Palo Alto Networks Raises FY2026 Revenue Outlook to $11.3B, Cuts EPS Guide
Q2 revenue climbed 15% to $2.59 billion with NGS ARR up 33% to $6.33 billion and adjusted EPS of $1.03. The company raised its fiscal 2026 revenue forecast to $11.28–11.31 billion but cut full-year non-GAAP EPS guidance to $3.65–3.70, sending shares down about 5%.
1. Q2 Financial Results
Revenue rose 15% year-over-year to $2.59 billion in the fiscal second quarter, while next-generation security ARR jumped 33% to $6.33 billion. Adjusted non-GAAP EPS reached $1.03, ahead of prior expectations, and SASE ARR climbed 40% to $1.5 billion as software firewall ARR increased 25%.
2. Updated Fiscal 2026 Revenue Outlook
Management lifted its full-year revenue guidance to a range of $11.28 billion–$11.31 billion and sees NGS ARR of $8.52 billion–$8.62 billion. The company reiterated targets of $20 billion in NGS ARR by 2030 and a 40% free cash flow margin by fiscal 2028.
3. EPS Guidance Revision and Market Reaction
Despite top-line strength, full-year non-GAAP EPS guidance was cut to $3.65–$3.70 from $3.87, with third-quarter EPS now expected at $0.78–$0.80. Shares fell roughly 5% on the news, though some analysts view the pullback as a buying opportunity.
4. AI-Driven Growth and Strategic Initiatives
CEO highlighted accelerating AI adoption driving demand for integrated security across network, cloud, endpoint and identity. Recent acquisitions of CyberArk, Chronosphere and Israeli firm Koi bolster identity protection and observability, while Prisma AIRS customer count quadrupled this quarter.