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what it is
Palo Alto Networks sells software that helps companies keep hackers out of their systems and data.
how it gets paid
Last year Palo Alto Ntwks made $9.2B in revenue. Americas was the main engine at $6.2B, or 67% of sales.
why it's growing
Revenue grew 14.9% last year. First-quarter sales rebounded to a still-muted, mid-teen pace, but annual recurring revenue for next generation products jumped 29% to $5.9 billion.
what just happened
Quarterly revenue in this feed tracks near ~$2.47B (consensus), not $5.1B—that larger figure was mislabeled as a single quarter vs ~$9.2B FY. EPS $1.07 vs $0.93 expected.
At a glance
B++ balance sheet — above average — nothing keeping you up at night
30/100 earnings predictability — expect surprises
116.8x trailing p/e — you're paying up for this one
32.0% return on capital — every dollar works hard here
xvary composite: 59/100 — below average
What they do
Palo Alto Networks sells software that helps companies keep hackers out of their systems and data.
Palo Alto sells through channel partners, which means resellers do the heavy lifting. So what: your security stack gets harder to replace once it is wired into the network. The company posted a 27.5% net margin and 32.0% return on capital, or profit on money invested, which is sturdy for a security vendor.
How they make money
$9.2B
annual revenue · their business grew +14.9% last year
Americas
$6.2B
EMEA
$1.9B
APAC
$1.1B
The products that matter
network, cloud, and endpoint security platform
Security Platform
~$9.2B FY revenue · platform transition
total company revenue is about $9.2B and grew ~15% in this feed. legacy product lines can shrink while ARR and next-gen grow—do not mix a segment decline with FY totals.
reported base
next-gen recurring security products
Next-gen security
$5.9B ARR · +29%
this $5.9B ARR stream is growing 29% and is the cleanest evidence that the newer platform pieces are working. it's the number the bull case lives on.
growth engine
Key numbers
$265
consensus target
Consensus target → analyst price goal → $265 is 42% above $186.85.
116.8x
price / profit
Trailing P/E → price divided by last year's profit → 116.8x says you are paying a steep premium.
$9.2B
annual revenue
Annual revenue → money collected in a year → $9.2B grew 14.9%.
13.5%
operating margin
Operating margin → core business before tax → 13.5% here vs ~27.5% net margin in the health block (below)—they are different lines; do not merge them.
Financial health
B++
strength
- balance sheet grade B++ — above average financial health
- risk rank 3 — safer than 50% of stocks
- price stability 35 / 100
- net profit margin 27.5% — ~27.5¢ per revenue dollar
- return on equity 32% — $0.32 profit for every $1 investors have put in
B++ — functional but not a standout on the balance sheet.
Total return vs. market
You invested $10,000 in PANW 3 years ago → it's now worth $26,650.
The index would have given you $13,920.
source: institutional data · total return
What just happened
beat estimates
Quarterly revenue near ~$2.47B (consensus-sized quarter), and EPS landed at $1.07 versus $0.93 expected.
Prior copy used $5.1B as “quarterly,” which does not stack against ~$9.2B FY. Use the filing quarter total (~$2.5B class). EPS $1.07 vs $0.93; gross margin 73.9%.
~$2.47B
Q revenue (approx.)
$1.07
eps
73.9%
gross margin
the number that mattered
The clean check is EPS $1.07 vs $0.93 on a ~$2.47B revenue quarter—not a mislabeled $5.1B quarter.
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this palo alto networks’ earnings presentation is different.our estimates are now presented on a non-gaap basis, which excludes substantial stock compensation and amortization charges previously included.
-
prior years have not been restated.
-
our fiscal 2026 (ends july 31st) earnings-per-share estimate is $3.85, which is 15% above fiscal 2025’s comparative $3.34 non-gaap figure.
-
older products are masking solid growth of next-generation security solutions.
-
first-quarter sales rebounded to a still-muted, mid-teen pace, but annual recurring revenue (arr) for next generation products jumped 29% to $5.9 billion.
source: company earnings report, 2026
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What could go wrong
the #1 risk is the next-gen transition not showing up cleanly enough in reported revenue and earnings.
med
platform transition slippage
next-gen ARR is up 29% to $5.9B, but reported annual revenue still shows a 45% decline to $5.1B. if the newer platform keeps growing without fixing the headline revenue story, investors may stop giving management the benefit of the doubt.
the bull case needs the $5.9B ARR engine to translate into something closer to the $11B fiscal 2026 revenue expectation.
med
non-gaap comparability risk
the company shifted to non-gaap presentation and did not restate prior years. that makes trend analysis harder right when the market is trying to judge whether the business is actually accelerating.
when full-year EPS is $1.60 and fiscal 2026 is expected at $3.85, clean comparisons are not a luxury. they are the story.
med
valuation compression
a 116.8x trailing p/e leaves little room for confusion. you can survive a messy quarter with a cheap stock. this is not a cheap stock.
if the transition stalls, the premium multiple can fall even if the underlying business stays profitable at a 26.3% net margin.
at 116.8x trailing earnings, the market is already pricing in cleaner execution than the current $5.1B revenue figure shows.
source: institutional data · regulatory filings · risk analysis
Pay attention to
growth
next-gen ARR
$5.9B and growing 29% is the cleanest proof the platform strategy is working. if that number cools, the whole narrative cools with it.
reporting
non-gaap comparisons
the new presentation excludes stock compensation and amortization, while older years were not restated. watch whether management makes the bridge easier or leaves you doing the math alone.
risk
reported revenue reacceleration
the current annual revenue figure is $5.1B with a 45% decline. the street expects $11B for fiscal 2026. that gap is the test.
ownership
institutional conviction
1,455 buyers versus 758 sellers in 3Q2025 says big money is still leaning in. if that flips while the numbers stay messy, pay attention.
Analyst rankings
short-term outlook
average
momentum score 3. in human-speak, analysts see a stock trading roughly with the market, not breaking away from it.
risk profile
average
stability score 3 means middle-of-the-pack risk. not especially safe, not unusually fragile.
chart momentum
top 20%
technical score 2 means above-average price action. translation: the chart looks better than the accounting noise.
earnings predictability
30 / 100
low predictability means you should expect less tidy comparisons and more debate after each quarter.
source: institutional data
Institutional activity
institutions have been net buying for 3 consecutive quarters — 1,455 buyers vs. 758 sellers in 3q2025. total institutional holdings: 0.6B shares. net buying for 3 quarters.
source: institutional data
Price targets
3-5 year target range
$152
$317
$187
current price
$235
target midpoint · +26% from current · 3-5yr high: $320 (+70% · 14% ann'l return)
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