Key Takeaways:
- Revenue rose 31 percent to $3 billion, topping consensus of $2.94 billion
- Remaining performance obligations hit $18.4 billion, up 36 percent
- Q4 revenue guidance of $3.35 billion exceeded analyst estimates
Back
Palo Alto Networks beats Q3 estimates as AI fuels cybersecurity demand
Palo Alto Networks reported fiscal third-quarter revenue of $3 billion, beating estimates, as AI-driven threats pushed enterprises to accelerate cybersecurity spending.
"The latest advancements at the AI frontier have increased the level of urgency around cybersecurity," Chief Executive Officer Nikesh Arora said.
Adjusted earnings came in at 80 cents a share, matching the year-ago period and topping the 79-cent consensus. Remaining performance obligations, a key measure of contracted but unbooked revenue, rose 36 percent to $18.4 billion, above the $17.89 billion estimate. Subscription-based annual recurring revenue reached $8.1 billion, compared with a $7.95 billion forecast.
Shares rose 6 percent in extended trading to $317.50, extending a 59 percent year-to-date gain. The company forecast fourth-quarter revenue of $3.35 billion and RPO of $20.95 billion, both above analyst projections of $3.28 billion and $20.25 billion, respectively.
The results show how Palo Alto Networks is benefiting from its platformization strategy, which encourages customers to adopt its full security suite rather than point products. The company added about 110 net new platform customers in the prior quarter, bringing the total to roughly 1,550, up 35 percent from a year earlier.
Large deals are also accelerating. A global automotive company signed a security transformation deal worth more than $50 million, while a technology supplier committed over $40 million for XSIAM and SASE services, according to the company's prior-quarter commentary.
Palo Alto completed two major acquisitions earlier this year — CyberArk for $25 billion and Chronosphere for $3.35 billion — expanding its identity security and cloud observability capabilities. The CyberArk unit was rebranded as Idira last month as part of a pivot toward agentic identity security, a fast-growing segment driven by the proliferation of AI agents.
Chief Financial Officer Dipak Golechha said the company is "executing ahead of our M&A integration plans and improving profitability across our businesses," reiterating a target of 40 percent adjusted free cash flow margin by fiscal 2028.
The guidance raise signals management expects AI-related demand to sustain its momentum. Investors will watch the fiscal fourth-quarter earnings call for updates on segment margins and integration progress.
This article is for informational purposes only and does not constitute investment advice.
[1] Palo Alto Networks' stock is rising as earnings show AI is a friend, not a foe[2] Palo Alto Networks jumps as Q3 results, guidance top estimates[3] Palo Alto, CrowdStrike to Post Results as AI Puts Cybersecurity in Focus -- Earnings Preview[4] Palo Alto Fiscal Q3 Earnings, Revenue, Key Metrics Top Wall Street Targets[5] Palo Alto Networks to Report Q3 Earnings: Buy, Sell or Hold the Stock?
