Palo Alto Networks reported fiscal third-quarter 2026 financial results for the period ending April 30, 2026, with revenue climbing to $3.0 billion, representing a 31% increase from the same quarter a year earlier. The total included $388 million attributed to CyberArk and Chronosphere. Company leadership highlighted increasing demand from organizations seeking security capabilities for artificial intelligence deployments, contributing to stronger business momentum during the quarter.

The company also recorded substantial expansion across key subscription metrics. Next-Generation Security ARR reached $8.1 billion, reflecting 60% year-over-year growth, including $1.6 billion associated with CyberArk and Chronosphere. Remaining performance obligation increased to $18.4 billion, up 36% from the prior year and including $1.8 billion from those businesses. Management stated that integration efforts tied to acquisitions are progressing ahead of schedule while profitability initiatives continue across operations.

Financial performance showed a contrast between GAAP and non-GAAP measures. Palo Alto Networks posted a GAAP operating loss of $183 million compared with GAAP operating income of $219 million in the prior-year quarter. GAAP net results moved to a loss of $177 million, or $0.22 per diluted share, versus net income of $262 million, or $0.37 per diluted share, one year earlier. Meanwhile, non-GAAP operating income rose to $814 million from $627 million, while non-GAAP net income increased to $684 million from $561 million.

Cash generation strengthened considerably during the quarter. Net cash provided by operating activities reached $871 million, compared with $628 million in the corresponding period last year. Adjusted free cash flow advanced to $910 million from $578 million, while the trailing 12-month adjusted free cash flow margin improved by 430 basis points to 38.5%. Company executives reiterated confidence in achieving a 40% adjusted free cash flow margin target by fiscal 2028.

Looking ahead, Palo Alto Networks expects fourth-quarter 2026 revenue between $3.345 billion and $3.355 billion. The company also forecast Next-Generation Security ARR of $8.90 billion to $8.95 billion and remaining performance obligation of $20.9 billion to $21.0 billion. For the full fiscal year, management projects revenue between $11.415 billion and $11.425 billion, non-GAAP operating margin of 28.9% to 29.2%, diluted non-GAAP earnings per share of $3.77 to $3.79, and an adjusted free cash flow margin of 37.5%.

📊 What This Means (Our Analysis)

The quarter stands out because growth appeared across multiple operating measures at the same time. Revenue, annual recurring revenue, remaining performance obligations, operating cash flow, and adjusted free cash flow all moved higher, suggesting expansion is occurring across both current business activity and future contracted demand.

The results also indicate that management is placing equal emphasis on scale and financial discipline. While GAAP profitability declined, the company reported stronger non-GAAP earnings, improving cash generation, and continued progress toward longer-term free cash flow objectives. Taken together, those metrics present a picture of a business focused on expanding its platform footprint while maintaining attention on operating efficiency.

📌 Our Take: The company’s outlook suggests that momentum recorded during the third quarter is expected to extend through the remainder of fiscal 2026.