Shares of Palo Alto Networks (NASDAQ:PANW) climbed more than 5% in premarket trading Tuesday after the cybersecurity firm posted quarterly results and issued guidance that exceeded Wall Street expectations.
The company reported adjusted earnings of 95 cents per share for the fourth quarter ended in July, surpassing analysts’ consensus of 89 cents. Revenue came in at $2.5 billion, matching forecasts.
Next-generation security (NGS) annual recurring revenue (ARR), a closely watched metric, reached $5.58 billion, marking a 32% increase year-on-year and slightly above the $5.55 billion consensus. Net new annual recurring revenue (NNARR) grew 14% year-on-year, the fastest pace since fiscal Q3 2024.
Total remaining performance obligations (RPO) hit $15.8 billion, topping the consensus of $15.26 billion and the company’s guidance of $15.2–15.3 billion. Growth accelerated to 24% year-on-year, up from 19% in the prior quarter.
“PANW delivered some ‘Q4 magic’, with RPOs crushing cons. & accelerating to +24% Y/Y vs. +19% Y/Y last qtr,” analysts at D.A. Davidson noted.
Looking ahead, Palo Alto expects earnings of 88–90 cents per share for the current quarter, above the 86-cent estimate. Revenue guidance is $2.45–$2.47 billion, slightly higher than the average analyst forecast.
For fiscal 2026, the company projected earnings of $3.75–$3.85 per share and revenue between $10.475 and $10.525 billion, beating Wall Street estimates.
Management also anticipates that the combined Palo Alto and Cyberark business will deliver free cash flow (FCF) margins above 40% in FY28, up from the previous medium-term target of 37%, thanks to expected synergies versus Cyberark’s standalone 27% margin goal for 2028.
“Our back-of-the-envelope math suggests FY28 could generate $15B+ in combined revenue with $6B+ in FCF, which over the next two years could buy back a material portion of the dilution,” Barclays analysts added.
In corporate updates, Palo Alto Networks announced that founder and CTO Nir Zuk has retired after more than 20 years. Chief Product Officer Lee Klarich will step into the CTO role and join the board.
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