We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
PANW's NGS ARR Hits $5.58B in Q4: What's Fueling the Growth?
Read MoreHide Full Article
Key Takeaways
Palo Alto Networks' NGS ARR rose 32% year over year to $5.58B, with $490M net new ARR added in Q4.
SASE ARR grew 35%, boosted by a $60M mega-deal and over 6M Prisma Access Browser licenses.
XSIAM reached 400 customers, while AI security ARR jumped 2.5x year over year to $545M.
Palo Alto Networks (PANW - Free Report) ended the fourth quarter of fiscal 2025, showing strong growth in its Next-Generation Security (NGS) business. The company’s NGS annual recurring revenue (ARR) grew 32% year over year to $5.58 billion. Moreover, the company added about $490 million in new NGS ARR during the quarter.
The growth came from three main areas. First, the demand in the Security Access Service Edge (SASE) business stayed strong, where its ARR grew 35% year over year. Palo Alto Networks won its largest SASE contract ever with a global professional services firm, worth $60 million, spanning across 200,000 users. Its Prisma Access Browser also gained adoption, adding more than three million licenses in the fourth quarter, which grew twofold on a sequential basis, pushing the total above six million.
Second, software firewalls grew nearly 20% year over year. Palo Alto Networks now holds about a 50% share in this market, and its products are available in all major public clouds. Third, XSIAM, Palo Alto Networks’ AI-based Security Operations Centre platform, continued rapid adoption. It now has around 400 customers, most generating more than $1 million in ARR. Moreover, around 25% of these customers were Global 2000 companies, which shows strong adoption among large enterprises.
AI security is also becoming a key factor in supporting the company’s revenue growth. In the fourth quarter, AI-related ARR climbed to $545 million, more than 2.5 times higher than a year ago. This was helped by the launch of new products, such as Prisma AIRS and the acquisition of Protect AI, both aimed at securing AI apps, models, and data.
Management believes that these growth drivers will support its long-term growth trajectory and help it reach its target of $15 billion in NGS ARR by 2030.
How Competitors Fare Against PANW
Competitors like CrowdStrike (CRWD - Free Report) and Zscaler (ZS - Free Report) are also gaining ground through platform expansion and AI innovation.
CrowdStrike ended its second quarter of fiscal 2026 with $4.66 billion in ARR, reflecting 20% year-over-year growth. The robust increase was fueled by the growing adoption of CrowdStrike’s Falcon Flex subscription model.
Zscaler ended its third quarter of fiscal 2025 with $2.9 billion in ARR, reflecting 23% year-over-year growth. The robust growth was driven by Z-Flex and rapid traction across Zscaler’s three strategic growth pillars, which include Zero Trust Everywhere, Data Security Everywhere and Agentic Operations.
PANW’s Price Performance, Valuation and Estimates
Shares of Palo Alto Networks have gained 4.7% year to date compared with the Security industry’s growth of 10.2%.
PANW YTD Price Return Performance
Image Source: Zacks Investment Research
From a valuation standpoint, Palo Alto Networks trades at a forward price-to-sales ratio of 12.05X, slightly lower than the industry’s average of 12.23X.
PANW Forward 12-Month P/S Ratio
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Palo Alto Networks’ fiscal 2026 and 2027 earnings implies year-over-year growth of 12.9% and 13.6%, respectively. The estimates for fiscal 2026 and 2027 earnings have been revised upward over the past 30 days.
Image: Bigstock
PANW's NGS ARR Hits $5.58B in Q4: What's Fueling the Growth?
Key Takeaways
Palo Alto Networks (PANW - Free Report) ended the fourth quarter of fiscal 2025, showing strong growth in its Next-Generation Security (NGS) business. The company’s NGS annual recurring revenue (ARR) grew 32% year over year to $5.58 billion. Moreover, the company added about $490 million in new NGS ARR during the quarter.
The growth came from three main areas. First, the demand in the Security Access Service Edge (SASE) business stayed strong, where its ARR grew 35% year over year. Palo Alto Networks won its largest SASE contract ever with a global professional services firm, worth $60 million, spanning across 200,000 users. Its Prisma Access Browser also gained adoption, adding more than three million licenses in the fourth quarter, which grew twofold on a sequential basis, pushing the total above six million.
Second, software firewalls grew nearly 20% year over year. Palo Alto Networks now holds about a 50% share in this market, and its products are available in all major public clouds. Third, XSIAM, Palo Alto Networks’ AI-based Security Operations Centre platform, continued rapid adoption. It now has around 400 customers, most generating more than $1 million in ARR. Moreover, around 25% of these customers were Global 2000 companies, which shows strong adoption among large enterprises.
AI security is also becoming a key factor in supporting the company’s revenue growth. In the fourth quarter, AI-related ARR climbed to $545 million, more than 2.5 times higher than a year ago. This was helped by the launch of new products, such as Prisma AIRS and the acquisition of Protect AI, both aimed at securing AI apps, models, and data.
Management believes that these growth drivers will support its long-term growth trajectory and help it reach its target of $15 billion in NGS ARR by 2030.
How Competitors Fare Against PANW
Competitors like CrowdStrike (CRWD - Free Report) and Zscaler (ZS - Free Report) are also gaining ground through platform expansion and AI innovation.
CrowdStrike ended its second quarter of fiscal 2026 with $4.66 billion in ARR, reflecting 20% year-over-year growth. The robust increase was fueled by the growing adoption of CrowdStrike’s Falcon Flex subscription model.
Zscaler ended its third quarter of fiscal 2025 with $2.9 billion in ARR, reflecting 23% year-over-year growth. The robust growth was driven by Z-Flex and rapid traction across Zscaler’s three strategic growth pillars, which include Zero Trust Everywhere, Data Security Everywhere and Agentic Operations.
PANW’s Price Performance, Valuation and Estimates
Shares of Palo Alto Networks have gained 4.7% year to date compared with the Security industry’s growth of 10.2%.
PANW YTD Price Return Performance
Image Source: Zacks Investment Research
From a valuation standpoint, Palo Alto Networks trades at a forward price-to-sales ratio of 12.05X, slightly lower than the industry’s average of 12.23X.
PANW Forward 12-Month P/S Ratio
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Palo Alto Networks’ fiscal 2026 and 2027 earnings implies year-over-year growth of 12.9% and 13.6%, respectively. The estimates for fiscal 2026 and 2027 earnings have been revised upward over the past 30 days.
Image Source: Zacks Investment Research
Palo Alto Networks currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.