Palo Alto doubled down on its inorganic growth strategy by announcing another big-ticket acquisition.
- CEO Nikesh Arora said the strong start to the fiscal year reflected “excellent results across all metrics, and significant platformization wins.”
- The company expects its strategic acquisitions of CyberArk and Chronosphere to position it as the data and security partner of choice in the AI era.
- The stock, however, has underperformed (+10%) this year.
Cybersecurity vendor Palo Alto Networks, Inc. (PANW) reported forecast-beating quarterly results and announced an artificial intelligence (AI)-related acquisition. Traders bid down Palo Alto’s stock in the after-hours as the full-year revenue was guided to either in-line or a miss, but retail optimism abounded.
The stock has underperformed the broader market and the tech sector this year, having gained about 10%.
Palo Alto’s Q1 Snapshot
CEO Nikesh Arora said the strong start to the fiscal year reflected “excellent results across all metrics, and significant platformization wins.”
For the fiscal year 2026 first quarter, Santa Clara, California-based company reported revenue growth of 16% year over year (YoY) to $2.47 billion, slightly exceeding the Fiscal.ai-compiled consensus of $2.46 billion.
The adjusted earnings per share (EPS) climbed YoY to $0.93 from $0.78, versus the average analysts’ estimate of $0.89.
Among key operational metrics, next-generation annual recurring revenue (ARR) climbed 29% YoY to $5.9 billion, and remaining performance obligations (RPO) rose 24% to $15.5 billion.
CFO Dipak Golechha said operating margin was above 30% for another quarter, underlining the company’s sustainable profit growth.
Separately, the company said Mark Goodburn, a veteran in global advisory, technology, and innovation, has been appointed to its board, while its longest-serving board member, Mary Pat McCarthy, would retire, effective Jan. 23, 2026.
Palo Alto’s Outlook
The company expects second-quarter revenue of $2.57 billion to $2.59 billion and adjusted EPS of $0.93 to $0.95. Analysts, on average, expect the numbers to be at $2.58 billion and $0.93, respectively.
Palo Alto raised its full-year guidance as follows:
-Revenue: $10.50B-$10.54B (up from $10.475B-$10.525B)
-Adj. EPS: $3.80-$3.90 (up from $3.75-$3.85)
This compares to the consensus estimates of $10.52 billion and $3.80, respectively.
Chronosphere Acquisition
In a separate release, Palo Alto said it has agreed to acquire Chronosphere, a next-generation observability platform built to scale for the AI era, for $3.35 billion in cash and replacement equity awards. The company sees the proposed buy as a way to strengthen its help organizations navigate a world where modern applications and AI workloads demand a unified data and security foundation.
Chronosphere generated ARR of over $160 million at the end of September. Palo Alto expects the deal to close in the second half of fiscal year 2026.
Arora said, “Our robust innovation engine, paired with the strategic acquisitions of CyberArk and Chronosphere, positions us as the data and security partner of choice in the AI era.”
Palo Alto Stock
On Stocktwits, retail sentiment toward Palo Alto stock remained in the ‘extremely bullish’ zone as of late Wednesday, although rising a few notches within the territory. The message volume improved to ‘extremely high’ levels.
A bullish watcher remained hopeful that the stock would hit $200+ levels on Thursday.
Another user said they bought the stock at $189 on the dip.
Palo Alto ended Wednesday’s regular session down 0.55% at $199.90, and has traded in a 52-week range of $144.15-$223.61. After hours, it shed 3.74%.
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