Palo Alto Networks Surpasses Estimates as AI Cybersecurity Demand Intensifies, Acquires Console

We're lifting our price target on Palo Alto Networks as AI-driven cyber demand intensifies

Palo Alto Networks on Tuesday night ended its fiscal 2026 on a high note and signaled that the good times will continue in the new year. The numbers and conference call commentary reinforce the essential role of cybersecurity in the artificial intelligence era. Revenue in the company's fiscal fourth quarter increased 34% year over year to $3.41 billion, exceeding the Wall Street consensus estimate of $3.35 billion, according to LSEG. Adjusted earnings per share (EPS) in the May-to-July period totaled $1.02 in the quarter, ahead of the 98-cent LSEG consensus estimate. On an annual basis, adjusted EPS rose 7%. Shares were down almost 2% in extended trading, though it's tough to say that move is purely a judgement on what Palo Alto delivered. When the earnings release first hit the tape, the stock initially moved higher by a couple of percentage points, only to reverse course before the conference call even got underway. Some of this could simply be profit-taking, considering the stock has had a massive move in recent months; after all, we took profits Monday ourselves , so we cannot fault anyone here. Another potential culprit for the reversal? OpenAI announcing that its upcoming AI model, dubbed Astra, breaches certain cybersecurity thresholds and will have throttled-back cyber capabilities when released. "We now believe Astra meets the Critical cybersecurity capability threshold under our Preparedness Framework , meaning that with the right tools and access, it can find previously unknown security flaws and develop ways to exploit them across many well-protected systems without a person guiding each step," OpenAI said in a press release. "It is the first model we are designating at this level, and requires stronger safeguards during development and before release." We've seen this song and dance already this year, where cybersecurity names get sold off on the back of a more advanced cybersecurity model. We remain undeterred, believing it is silly to think that the very companies creating AI -- and the risks that come with the powerful technology -- would be the ones to displace industry incumbents. It's also fanciful to argue that the enterprise companies looking to embed AI into their workflows would risk a data breach trying to vibe code a replacement for cybersecurity platforms that took ages to build and have amassed valuable, proprietary data unavailable anywhere else. PANW YTD mountain Palo Alto Networks' year-to-date stock performance. Bottom line Astra doesn't change our read on Palo Alto's results, which strengthened our conviction that cybersecurity is the software component that enables the adoption of artificial intelligence. Memory may be the hardware component that AI chips need to thrive, but cybersecurity is what allows an organization to adopt and deploy this technology securely. At the end of the day, the ability to implement is all that matters. What good is a Ferrari sitting in the driveway if you don't have a driver's license? "You cannot deploy AI successfully if you do not get cybersecurity right," Palo Alto CEO Nikesh Arora told Jim Cramer on "Mad Money" Tuesday night, adding that AI changes the industry's long-term growth rate for the better. The reality is that while AI is certainly bringing new levels of productivity to enterprises around the world, it also introduces a new level of risk when it comes to protecting sensitive data. That's especially true when thinking about legacy infrastructure, the kind of stuff installed when the word "agent" was most commonly associated with the person who helps athletes and actors land work. Five to six years ago, certainly, people were not thinking about agentic AI systems that can plan and complete multi-step tasks with little to no human intervention. "There is approximately $1 trillion of global cybersecurity debt that must be modernized to defend against automated threats," Arora said on Tuesday's earnings call. By debt, Arora means that roughly $1 trillion of infrastructure is still out there from the pre-generative AI era and not ready for what's coming. That naturally represents a massive opportunity going forward. That's translating into even stronger demand for Palo Alto's all-encompassing cybersecurity platform than we saw just a few months ago. One of the big trends within cybersecurity is so-called platformization, which refers to getting customers to consolidate their spending on security tools to a more limited number of vendors. This is a historically fragmented industry, with different vendors for different kinds of services, such as firewall, threat detection, and identity. Palo Alto and fellow Club name CrowdStrike are the leaders in this platform shift. Palo Alto's closely watched next-generation security annual recurring revenue (NGS ARR) grew an incredible 63% year-over-year, up from the 60% growth rate we saw in the prior quarter, and ahead of what the Street was looking for. The businesses included in NGS ARR are focused on subscriptions for its cloud-native services; it excludes hardware and legacy products. Another key metric providing insight into the demand environment is net new platformizations, which came in at about 220 in the quarter, representing a 44% year-over-year increase. That is double the number of platformizations in the third quarter. "As we look forward, we remain on track towards our long-term objective of over 4,000 platformizations by fiscal 2030, which serves as a bedrock for reaching our $20 billion next generation security ARR target." Total remaining performance obligation (RPO), meanwhile, which represents business signed but not yet converted into revenue, increased 34% year over year, to $21.2 billion. That was also ahead of expectations. "Fiscal 2026 was a transformative year for Palo Alto Networks and the broader industry," Arora said. "We remain convinced that the AI tailwinds catalyzing cybersecurity demand will only intensify as we look towards the future." To date, Arora called out three key moments that helped drive the demand, including: The rise of Open Claw, which showed the world the potential of agentic AI. It was first released in November 2025 under a different name . The emergence of Anthropic's Mythos in April, which made clear that AI, left unchecked and unsecured, could be leveraged by bad actors to exploit previously undiscovered vulnerabilities. The growing normalization and adoption of open-weight AI models, as enterprises and consumers alike seek to customize models to their unique use cases. Going forward, Arora's belief that AI will continue to drive demand is due to: The incredible levels of investment happening in AI. Arora said he expects capital expenditures in the next five years to outpace what we've seen over the past two decades combined. "This surge in critical infrastructure is a permanent tailwind for cybersecurity, a trend already manifesting in the accelerated momentum of our network security and observability businesses this year," he said. The increasing importance of being able to respond to threats in real time, adding that fragmented solutions "are no longer viable." He added, "Platformization is the only solution for real-time defense, ensuring that telemetry and policy are harmonized across every control point. We're still in the early chapters of this structural change." The rise of agents brings with it new risks and, in turn, new opportunities for Palo Alto. "The rise of autonomous agents will dramatically expand the network surface area that requires fortification, robust governance and security guardrails for AI have shifted from optional features to essential enterprise requirements," Arora said. "While this market is evolving rapidly, we believe the future belongs to architectures providing end-to-end controls." Palo Alto is putting its money where its mouth is on agentic security, announcing Tuesday the acquisition of Console for an undisclosed sum. This suggests the deal is on the smaller side, but the strategic rationale makes sense. "Console is designed to help organizations apply AI-driven analysis and action across their enterprise operations, giving organizations the force multiplier they need to resolve alerts, issues, and requests at machine speed," the company said in a press release. The bottom line? AI is a major tailwind for cybersecurity that won't let up anytime soon. Sure, the stock may be down after-hours trading due to profit-taking given the incredible advance since Mythos was announced in early April, and the OpenAI announcement noted above. If anything, this helps explain why we sold some shares into strength Monday -- we figured expectations would be high following strong prints from CrowdStrike and Okta last week. This has played out like we thought it would, with PANW down about 5% (including Tuesday night's move) since our sales despite a terrific quarter and strong outlook. Nevertheless, we're raising our price target to $400 from $380. Our rating is under review. Guidance The company's outlook for the full year and first quarter of fiscal 2027 came in above estimates across every line item. Revenue in the range of $3.3 billion to $3.31 billion, above the consensus estimate of $3.22 billion, according to LSEG. Adjusted EPS in the range of 96 cents to 98 cents, which at a midpoint of 97 cents beats the LSEG consensus estimate of 93 cents. Next-gen security ARR of $9.54 billion to $9.56 billion, which is well above the FactSet consensus estimate of $9.215 billion. RPO of $20.8 billion to $20.9 billion, which is above the consensus estimate of $20.38 billion. For the full year, management guided to: Total revenue in the range of $14.1 billion to $14.2 billion, well ahead of the $14.79 billion expected, according to LSEG. Adjusted EPS in the range of $4.16 to $4.19ahead of the $4.11 LSEG consensus estimate. Next-gen security ARR of $11.075 billion to $11.175 billion, ahead of expectations of $10.915 billion. RPO of $25.2 billion to $25.4 billion, a strong outlook versus estimates of $24.78 billion. (Jim Cramer's Charitable Trust is long PANW and CRWD. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

Palo Alto CEO says $1 trillion of cybersecurity infrastructure isn't ready for AI

* Palo Alto Networks CEO Nikesh Arora said AI is forcing companies to modernize roughly $1 trillion of aging cybersecurity infrastructure that isn't equipped for attacks moving at machine speed. * He said the AI threat is extending cybersecurity's growth runway. In this article * CRWD * PANW Follow your favorite stocksCREATE FREE ACCOUNT Palo Alto Networks CEO Nikesh Arora said Tuesday that AI is forcing companies to overhaul roughly $1 trillion of aging cybersecurity infrastructure built for a pre-AI world. "Nothing that was deployed seven or 10 years ago is prepared or ready to handle AI at machine speed," Arora told CNBC's Jim Cramer on "Mad Money." "You have to rethink your cyber architecture." Palo Alto's earnings report on Tuesday suggests that urgency is already translating into business. The company beat fiscal fourth quarter estimates and issued a strong outlook for its new fiscal year. Cramer's Charitable Trust, the portfolio run by the CNBC Investing Club, owns Palo Alto and cyber peer CrowdStrike. Arora expects the opportunity to grow as AI allows attackers to find and exploit vulnerabilities faster than ever before, forcing companies to modernize security defenses that weren't designed for automated threats. "You cannot deploy AI successfully if you don't get cybersecurity right," he said. "There's approximately $1 trillion of global cybersecurity debt that must be modernized to defend against automated threats because they operate instantaneously," Arora said on Palo Alto's earnings call. That opportunity marks a dramatic reversal from how investors viewed AI's impact on cybersecurity earlier this year. Palo Alto and other cybersecurity stocks came under pressure on fears that increasingly capable AI models could disrupt traditional security software. Eventually, the market began to view AI as a growth driver as investors recognized that attackers can weaponize the same technology. "Nine months ago, ... we were guilty and convicted of near death because AI was going to eat our lunch, breakfast, and dinner," Arora told Cramer. "It seems like that's not the case. It seems like we're going to have to have the feast with them." Arora pointed to the emergence of Anthropic's Mythos model earlier this year as a turning point. Mythos prompted companies to take cybersecurity more seriously because the model could be easily used to exploit software vulnerabilities. Shares of Palo Alto have surged 113% since April 7. Prior to that point, the stock was in the red for 2026. "I've been trying for eight years to tell customers they're not ready, and [Anthropic CEO Dario Amodei] did it in one event, just by launching Mythos," Arora said on CNBC. Arora said Palo Alto has held conversations with roughly 2,000 companies about its Frontier AI Critical Defense Program, which uses advanced AI models to test customers' defenses, identify vulnerabilities, and help them modernize their security infrastructure. The company formally introduced the initiative in August. While Arora cautioned that the spending won't materialize all at once, he said AI has fundamentally expanded the size and duration of the opportunity for the cybersecurity industry. "Not everything's going to happen next quarter," Arora told Cramer. "But all I say is this changes the long-term growth rate and duration of cybersecurity, not just for Palo Alto, but as an industry." Jim Cramer's Guide to Investing Click here to read Jim Cramer's Guide to Investing at no cost to help you build long-term wealth and invest smarter Sign up now for the CNBC Investing Club to follow Jim Cramer's every move in the market. Disclaimer Questions for Cramer? Call Cramer: 1-800-743-CNBC Want to take a deep dive into Cramer's world? Hit him up! Mad Money Twitter - Jim Cramer Twitter - Facebook - Instagram Questions, comments, suggestions for the "Mad Money" website? [email protected] Choose CNBC as your preferred source on Google and never miss a moment from the most trusted name in business news.

Palo Alto Networks beats quarterly estimates on AI demand, continues acquisition spree

* Palo Alto Networks topped estimates as AI risks spur demand for its cybersecurity tools. * CEO Nikesh Arora told CNBC that accelerating attacks are forcing customers to build better and faster cyber defenses. * Palo Alto announced plans to buy AI agent startup Console as it broadens its acquisition spree and AI push. In this article * ANTHR.FG * PANW Follow your favorite stocksCREATE FREE ACCOUNT Nikesh Arora, chief executive officer at Palo Alto Networks Inc., at the AI Impact Summit in New Delhi, India, on Thursday, Feb. 19, 2026. Ruhani Kaur | Bloomberg | Getty Images Palo Alto Networks surpassed fiscal fourth-quarter estimates as mounting artificial intelligence risks boost demand for its cybersecurity tools. Shares gained about 5% in extended trading, following a 5% drop during regular trading. Here's how the company did versus LSEG estimates: * Earnings per share: $1.02 adjusted vs. 98 cents expected * Revenue: $3.41 billion vs. $3.35 billion expected. Revenue jumped 34% during the quarter from $2.54 billion a year ago, the company said. Palo Alto reported a net loss of $282 million, a loss of 35 cents per share, down from net income of $254 million, or 36 cents per share, a year ago. The acceleration of AI attacks is forcing customers to build better and faster cyber defenses, CEO Nikesh Arora told CNBC. Those concerns have already moved the needle, but the long-term growth runway is still in the early stages. "This is a long-term tailwind, and it will not happen in one quarter. It will not happen in two, but it just underpins the long-term duration from a growth rate perspective for our business," Arora said. Shares of Palo Alto Networks have nearly doubled this year as the rise of highly capable AI models like Anthropic's Mythos spurs demand for newer security tools to detect and respond to agentic cyberattacks. Those concerns have accelerated as breaches, like the OpenAI-Hugging Face hack, prove that agents can increasingly plan and orchestrate attacks autonomously. Stock Chart IconStock chart icon Palo Alto Networks stock chart. Arora said the company has held over 2,000 customer briefings, up from the roughly 1,200 it disclosed last quarter, in the wake of the Anthropic Mythos launch. Palo Alto also said it plans to buy agentic AI startup Console as it deepens its AI security offerings. in a little over a year, Arora has accelerated an aggressive dealmaking push, which included a mega $25 billion deal for identity security firm CyberArk and the acquisition of Chronosphere for $3.4 billion. "I see the cyber startup ecosystem as a large lab where people are trying different things," Arora said, adding that Palo can look to acquire from the space if its internal approach isn't working. Palo Alto issued upbeat guidance, expecting $3.30 billion to $3.31 billion in revenue for the first quarter, topping an analyst estimate of $3.22 billion. For the full year, the company forecasted between $14.10 billion and $14.20 billion in revenue and adjusted EPS of $4.16 to $4.19. That surpassed the $13.79 billion revenue and $4.11 EPS forecast. Read more CNBC tech news Choose CNBC as your preferred source on Google and never miss a moment from the most trusted name in business news.

Palo Alto Networks beats estimates but margin concerns send shares lower

Palo Alto Networks beats estimates but margin concerns send shares lower Shares in Palo Alto Networks Inc. fell around 2% in late trading today after the cybersecurity company beat Wall Street targets in its fiscal fourth quarter and guided above consensus for the year ahead, though not on margins. The stock had already dropped more than 5% during the regular session. For the quarter that ended on July 31, Palo Alto reported adjusted earnings of $1.02 per share, up from 95 cents a year earlier, on revenue of $3.41 billion, up 34% year-over-year. Analysts were expecting 98 cents per share on revenue of $3.35 billion. Subscription and support accounted for $2.67 billion of the total. Product revenue, the smaller and slower line, rose to $738 million from $574 million. Deals closed earlier in the year pushed the unadjusted result into the red. Palo Alto reported a net loss of $282 million, or 35 cents per share, against net income of $254 million, or 36 cents, a year earlier. Amortization of acquired intangible assets, acquisition costs and a $524 million non-cash charge on convertible notes that came with the acquisition of CyberArk Software Ltd. accounted for most of the swing, and adjusted net income came in at $853 million, up from $673 million. Next-generation security annual recurring revenue, the measure the company uses to track the platform business it is betting on, grew 63% to $9.10 billion. Net new next-generation annual recurring revenue was nearly $1 billion in the quarter. Remaining performance obligations rose 34% to $21.2 billion, clearing $20 billion for the first time. Operating activities generated $1.4 billion of cash during the quarter, up from $1 billion, and adjusted free cash flow came to $1.3 billion against $954 million a year ago. Revenue for the full fiscal year totaled $11.48 billion, up 24%, with an adjusted free cash flow margin of 38.4%. Chairman and Chief Executive Nikesh Arora put the demand backdrop down to artificial intelligence. Advances in the technology have pushed cybersecurity to the top of the chief information officer priority list, he said in the earnings release, and he called them "durable tailwinds" for the $20 billion next-generation annual recurring revenue target the company has set for fiscal 2030. Chief Financial Officer Dipak Golechha credited the Network and AI Security, Cortex and Idira platforms for a quarter that beat guidance "across the board." The fiscal 2028 target of a 40% adjusted free cash flow margin is unchanged, he said. Palo Alto also disclosed alongside the results that it has acquired Console Inc., an AI-native platform for running agentic workflows across enterprise operations. Terms were not disclosed. Console will expand the role of Cortex across the broader enterprise, the company said. Guidance was the bright spot. Palo Alto is forecasting first-quarter revenue of $3.30 billion to $3.31 billion and adjusted earnings of 96 to 98 cents per share, against consensus of $3.22 billion and 93 cents. Full-year revenue of $14.10 billion to $14.20 billion and adjusted earnings of $4.16 to $4.19 per share also top the $13.79 billion and $4.11 analysts had modeled. The company expects next-generation security ARR to reach $11.075 billion to $11.175 billion by the end of fiscal 2027, remaining performance obligations of $25.2 billion to $25.4 billion and an adjusted operating margin of 29.5%. Despite the beats, margins are the likely culprit for the after-hours drop. Adjusted gross margin narrowed about a percentage point from a year earlier to 74.8%, and Golechha told analysts that cloud hosting costs will grow faster than revenue in fiscal 2027.

Palo Alto Beats Q4 Estimates, Announces Console Acquisition to Strengthen Agentic Capabilities - Palo Alt

Palo Alto Networks Inc (NASDAQ:PANW) reported financial results for the fourth quarter of fiscal 2026 after the market close on Tuesday. Here's a look at the key details from the print. * Palo Alto Networks stock is moving higher. Why are PANW shares up? Palo Alto Q4 Earnings Highlights Palo Alto posted fourth-quarter revenue of $3.41 billion, beating analyst estimates of $3.35 billion. The cybersecurity company reported adjusted earnings of $1.02 per share for the quarter, beating estimates of 98 cents per share, according to Benzinga Pro. Total revenue was up 34% year-over-year, and remaining performance obligations grew 34% year-over-year to $21.2 billion. The company said next-generation security annual recurring revenue increased 63% year-over-year to $9.1 billion. Palo Alto generated $1.3 billion in adjusted free cash flow during the quarter and exited the period with approximately $2.51 billion in cash and cash equivalents. Trending "We delivered a strong Q4 to close out the year, adding nearly $1 billion of Net New NGS ARR in a single quarter," said Nikesh Arora, chairman and CEO of Palo Alto Networks. "The latest advancements in AI are elevating cybersecurity to the top of the CIO priority list, and will serve as durable tailwinds as we progress towards our $20 billion FY30 NGS ARR target." Palo Alto expects first-quarter revenue to be in the range of $3.30 billion to $3.31 billion versus estimates of $3.22 billion. The company anticipates first-quarter adjusted earnings between 96 cents and 98 cents per share versus estimates of 93 cents per share. Palo Alto also introduced fiscal 2027 guidance. The company expects full-year revenue of $14.10 billion to $14.20 billion versus estimates of $13.79 billion, and adjusted earnings of $4.16 to $4.19 per share versus estimates of $4.11 per share. In connection with earnings, Palo Alto announced the acquisition of Console, an AI-native platform that enables agentic capabilities. The company said Console will help deepen its agentic capabilities in Cortex as AI reshapes the threat landscape. Palo Alto management will discuss the quarter on an earnings call with investors and analysts at 4:30 p.m. ET. A link to the call has been provided below. PANW Shares Move Higher After Earnings PANW Price Action: Palo Alto shares were up 3.04% in after-hours, trading at $368.58 at the time of publication on Tuesday, according to Benzinga Pro. Tech Elon Musk Predicts AI Will Be 'Superhuman' at Everything Digital by End of 2027: 'Doesn't Require Shaping Atoms' Elon Musk sees superhuman AI arriving across the digital world by the end of next year, extending his increasingly aggressive timeline. 3 min read Read this article Image: Shutterstock.com Market News and Data brought to you by Benzinga APIs To add Benzinga News as your preferred source on Google, click here.

Why is Palo Alto Networks stock gaining today? By Investing.com

Investing.com -- Palo Alto Networks stock edged up 0.1% in after-hours trading after the company delivered a fiscal fourth-quarter earnings report that cleared Wall Street's already elevated bar on every key metric. Adjusted earnings per share came in at $1.02, topping the consensus estimate of $0.98, while quarterly revenue reached $3.41 billion against expectations of $3.35 billion -- a 34% year-over-year increase driven by intensifying enterprise demand for AI-focused cyber defenses. Equally important to investors was the company's forward outlook, which exceeded analyst projections across the board. Full-year fiscal 2027 revenue guidance of $14.10 billion to $14.20 billion surpassed the Street's $13.84 billion estimate, and first-quarter 2027 revenue guidance of $3.30 billion to $3.31 billion also came in ahead of the $3.21 billion consensus. CEO Nikesh Arora noted that the company added nearly $1 billion of Net New Next-Generation Security ARR in the quarter alone, underscoring the platform's momentum. The company also announced the acquisition of AI-native agentic workflow startup Console to expand its Cortex security operations offering. Earlier in the session, Scotiabank raised its price target on the stock to $430 from $320, citing improving feedback from chief information security officers. The broader market provided a neutral backdrop, with the S&P 500 up just 0.1%, the Dow Jones barely changed, and the Nasdaq essentially flat -- meaning the stock's after-hours move was entirely a function of its own results rather than any macro tailwind. The cybersecurity sector had been on watch given the high-profile earnings slate, and PANW entered the print having already risen 96% year-to-date, leaving little room for error. Taken together, a clean earnings beat, guidance that comfortably cleared consensus, strong recurring-revenue metrics, and a fresh analyst price-target increase combined to lift the stock in after-hours trading, reinforcing the investment thesis that accelerating AI-related cyber risk is translating into durable, high-growth demand for Palo Alto Networks' integrated platform. This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Palo Alto Projects Double-Digit Growth as AI Drives Cybersecurity Spending -- Update

Palo Alto Networks swung to a loss in the fiscal fourth quarter, but posted higher revenue and projected double-digit revenue growth in the current fiscal year as customers continue to boost their cybersecurity spending in response to advancements in artificial-intelligence. The cybersecurity company on Tuesday said it is expecting revenue to rise between 23% and 24% to $14.1 billion to $14.2 billion in fiscal 2027. Analysts polled by FactSet are expecting $13.84 billion in revenue. Chief Executive Officer Nikesh Arora said the results and outlook reflect growing recognition among enterprises that they need to modernize their cyber defenses to meet the capabilities of ever-more-powerful AI models, especially following the release of Anthropic's Mythos earlier this year. "In that context, people are gravitating towards the largest players in the industry and looking at us to provide the antidotes to this development in AI," Arora said in an interview. Palo Alto also forecast adjusted earnings between $4.16 and $4.19 a share for the fiscal year, ahead of analyst expectations of $4.10 a share. The company guided for next-generation security annual recurring revenue between $11.075 billion and $11.175 billion, representing 22% to 23% growth. In the fourth quarter, Palo Alto had a loss of $282 million, or 35 cents a share, compared with a profit of $254 million, or 36 cents a share, a year earlier. The loss was driven by the accounting treatment of the company's acquisition of CyberArk. Stripping out certain one-time items, adjusted earnings were $1.02 a share. Analysts polled by FactSet were expecting 98 cents a share. Revenue rose 34% to $3.41 billion, beating analyst expectations of $3.35 billion. Subscription and support revenue surged to $2.67 billion from $1.96 billion, while product revenue grew to $738 million from $574 million. The company said next-generation security ARR rose 63% year-over-year to $9.1 billion. Remaining performance obligations were $21.2 billion, up 34%. Palo Alto also notched around 220 net "platformizations" during the quarter, referring to customers who upgrade diffuse cybersecurity measures into a single platform. That figure is roughly double the company's platformizations during the third quarter, and indicates that customers are favoring integrated cybersecurity solutions as they adapt to AI, Arora said. "From a technological perspective, it is becoming evident that if your fragmented products don't talk to each other, then AI is going to get the better of you, because you need your infrastructure to be able to respond at AI-level or machine-level speed," Arora said. "That can only happen if your products are not fragmented or integrated." For the current fiscal first quarter, the company is expecting adjusted earnings between 96 cents and 98 cents a share on revenue of $3.3 billion to $3.31 billion. Analysts currently expect 93 cents a share in adjusted earnings on $3.22 billion in revenue. First-quarter next-generation security ARR is projected between $9.54 billion and $9.56 billion. The company on Tuesday also announced that it had acquired Console, a company that provides a platform to manage agentic AI operations. Financial terms of that deal weren't disclosed. The acquisition was Palo Alto's second deal during the quarter, following its announcement of a planned acquisition of the observability platform Embrace in July. Other recent acquisitions include CyberArk for $25 billion and the observability platform Chronosphere for $3.35 billion.

Palo Alto Networks cashes in fully on the AI-driven rush into cybersecurity

In the fourth quarter, ended July 31, Palo Alto Networks revenue rose 34% year over year to $3.41bn, versus $3.35bn expected, while adjusted earnings per share (non-GAAP) came in at $1.02, compared with about $0.98 anticipated. Adjusted operating income increased 32%, to just over $1bn, lifting the related margin to nearly 30% and underscoring the group's ability to sustain high profitability despite the rapid expansion of its footprint. The metrics specific to the U.S. cybersecurity specialist above all confirm strong commercial momentum for its next-generation platforms. NGS ARR, which measures annualized recurring revenue for this strategic business, surged 63% to $9.1bn, or nearly an additional $1bn in the quarter alone, while remaining performance obligations, which indicate revenue already under contract but not yet recognized, increased 34% to $21.2bn. This momentum comes as the rise of AI is rapidly reshaping the cybersecurity market, multiplying both new attack vectors and corporate protection needs. Palo Alto is looking to strengthen its positioning in this segment, notably with the recent acquisition of Console, a platform specializing in agentic workflows, while CEO Nikesh Arora believes that 'AI puts cybersecurity at the top of CIOs' priorities' and is now targeting $20bn of NGS ARR by 2030. For fiscal 2027, the group forecasts revenue of between $14.1bn and $14.2bn, growth of 23% to 24%. The pace should therefore normalize meaningfully after the recent acceleration, which was partly supported by the acquisitions of CyberArk and Chronosphere, even if the targets communicated remain above market expectations ahead of the release.