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Can Platform Wins Accelerate Palo Alto Networks' Long-Term Growth?
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Key Takeaways
PANW added 110 platform customers in Q2 FY26, taking the total to 1,550, up 35% year over year.
Palo Alto Networks secured large deals, including contracts worth over $50M and $40M.
PANW reported 119% net retention, with customers expanding usage across its platform.
Palo Alto Networks' (PANW - Free Report) platform strategy remained a key growth driver in the second quarter of fiscal 2026. PANW added about 110 net new platformizations in the second quarter, taking the total platformized customers to around 1,550, up 35% year over year. This robust growth shows that customers are moving away from using multiple point products and are adopting a unified platform. The company believes this approach is becoming more common as security environments become more complex.
The company highlighted large deals in the second quarter that reflect this shift. These included a more than $50 million deal combining SASE and XSIAM, a $40 million deal focused on security operations, and a $20 million expansion with an existing customer. Management stated these are long-term architectural decisions where customers standardize their security operations on PANW's platform across different security functions.
Palo Alto Networks also reported strong retention among platform customers. Net retention for these customers was 119% with low-single digit churn in the second quarter. This indicates that customers continue to expand their usage after initial adoption. Customers can start with products like SASE, firewalls or Cortex, and then add more solutions over time within the same platform.
The above-mentioned factors show how PANW's platform strategy is becoming important as security needs become more complex, with more endpoints and activity to manage, where fragmented tools are not effective in this environment. PANW's unified platform, built on real-time data across network, cloud and endpoint, can provide better visibility and control. This approach is expected to support the company’s long-term growth.
The Zacks Consensus Estimate for fiscal 2026 and 2027 revenues indicates a year-over-year increase of around 21.5% and 19%, 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 10.9% in the year-to-date period compared with the Zacks Security industry’s decline of 15%.
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 10.54X compared with the industry’s average of 9.81X. The Zacks Value Score of F also suggests that PANW stock is overvalued.
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 11.1% and 8.2%, respectively. Estimates for fiscal 2026 and 2027 have both been revised down over the past 60 and 30 days, respectively.
View the Zacks #1 Rank List
Image: Bigstock
Can Platform Wins Accelerate Palo Alto Networks' Long-Term Growth?
Key Takeaways
Palo Alto Networks' (PANW - Free Report) platform strategy remained a key growth driver in the second quarter of fiscal 2026. PANW added about 110 net new platformizations in the second quarter, taking the total platformized customers to around 1,550, up 35% year over year. This robust growth shows that customers are moving away from using multiple point products and are adopting a unified platform. The company believes this approach is becoming more common as security environments become more complex.
The company highlighted large deals in the second quarter that reflect this shift. These included a more than $50 million deal combining SASE and XSIAM, a $40 million deal focused on security operations, and a $20 million expansion with an existing customer. Management stated these are long-term architectural decisions where customers standardize their security operations on PANW's platform across different security functions.
Palo Alto Networks also reported strong retention among platform customers. Net retention for these customers was 119% with low-single digit churn in the second quarter. This indicates that customers continue to expand their usage after initial adoption. Customers can start with products like SASE, firewalls or Cortex, and then add more solutions over time within the same platform.
The above-mentioned factors show how PANW's platform strategy is becoming important as security needs become more complex, with more endpoints and activity to manage, where fragmented tools are not effective in this environment. PANW's unified platform, built on real-time data across network, cloud and endpoint, can provide better visibility and control. This approach is expected to support the company’s long-term growth.
The Zacks Consensus Estimate for fiscal 2026 and 2027 revenues indicates a year-over-year increase of around 21.5% and 19%, 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 10.9% in the year-to-date period compared with the Zacks Security industry’s decline of 15%.
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 10.54X compared with the industry’s average of 9.81X. The Zacks Value Score of F also suggests that PANW stock is overvalued.
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 11.1% and 8.2%, respectively. Estimates for fiscal 2026 and 2027 have both been revised down over the past 60 and 30 days, respectively.
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.