | – | – |
| Adjusted free cash flow, fiscal fourth quarter 2026non-GAAP | $ 1,289 million | – | – |
| Adjusted free cash flow margin, fiscal fourth quarter 2026non-GAAP | 37.8 % | – | – |
| Net cash provided by operating activities, fiscal year 2026GAAP | $ 4,553 million | – | – |
| Free cash flow, fiscal year 2026non-GAAP | $ 4,113 million | – | – |
| Adjusted free cash flow, fiscal year 2026non-GAAP | $ 4,414 million | – | – |
| Adjusted free cash flow margin, fiscal year 2026non-GAAP | 38.4 % | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| ProductNot disclosed. | $ 738 million | – | – |
| Subscription and supportNot disclosed. | $ 2,672 million | – | – |
fiscal first quarter 2027 and fiscal year 2027 outlook
- RevenueFiscal first quarter 2027: $3.300 billion to $3.310 billion, representing year-over-year growth of 33% to 34%. Fiscal year 2027: $14.10 billion to $14.20 billion, representing year-over-year growth of 23% to 24%.
- NoteFiscal first quarter 2027 Next-Generation Security ARR: $9.54 billion to $9.56 billion, representing year-over-year growth of 63%.
- NoteFiscal first quarter 2027 remaining performance obligations: $20.8 billion to $20.9 billion, representing year-over-year growth of 34% to 35%.
- NoteFiscal first quarter 2027 diluted non-GAAP net income per share: $0.96 to $0.98, using 837 million to 844 million shares outstanding.
- NoteFiscal year 2027 Next-Generation Security ARR: $11.075 billion to $11.175 billion, representing year-over-year growth of 22% to 23%.
- NoteFiscal year 2027 remaining performance obligations: $25.2 billion to $25.4 billion, representing year-over-year growth of 19% to 20%.
- NoteFiscal year 2027 non-GAAP operating margin: 29.5%.
- NoteFiscal year 2027 diluted non-GAAP net income per share: $4.16 to $4.19, using 844 million to 847 million shares outstanding.
- NoteFiscal year 2027 adjusted free cash flow margin: 38.0%.
What drove it
- Total revenue grew 34% year over year to $3.41 billion in the fiscal fourth quarter 2026.
- Next-Generation Security ARR grew 63% year over year to $9.10 billion.
- Remaining performance obligations grew 34% year over year to $21.2 billion.
- Management cited strength across the Network & AI Security, Cortex, and Idira platforms.
- Palo Alto Networks acquired Console, an AI-native platform intended to expand the role of Cortex across enterprise agentic transformation.
Concerns
- GAAP operating income was $172 million, compared with $497 million in the fiscal fourth quarter 2025.
- GAAP net loss was $282 million, compared with GAAP net income of $254 million in the fiscal fourth quarter 2025.
- Other income (expense), net was $ (441) million in the fiscal fourth quarter 2026, compared with $ 95 million in the fiscal fourth quarter 2025.
- The fiscal fourth-quarter non-GAAP reconciliation included $ 524 million of change in fair value of convertible senior notes and capped calls, $ 281 million of acquired-intangible amortization expense, and $ 487 million of share-based compensation-related charges.
- Fiscal year 2027 Next-Generation Security ARR growth guidance of 22% to 23% is below the 63% growth reported for fiscal fourth-quarter 2026 Next-Generation Security ARR.
What to watch
- Fiscal first quarter 2027 Next-Generation Security ARR guidance of $9.54 billion to $9.56 billion.
- Fiscal first quarter 2027 remaining performance obligations guidance of $20.8 billion to $20.9 billion.
- Fiscal year 2027 revenue guidance of $14.10 billion to $14.20 billion.
- Fiscal year 2027 non-GAAP operating margin target of 29.5%.
- Fiscal year 2027 adjusted free cash flow margin target of 38.0%.
- Execution of the Console acquisition and its planned expansion of Cortex across enterprise agentic transformation.
Balance sheet and cash flow
- Cash and cash equivalents at July 31, 2026: $ 2,514 million, compared with $ 2,269 million at July 31, 2025.
- Short-term investments at July 31, 2026: $ 557 million, compared with $ 635 million at July 31, 2025.
- Long-term investments at July 31, 2026: $ 4,835 million, compared with $ 5,555 million at July 31, 2025.
- Long-term convertible senior notes at July 31, 2026: $ 1,774 million, compared with $ — at July 31, 2025.
- Total assets at July 31, 2026: $ 48,460 million, compared with $ 23,576 million at July 31, 2025.
- Total liabilities at July 31, 2026: $ 20,968 million, compared with $ 15,752 million at July 31, 2025.
- Total stockholders’ equity at July 31, 2026: $ 27,492 million, compared with $ 7,824 million at July 31, 2025.
- Total deferred revenue at July 31, 2026: $ 14,756 million, comprising current deferred revenue of $ 7,747 million and long-term deferred revenue of $ 7,009 million.
Analysis
Palo Alto Networks closed fiscal 2026 with strong top-line and operating-metric momentum. Fiscal fourth-quarter revenue grew 34% year over year to $3.41 billion, with product revenue of $ 738 million and subscription and support revenue of $ 2,672 million. Next-Generation Security ARR grew 63% to $9.10 billion and remaining performance obligations grew 34% to $21.2 billion. Management attributed the result to strength across Network & AI Security, Cortex, and Idira.
Profitability diverged sharply between GAAP and non-GAAP measures. GAAP operating income declined to $172 million from $497 million, and the company recorded a GAAP net loss of $282 million versus GAAP net income of $254 million. The quarter included $ 441 million of other expense, net. Non-GAAP operating income increased to $1,011 million from $768 million, and non-GAAP net income increased to $853 million from $673 million. The non-GAAP reconciliation included share-based compensation-related charges, acquisition-related costs, acquired-intangible amortization, and changes in fair value of convertible senior notes and capped calls.
Cash generation remained strong. Net cash provided by operating activities was $ 1,357 million, free cash flow was $ 1,254 million, and adjusted free cash flow was $ 1,289 million in the fourth quarter. Adjusted free cash flow margin was 37.8 %, compared with 37.6 % in the prior-year quarter. For fiscal 2026, adjusted free cash flow was $ 4,414 million and adjusted free cash flow margin was 38.4 %. The balance sheet showed $ 2,514 million of cash and cash equivalents, $ 557 million of short-term investments, $ 4,835 million of long-term investments, and $ 1,774 million of long-term convertible senior notes at July 31, 2026.
The fiscal 2027 outlook calls for $14.10 billion to $14.20 billion of revenue, 22% to 23% Next-Generation Security ARR growth, 19% to 20% remaining performance obligations growth, a 29.5% non-GAAP operating margin, and a 38.0% adjusted free cash flow margin. For the fiscal first quarter, the company guided revenue to $3.300 billion to $3.310 billion and Next-Generation Security ARR to $9.54 billion to $9.56 billion. The company also acquired Console, which it said will expand Cortex across broader enterprise agentic transformation.
Management, verbatim
We delivered a strong Q4 to close out the year, adding nearly $1 billion of Net New NGS ARR in a single quarter.
Nikesh Arora, chairman and chief executive officer of Palo Alto Networks
The latest advancements in AI are elevating cybersecurity to the top of the CIO priority list, and will serve as durable tailwinds as we progress towards our $20 billion FY30 NGS ARR target.
Nikesh Arora, chairman and chief executive officer of Palo Alto Networks
We delivered a strong finish to a record year and exceeded our guidance across the board, fueled by strength across our Network & AI Security, Cortex, and Idira platforms.
Dipak Golechha, chief financial officer of Palo Alto Networks
Not in the filing
stated, not guessed- Prior-quarter comparisons for reported fiscal fourth-quarter metrics were not provided.
- GAAP or non-GAAP gross margin was not reported.
- Fiscal fourth-quarter operating margin was not reported.
- Capital return activity, including share repurchases and dividends, was not reported.
- Prior-period outlook was not provided, so no reported results can be compared with prior guidance.
- A fiscal first quarter 2027 gross margin, operating expenses, and tax-rate outlook was not provided.
- Revenue growth rates for product revenue and subscription and support revenue were not reported as separate line-item percentage changes.
- Segment revenue beyond product and subscription and support was not reported.
AlphaAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.