In Q4 (May–July 2026), Palo Alto Networks completed the Portkey acquisition ($117M, AI Gateway capabilities enhancing Prisma AIRS) on May 29 and signed definitive agreements for Embrace Mobile ($325M, Real User Monitoring for the observability platform) on July 20 and Console Systems ($500M, agentic workflows for Cortex) on July 29; both latter deals closed after fiscal year-end (August 27 and September 1, 2026). Annual context: fiscal 2026 included six acquisitions totaling approximately $25.5B in consideration, anchored by the $21.1B CyberArk deal (February 2026, forming the Idira identity security platform) and $3.0B Chronosphere deal (January 2026, forming the observability platform).
Prisma AIRS Gateway reached general availability on July 16, 2026 (Q4), incorporating Portkey's AI gateway capabilities into the AI security platform for governing AI agents, securing AI coding tools, and inspecting LLM traffic. Annual context: fiscal 2026 product introductions also included PAN-OS 12.1 Orion, Prisma AIRS 2.0 and 3.0, Next-Gen Trust Protection (NGTS), and Unit 42 Frontier AI Defense services (launched April 2026) to help customers neutralize threats from next-generation AI models.
Annual (fiscal 2026) operating metrics: total revenue $11.5B (+24% YoY); NGS ARR $9.1B (vs. $5.6B a year prior); remaining performance obligations $21.2B (vs. $15.8B); subscription and support 80.1% of revenue; gross margin 70.4% (down from 73.4%); operating margin 6.1% (down from 13.5%); net income $307M. Q4-specific: the company disclosed supply chain disruption during the fourth quarter, including increased memory and component costs from a global memory shortage, which negatively affected gross margin and could continue to do so.
Headcount grew to 21,921 at fiscal year-end from 16,068 at the prior year-end, including approximately 4,223 additional employees from the CyberArk acquisition. In connection with CyberArk integration, a workforce optimization plan was initiated with a total estimated cost of $60M; $18M in cash severance was paid during fiscal 2026, and $14M remained as a severance liability at July 31, 2026. The plan is expected to be substantially completed by the end of fiscal 2027.
In May 2026 (Q4), the company identified an authentication bypass vulnerability in certain versions of its PAN-OS software, published a security advisory, provided software updates, and engaged in customer outreach, support, and remediation efforts.
(Filed on June 3, 2026)
+31.1%
67.6%
$2.4B
Completed acquisition of CyberArk on February 11, 2026, for $21.1 billion ($2.3B cash plus 112 million shares valued at $18.5B), forming the Idira next-generation identity security platform. Total headcount grew to 21,491 from 16,068 at the prior fiscal year-end, including approximately 4,166 from CyberArk. The company initiated a workforce optimization plan with an estimated $59 million total cost, expected to be substantially completed by the end of fiscal 2027; $12 million in cash severance was paid through April 30. Q3 results included $41 million in CyberArk transaction costs and $41 million in severance charges.
Completed acquisition of Koi Security on April 14, 2026, for $231 million to add agentic endpoint security capabilities to the Cortex security operations platform and enhance Prisma AIRS. Entered a definitive agreement on April 30, 2026, to acquire Portkey, an AI Gateway company, for $140 million in cash and replacement awards to further enhance Prisma AIRS; the transaction closed on May 29, 2026, as a subsequent event.
Launched Prisma AIRS 3.0, which discovers, assesses, and protects agentic AI, and Next-Generation Trust Security, which unifies certificate lifecycle management with Prisma AIRS. In April 2026, launched the Unit 42 Frontier AI Defense services suite to help customers proactively discover and neutralize threats introduced by next-generation AI models.
Next-Generation Security Annualized Recurring Revenue (NGS ARR) reached $8.1 billion as of April 30, 2026, up from $5.6 billion at the prior fiscal year-end; remaining performance obligations totaled $18.4 billion, of which approximately $8.3 billion is expected to be recognized as revenue over the next 12 months. Q3 revenue of $3.0 billion grew 31% year-over-year, reflecting contributions from the CyberArk and Chronosphere acquisitions in addition to organic demand.
In April 2026, entered three lease amendments extending the Santa Clara corporate headquarters lease terms by 12 years through July 2040 (with renewal options through July 2052), involving approximately $469 million in net lease payments over the extended term. Separately, purchased 14.5 acres of land adjacent to the headquarters for $91 million to accommodate future expansion.
Q3 operating results reflected a net loss of $(177) million and an operating loss of $(183) million, compared to a net income of $262 million and operating income of $219 million in the prior-year quarter. The decline was driven by acquisition-related charges (CyberArk transaction costs, severance, and $177 million in accelerated equity vesting), higher intangible asset amortization, and personnel cost growth from acquisitions. Gross margin declined to 67.6% from 72.9% year-over-year.
(Filed on February 18, 2026)
+14.9%
73.6%
$4.2B
Completed acquisition of Chronosphere, Inc. on January 29, 2026 for $3.0 billion ($2,842M cash, $109M replacement equity awards), forming Palo Alto Networks' next-generation observability platform. The acquisition added $2,364M of goodwill and $565M of intangible assets (developed technology, customer relationships, trade name). Post-acquisition revenue and earnings were not material to the quarter. The Chronosphere Telemetry Pipeline is described as integrating with Cortex XSIAM to ingest and optimize massive data volumes for cost-effective scaling of autonomous security operations.
Completed acquisition of CyberArk Software Ltd. on February 11, 2026 (subsequent to quarter-end) for $2.3 billion in cash and 112 million shares of common stock, forming the company's next-generation identity security platform. A definitive agreement was entered into on July 30, 2025 at $45.00 cash plus 2.2005 shares per CyberArk share. The company also assumed CyberArk's $1.25 billion 0.00% Convertible Senior Notes due 2030 and related capped call transactions. On February 16, 2026 (subsequent to quarter-end), Palo Alto Networks entered into a definitive agreement to acquire Koi Security Ltd., a privately-held endpoint posture management company, for $300 million in cash and replacement awards, expected to close in the second half of fiscal 2026 and to expand the security operations platform.
Q2 FY2026 revenue was $2,594M, up 15% year-over-year. Product revenue grew 22% to $514M (19.8% of total), driven by increased software license revenue and demand for new-generation hardware. Subscription and support revenue grew 13% to $2,080M (80.2% of total). Next-Generation Security ARR increased to $6.3B from $5.6B at July 31, 2025. Remaining performance obligations were $16.0B (approximately $7.1B expected to be recognized over the next 12 months). Revenue growth was broad-based: Americas +14%, EMEA +17%, APAC +17%. Headcount grew from 16,068 to 17,027 during the six months.
Operating margin expanded to 15.3% in Q2 FY2026 from 10.6% a year earlier, on gross margin of 73.6% (product gross margin 77.6%, subscription and support 72.6%). Six-month operating income was $706M vs. $527M. Cloud hosting service costs supporting cloud-based subscription offerings increased $48M year-over-year for the quarter, and personnel costs in sales and marketing grew $69M, largely due to headcount growth. Six-month free cash flow (non-GAAP) was $2,071M, and total cash, cash equivalents, and investments stood at $7.9B. No share repurchases were made during the quarter; $1.0B remained available under the repurchase program expiring December 31, 2026.
Purchased 14.5 acres of land adjacent to its Santa Clara headquarters for $91M during the six months to accommodate future headquarters expansion. The company recorded $135M in payments toward the IBM QRadar contingent consideration liability during the six months (estimated undiscounted range $0.4B–$0.6B through June 2028); the liability balance was $369M at January 31, 2026. Non-cancelable purchase commitments totaled $6,789M, of which $6,446M relates to cloud hosting service providers. The company noted that higher tariff costs contributed to increased product cost of revenue, partially offset by a decrease in inventory excess and obsolete charges.
(Filed on November 20, 2025)
+15.7%
74.2%
$3.1B
On July 30, 2025, Palo Alto Networks entered into a definitive agreement to acquire CyberArk Software Ltd., an identity security company, for an equity value of approximately $25 billion ($45.00 cash plus 2.2005 shares of PANW common stock per CyberArk share). The acquisition is expected to close in fiscal Q3 2026, subject to antitrust and foreign investment approvals; PANW expects to fund the cash portion with cash on hand. A $1.0 billion termination fee is payable by PANW under specified circumstances.
During the quarter, PANW shipped two product/platform milestones: in August 2025, it released PAN-OS 12.1 Orion, a software upgrade providing enterprise-wide quantum security readiness, and in October 2025 it launched Prisma AIRS 2.0, a major AI security platform upgrade that completes the native integration of acquired Protect AI, Inc. to offer end-to-end protection across the AI application lifecycle (AI model security, posture management, red teaming, runtime security, and agent security).
As a subsequent event disclosed in the filing, on November 19, 2025 PANW entered into a definitive agreement to acquire Chronosphere, Inc., a privately held observability technology company, for total consideration of $3.35 billion in cash and replacement awards. PANW stated the acquisition represents its entry into the observability space and is expected to close in the second half of fiscal 2026, subject to regulatory clearance.
Key operating metrics as of and for the three months ended October 31, 2025: Next-Generation Security ARR was $5.9 billion (up from $5.6 billion at July 31, 2025); remaining performance obligations were $15.5 billion (~$6.9 billion expected to be recognized over the next 12 months); total revenue was $2.47 billion, up 16% year-over-year (product revenue $434M, +23% YoY; subscription and support $2.04B, +14% YoY); headcount increased to 16,413 from 16,068 at fiscal year-end 2025; free cash flow (non-GAAP) was $1.69 billion.
Payments on the contingent consideration liability from the August 2024 acquisition of certain QRadar assets from IBM commenced during this quarter, with $121 million paid in cash. The total fair value of the remaining contingent consideration liability was $380 million at October 31, 2025 (down from $514 million at the start of the quarter), with the estimated undiscounted payment range of $0.4–$0.6 billion expected to continue through the fiscal quarter ending October 2028.
