SANTA CLARA, California, September 2, 2026, 15:20 (PDT) – Shares of Palo Alto Networks fell 9.3%, with the company’s 34% revenue increase overshadowed by its reported GAAP net loss.
- Palo Alto Networks finished at $328.48, falling 9.28%, with 13.1 million shares traded.
- Revenue for the fiscal fourth quarter increased by 34%, but GAAP net income shifted to a loss of $282 million.
- The outlook for fiscal 2027 projects revenue growth of 23%–24% and an adjusted free-cash-flow margin of 38%.
Palo Alto Networks NASDAQ:PANW stock dropped 9.3% on Wednesday, even as the company reported record revenue for the quarter. Shares finished the session at $328.48 and ticked up 0.4% in after-hours trading S&P Global market data.
The response highlighted a clear division in earnings quality. Sales and adjusted profit increased, yet acquisition costs expanded the GAAP difference.
Trading volume rose to 13.1 million shares, marking a 58% increase compared to Tuesday. The stock dropped 14.0% over two sessions, as the S&P 500 advanced 0.5% on Wednesday AP market report.
PANW closes: earnings erase the late-August rally
Revenue for the fiscal fourth quarter increased by 34% to $3.41 billion. Annual recurring revenue from next-generation security jumped 63% to $9.10 billion company earnings release.
Remaining performance obligations climbed by 34%, totaling $21.2 billion. This backlog underpins growth, though the baseline now factors in businesses acquired.
Chief Executive Nikesh Arora stated that the quarter brought in almost $1 billion in net new security ARR. He attributed the demand to the growing prominence of AI on CIO agendas.
Q4 operating-income bridge
USD millions; company reconciliation from GAAP to non-GAAP
A further $3 million of litigation charges completes the reconciliation. Source: Palo Alto Networks Q4 FY2026 earnings presentation.
The adjustment bridge has a significant impact. GAAP operating income stood at $172 million, compared to non-GAAP operating income of $1.01 billion.
GAAP net income shifted to a loss of $282 million, compared with a profit of $254 million previously. The SEC-filed release indicated non-GAAP net income reached $853 million.
Cash conversion stayed robust. Operating cash flow for the quarter climbed to $1.36 billion, with adjusted free cash flow totaling $1.29 billion.
Management projects fiscal 2027 revenue in the range of $14.10 billion to $14.20 billion. The midpoint suggests growth of approximately 23.5%, with a non-GAAP operating margin of 29.5%.
Wall Street sentiment remains positive. S&P Global data indicated that 44 out of 55 analysts assigned buy-level ratings following the results.
Analyst recommendations after earnings
55 analysts • average target $385.65 • 17.4% above the September 2 close
Source: S&P Global Market Intelligence via StockAnalysis, last updated September 2, 2026.
The mean price target stood at $385.65, representing a 17.4% premium over Wednesday’s closing price. That buffer depends on the integration achieving the forecasted margin.
Risks include higher costs or delays in cross-selling due to acquisition integration. ARR growth could also be impacted by increased competition, customer consolidation, and reduced security spending.
The upcoming challenge is execution. Revenue guidance for the fiscal first quarter is projected at $3.30 billion to $3.31 billion, with ARR growth expected at 63%.
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