Palo Alto Networks’ fourth quarter was notable for strong top-line growth and a solid beat on non-GAAP profit, but the market responded negatively to the company’s results. Management attributed performance to robust demand for its platform-based cybersecurity offerings, emphasizing particularly strong customer uptake in SASE (Secure Access Service Edge), software firewalls, and new AI security products. CEO Nikesh Arora highlighted that the company’s success in “platformization” is driving both new customer wins and deeper client engagement, but acknowledged that the integration of recent acquisitions and evolving customer needs are putting pressure on the business.
Is now the time to buy PANW? Find out in our full research report (it’s free for active Edge members).
Palo Alto Networks (PANW) Q4 CY2025 Highlights:
- Revenue: $2.59 billion vs analyst estimates of $2.58 billion (14.9% year-on-year growth, in line)
- Adjusted EPS: $1.03 vs analyst estimates of $0.94 (9.9% beat)
- Adjusted Operating Income: $785 million vs analyst estimates of $758.4 million (30.3% margin, 3.5% beat)
- The company lifted its revenue guidance for the full year to $11.3 billion at the midpoint from $10.52 billion, a 7.4% increase
- Management lowered its full-year Adjusted EPS guidance to $3.68 at the midpoint, a 4.5% decrease
- Operating Margin: 15.3%, up from 10.6% in the same quarter last year
- Billings: $2.79 billion at quarter end, up 15.1% year on year
- Market Capitalization: $117.6 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Palo Alto Networks’s Q4 Earnings Call
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Robbie Owens (Piper Sandler) asked if artificial intelligence will disrupt cybersecurity as cloud once threatened to do. CEO Nikesh Arora responded that AI is driving consolidation and greater demand for unified security, not displacement.
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Brad Zelnick (Deutsche Bank) questioned if large language models (LLMs) threaten existing security tools. Arora argued that LLMs are an additive capability, but not a replacement for core security products due to accuracy limitations.
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Saket Kalia (Barclays) pressed for details on joint go-to-market opportunities after the CyberArk acquisition. Arora described early coordinated sales efforts but cautioned integration will progress gradually.
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Adam Tindle (Raymond James) inquired about Chronosphere’s large AI provider deal and the sustainability of ARR growth. Arora confirmed vendor displacement and cited Chronosphere’s technical scalability as key factors, with further large enterprise wins targeted.
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Gregg Moskowitz (Mizuho) asked about execution risk from integrating two large acquisitions. Arora emphasized detailed planning and prior experience managing complex integrations, but admitted additional management focus and capacity are required.
Catalysts in Upcoming Quarters
In future quarters, the StockStory team will be closely monitoring (1) how effectively Palo Alto Networks executes the integration of CyberArk and Chronosphere, (2) the pace of adoption for Prisma AIRS and other AI-focused security products as enterprises scale AI workloads, and (3) whether the company can maintain strong customer retention and cross-selling momentum in the face of industry consolidation and platformization trends. The trajectory of operating margins and synergies from recent acquisitions will also serve as key indicators of management’s ability to deliver on guidance.
Palo Alto Networks currently trades at $144.39, down from $163.50 just before the earnings. At this price, is it a buy or sell? See for yourself in our full research report (it’s free).
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