Palo Alto Networks delivered a stronger-than-expected quarterly performance, with growing artificial intelligence threats driving increased demand for its cybersecurity products.
The company reported adjusted earnings per share of $1.02, beating the consensus estimate of 98 cents, while revenue reached $3.41 billion against the $3.35 billion analysts had forecast.
Revenue jumped 34% year over year, climbing from $2.54 billion in the same period last year, underscoring the rapid pace of growth in enterprise cybersecurity spending.
Despite the top and bottom line beats, Palo Alto posted a net loss of $282 million, or 35 cents per share, compared to net income of $254 million, or 36 cents per share, a year ago.
CEO Nikesh Arora told CNBC that the acceleration of AI-powered attacks is compelling customers to build faster and more capable cyber defenses to protect their operations.
“You cannot deploy AI successfully if you do not get cybersecurity right,” Arora said, adding that artificial intelligence changes the industry’s long-term growth rate for the better.
Arora’s remarks reflect a broader industry shift as corporate technology leaders increasingly treat cybersecurity as a foundational requirement before adopting AI-driven tools and workflows.
The company announced an acquisition of AI-native platform Console, saying advances in artificial intelligence are making cybersecurity a higher priority for enterprise decision-makers.
Arora said the Console deal will allow customers to “build agentic workflows in natural language” that can automatically flag and remediate security issues across their organizations.
Palo Alto also reported an increase of nearly $1 billion in net new next-generation security annual recurring revenue over the course of the fiscal year, reflecting strong platform adoption.
Console is designed to help organizations use AI-driven analysis and automated action across enterprise operations, complementing Palo Alto’s existing portfolio of security products.
Looking ahead, the company projected revenue growth of between 23% and 24% for fiscal 2027, pointing to a target range of $14.1 billion to $14.2 billion in total revenue.
Shares of PANW fell nearly 2% in extended trading, reversing an initial post-earnings gain of a couple of percentage points that emerged when the results first hit the tape.
The stock’s reversal came before the company’s earnings conference call got underway, suggesting investors may have had questions about profitability or the pace of near-term margin expansion.
