Cybersecurity leader posts strong revenue growth, expanding profitability, and raises confidence in long-term outlook
Palo Alto Networks (PANW) reported impressive fiscal third-quarter 2026 results, highlighting the growing demand for cybersecurity solutions as enterprises rapidly expand their artificial intelligence initiatives. The company generated $3.0 billion in revenue during the quarter ended April 30, representing a 31% year-over-year increase and reflecting strong performance across its security platforms.
Chairman and CEO Nikesh Arora said the latest advancements in AI have increased the urgency around cybersecurity, driving customers to seek comprehensive protection for large-scale AI deployments. Palo Alto’s Next-Generation Security Annual Recurring Revenue (ARR) surged 60% year over year to $8.1 billion, while remaining performance obligations climbed 36% to $18.4 billion, demonstrating strong future demand.
The company also showed significant progress on profitability and cash generation. Non-GAAP operating income increased to $814 million from $627 million a year ago, while non-GAAP earnings per share rose to $0.85 from $0.80. Adjusted free cash flow reached $910 million, up sharply from $578 million in the prior-year period, with trailing twelve-month adjusted free cash flow margin improving to 38.5%.
Recent acquisitions, including CyberArk and Chronosphere, contributed to growth and appear to be integrating ahead of management’s expectations. Chief Financial Officer Dipak Golechha noted that the company remains firmly on track to achieve a 40% adjusted free cash flow margin by fiscal 2028.
Looking ahead, Palo Alto Networks provided an optimistic outlook. The company expects fourth-quarter revenue of approximately $3.35 billion and projects fiscal 2026 revenue between $11.415 billion and $11.425 billion. With AI adoption accelerating globally and cybersecurity becoming increasingly mission-critical, Palo Alto Networks continues to strengthen its position as one of the industry’s leading growth and profitability stories.
