Palo Alto Networks Stock Earnings Reports

Palo Alto Networks reported a strong fiscal Q2 2026 with continued execution on its platformization strategy and improving profitability. Key financials: Next-Gen Security (NGS) ARR grew 33% to $6.33B (organic +28% y/y excluding Chronosphere), total revenue $2.59B (+15% y/y), product revenue +22%, RPO $16.0B (+23%), Q2 operating margin 30.3%, diluted non-GAAP EPS $1.03, and Q2 adjusted free cash flow $502M (trailing 12-month free cash flow margin 37.9%). Management closed two major acquisitions (Chronosphere and CyberArk), announced intent to acquire Koi, and welcomed those teams to accelerate capabilities in observability, identity security, and agentic endpoint protection. Product momentum: SASE passed $1.5B ARR (~+40% y/y), XSIAM surpassed $0.5B ARR with ~600 customers (average ~ $1M ARR), Prisma AIRS scaled to 100+ customers, and Prisma Browser exceeded 9M licenses sold to date. Management emphasized AI as a structural inflection that increases attack surface and creates demand for integrated, real-time security across network, cloud, endpoint, browser and identity. Integration and capital deployment: combined cash outlay for Chronosphere and CyberArk ~ $4.9B (plus CyberArk note guarantees and share issuance of 112M shares); companies are being integrated with detailed account planning and incentive alignment. Guidance (includes M&A): Q3 NGS ARR $7.94B–$7.96B (+56% incl. M&A), Q3 revenue $2.941B–$2.945B (+28–29% incl. M&A); fiscal 2026 NGS ARR $8.52B–$8.62B and revenue $11.28B–$11.31B; FY operating margin ~28.5–29% and adjusted FCF margin ~37%. Management reiterated long-term targets (40% FCF margin by FY2028 and $20B NGS ARR by FY2030). Risks highlighted include supply-chain cost pressure (memory/storage), forward-looking statements, and integration execution, though management says they have strong governance and prior M&A experience.