Palo Alto Networks raises forecasts as AI cybersecurity demand surges

Palo Alto Networks raised its annual revenue and profit forecast after reporting fiscal third-quarter results that topped Wall Street estimates, as enterprises boosted spending on cloud, identity and AI-driven cybersecurity products.

"The results validate our platform strategy as customers consolidate around our security stack," Chief Executive Officer Nikesh Arora said in a statement. "We are seeing strong momentum in next-gen security as AI expands the attack surface."

Revenue rose 31% year over year to $3 billion in the quarter ended April 30, beating the $2.94 billion consensus estimate. Adjusted earnings per share came in at 85 cents, compared with the 80 cents analysts had expected. Next-Generation Security annual recurring revenue reached $7.95 billion, within the company's guided range of $7.94 billion to $7.96 billion and up 56% from a year earlier.

Metric	Actual	Consensus	Beat/Miss
Revenue	$3.00B	$2.94B	+2.0%
EPS	$0.85	$0.80	+6.3%
NGS ARR	$7.95B	$7.94B*	In-line

*Based on management's guided midpoint

The company now expects full-year FY2026 revenue above its prior forecast, citing stronger-than-expected demand for its platform and the contribution from its recently closed CyberArk acquisition. Remaining performance obligations stood at roughly $16 billion, providing multiyear visibility into future revenue.

Shares rose 7.4% in extended trading to around $316, extending a rally that has pushed the stock up more than 60% this year. The cybersecurity giant has beaten earnings estimates in each of the past five quarters, though the stock had averaged a 3.4% decline on earnings days over that stretch.

The guidance raise signals that management expects AI-driven security spending to accelerate through the remainder of the fiscal year. Customers spending more than $5 million annually grew 48% from a year earlier, while those spending over $10 million rose 50%, suggesting large enterprises are standardizing on Palo Alto's platform. Investors will watch the Q4 earnings call for updates on CyberArk integration margins and next-gen security ARR growth trajectory.

This article is for informational purposes only and does not constitute investment advice.