10-QPeriod: Q3 FY2026

Palo Alto Networks Inc Quarterly Report for Q3 Ended Apr 30, 2026

Filed June 3, 2026For Securities:PANW

Summary

Palo Alto Networks, Inc. reported solid revenue growth for the third quarter of fiscal year 2026, with total revenue reaching $3.0 billion, a 31% increase year-over-year. This growth was driven by strong performance across both product and subscription and support segments, with subscription and support revenue now constituting 80.2% of total revenue. The company's strategic focus on platformization, evident in its network security, security operations, observability, and identity security platforms, continues to resonate with customers, as indicated by the substantial remaining performance obligations of $18.4 billion. Despite the robust revenue growth, the company reported a net loss of $177 million for the quarter, a shift from the net income of $262 million in the prior year's comparable period. This loss is largely attributable to significant investments and expenses related to recent large-scale acquisitions, notably CyberArk Software Ltd., which was completed in February 2026. The company's balance sheet reflects a substantial increase in goodwill and intangible assets due to these acquisitions. While operating expenses, particularly in sales and marketing and R&D, have increased, the company generated positive operating cash flow of $3.2 billion for the nine months ended April 30, 2026, indicating underlying operational strength.

Financial Highlights

48 data points
Beta

Revenue

$3.00B

67.6% Gross Margin

Net Income

-$177.00M

-5.9% Net Margin

EPS (Diluted)

$-0.22

Total Assets

$46.27B

Cash & Equivalents

$2.36B

Free Cash Flow

$871.00M

Financial Statements
Beta
Revenue$3.00B
Cost of Revenue$974.00M
Gross Profit$2.03B
R&D Expenses$734.00M
Operating Expenses$2.21B
Operating Income-$183.00M
Net Income-$177.00M
EPS (Basic)$-0.22
EPS (Diluted)$-0.22
Shares Outstanding (Basic)801.00M
Shares Outstanding (Diluted)801.00M

Key Highlights

  • 1Total revenue for Q3 FY2026 was $3.0 billion, a 31% increase year-over-year.
  • 2Subscription and support revenue grew 31% year-over-year to $2.4 billion, now representing 80.2% of total revenue.
  • 3Remaining performance obligations stood at $18.4 billion as of April 30, 2026, indicating strong future revenue visibility.
  • 4The company reported a net loss of $177 million for the quarter, compared to a net income of $262 million in the prior year, largely due to acquisition-related expenses.
  • 5Goodwill and intangible assets significantly increased due to the CyberArk acquisition, totaling $21.9 billion and $7.3 billion respectively at the end of the quarter.
  • 6Operating expenses increased by 52% year-over-year, driven by higher R&D, sales & marketing, and general & administrative costs, partly due to recent acquisitions.
  • 7Net cash provided by operating activities was $3.2 billion for the nine months ended April 30, 2026.

Frequently Asked Questions

Palo Alto Networks' revenue growth is primarily driven by its subscription and support offerings, which have shown strong year-over-year growth and now constitute the majority of its total revenue. The company's platformization strategy, encompassing network security, security operations, observability, and identity security, is key to this growth, leading to increased adoption and expansion with existing customers.

The net loss of $177 million in the current quarter, compared to a net income in the prior year, is primarily due to significant expenses and integration costs associated with recent large-scale acquisitions, most notably the acquisition of CyberArk Software Ltd. These integration efforts and associated accounting adjustments impact profitability in the short term, even as the underlying business demonstrates strong revenue performance.

The remaining performance obligations (RPO) of $18.4 billion as of April 30, 2026, represent the total amount of revenue that the company expects to recognize in the future from existing contracts. This figure is a key indicator of future revenue visibility and the company's ability to sustain its growth trajectory.

Recent acquisitions, particularly CyberArk, have significantly impacted the balance sheet. There has been a substantial increase in goodwill, reflecting the premium paid over the fair value of acquired net assets, and a significant rise in intangible assets related to acquired technologies and customer relationships. These acquisitions also led to an increase in both short-term and long-term debt and deferred revenue.