Palo Alto Networks Reports Strong Fiscal Q2 2026 Results, Raises Growth Outlook
Palo Alto Networks, a leading cybersecurity company, announced its financial results for the fiscal second quarter ended January 31, 2026. The company reported solid revenue growth and profitability gains, driven by strong demand for its next-generation security products and ongoing integration of recent acquisitions. Alongside the quarterly results, Palo Alto Networks provided an optimistic outlook for the upcoming quarter and full fiscal year, reflecting confidence in accelerating adoption of AI-enhanced cybersecurity solutions.
Key Details:
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Revenue and Profitability:
- Total revenue for Q2 fiscal 2026 reached $2.6 billion, up 15% from $2.3 billion in the same quarter last year.
- GAAP net income rose to $432 million, or $0.61 per diluted share, compared to $267 million, or $0.38 per share, a year earlier.
- Non-GAAP net income was $732 million, or $1.03 per diluted share, up from $566 million, or $0.81 per share, in Q2 2025.
- The company achieved its third consecutive quarter with non-GAAP operating margins exceeding 30%, highlighting improved operational efficiency.
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Subscription and Contract Metrics:
- Next-Generation Security Annual Recurring Revenue (ARR) grew 33% year-over-year to $6.3 billion, underscoring strong customer demand for Palo Alto’s evolving security platform.
- Remaining performance obligation (RPO), representing contracted but unrecognized revenue, increased 23% to $16.0 billion, indicating a healthy backlog and future revenue visibility.
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Strategic Acquisitions and Integration:
- Palo Alto Networks welcomed employees from recent acquisitions Chronosphere and CyberArk, signaling ongoing expansion of its cybersecurity portfolio.
- Management emphasized leveraging operational excellence to integrate these businesses and unlock additional growth opportunities.
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Management Commentary:
- CEO Nikesh Arora highlighted accelerating platform adoption driven by AI, with customers modernizing and consolidating their cybersecurity stacks around Palo Alto’s solutions.
- CFO Dipak Golechha noted the company’s consistent execution on operational efficiency and expressed confidence in driving integration value from recent acquisitions.
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Guidance for Fiscal Q3 2026:
- Next-Generation Security ARR is expected between $7.94 billion and $7.96 billion, representing approximately 56% year-over-year growth.
- Remaining performance obligation is projected between $17.85 billion and $17.95 billion, up roughly 32-33% year-over-year.
- Total revenue guidance is $2.941 billion to $2.945 billion, implying 28-29% growth compared to the prior year’s third quarter.
- Diluted non-GAAP net income per share is forecasted between $0.78 and $0.80, based on 812 million to 817 million shares outstanding.
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Fiscal Year 2026 Outlook:
- Next-Generation Security ARR is expected to reach between $8.52 billion and $8.62 billion, reflecting 53-54% growth year-over-year.
- Remaining performance obligation is anticipated between $20.2 billion and $20.3 billion, continuing the strong growth trend.
Implications for Investors:
- Palo Alto Networks continues to demonstrate robust top-line growth fueled by its expanding subscription base and strong contract backlog, reinforcing its position as a leader in cybersecurity.
- The company’s ability to sustain over 30% non-GAAP operating margins for multiple quarters signals improving profitability and operational discipline.
- Accelerated adoption of AI-driven security solutions is a key strategic driver, positioning Palo Alto Networks to capitalize on evolving market demands.
- Integration of recent acquisitions Chronosphere and CyberArk is underway, with management confident these will contribute to future growth and broaden the company’s product offerings.
- The raised guidance for both the next quarter and full fiscal year reflects strong momentum and confidence in the company’s growth trajectory.