Palo Alto Networks (NASDAQ:PANW) traded more than 4% lower in premarket action on Thursday after the cybersecurity leader posted stronger-than-expected quarterly results but paired them with a revenue outlook that failed to excite Wall Street.

For its fiscal first quarter, the California-based group delivered adjusted earnings of $0.93 per share, topping the $0.89 consensus estimate. GAAP earnings slipped slightly to $0.47 per share, compared with $0.49 in the same period last year.

Revenue climbed 16% year over year to $2.5 billion, coming in ahead of the $2.46 billion forecast, driven by ongoing strength across its next-generation security offerings.

Annual recurring revenue from those next-gen products rose 29% to $5.9 billion, while remaining performance obligations increased 24% to $15.5 billion. Product revenue grew 23%, well above the 19% expected by analysts.

CEO Nikesh Arora said the company delivered “excellent results across all metrics,” citing robust platform adoption and the strategic contribution from recent deals such as CyberArk and observability specialist Chronosphere, which Palo Alto said it plans to acquire.

Jefferies analysts Joseph Gallo and Brent Thill noted that the move “raises execution risk but should also sustain growth.”

Guggenheim’s John DiFucci offered a similar assessment, calling the acquisition both an “opportunity and risk.” He added: “These are either bigger entities (CYBR) or an entirely different market (Chronosphere). Perhaps. It isn’t lost on us that if this is successful, it’s validation that PANW, as the leading pure security player in the world, can become much, much more. But at this valuation at this time, we remain Sell with a $135 PT.”

For the fiscal second quarter, the company projected revenue between $2.57 billion and $2.59 billion — a 14–15% increase but effectively surrounding the Street’s $2.59 billion estimate. Adjusted EPS guidance of $0.93–$0.95 was roughly in line with expectations.

Full-year forecasts call for revenue of $10.50–$10.54 billion and adjusted EPS of $3.80–$3.90, both ranges hovering around consensus, with the low end of revenue just shy of analyst models.

Management reaffirmed its target for a 30% non-GAAP operating margin and said it remains on track to exceed 40% adjusted free-cash-flow margins by fiscal 2028.

The company also announced that Mark Goodburn has joined the board, while long-serving director Mary Pat McCarthy will step down in January.

Palo Alto stock price

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