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.
Palo Alto Networks to Report Q4 Earnings: How to Play the Stock
Read MoreHide Full Article
Key Takeaways
Palo Alto Networks expects Q4 revenues of $3.34-$3.35 billion, implying about 32% year-over-year growth.
PANW's platformization strategy and AI-powered XSIAM, SASE and firewall adoption may support NGS ARR growth.
Palo Alto Networks faces rising integration costs and softer IT spending that may weigh on Q4 profitability.
Palo Alto Networks, Inc. (PANW - Free Report) is scheduled to report its fourth-quarter fiscal 2026 results on Sept. 1.
Palo Alto Networks projects fiscal fourth-quarter revenues in the range of $3.34-$3.35 billion, which suggests a year-over-year increase of 32%. The Zacks Consensus Estimate is pegged at $3.35 billion, which implies growth of 32.1% from the year-ago reported figure.
For the fiscal fourth quarter, the company expects non-GAAP earnings per share between 96 cents and 98 cents. The consensus mark for PANW’s fiscal fourth-quarter non-GAAP earnings has remained unchanged at 98 cents per share over the past 30 days, which indicates a 3.2% increase from the year-ago quarter’s earnings.
Image Source: Zacks Investment Research
Palo Alto Networks’ earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 7.03%.
Our proven model does not conclusively predict an earnings beat for Palo Alto Networks this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is not the case here.
Palo Alto Networks’ fourth-quarter fiscal 2026 performance is likely to have benefited from the robust traction stemming from deal wins, along with continued progress in its platformization strategy. The increased adoption of its AI-powered XSIAM, SASE and software firewall offerings, which enable enterprises to advance zero-trust network security, is expected to have contributed to the growing share of incremental Next-Generation Security (NGS) Annual Recurring Revenues (ARR).
Through its platformization strategy, Palo Alto Networks is enabling larger customers to adopt its full security platform, which is helping the company grow faster and secure bigger deals. In the third quarter of fiscal 2026, PANW’s NGS ARR grew 60% year over year to $8.13 billion, where the platformization strategy was a key driver. In the third quarter of fiscal 2026, the company added 110 new platformized customers, including 20 from the CyberArk and Chronosphere acquisitions. Total platformized customers reached approximately 2,280 at the end of the third quarter.
PANW's platformized customers currently have a 120% net retention rate and single-digit churn. This means existing customers continue to buy more PANW products over time, while very few leave the platform. During the fiscal third quarter, the company shared examples of customers expanding their deployments. A large U.S. power producer adopted next-generation firewalls and SASE in an $80 million deal, while a global consulting company signed a contract worth more than $20 million to use Prisma AIRS for securing its AI applications and agents. These gains show that large enterprises are consolidating security budgets with PANW as customers want fewer tools and simpler security operations, which is likely to have boded well for the company’s prospects in the to-be-reported quarter.
However, PANW’s fiscal fourth-quarter prospects are expected to be weighed down due to rising integration and acquisition-related costs. As a result of back-to-back acquisitions, PANW is incurring high integration-related costs, including onboarding employees, aligning go-to-market teams and integrating systems and operations. Acquisition-related costs in the third quarter of fiscal 2026 amounted to $113 million, a whopping increase from $5 million incurred in the prior quarter. These costs are expected to have hurt the company's profitability in the to-be-reported quarter before the benefits of synergies from acquisitions are fully realized.
Further, PANW’s near-term prospects might be hurt by softening IT spending due to the current uncertain macroeconomic environment. Enterprises are postponing their large IT spending plans due to a weakening global economy amid ongoing macroeconomic and geopolitical issues. This is expected to have hurt Palo Alto Networks’ prospects in the to-be-reported quarter.
Price Performance & Stock Valuation
Palo Alto Networks’ shares have surged 100.5% over the past year, outperforming the Zacks Security industry and its peers, including Okta Inc. (OKTA - Free Report) , Qualys Inc. (QLYS - Free Report) and Zscaler (ZS - Free Report) .
The Zacks Security industry has jumped 63.1% over the past year. Shares of Okta and Qualys have surged 84.6% and 38.8%, respectively, while Zscaler shares have lost 32.6%.
One-Year Price Return Performance
Image Source: Zacks Investment Research
Now, let’s look at the value Palo Alto Networks offers investors at the current levels. Palo Alto Networks is currently trading at a premium with a forward 12-month P/S of 22.45X compared with the industry’s 16.77X.
PANW Forward 12-Month P/S Ratio
Image Source: Zacks Investment Research
Palo Alto Networks stock also trades at a higher P/S multiple compared with other industry peers, including Okta, Qualys and Zscaler. At present, Okta, Qualys and Zscaler have P/S multiples of 8.92X, 8.45X and 7.68X, respectively.
PAWN’s rally reflects strong investor confidence in AI-related cybersecurity demand, putting it above industry and peers in terms of valuation, reflecting the high growth expectations of the company in the long term.
Investment Consideration
Palo Alto Networks remains well positioned to benefit from the growing demand for cybersecurity as enterprises consolidate security tools and adopt AI. Its platformization strategy is helping the company win larger deals and expand spending among existing customers. The strong growth in NGS ARR and the 120% net retention rate among platformized customers indicate that customers are increasing their use of PANW’s broader security portfolio.
The company is also seeing growing demand for AI security, SASE and next-generation firewall products. The expansion of Prisma AIRS and XSIAM should provide additional growth opportunities as enterprises look to secure AI applications, agents and cloud environments. The company is combining network security, AI security, security operations, identity and observability on a single platform and aims to reach more than 4,000 platformized customers and $20 billion in Next-Generation Security ARR by fiscal 2030. Rising AI adoption should continue to increase demand across these product areas and help PANW expand its addressable market and support its long-term ARR target.
Conclusion: Buy Palo Alto Networks Stock Right Now
Palo Alto Networks remains a leader in cybersecurity, with a strong long-term growth trajectory, continued AI-driven innovation and a shift toward a more predictable recurring revenue model. Strong traction in Palo Alto Networks’ platform-based security offerings, supported by large enterprise deals and increasing customer adoption, provides a favorable long-term growth opportunity for the company.
View the Zacks #1 Rank List
Image: Bigstock
Palo Alto Networks to Report Q4 Earnings: How to Play the Stock
Key Takeaways
Palo Alto Networks, Inc. (PANW - Free Report) is scheduled to report its fourth-quarter fiscal 2026 results on Sept. 1.
Palo Alto Networks projects fiscal fourth-quarter revenues in the range of $3.34-$3.35 billion, which suggests a year-over-year increase of 32%. The Zacks Consensus Estimate is pegged at $3.35 billion, which implies growth of 32.1% from the year-ago reported figure.
For the fiscal fourth quarter, the company expects non-GAAP earnings per share between 96 cents and 98 cents. The consensus mark for PANW’s fiscal fourth-quarter non-GAAP earnings has remained unchanged at 98 cents per share over the past 30 days, which indicates a 3.2% increase from the year-ago quarter’s earnings.
Image Source: Zacks Investment Research
Palo Alto Networks’ earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 7.03%.
Palo Alto Networks, Inc. Price and EPS Surprise
Palo Alto Networks, Inc. price-eps-surprise | Palo Alto Networks, Inc. Quote
Earnings Whispers for PANW
Our proven model does not conclusively predict an earnings beat for Palo Alto Networks this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is not the case here.
Palo Alto Networks has an Earnings ESP of -2.66% and carries a Zacks Rank #2 at present. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter. You can see the complete list of today’s Zacks #1 Rank stocks here.
Factors Likely to Influence PANW’s Q4 Results
Palo Alto Networks’ fourth-quarter fiscal 2026 performance is likely to have benefited from the robust traction stemming from deal wins, along with continued progress in its platformization strategy. The increased adoption of its AI-powered XSIAM, SASE and software firewall offerings, which enable enterprises to advance zero-trust network security, is expected to have contributed to the growing share of incremental Next-Generation Security (NGS) Annual Recurring Revenues (ARR).
Through its platformization strategy, Palo Alto Networks is enabling larger customers to adopt its full security platform, which is helping the company grow faster and secure bigger deals. In the third quarter of fiscal 2026, PANW’s NGS ARR grew 60% year over year to $8.13 billion, where the platformization strategy was a key driver. In the third quarter of fiscal 2026, the company added 110 new platformized customers, including 20 from the CyberArk and Chronosphere acquisitions. Total platformized customers reached approximately 2,280 at the end of the third quarter.
PANW's platformized customers currently have a 120% net retention rate and single-digit churn. This means existing customers continue to buy more PANW products over time, while very few leave the platform. During the fiscal third quarter, the company shared examples of customers expanding their deployments. A large U.S. power producer adopted next-generation firewalls and SASE in an $80 million deal, while a global consulting company signed a contract worth more than $20 million to use Prisma AIRS for securing its AI applications and agents. These gains show that large enterprises are consolidating security budgets with PANW as customers want fewer tools and simpler security operations, which is likely to have boded well for the company’s prospects in the to-be-reported quarter.
However, PANW’s fiscal fourth-quarter prospects are expected to be weighed down due to rising integration and acquisition-related costs. As a result of back-to-back acquisitions, PANW is incurring high integration-related costs, including onboarding employees, aligning go-to-market teams and integrating systems and operations. Acquisition-related costs in the third quarter of fiscal 2026 amounted to $113 million, a whopping increase from $5 million incurred in the prior quarter. These costs are expected to have hurt the company's profitability in the to-be-reported quarter before the benefits of synergies from acquisitions are fully realized.
Further, PANW’s near-term prospects might be hurt by softening IT spending due to the current uncertain macroeconomic environment. Enterprises are postponing their large IT spending plans due to a weakening global economy amid ongoing macroeconomic and geopolitical issues. This is expected to have hurt Palo Alto Networks’ prospects in the to-be-reported quarter.
Price Performance & Stock Valuation
Palo Alto Networks’ shares have surged 100.5% over the past year, outperforming the Zacks Security industry and its peers, including Okta Inc. (OKTA - Free Report) , Qualys Inc. (QLYS - Free Report) and Zscaler (ZS - Free Report) .
The Zacks Security industry has jumped 63.1% over the past year. Shares of Okta and Qualys have surged 84.6% and 38.8%, respectively, while Zscaler shares have lost 32.6%.
One-Year Price Return Performance
Image Source: Zacks Investment Research
Now, let’s look at the value Palo Alto Networks offers investors at the current levels. Palo Alto Networks is currently trading at a premium with a forward 12-month P/S of 22.45X compared with the industry’s 16.77X.
PANW Forward 12-Month P/S Ratio
Image Source: Zacks Investment Research
Palo Alto Networks stock also trades at a higher P/S multiple compared with other industry peers, including Okta, Qualys and Zscaler. At present, Okta, Qualys and Zscaler have P/S multiples of 8.92X, 8.45X and 7.68X, respectively.
PAWN’s rally reflects strong investor confidence in AI-related cybersecurity demand, putting it above industry and peers in terms of valuation, reflecting the high growth expectations of the company in the long term.
Investment Consideration
Palo Alto Networks remains well positioned to benefit from the growing demand for cybersecurity as enterprises consolidate security tools and adopt AI. Its platformization strategy is helping the company win larger deals and expand spending among existing customers. The strong growth in NGS ARR and the 120% net retention rate among platformized customers indicate that customers are increasing their use of PANW’s broader security portfolio.
The company is also seeing growing demand for AI security, SASE and next-generation firewall products. The expansion of Prisma AIRS and XSIAM should provide additional growth opportunities as enterprises look to secure AI applications, agents and cloud environments. The company is combining network security, AI security, security operations, identity and observability on a single platform and aims to reach more than 4,000 platformized customers and $20 billion in Next-Generation Security ARR by fiscal 2030. Rising AI adoption should continue to increase demand across these product areas and help PANW expand its addressable market and support its long-term ARR target.
Conclusion: Buy Palo Alto Networks Stock Right Now
Palo Alto Networks remains a leader in cybersecurity, with a strong long-term growth trajectory, continued AI-driven innovation and a shift toward a more predictable recurring revenue model. Strong traction in Palo Alto Networks’ platform-based security offerings, supported by large enterprise deals and increasing customer adoption, provides a favorable long-term growth opportunity for the company.