10-QPeriod: Q2 FY2026

Palo Alto Networks Inc Quarterly Report for Q2 Ended Jan 31, 2026

Filed February 18, 2026For Securities:PANW

Summary

Palo Alto Networks Inc. (PANW) reported strong revenue growth of 15% year-over-year for the six months ended January 31, 2026, reaching $5.1 billion. This growth was primarily driven by an increase in subscription and support revenue, which now constitutes 81.3% of total revenue, alongside a healthy 22% rise in product revenue. The company also saw a significant increase in operating income to $706 million for the six-month period, up from $527 million in the prior year, contributing to an improved operating margin of 13.9%. The company completed two significant acquisitions during this period: Chronosphere, Inc. for $3.0 billion, bolstering its observability platform, and CyberArk Software Ltd. for $2.3 billion in cash and stock, strengthening its identity security offerings. These strategic moves are expected to expand PANW's platform capabilities and market reach. Despite substantial investments in growth, including R&D and sales and marketing, the company maintained a solid gross margin of 73.9% for the six months. Liquidity remains strong with over $7.8 billion in cash, cash equivalents, and investments as of January 31, 2026.

Financial Highlights

47 data points
Beta

Revenue

$2.59B

73.6% Gross Margin

Net Income

$432.00M

16.7% Net Margin

EPS (Diluted)

$0.61

Total Assets

$24.98B

Cash & Equivalents

$4.16B

Free Cash Flow

$554.00M

Financial Statements
Beta
Revenue$2.59B
Cost of Revenue$685.00M
Gross Profit$1.91B
R&D Expenses$511.00M
Operating Expenses$1.51B
Operating Income$397.00M
Net Income$432.00M
EPS (Basic)$0.61
EPS (Diluted)$0.61
Shares Outstanding (Basic)704.00M
Shares Outstanding (Diluted)711.00M

Key Highlights

  • 1Total revenue for the six months ended January 31, 2026, increased by 15% year-over-year to $5.1 billion.
  • 2Subscription and support revenue grew by 14% to $4.1 billion, now representing 81.3% of total revenue.
  • 3Product revenue increased by 22% to $948 million, indicating strong demand for hardware and software licenses.
  • 4Operating income more than doubled to $706 million for the six-month period, with operating margin improving to 13.9% from 12.0%.
  • 5The company completed two significant acquisitions: Chronosphere, Inc. for $3.0 billion and CyberArk Software Ltd. for $2.3 billion, significantly expanding its platform capabilities.
  • 6Gross margin remained strong at 73.9% for the six-month period.
  • 7Cash, cash equivalents, and investments stood at $7.9 billion as of January 31, 2026, demonstrating robust liquidity.

Frequently Asked Questions

Palo Alto Networks demonstrated strong financial performance in the first half of fiscal year 2026, with total revenue growing 15% year-over-year to $5.1 billion. This growth was driven by robust subscription and support revenue and a significant increase in product revenue. The company also saw substantial improvement in operating income, reaching $706 million, and maintained a healthy gross margin of 73.9%.

Palo Alto Networks completed two significant acquisitions: Chronosphere, Inc. for $3.0 billion to enhance its observability platform and CyberArk Software Ltd. for $2.3 billion in cash and stock to bolster its identity security offerings. These acquisitions are expected to expand the company's comprehensive cybersecurity platform, integrate new technologies, and create cross-selling opportunities, ultimately strengthening its market position.

The company continues to see a favorable shift towards recurring revenue streams. Subscription and support revenue grew 14% to $4.1 billion for the six months ended January 31, 2026, now representing 81.3% of total revenue. This trend highlights the increasing adoption of Palo Alto Networks' cloud-delivered security services and ongoing customer commitment to its platform, suggesting continued revenue predictability and growth.

Palo Alto Networks maintains a strong liquidity position, with over $7.8 billion in cash, cash equivalents, and investments as of January 31, 2026. The company has a remaining authorization of $1.0 billion for share repurchases under its existing program. The robust cash position, coupled with strong operating cash flow, provides flexibility for continued strategic investments in R&D, sales, marketing, and potential future acquisitions.