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PANW targets $20B in NGS ARR by fiscal 2030 as large enterprise deals expand.
Palo Alto Networks (PANW - Free Report) is focusing on its platformization strategy, which involves getting its customers to adopt multiple PANW products spanning across network, cloud and endpoint security, under a unified platform approach. In the second quarter of fiscal 2026, PANW’s NGS annual recurring revenue (ARR) grew 33% year over year to $6.33 billion, where the platformization strategy was a key driver.
This growth came mainly from software firewalls, Secure Access Service Edge (SASE) and Cortex Extended Security Intelligence and Automation Management (XSIAM), which continued to see more customer use. In the second quarter of fiscal 2026, Palo Alto Networks added about 110 net new platform customers. The total number of platformized customers reached about 1,550, up 35% year over year. Platform customers currently have a net retention rate of about 119% and low single-digit churn, suggesting that most customers continue using the platform and add more products after initial adoption.
Large enterprise deals are supporting this trend. A global automotive company signed a security transformation deal worth more than $50 million. The deal included $30 million for SASE and $20 million for XSIAM to run its global security operations center. A global technology supplier also signed a transformation deal worth more than $40 million that included XSIAM and expanded SASE adoption. In another case, a large IT services provider expanded its relationship through a $20 million deal centered on XSIAM. These deals show that some enterprises are replacing point security tools with broader security platforms.
If adoption continues to rise, PANW's platformization strategy could remain one of the most important contributors to help it reach its long-term NGS ARR target of $20 billion by fiscal 2030. The Zacks Consensus Estimate for fiscal 2026 and 2027 revenues indicates a year-over-year increase of around 23% and 21%, respectively.
How Competitors Fare Against PANW
Competitors like CrowdStrike (CRWD - Free Report) and SentinelOne (S - Free Report) are also gaining ground through platform expansion and AI innovation.
CrowdStrike ended its fourth 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.
Though comparatively a small competitor, SentinelOne posted fourth-quarter fiscal 2026 year-over-year growth of 22% in its ARR. The growth was fueled by the rising adoption of SentinelOne’s AI-first Singularity platform and Purple AI.
PANW’s Price Performance, Valuation & Estimates
Shares of Palo Alto Networks have lost 17.8% in the past six months compared with the Zacks Security industry’s decline of 12.5%.
PANW 6-month Price Return Performance
Image Source: Zacks Investment Research
From a valuation standpoint, Palo Alto Networks trades at a forward price-to-sales ratio of 10.88X compared with the industry’s average of 10.78X.
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 11.7% and 9.1%, respectively. Estimates for fiscal 2026 and 2027 have both been revised down by 11 cents and 25 cents, respectively, over the past 30 days.
View the Zacks #1 Rank List
Image: Bigstock
Can Platformization Boost Palo Alto Networks' Long-Term ARR Growth?
Key Takeaways
Palo Alto Networks (PANW - Free Report) is focusing on its platformization strategy, which involves getting its customers to adopt multiple PANW products spanning across network, cloud and endpoint security, under a unified platform approach. In the second quarter of fiscal 2026, PANW’s NGS annual recurring revenue (ARR) grew 33% year over year to $6.33 billion, where the platformization strategy was a key driver.
This growth came mainly from software firewalls, Secure Access Service Edge (SASE) and Cortex Extended Security Intelligence and Automation Management (XSIAM), which continued to see more customer use. In the second quarter of fiscal 2026, Palo Alto Networks added about 110 net new platform customers. The total number of platformized customers reached about 1,550, up 35% year over year. Platform customers currently have a net retention rate of about 119% and low single-digit churn, suggesting that most customers continue using the platform and add more products after initial adoption.
Large enterprise deals are supporting this trend. A global automotive company signed a security transformation deal worth more than $50 million. The deal included $30 million for SASE and $20 million for XSIAM to run its global security operations center. A global technology supplier also signed a transformation deal worth more than $40 million that included XSIAM and expanded SASE adoption. In another case, a large IT services provider expanded its relationship through a $20 million deal centered on XSIAM. These deals show that some enterprises are replacing point security tools with broader security platforms.
If adoption continues to rise, PANW's platformization strategy could remain one of the most important contributors to help it reach its long-term NGS ARR target of $20 billion by fiscal 2030. The Zacks Consensus Estimate for fiscal 2026 and 2027 revenues indicates a year-over-year increase of around 23% and 21%, respectively.
How Competitors Fare Against PANW
Competitors like CrowdStrike (CRWD - Free Report) and SentinelOne (S - Free Report) are also gaining ground through platform expansion and AI innovation.
CrowdStrike ended its fourth 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.
Though comparatively a small competitor, SentinelOne posted fourth-quarter fiscal 2026 year-over-year growth of 22% in its ARR. The growth was fueled by the rising adoption of SentinelOne’s AI-first Singularity platform and Purple AI.
PANW’s Price Performance, Valuation & Estimates
Shares of Palo Alto Networks have lost 17.8% in the past six months compared with the Zacks Security industry’s decline of 12.5%.
PANW 6-month Price Return Performance
Image Source: Zacks Investment Research
From a valuation standpoint, Palo Alto Networks trades at a forward price-to-sales ratio of 10.88X compared with the industry’s average of 10.78X.
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 11.7% and 9.1%, respectively. Estimates for fiscal 2026 and 2027 have both been revised down by 11 cents and 25 cents, respectively, 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.