Palo Alto Networks Reports Strong Q3 Results, Emphasizes AI-Driven Cybersecurity Amid Market Challenges

Cybersecurity is in a pivotal moment with AI, says Palo Alto Networks CEO

"I think this is a perfect time for security companies to be out there working with our customers to make sure, as we say, 'deploy AI bravely,' and it's going to be an inflection point," he said. According to Arora, even "naysayers" of AI are now trying to move data to the cloud in order to keep up with competitors. New AI models require the cloud, he said, claiming that businesses will be left behind if they don't move their company to the platform. He pointed out that tech megacaps are set to spend more than $300 billion on data centers this year, and companies must make sure their technology is secure. Arora also touched on the future of agentic AI, suggesting that, "eventually, you're going to have to give these agents true agency." He explained that agents will be able to do things like manage manufacturing capabilities and run production systems -- which will stir paranoia for businesses as they wonder if the programs could go "rouge." Cybersecurity is about protecting agents from hijackers, he continued. Palo Alto Networks posted its quarterly results Tuesday after close, reporting better-than-expected earnings and revenue. However, its gross margin was below estimates. Shares of the company dipped 3.7% in extended trading. Arora said the last quarter was challenging as customers grew anxious about heightened tariffs, pointing in particular to market uncertainty in April. "I think these are phenomenal results in that kind of an execution environment," he said.

Palo Alto Networks stock slips despite earnings and guidance beats - SiliconANGLE

Palo Alto Networks stock slips despite earnings and guidance beats Shares in Palo Alto Networks Inc. were down over 3% in late trading today despite the network management and security firm reporting beats in its fiscal 2025 third quarter and giving a better-than-expected earnings forecast. For the quarter that ended on April 30, Palo Alto Networks reported adjusted earnings per share of 80 cents, up from 66 cents per share in the same quarter of the previous fiscal year, on revenue of $2.29 billion, up 15% year-over-year. Both figures were ahead of the 77 cents per share and revenue of $2.28 billion expected by analysts. The company's strong figures were driven by growth in its Next-Generation Security offering, with NGS annual recurring revenue growing 34% year-over-year to $5.09 billion. As of the end of the quarter, Palo Alto Networks had $13.5 billion in remaining performance obligations, up 19% year-over-year. Additionally, operating income in the quarter came in at $627 million, up 23% year-over-year. Business highlights in the quarter include Palo Alto's February launch of Cortex Cloud, a next-generation platform that combines the company's Prisma Cloud and Cortex CDR into a unified artificial intelligence-powered solution for real-time cloud threat detection and response. In April, Palo Alto Networks introduced new Cortex XSIAM enhancements that expanded its AI-driven Security Operations Center capabilities. The updated platform delivers broader coverage for exposure management and email security, threat detection and response through automation that improves analyst productivity. The company also launched Prisma Access Browser 2.0, a cloud-native secure browser designed for hybrid workforces and Prisma AIRS, a dedicated platform to secure AI development and deployment pipelines. The biggest news through the quarter came on April 28, when Palo Alto announced that it had entered into a definitive agreement to acquire cybersecurity company Protect AI Inc. According to reports, the deal, which is yet to close, is worth more than $500 million. "In Q3, we continued to make progress on our platformization strategy and achieved an important milestone in crossing $5 billion in Next-Gen Security ARR," said Nikesh Arora, chairman and CEO of Palo Alto Networks. "Our scale and platform breadth makes us a leading consolidator of choice in cybersecurity." For its fiscal 2025 fourth quarter, Palo Alto Networks expects adjusted earnings per share of 87 cents to 89 cents on revenue of $2.49 billion to $2.51 billion. The earnings forecast was ahead of an expected 86 cents per share, while revenue at the midpoint was in line with analyst expectations. For the full year, the company expects adjusted earnings per share of $3.26 to $3.28 on revenue of $9.17 billion to $9.19 billion. Anand Oswal, senior vice president and general manager at Palo Alto Networks, spoke with theCUBE, SiliconANGLE Media Inc.'s livestreaming studio, in March, where he discussed how the company is forging a collaborative future for 5G security.

Palo Alto Networks Posts Solid 3Q, Next Gen Security Momentum Strong Despite Macro Uncertainty - Palo Alto Networks (NASDAQ:PANW)

Shares of Palo Alto Networks Inc. PANW continued to slide after the company reported its fiscal third-quarter results on Tuesday. Here are some key analyst takeaways. Goldman Sachs On Palo Alto Networks Analyst Gabriela Borges maintained a Buy rating while raising the price target from $215 to $231. Palo Alto Networks reported a mixed quarter, with RPO and revenue in line with Street expectations, while EBIT margin and earnings beat estimates by 30 basis points (bps) and 3%, respectively, Borges said in a note. Management raised their full-year revenue, earnings, and margin projections to the high end of their prior guidance, she added. The company noted that deal activity was impacted by macro uncertainty in early April, but the deal cycle normalized later in the month and into May, the analyst stated. "While we expect to see a number of next-gen vendors in AI security, we ultimately believe that this field will consolidate over time in favor of leaders such as Palo Alto, that have the ability and willingness to invest in technology leadership, outsource R&D via M&A, and realize attractive unit economics from cross sell," she further wrote. TD Cowen On Palo Alto Networks Analyst Shaul Eyal reiterated a Buy rating and price target of $230. Palo Alto Networks' NGS ARR (next-generation security annual recurring revenue) grew by 34% year-on-year to $5.09 billion, exceeding the consensus of $5.06 billion, while RPO (remaining performance obligation) rose 19.5% year-on-year to $13.5 billion, almost in line with expectations, Eyal said. The company generated revenue growth of 15% year-on-year, taking its top line to $2.29 billion, above the consensus of $2.28 billion, he added. The analyst stated that the results reflect "ongoing healthy platformization performance" and strong adoption of AI solutions in the fiscal third quarter. Palo Alto Networks has a robust pipeline for the fourth quarter, "lending itself for a strong FY25 finish," he wrote. Piper Sandler On Palo Alto Networks Analyst Rob Owens reaffirmed a Neutral rating and price target of $200. Owens said Palo Alto Networks recorded operating margins of 27.4%, beating consensus by around 30 bps. This took earnings to 80 cents per share, 3 cents per share higher than the top end of its guidance range. However, bookings growth decelerated sequentially to 9%, from 15% in the previous quarter, the analyst stated. While the company said it faced uncertainty during April due to "geopolitical shifts," this has "largely subsided since," he further wrote. Check out other analyst stock ratings. KeyBanc Capital Markets On Palo Alto Networks Analyst Eric Heath maintained an Overweight rating and price target of $220. For the fiscal fourth quarter, Palo Alto Networks guided to revenues of $2.49-$2.51 billion, representing 14%-15% year-on-year growth, almost in line with consensus, Heath said. Its RPO guidance of $15.2-$15.3 billion incorporates 20% year-on-year growth, similar to the previous quarter, he added. The analyst stated that the company raised its revenue guidance for the full year by $15 million to $9.17-$9.19 billion, up 14% and beating the consensus of $9.166 billion. NSG momentum remained robust, with "notable strength" from XSIAM (extended security intelligence and automation management). JMP Securities On Palo Alto Networks Analyst Trevor Walsh reiterated a Market Outperform rating and a price target of $212. Palo Alto Networks reported its quarterly results modestly better than expected, Walsh said. The company guided to non-GAAP earnings of 87-89 cents per share for the fiscal fourth quarter, above consensus of 86 cents per share, he added. Management indicated that "rapid and widespread" AI adoption was not only driving "the need to secure AI-specific resources but also further accelerating broader IT transformations, such as the transition to the cloud," the analyst further wrote. Guggenheim Securities On Palo Alto Networks Analyst John DiFucci reaffirmed a Sell rating and price target of $130. Palo Alto Networks' results were mixed, "with revenue about a half percent above the consensus number, driven by Product outperformance and partially offset by subscription underperformance," DiFucci said. The company maintained its full-year NGS ARR and RPO guidance, indicating growth between 31%-32% and 19%-20%, respectively, he added. "Management acknowledged April weakness post Liberation Day, though this has leveled out, but not before resulting in dampened F3Q25 results, which carried over to mixed F4Q25 guidance (that may include some acquired Protect AI contribution that should close by F1Q)," the analyst wrote. RBC Capital Markets On Palo Alto Networks Analyst Matthew Hedberg maintained an Outperform rating and a price target of $232. Palo Alto Networks reported solid results, despite some tariff related macro disruption in the quarter, Hedberg said. He added, however, that the macro environment normalized into May. The company generated an AI ARR of $400 million, up from $250 million in the first quarter, and recorded an average ARR per customer of more than $1 million for XSIAM, the analyst stated. "Overall, we like the large-deal and newer product momentum fueling NGS ARR growth." PANW Price Action: At the time of publication on Wednesday, shares of Palo Alto Networks had declined by 5.99% to $182.83. Read More: T-Mobile, Palo Alto Partner To Enhance 5G Cybersecurity For US Businesses Photo: Shutterstock PANWPalo Alto Networks Inc$182.65-6.08%Stock Score Locked: Want to See it? Benzinga Rankings give you vital metrics on any stock - anytime. Reveal Full ScoreEdge RankingsMomentum79.21Growth94.53Quality-Value4.70Price TrendShortMediumLongOverviewMarket News and Data brought to you by Benzinga APIs

Palo Alto Networks Finding 'Acceleration' On Platform Strategy: Analysts

The cybersecurity giant reports that its platformization push yielded faster growth in new deals during its latest quarter. Palo Alto Networks continues to show signs that its strategy to entice customers to consolidate tools on its broad cybersecurity platform is working, according to Wall Street analysts. The analysts, who reviewed the company's latest quarterly results released Tuesday, told investors that their confidence only continues to grow in Palo Alto Networks' push around "platformization." [Related: Palo Alto Networks CPO: Why Cybersecurity Needs 'Much More' AI] The cybersecurity giant disclosed that it had a total of about 1,250 platformization customers as of the third quarter of the company's fiscal 2025, ended April 30. That includes roughly 90 new platformization deals landed during the quarter, up from 75 during the previous quarter sequentially, noted Shaul Eyal, a managing director and senior analyst at TD Cowen, in a note to investors Wednesday. This "platformization acceleration," according to Eyal, is one of several positive signals about Palo Alto Networks' revamped growth strategy that was first initiated more than a year ago. In February 2024, Palo Alto Networks CEO Nikesh Arora announced the overhaul of the company's strategy that aimed to incentivize faster platform consolidation by customers. Thanks in part to the platformization results, it's clear that Palo Alto Networks' efforts to reach the goal of $15 billion in annual recurring revenue (ARR) by its fiscal year 2030 "remains firmly on track," Eyal wrote. Judging from the quarterly results disclosed Tuesday, it's clear that Palo Alto Networks is "laying the foundation for its platformization approach heading into FY2026 with AI front and center," wrote Daniel Ives, managing director and senior equity research analyst at Wedbush Securities, in a note to investors Wednesday. "We view 2025 as a transition year for the company as platformization deals with cloud penetration are leading to strong deal flow and a more stable pipeline while being a prime beneficiary of AI spending," Ives wrote. During the company's quarterly call Tuesday, Arora pointed to major platformization wins during the quarter, including a deal worth more than $90 million with a global consulting firm. The deal included implementation of Palo Alto Networks' Cortex XSIAM in place of a "legacy" SIEM provider, he said. The platformization deal "reduced costs by consolidating a total of four products" while also helping the customer to "materially" improve their average response times to security issues, Arora said. Cortex XSIAM is Palo Alto Networks' alternative to traditional SIEM (security information and event management) and was another major bright spot of the quarter with ARR up 200 percent as of the end of the latest quarter, year over year, according to Arora. That growth rate is "nearly twice as fast as our closest next-generation SIEM competitor," he said, and XSIAM is now approaching $1 billion in total bookings. Looking ahead, Arora predicted that traditional SIEM as a category will be displaced within several years by "new age players" that are using AI and modern architectures to enable security operations teams. "I think in the next three to five years, it'll get replaced," he said.

Palo Alto's AI Momentum Make It A Top Cybersecurity Pick, Analyst Says - Palo Alto Networks (NASDAQ:PANW)

Wedbush analyst Daniel Ives maintained an Outperform rating on Palo Alto Networks, Inc PANW with a price forecast of $225 on Wednesday. On Tuesday, Palo Alto Networks delivered its fiscal third-quarter results, which featured beats in revenue, EPS, and NGS ARR. At the same time, RPO came in line with the Street as the company accelerates its platformization strategy heading into fiscal 2026, and beyond, more customers are looking to consolidate their security vendors, Ives noted. Total revenues were $2.29 billion, at the high end of the guidance range of $2.26 billion -- $2.29 billion and slightly above the Street's estimate of $2.28 billion. Also Read: PANW CEO Warns Traditional IT Can't Handle AI's Next Phase: '...The Conversation Is Shifting To Agentic AI' In comparison, RPO accelerated 19% to $13.5 billion, compared to guidance of $13.50 billion -- $13.60 billion and the Street's estimate of $13.54 billion, as the company's platformization continues to take hold. As per the analyst, significant growth continues to be seen in XSIAM (Cortex), SASE (Prisma), and Product (Firewall) despite an uneasy macro in April. NGS ARR grew to $5.09 billion (up 34%), which was above guidance of $5.03 billion-$5.08 billion and the Street's estimate of $5.06 billion. Palo Alto Networks reaffirmed that both its fiscal fourth-quarter NextGen Security ARR guidance of $5.52 billion-$5.57 billion (up 31%-32%) and RPO guide of $15.2 billion-$15.3 billion (up 19%-20%), as it is laying the foundation for its platformization approach heading into fiscal 2026 with AI front and center, the analyst noted. Palo Alto Networks also provided fiscal fourth-quarter revenue guidance of $2.49 billion-$2.51 billion versus the Street of $2.50 billion, while EPS guidance of $0.87-$0.89 versus the Street of $0.87 as the company's demand has stabilized after an uneasy April heading into the end of fiscal 2025, he said. Overall, Palo Alto Networks continues to be one of Ives' favorite cybersecurity names to own over the next 12-18 months as he noted 2025 as a transition year for the company as platformization deals with cloud penetration are leading to strong deal flow and a more stable pipeline while being a prime beneficiary of AI spending as cybersecurity is a clear second or third derivative play on the AI Revolution as the company is in the driver's seat to gain market or mind share in the cybersecurity landscape with the continued shift to the cloud. Price Action: PANW is trading lower by 6.99% to $180.90 at last check Wednesday. Read Next: Lyft's AV Plans, Rider Increase, Ads Drive Fuel Up To 70% Upside: Analyst Photo by Tada Images via Shutterstock PANWPalo Alto Networks Inc$180.79-7.04%Stock Score Locked: Want to See it? Benzinga Rankings give you vital metrics on any stock - anytime. Reveal Full ScoreEdge RankingsMomentum79.21Growth94.53Quality-Value4.70Price TrendShortMediumLongOverviewMarket News and Data brought to you by Benzinga APIs

Palo Alto Networks CEO Nikesh Arora: SIEM's Days Are Numbered

It's inevitable that traditional SIEM will be displaced by AI-powered, 'new age players' such as Cortex XSIAM, Arora said during a quarterly call Tuesday. The traditional SIEM market is increasingly unable to keep up with modern threats, making it now all but inevitable that newer AI-powered tools will replace the "legacy" security operations technology over the next several years, Palo Alto Networks CEO Nikesh Arora said Tuesday. Arora made the comments while discussing the surging growth of Cortex XSIAM, which is Palo Alto Networks' alternative to traditional SIEM (security information and event management). XSIAM is the company's "fastest-growing product ever" and is generating an average of more than $1 million in annual recurring revenue (ARR) per customer, he told analysts Tuesday during the company's quarterly call. [Related: Palo Alto Networks CPO: Why Cybersecurity Needs 'Much More' AI] After an analyst asked about the size of the opportunity around XSIAM, Arora responded, "Which was the last product that came out where the average ARR was $1 million a year?" Going forward with XSIAM, "I think the opportunity is huge," he said. Periodically in cybersecurity, Arora said, product categories tend to "reach inflection points where the next set of products are so much better -- that everybody has to be shaken out of their stupor [about] their old solutions to go replace them." This has happened in recent decades in both network and endpoint security, and now, "I think this is the moment for the SIEM market," he said. "I think in the next three to five years, it'll get replaced. It'll be replaced by new age players. The legacy players will try their darndest to hang on to it. But the architectures are fundamentally different." As an indicator of this transition, ARR for XSIAM was up 200 percent as of the end of the third quarter of the company's fiscal 2025, ended April 30, from the year before. That growth rate is "nearly twice as fast as our closest next-generation SIEM competitor," Arora said, and XSIAM is now approaching $1 billion in total bookings. While XSIAM saw rapid growth almost from the get-go after its introduction in October 2022, the offering got a major boost from the vendor's $500 million acquisition of IBM's QRadar SaaS business in September 2024. The company has been heavily focused on enabling customers to move to XSIAM from QRadar since then, and Palo Alto Networks has continued to have a "phenomenal partnership" with IBM around migrating customers to XSIAM, Arora said Tuesday. For Palo Alto Networks' fiscal third quarter as a whole, revenue climbed 15 percent from a year earlier to $2.29 billion, beating the Wall Street analyst consensus estimate by $10 million. Other bright spots for the cybersecurity giant during its latest quarter included its AI business, which has grown by more than 2.5X year-over-year to reach $400 million in ARR, according to Palo Alto Networks CFO Dipak Golechha. At RSAC 2025 in late April, the company debuted its new AI security platform, Prisma AIRS, and also announced plans to acquire a well-known AI security startup, Protect AI. The total consideration for the Protect AI acquisition deal is $700 million, which includes cash and replacement equity awards, and the deal is expected to close by the first quarter of the vendor's fiscal 2026, Golechha said during the call Tuesday. Palo Alto Networks' stock price was down 4 percent to $186.70 a share in after-hours trading Tuesday. Meanwhile, Golechha noted that the Trump administration's tariff policies have not impacted Palo Alto Networks, which is a major producer of hardware firewalls, so far. The vendor has been transitioning to a contract manufacturing facility in Texas, and differentiates from competitors by assembling "all of our hardware in the USA," he said. "As a result, tariff impact to our business has been immaterial," Golechha said.

PANW CEO Warns Traditional IT Can't Handle AI's Next Phase: '...The Conversation Is Shifting To Agentic AI' - Palo Alto Networks (NASDAQ:PANW)

At Palo Alto Networks Inc. PANW, the tone around AI is evolving rapidly and while the world still plays catch-up, the company is already setting its sights on what comes next, agentic AI. What Happened: During its third quarter earnings call on Tuesday, the company's CEO, Nikesh Arora, said that AI has become a central theme in virtually every customer conversation. But what's notable now, he said, is the pivot to a new phase. "During every conference, every customer conversation, the topic of AI transformation is more and more frequent, and now the conversation is shifting to agentic AI," Arora said. This shift underscores the growing urgency across leading organizations to rethink traditional IT architecture, which Arora warns is not built to handle the scale and complexity of AI. See Also: Snowflake Earnings Are Imminent; These Most Accurate Analysts Revise Forecasts Ahead Of Earnings Call As enterprises move deeper into AI infrastructure, the conversation is no longer just about adoption, he says, it's about protection. Arora called AI security "a strategic imperative," noting that bad actors are already using AI to simulate entire ransomware attacks in under 25 minutes. To address this, Palo Alto is expanding its portfolio with tools like XSIAM, its AI-powered security operations platform, and the recently launched Prisma AIRS, which scans and protects AI artifacts in production. The company also announced the acquisition of Protect.ai to bolster its model testing and red-teaming capabilities. "As AI becomes more deeply integrated into our customers' businesses," Arora says, "the need to protect the underlying data, models, and infrastructure will become paramount." Why It Matters: On Tuesday, Wedbush analyst Dan Ives reiterated his "Outperform" rating on Palo Alto, citing strong cybersecurity deal activity across enterprises, with a price target of $225, or an upside of 15.6% from current levels. Get StartedEarn 7.2% -- No Matter What the Fed Does Markets expect rate cuts -- but your earnings don't have to suffer. Lock in 7.2% until 2028 from ten individual bonds. Get Started Recently, Stephanie Link of Hightower Advisors doubled down on the company, calling it a "must-own in a sector where bigger is better." The company released its third quarter results on Tuesday, reporting $2.29 billion in revenue, up 15.3% year-over-year, and beating consensus estimates at $2.28 billion. It posted a profit of $0.80 per share, ahead of estimates at $0.77. Price Action: The stock was up 0.09% on Tuesday, trading at $194.48 per share, but is down 5.13% after hours, following its third quarter results. According to Benzinga's Edge Stock Rankings, Palo Alto shares score well on Momentum and Growth, and have a favorable price trend in the short, medium, and long term. Click here for deeper insights into the stock. Read More: Tesla Robotaxi Rival Waymo Reaches 10 Million Paid Rides Milestone As Self-Driving Cars Step Into The Spotlight Photo: Shutterstock PANWPalo Alto Networks Inc$183.90-5.44%Stock Score Locked: Edge Members Only Benzinga Rankings give you vital metrics on any stock - anytime. Unlock RankingsEdge RankingsMomentum79.21Growth94.53Quality-Value4.70Price TrendShortMediumLongOverviewMarket News and Data brought to you by Benzinga APIs