#Palo Alto Networks Reports Strong Q2 FY2026 Earnings
Palo Alto Networks reported fiscal second-quarter 2026 results with revenue up 15% year over year to $2.6 billion. GAAP net income was $432 million ($0.61 per diluted share) and non-GAAP net income was $732 million ($1.03 per diluted share). Remaining performance obligation (RPO) rose 23% to $16.0 billion. Despite beating top and bottom line estimates, shares fell on Q3 non-GAAP EPS guidance that came in below market expectations.
#Strategic and Operational Highlights
NGS ARR grew 33% year over year to $6.3 billion, driven by platformization and expanding AI capabilities across Cortex and Prisma. The quarter marked the completion of two acquisitions — CyberArk (identity security) and Chronosphere (cloud observability) — with management expressing confidence in integration using its established operational playbook. Large deal activity remained strong, though elongated sales cycles persisted as enterprises scrutinize cybersecurity budgets.
#Management Commentary and Outlook
For Q3 FY2026, management guided to revenue of $2.941–$2.945 billion and non-GAAP diluted EPS of $0.78–$0.80. For the full fiscal year, revenue guidance was raised to $11.28–$11.31 billion (22–23% growth), with non-GAAP operating margin of 28.5–29.0% and adjusted free cash flow margin of 37% (non-GAAP). Leadership cited resilient cybersecurity demand while acknowledging macroeconomic uncertainty and longer enterprise decision cycles.
#Investor Takeaway and Risk Framing
The quarter reflects solid execution in subscription growth, margin discipline, and cash generation. Near-term EPS guidance and elongated sales cycles highlight sensitivity to enterprise spending patterns. Results remain dependent on sustained demand, successful integration of recent acquisitions, competitive dynamics, and broader macro conditions.