Cybersecurity giant Palo Alto Networks' Q3 fiscal year 2026 results:
Revenue of $3.0 billion, an increase of 31% year-over-year, including $388 million from CyberArk and Chronosphere.
Next-Generation Security (NGS) Annual Recurring Revenue (ARR) grew 60% year-over-year to $8.1 billion, including $1.6 billion in NGS ARR from CyberArk and Chronosphere.
Remaining Performance Obligations (RPO) increased by 36% year-over-year to $18.4 billion, including $1.8 billion from CyberArk and Chronosphere.
GAAP net loss for the third quarter of fiscal year 2026 was $177 million, or $0.22 per diluted share, compared to GAAP net income of $262 million, or $0.37 per diluted share, for the third quarter of fiscal year 2025. Non-GAAP net income for the third quarter of fiscal year 2026 was $684 million, or $0.85 per diluted share, compared to non-GAAP net income of $561 million, or $0.80 per diluted share, for the third quarter of fiscal year 2025.
Net cash flow from operating activities for the third quarter of fiscal year 2026 was $871 million, compared to $628 million for the third quarter of fiscal year 2025. Adjusted for the third quarter of fiscal year 2026Free cash flowwas $910 million, compared to $578 million for the third quarter of fiscal year 2025. Adjusted free cash flow margin over the trailing twelve months was 38.5%, an increase of 430 basis points year-over-year. A reconciliation of GAAP and non-GAAP measures is provided in the table below.
Nikesh Arora, Chairman and Chief Executive Officer of Palo Alto Networks, stated:
“The third quarter was an exceptional one for Palo Alto Networks. As customers increasingly turn to us to secure their large-scale AI deployments, our organic order growth accelerated. Recent advances at the forefront of artificial intelligence have heightened the urgency of cybersecurity and are redefining the industry landscape for the coming years.”
Dipak Golechha, Chief Financial Officer of Palo Alto Networks, stated:
“As we continue to scale, our third-quarter results reflect strong growth across all of our platforms. OurM&Aintegration efforts are progressing well, and profitability across our businesses continues to improve, enabling us to steadily advance toward our target of a 40% adjusted free cash flow margin by fiscal year 2028.”
Financial Outlook
For the fourth quarter of fiscal year 2026, the company expects:
Annual Recurring Revenue (ARR) from Next-Generation Security to be between $8.9 billion and $8.95 billion, representing year-over-year growth of 59% to 60%.
Remaining Performance Obligations to be between $20.9 billion and $21.0 billion, representing year-over-year growth of 32% to 33%.
Total revenue to be between $3.345 billion and $3.355 billion, representing year-over-year growth of 32%.
Non-GAAP diluted net income per share to be between $0.96 and $0.98, based on a weighted average share count of 830 million to 840 million shares outstanding.
Fiscal Year 2026 Outlook:
Annual Recurring Revenue (ARR) from Next-Generation Security to be between $8.9 billion and $8.95 billion, representing year-over-year growth of 59% to 60%.
Remaining Performance Obligations to be between $20.9 billion and $21.0 billion, representing year-over-year growth of 32% to 33%.
Total revenue is anticipated to range between $11.415 billion and $11.425 billion, an increase of 24% year-over-year.
Non-GAAP operating margin is expected to be between 28.9% and 29.2%.
Non-GAAP diluted net income per share is forecasted to be between $3.77 and $3.79, based on a diluted share count of 763 million to 766 million shares.
Adjusted free cash flow margin is expected to be 37.5%.
Editor/Liam