01—Abstract
Summary
Summary of the 10-Q filed November 20, 2025. Cited figures are marked; the original filing is the authoritative source.
Palo Alto Networks, Inc. (PANW) reported solid revenue growth of 16% year-over-year to $2.47 billiona for the first quarter of fiscal year 2026, ending October 31, 2025.
This growth was driven by a strong performance in both product revenue, which increased by 23%b, and subscription and support revenue, which grew by 14%. The company maintained a consistent gross margin of 74.2%. While operating income saw a slight decrease in margin to 12.5% from 13.4% in the prior year, this was largely due to an increase in general and administrative expenses, including legal accrual adjustments and higher share-based compensation.
Financially, PANW demonstrated robust cash flow generation, with net cash provided by operating activities increasing to $1.77 billionc. The company's liquidity remains strong, with total cash, cash equivalents, and investments reaching $10.2 billion.
Notably, the company announced its definitive agreement to acquire CyberArk Software Ltd. for approximately $25 billiond, a significant strategic move expected to close in the third quarter of fiscal year 2026, signaling a major expansion and focus on identity security. This acquisition, funded by cash on hand, represents a substantial investment and potential for future growth and synergy.
02—Key points
Key Highlights
- Total revenue increased 16% year-over-year to $2.47 billion for the first quarter of fiscal year 2026.
- Product revenue grew 23% year-over-year to $434 million, and subscription and support revenue increased 14% to $2.04 billion.
- Gross margin remained strong at 74.2%.
- Net income decreased to $334 million from $351 million in the prior year, impacted by increased operating expenses.
- Operating cash flow was robust at $1.77 billion, reflecting strong business performance.
- Total cash, cash equivalents, and investments stood at $10.2 billion, indicating a healthy liquidity position.
- Palo Alto Networks entered into a definitive agreement to acquire CyberArk Software Ltd. for approximately $25 billion, a significant strategic move expected to close in Q3 FY2026.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2026, Palo Alto Networks Inc kept $0.14.
- Revenue$2.47B100.0%
- Cost of revenue−$638.0M25.8%
- Gross profit$1.84B74.2%
- Operating costs−$1.53B61.7%
- Operating income$309.0M12.5%
- Interest, other & tax$25.0M1.0%
- Net income$334.0M13.5%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2026filed November 20, 2025Financial Statements
Q1 FY2026 against Q1 FY2025
| Line item | Q1 FY2026Q1 FY2025 | Change |
|---|---|---|
| Revenue | $2.47B$2.14B | +15.7% |
| Cost of Revenue | $638.00M$554.00M | +15.2% |
| Gross Profit | $1.84B$1.58B | +15.8% |
| R&D Expenses | $528.00M$481.00M | +9.8% |
| Operating Expenses | $1.53B$1.30B | +17.6% |
| Operating Income | $309.00M$286.00M | +8.0% |
| Net Income | $334.00M$351.00M | −4.8% |
| EPS (Basic) | $0.49$0.54 | −9.3% |
| EPS (Diluted) | $0.47$0.49 | −4.1% |
| Shares Outstanding (Basic) | 679.00M654.00M | +3.8% |
| Shares Outstanding (Diluted) | 709.00M709.00M | 0.0% |
05—Questions
Frequently Asked Questions
What was Palo Alto Networks' revenue performance in the first quarter of fiscal year 2026?
Palo Alto Networks reported a 16% year-over-year increase in total revenue, reaching $2.47 billion for the first quarter ended October 31, 2025. Product revenue grew by 23% to $434 million, and subscription and support revenue increased by 14% to $2.04 billion.
How did the company's profitability fare during the quarter?
Gross margin remained strong at 74.2%. However, net income decreased to $334 million from $351 million in the same period last year. This was influenced by an increase in operating expenses, particularly in general and administrative costs, partly due to legal accrual adjustments and higher share-based compensation.
What is the company's financial health and liquidity situation?
The company maintains a strong financial position. Net cash provided by operating activities was $1.77 billion, and total cash, cash equivalents, and investments reached $10.2 billion as of October 31, 2025, indicating robust liquidity.
What is the significance of the announced acquisition of CyberArk Software Ltd.?
Palo Alto Networks announced a definitive agreement to acquire CyberArk Software Ltd. for approximately $25 billion. This is a major strategic acquisition expected to close in the third quarter of fiscal year 2026. It signals a significant expansion into the identity security market and is anticipated to drive future growth and create synergies.
06—Continue