Palo Alto Networks (PANW) Q1 2026 earnings summary

Executive summary

• Q1 FY26 revenue reached $2.5B–$2.47B, up 16% year-over-year, with all top-line metrics ahead of guidance and strong Next-Gen Security ARR growth of 29% to $5.9B–$5.85B.

• Major wins included a $100M XSIAM deal with a large US telco and a $33M SASE deal with a U.S. cabinet agency, reflecting robust demand for unified platforms.

• Continued innovation in AI, quantum security, and observability, with Prisma AIRS deals more than doubling quarter-over-quarter and new platform launches.

• Announced acquisitions of CyberArk (identity security) and Chronosphere (observability), both expected to close in FY26, expanding TAM and future growth opportunities.

• Board changes included the appointment of Mark Goodburn and retirement of Mary Pat McCarthy.

Financial highlights

• Total revenue was $2.5B–$2.47B (+16% y/y); product revenue grew 23% to $434M; subscription/support revenue reached $2.04B.

• Non-GAAP operating margin was 30.2%, up 140 bps year-over-year; non-GAAP EPS was $0.93 (+19% y/y); GAAP net income was $334M ($0.47 per share).

• Adjusted free cash flow was $1.7B–$1.71B, up 17% year-over-year; cash and equivalents exceeded $10B at quarter end.

• RPO grew 24% to $15.5B; NGS ARR ended at $5.85B–$5.9B, up 29% year-over-year.

• Gross margin was 74.2–76.9%; product gross margin 80.2%; services gross margin 76.2%.

Outlook and guidance

• Q2 FY26: Revenue expected at $2.57–$2.59B (+14–15%), NGS ARR at $6.11–$6.14B (+28%), non-GAAP EPS at $0.93–$0.95.

• FY26: Revenue $10.50–$10.54B (+14%), NGS ARR $7–$7.1B (+26–27%), operating margin 29.5–30%, adjusted free cash flow margin 38–39%.

• Reiterated 40%+ adjusted free cash flow margin target for FY28; guidance excludes impact from pending CyberArk acquisition.

• Management expects continued growth driven by platformization, innovation, and customer base expansion.

• Cash flow and liquidity position are sufficient for at least the next 12 months.