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Palo Alto Networks Inc.: Q4 FY2026 earnings call

What management said about Q4 FY2026, from the documents filed with the SEC on 1 September 2026: press release. Guidance figures: 10 new. The quarter’s numbers.

Key takeaways

  • Q4 revenue grew 34%: Fourth-quarter total revenue was $3,410 million, against $2,536 million a year earlier, according to the statement of operations. Source
  • Next-Generation Security ARR up 63%: Next-Generation Security ARR reached $9.10 billion for the quarter, up 63% year over year. Source
  • Convertible note fair-value change hit GAAP: GAAP net loss was $282 million, against net income of $254 million a year earlier. GAAP results include a $524 million fair-value change on convertible notes and capped calls, which non-GAAP excludes. Source
  • Non-GAAP operating income rose: Non-GAAP operating income was $1,011 million, up from $768 million. GAAP operating income fell to $172 million from $497 million. Source
  • Adjusted free cash flow $1.29 billion: Adjusted free cash flow was $1,289 million in the quarter, against $954 million, a margin of 37.8%. Source

“We delivered a strong Q4 to close out the year, adding nearly $1 billion of Net New NGS ARR in a single quarter,”

Nikesh Arora, chairman and chief executive officer of Palo Alto Networks

Guidance

AreaPeriodFigureAgainst last quarter
Next-Generation Security ARR SourceFiscal first quarter 2027$9.54 billion to $9.56 billionNew
Remaining performance obligations SourceFiscal first quarter 2027$20.8 billion to $20.9 billionNew
Total revenue SourceFiscal first quarter 2027$3.300 billion to $3.310 billionNew
Diluted non-GAAP net income per share SourceFiscal first quarter 2027$0.96 to $0.98, using 837 million to 844 million shares outstandingNew
Next-Generation Security ARR SourceFiscal year 2027$11.075 billion to $11.175 billionNew
Remaining performance obligations SourceFiscal year 2027$25.2 billion to $25.4 billionNew
Total revenue SourceFiscal year 2027$14.10 billion to $14.20 billionNew
Non-GAAP operating margin SourceFiscal year 202729.5%New
Diluted non-GAAP net income per share SourceFiscal year 2027$4.16 to $4.19, using 844 million to 847 million shares outstandingNew
Adjusted free cash flow margin SourceFiscal year 202738.0%New

What changed from last quarter

  • New: Palo Alto Networks acquired Console, an AI-native platform for agentic workflows, to expand the Cortex platform. Source
  • New guidance: Guidance for the first quarter and fiscal year 2027 is given in this release; the documents show no earlier figures for those periods. Source

Results and growth drivers

  • Q4 revenue grew 34%: Fourth-quarter total revenue was $3,410 million, against $2,536 million a year earlier, according to the statement of operations. Source
  • Next-Generation Security ARR up 63%: Next-Generation Security ARR reached $9.10 billion for the quarter, up 63% year over year. Source
  • Non-GAAP net income per share $1.02: Non-GAAP net income was $853 million, or $1.02 per diluted share, against $673 million, or $0.95, a year earlier. GAAP net loss was $282 million, or $(0.35) per share. Source
  • Guidance excludes share-based charges: Non-GAAP guidance excludes share-based compensation charges, acquisition costs and amortization of acquired intangibles, among other items. GAAP guidance is not provided. Source

GAAP results and cost lines

  • Convertible note fair-value change hit GAAP: GAAP net loss was $282 million, against net income of $254 million a year earlier. GAAP results include a $524 million fair-value change on convertible notes and capped calls, which non-GAAP excludes. Source
  • Non-GAAP operating income rose: Non-GAAP operating income was $1,011 million, up from $768 million. GAAP operating income fell to $172 million from $497 million. Source
  • Acquired intangible amortization rose: Amortization of acquired intangible assets was $281 million, against $37 million. Share-based compensation-related charges were $487 million, against $372 million. Source
  • Operating expenses rose to $2.13 billion: Total operating expenses were $2,132 million, against $1,360 million. General and administrative was $226 million, against $27 million; sales and marketing was $1,127 million, against $829 million. Source
  • Cost of revenue increased: Total cost of revenue was $1,106 million, against $679 million. Subscription and support cost was $909 million, against $543 million. Source

“We delivered a strong finish to a record year and exceeded our guidance across the board”

Dipak Golechha, chief financial officer of Palo Alto Networks

Products, platforms and customers

  • Growth across three platforms: The CFO cited strength across the Network & AI Security, Cortex and Idira platforms as a source of the year's results. Source
  • Trusted by over 70,000 customers: The company describes itself as trusted by 70,000-plus customers and powered by Unit 42 threat intelligence. Source
  • Portfolio spans five security areas: The company describes its portfolio as covering Network, Cloud, Security Operations, AI and Identity. Source

Demand and the order book

  • AI lifts cybersecurity priority: Management said advances in AI have put cybersecurity at the top of the CIO priority list. Source
  • Remaining obligations up 34%: Remaining performance obligations reached $21.2 billion at July 31, 2026, up 34% year over year. Source
  • Targeting $20 billion FY30 ARR: Management described progress toward a $20 billion FY30 NGS ARR target as a durable tailwind. Source

“Our profitable growth framework continues to scale effectively, reinforcing our confidence in achieving 40% adjusted free cash flow margin in FY28.”

Dipak Golechha, chief financial officer of Palo Alto Networks

Cash flow, balance sheet and shares

  • Adjusted free cash flow $1.29 billion: Adjusted free cash flow was $1,289 million in the quarter, against $954 million, a margin of 37.8%. Source
  • Fiscal 2026 cash margin 38.4%: Fiscal 2026 adjusted free cash flow was $4,414 million, a 38.4% margin, against $3,507 million in fiscal 2025. Source
  • Operating cash flow rose to $1.36 billion: Net cash provided by operating activities was $1,357 million, against $1,021 million. Purchases of property, equipment and other assets were $103 million in the quarter. Source
  • Land purchase added back to cash flow: Adjusted free cash flow adds back a $91 million headquarters land purchase in fiscal 2026, along with a one-time corporate asset payment. Source
  • Cash and long-term convertible notes: Cash and cash equivalents were $2,514 million, against $2,269 million. Long-term convertible senior notes were $1,774 million, against none a year earlier. Source
  • Diluted share count rose: Weighted-average diluted shares were 817 million in the quarter, against 709 million. Non-GAAP diluted shares were 832 million. Source

Acquisitions and integration

  • CyberArk integration costs continue: Acquisition-related costs were $68 million in the quarter, against a $142 million credit a year earlier, and $295 million for fiscal 2026. Source
  • Goodwill and intangibles increased: Goodwill rose to $22,010 million from $4,567 million. Intangible assets, net, rose to $7,017 million from $763 million. Source
  • Acquisition payments in cash: Payments of acquisition-related costs were $28 million in the quarter and $164 million in fiscal 2026. Source

Coming up, as management said on 1 September 2026

  • Console to expand Cortex: Management said Console will extend the role of the Cortex platform across enterprise agentic transformation. Source

Figures management reported

FigureReported
Remaining performance obligations (backlog) Source$21.2 billion, up 34% year over year
Product revenue (segment) Source$738 million in the quarter; $2,280 million in fiscal 2026
Subscription and support revenue (segment) Source$2,672 million in the quarter; $9,200 million in fiscal 2026
Gross profit Source$2,304 million in the quarter; $8,077 million in fiscal 2026

Risks management discussed

  • Financial: The company says reconciling items will significantly affect GAAP net income, GAAP operating margin and GAAP operating cash flow, and their amounts are not predictable in advance. Source

Earlier plans management reported on

  • Ahead: Management said results exceeded fiscal 2026 guidance across the board. Source
  • Not stated: Management said it reinforces confidence in achieving a 40% adjusted free cash flow margin in FY28. Source

Other quarters

Summarised with AI from the documents the company filed with the SEC. Every point is checked against the filing before it is shown: management’s own words word for word, figures against the line or table row they come from. A point that fails the check is left out. Source opens the filing at that line.