10-QPeriod: Q1 FY2026

Palo Alto Networks Inc Quarterly Report for Q1 Ended Oct 31, 2025

Filed November 20, 2025For Securities:PANW

Summary

Palo Alto Networks, Inc. (PANW) reported solid revenue growth of 16% year-over-year to $2.47 billion 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%, 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 billion. 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 billion, 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.

Financial Highlights

47 data points
Beta

Revenue

$2.47B

74.2% Gross Margin

Net Income

$334.00M

13.5% Net Margin

EPS (Diluted)

$0.47

Total Assets

$23.54B

Cash & Equivalents

$3.07B

Free Cash Flow

$1.77B

Financial Statements
Beta
Revenue$2.47B
Cost of Revenue$638.00M
Gross Profit$1.84B
R&D Expenses$528.00M
Operating Expenses$1.53B
Operating Income$309.00M
Net Income$334.00M
EPS (Basic)$0.49
EPS (Diluted)$0.47
Shares Outstanding (Basic)679.00M
Shares Outstanding (Diluted)709.00M

Key Highlights

  • 1Total revenue increased 16% year-over-year to $2.47 billion for the first quarter of fiscal year 2026.
  • 2Product revenue grew 23% year-over-year to $434 million, and subscription and support revenue increased 14% to $2.04 billion.
  • 3Gross margin remained strong at 74.2%.
  • 4Net income decreased to $334 million from $351 million in the prior year, impacted by increased operating expenses.
  • 5Operating cash flow was robust at $1.77 billion, reflecting strong business performance.
  • 6Total cash, cash equivalents, and investments stood at $10.2 billion, indicating a healthy liquidity position.
  • 7Palo 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.

Frequently Asked Questions

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.

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.

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.

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.