Palo Alto Networks (PANW) on Monday issued fiscal 2026 revenue and profit guidance that exceeded analyst expectations, as the company bets on growing demand for its artificial intelligence-powered cybersecurity solutions, sending shares up 6.2% in pre-market trading.
Palo Alto Networks is benefiting from an AI-driven upgrade cycle as enterprises accelerate cloud adoption and modernize security operations amid a backdrop of frequent data breach incidents.
A series of high-profile cyberattacks that swept across global enterprises including Microsoft (MSFT), UnitedHealth Group (UNH), Walt Disney (DIS), and Oracle (ORCL) has created urgent market demand for robust security solutions.
The company's newly launched products, including cloud security platform "Cortex Cloud," security platform "Prisma AIRS" for protecting AI applications, and its planned $25 billion acquisition of CyberArk, all further enrich its cybersecurity product portfolio.
"The company benefits from both brand-new AI-related spending and resource reallocation from services to products (achieved through automation)," said Morningstar analyst Malik Ahmed Khan.
"We believe the acquisition of CyberArk software company will give them access to more customers, enabling cross-selling of identity-related products to Palo Alto Networks' existing customers and vice versa."
Palo Alto Networks also announced Monday that founder and Chief Technology Officer Nir Zuk is retiring after more than 20 years with the company. Lee Klarich, who has long served as head of products, has been appointed as Chief Technology Officer and board member.
Klarich will also serve as chairman of the board's security committee to help strengthen the company's AI-driven platform strategy.
According to data compiled by London Stock Exchange Group (LSEG), the company expects full-year revenue between $10.48 billion and $10.53 billion, above analysts' average expectation of $10.43 billion.
Its projected adjusted earnings per share of $3.75 to $3.85 exceeds the expected $3.67 for the fiscal year.
The company's first-quarter revenue guidance of $2.45 billion to $2.47 billion surpasses the expected $2.43 billion; adjusted quarterly earnings per share are projected at 88 cents to 90 cents, also above the expected 85 cents.
Palo Alto Networks' fourth-quarter revenue grew 16% year-over-year to $2.54 billion. For the quarter ended July 31, its adjusted earnings per share were 95 cents, beating the expected 88 cents.
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