Palo Alto Networks Q4 2026 earnings: adjusted profit beats amid GAAP net loss
Palo Alto Networks topped adjusted profit expectations and matched revenue forecasts in Q4 2026, posted a GAAP net loss on acquisition and stock-pay costs, and guided to continued growth in fiscal 2027.
| Q4 2026 | Reported | Expected | Surprise |
|---|---|---|---|
| EPS | $1.02 | $1.00 | +2.4% |
| Revenue | $3.41B | $3.42B | -0.3% |
Key takeaways
- Adjusted (non-GAAP) profit came in at $1.02 per share, above the roughly $1.00 analysts expected, while revenue of $3.41 billion was essentially in line with forecasts — a solid, unspectacular beat on the headline numbers investors watch most closely.
- Revenue grew about 34% from a year earlier ($2.54 billion), showing that demand for the company’s cybersecurity products and bundled ‘platform’ deals kept accelerating rather than slowing down.
- A key growth metric the company highlights, next-generation security annual recurring revenue (subscription revenue from newer cloud and AI security products), rose 63% year over year to $9.10 billion, beating the company’s own prior guidance and adding nearly $970 million in new subscription revenue in just this one quarter.
- Remaining performance obligations — contracted revenue not yet billed or recognized, a gauge of future business already locked in — crossed $20 billion for the first time, up 34% year over year, suggesting a healthy pipeline of work still to come.
- Despite the adjusted profit beat, the company posted a GAAP (standard accounting) net loss of $282 million for the quarter, versus a profit a year ago; the gap between a nearly 72% gross margin and a much thinner roughly 9.6% operating margin over the trailing year reflects heavy spending on stock-based compensation, acquisitions and integration costs that sit below the gross-profit line.
- Cash generation looked healthier than the accounting loss suggests: adjusted free cash flow (cash left after running the business and capital spending) rose to $1.3 billion for the quarter, up from $954 million a year earlier.
- The company said it is acquiring Console, a startup focused on AI-driven (‘agentic’) automation of enterprise workflows, to extend its Cortex security platform into managing AI-agent activity for corporate customers.
- For the current quarter (fiscal Q1 2027), management guided to revenue of $3.30–3.31 billion and adjusted EPS of $0.96–$0.98; for the full 2027 fiscal year it guided to revenue of $14.10–14.20 billion (23–24% growth), while cautioning that rising cloud-hosting and hardware component costs are expected to grow faster than revenue and pressure margins ahead.
Q4 2026 in context
| Metric | Jul 2026 | Jul 2025 | Change |
|---|---|---|---|
| Revenue | $3.4B | $2.5B | +34.5% |
| Net income | -$282M | $254M | -211.0% |
| Free cash flow | $1.3B | $934M | +34.3% |
| Gross margin | 67.6% | 73.2% | -5.7 pts |
| Operating margin | 5.0% | 19.6% | -14.6 pts |
| Net margin | -8.3% | 10.0% | -18.3 pts |
Figures for the quarter ended Jul 2026 and the quarter ended Jul 2025, as reported to the SEC. Fourth-quarter flows are derived as the fiscal year minus its first three quarters.
How the stock took it
Palo Alto Networks Inc closed at $382.13 on Aug 31, 2026, the last session before the report, and at $328.48 on Sep 2, 2026, the first session after it — -14.0% across the report.
Closes from the market's daily record. Each figure spans the report date — from the last session that closed before it to the first that closed after — because a company may report before the open or after the close.
Fundamentals
| Metric | Value | Period |
|---|---|---|
| Gross margin | 71.9% | Trailing 12 months |
| Operating margin | 9.6% | Trailing 12 months |
| Net profit margin | 8.0% | Trailing 12 months |
| Pretax margin | 13.2% | Trailing 12 months |
| EPS | $1.21 | Trailing 12 months |
| Revenue growth (YoY) | 19.5% | Trailing 12 months |
| EPS growth (YoY) | -30.5% | Trailing 12 months |
| Return on equity | 6.3% | Trailing 12 months |
Sources: company report · CNBC · Benzinga · Seeking Alpha