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Why Is Palo Alto (PANW) Up 21% Since Last Earnings Report?
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A month has gone by since the last earnings report for Palo Alto Networks (PANW - Free Report) . Shares have added about 21% in that time frame, outperforming the S&P 500.
But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is Palo Alto due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its latest earnings report in order to get a better handle on the important catalysts.
PANW Q4 Earnings Beat Estimates on Platformization Strength
Palo Alto Networks delivered fourth-quarter fiscal 2026 non-GAAP earnings of $1.02 per share, which beat the Zacks Consensus Estimate by 4.1%. The figure improved 7.4% year over year.
Revenues climbed 34% year over year to $3.41 billion and topped the consensus estimate by 1.8%. Broad-based strength across Network & AI Security, Cortex and Idira, along with record platformization adoption, drove the fourth-quarter results. Next-Generation Security ARR jumped 63% to $9.10 billion.
PANW's Revenue Mix Shows Broad-Based Growth
Product revenues increased 28.6% year over year to $738 million from $574 million in the year-ago quarter, accounting for 21.6% of total revenues. Subscription and support revenues rose 36.2% to $2.672 billion from $1.962 billion, which represented 78.4% of total revenues.
By platform, fourth-quarter revenues were $2.331 billion for Network & AI Security, $586 million for Cortex and $336 million for Idira. Other revenues, including Unit 42, professional services and financing income, totaled $157 million.
Palo Alto Networks' Platformization Hits Record Levels
Remaining performance obligations rose 34% year over year to $21.2 billion. Net new NGS ARR reached approximately $970 million, up 98% year over year, reflecting the strongest quarterly addition reported by the company.
Palo Alto Networks added roughly 220 net new platformizations in the quarter, up 44% year over year. Net revenue retention among platformized customers, excluding Identity and Observability, exceeded 120%, while more than 65% of NGS ARR came from platformized customers.
PANW's AI Security Products Gain Scale
Prisma AIRS reached roughly $120 million in ARR within one year of general availability and had over 800 customers, more than doubling sequentially. Software firewall ARR grew 29% year over year, while SASE competitive displacements totaled about $450 million in fiscal 2026.
Cortex momentum also remained strong. XSIAM ARR exceeded $700 million and grew about 70% year over year, while observability ARR surpassed $500 million and increased more than 2.5 times from the second quarter. CyberArk, now called Idira, generated more than 200 new-logo wins from PANW's installed base.
Non-GAAP gross profit was $2.552 billion, with gross margin at 74.8%, down from 75.8% a year earlier. Management attributed the pressure to a mix shift toward faster-growing SaaS offerings that have not yet reached gross-margin maturity.
Non-GAAP operating income was $1.011 billion, translating to a 29.6% margin compared with 30.3% a year ago.
Adjusted free cash flow increased to $1.289 billion from $954 million, with margin edging up to 37.8% from 37.6%. Cash and cash equivalents stood at $2.514 billion, with $557 million in short-term investments.
PANW Guides Strong Growth for Fiscal 2027
For the first quarter of fiscal 2027, Palo Alto Networks expects revenues of $3.300-$3.310 billion, indicating 33-34% growth. NGS ARR is projected to be in the range of $9.54-$9.56 billion, RPO in the band of $20.8-$20.9 billion and non-GAAP earnings per share between 96 cents and 98 cents.
For fiscal 2027, revenues are forecast at $14.10-$14.20 billion, implying 23-24% growth. NGS ARR is expected to be in the range of $11.075-$11.175 billion, RPO in the band of $25.2-$25.4 billion and non-GAAP earnings per share between $4.16 and $4.19. The company targets a 29.5% non-GAAP operating margin and a 38.0% adjusted free cash flow margin.
Palo Alto Networks Maps Platform Growth Ahead
Management expects fiscal 2027 Network & AI Security revenues to grow in the low double digits, Cortex revenues to rise about 30%, and Idira revenues to reach approximately $1.5 billion, implying pro forma growth in the high teens to 20%.
The company expects 60-61% of fiscal 2027 net new NGS ARR to arrive in the second half. Its outlook assumes the tail end of a large LLM customer's migration to Chronosphere continues through the first quarter, but contributes less net new ARR than it did in the fourth quarter.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a upward trend in fresh estimates.
The consensus estimate has shifted 7.78% due to these changes.
VGM Scores
Currently, Palo Alto has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock has a grade of F on the value side, putting it in the fifth quintile for value investors.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Interestingly, Palo Alto has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Palo Alto belongs to the Zacks Security industry. Another stock from the same industry, SentinelOne (S - Free Report) , has gained 20.7% over the past month. More than a month has passed since the company reported results for the quarter ended July 2026.
SentinelOne reported revenues of $291.98 million in the last reported quarter, representing a year-over-year change of +20.6%. EPS of $0.08 for the same period compares with $0.04 a year ago.
For the current quarter, SentinelOne is expected to post earnings of $0.09 per share, indicating a change of +28.6% from the year-ago quarter. The Zacks Consensus Estimate has changed -3.2% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for SentinelOne. Also, the stock has a VGM Score of F.
View the Zacks #1 Rank List
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Why Is Palo Alto (PANW) Up 21% Since Last Earnings Report?
A month has gone by since the last earnings report for Palo Alto Networks (PANW - Free Report) . Shares have added about 21% in that time frame, outperforming the S&P 500.
But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is Palo Alto due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its latest earnings report in order to get a better handle on the important catalysts.
PANW Q4 Earnings Beat Estimates on Platformization Strength
Palo Alto Networks delivered fourth-quarter fiscal 2026 non-GAAP earnings of $1.02 per share, which beat the Zacks Consensus Estimate by 4.1%. The figure improved 7.4% year over year.
Revenues climbed 34% year over year to $3.41 billion and topped the consensus estimate by 1.8%. Broad-based strength across Network & AI Security, Cortex and Idira, along with record platformization adoption, drove the fourth-quarter results. Next-Generation Security ARR jumped 63% to $9.10 billion.
PANW's Revenue Mix Shows Broad-Based Growth
Product revenues increased 28.6% year over year to $738 million from $574 million in the year-ago quarter, accounting for 21.6% of total revenues. Subscription and support revenues rose 36.2% to $2.672 billion from $1.962 billion, which represented 78.4% of total revenues.
By platform, fourth-quarter revenues were $2.331 billion for Network & AI Security, $586 million for Cortex and $336 million for Idira. Other revenues, including Unit 42, professional services and financing income, totaled $157 million.
Palo Alto Networks' Platformization Hits Record Levels
Remaining performance obligations rose 34% year over year to $21.2 billion. Net new NGS ARR reached approximately $970 million, up 98% year over year, reflecting the strongest quarterly addition reported by the company.
Palo Alto Networks added roughly 220 net new platformizations in the quarter, up 44% year over year. Net revenue retention among platformized customers, excluding Identity and Observability, exceeded 120%, while more than 65% of NGS ARR came from platformized customers.
PANW's AI Security Products Gain Scale
Prisma AIRS reached roughly $120 million in ARR within one year of general availability and had over 800 customers, more than doubling sequentially. Software firewall ARR grew 29% year over year, while SASE competitive displacements totaled about $450 million in fiscal 2026.
Cortex momentum also remained strong. XSIAM ARR exceeded $700 million and grew about 70% year over year, while observability ARR surpassed $500 million and increased more than 2.5 times from the second quarter. CyberArk, now called Idira, generated more than 200 new-logo wins from PANW's installed base.
Palo Alto Networks' Margins Reflect SaaS Mix Shift
Non-GAAP gross profit was $2.552 billion, with gross margin at 74.8%, down from 75.8% a year earlier. Management attributed the pressure to a mix shift toward faster-growing SaaS offerings that have not yet reached gross-margin maturity.
Non-GAAP operating income was $1.011 billion, translating to a 29.6% margin compared with 30.3% a year ago.
Adjusted free cash flow increased to $1.289 billion from $954 million, with margin edging up to 37.8% from 37.6%. Cash and cash equivalents stood at $2.514 billion, with $557 million in short-term investments.
PANW Guides Strong Growth for Fiscal 2027
For the first quarter of fiscal 2027, Palo Alto Networks expects revenues of $3.300-$3.310 billion, indicating 33-34% growth. NGS ARR is projected to be in the range of $9.54-$9.56 billion, RPO in the band of $20.8-$20.9 billion and non-GAAP earnings per share between 96 cents and 98 cents.
For fiscal 2027, revenues are forecast at $14.10-$14.20 billion, implying 23-24% growth. NGS ARR is expected to be in the range of $11.075-$11.175 billion, RPO in the band of $25.2-$25.4 billion and non-GAAP earnings per share between $4.16 and $4.19. The company targets a 29.5% non-GAAP operating margin and a 38.0% adjusted free cash flow margin.
Palo Alto Networks Maps Platform Growth Ahead
Management expects fiscal 2027 Network & AI Security revenues to grow in the low double digits, Cortex revenues to rise about 30%, and Idira revenues to reach approximately $1.5 billion, implying pro forma growth in the high teens to 20%.
The company expects 60-61% of fiscal 2027 net new NGS ARR to arrive in the second half. Its outlook assumes the tail end of a large LLM customer's migration to Chronosphere continues through the first quarter, but contributes less net new ARR than it did in the fourth quarter.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a upward trend in fresh estimates.
The consensus estimate has shifted 7.78% due to these changes.
VGM Scores
Currently, Palo Alto has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock has a grade of F on the value side, putting it in the fifth quintile for value investors.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Interestingly, Palo Alto has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Palo Alto belongs to the Zacks Security industry. Another stock from the same industry, SentinelOne (S - Free Report) , has gained 20.7% over the past month. More than a month has passed since the company reported results for the quarter ended July 2026.
SentinelOne reported revenues of $291.98 million in the last reported quarter, representing a year-over-year change of +20.6%. EPS of $0.08 for the same period compares with $0.04 a year ago.
For the current quarter, SentinelOne is expected to post earnings of $0.09 per share, indicating a change of +28.6% from the year-ago quarter. The Zacks Consensus Estimate has changed -3.2% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for SentinelOne. Also, the stock has a VGM Score of F.