Palo Alto Networks reported fourth-quarter results after the bell on Tuesday that topped Wall Street expectations on both earnings and revenue.

Adjusted earnings per share came in at $1.02, up from $0.95 a year ago and above the $0.98 consensus estimate. Revenue reached $3.41 billion, a 34% increase year over year and higher than the $3.35 billion analysts had expected.

The stock was up about 5% in after-hours trading after falling 5.2% during the regular session.

Backlog and software annual recurring revenue also came in above Wall Street consensus, two metrics investors watch closely because they help show how much business is already committed beyond the current quarter. The Q4 beat marked the second consecutive quarter Palo Alto exceeded revenue guidance at the midpoint, this time by $60 million.

Strong Product Performance Across the Board

Software firewalls grew 29% year over year in ARR. Prisma AIRS reached approximately $120 million in ARR, and XSIAM added $100 million in ARR quarter over quarter to reach $700 million. The company also reported $450 million in SASE competitive displacements.

Organic next-generation security ARR accelerated by roughly 1 percentage point quarter over quarter, excluding acquisitions.

Revenue growth was helped by the $21 billion acquisition of CyberArk in February and the Chronosphere deal in January, though the company did not break out contributions from those transactions this quarter.

Palo Alto also announced the acquisition of Console, an AI-native operations and IT platform, giving the company a foothold in AI agents.

Guidance Impresses Investors

Initial guidance for Q1 fiscal 2027 came in nearly $100 million above sell-side consensus. Full-year fiscal 2027 guidance topped consensus by $300 million.

CEO Nikesh Arora emphasized the company’s AI security narrative on the earnings call. “Validating, interpreting context and resolving these issues requires broad cybersecurity platforms, working alongside frontier AI,” Arora said. He added that this “synergy is essential to stress test environments, manage agentic actions, and trigger machine speed remediation during an active threat.”

The stock had been under pressure earlier this year, falling 38% from its October record high through February on fears that AI would disrupt enterprise software demand.

That narrative has since reversed. As AI makes it easier to launch cyberattacks at scale, demand for security software is growing, and investors are increasingly focused on whether vendors can secure AI systems as they are adopted inside enterprises. A recent example: OpenAI agents in a test environment went rogue and hacked into both OpenAI’s internal systems and Hugging Face’s network between May and July.

The stock is up 159% from its February low and has gained 96% year to date, trading near its 52-week high of $399.

Bernstein reiterated an Outperform rating and a $253 price target following the results. At Tuesday’s close, the stock traded at 87 times the midpoint of Palo Alto’s new EPS guidance range for next year.

Palo Alto Networks’ fourth-quarter report and forward guidance were highlighted in a Wall St Engine post on X: “PALO ALTO NETWORKS $PANW Q4’26 EARNINGS HIGHLIGHTS 🔹 Revenue: $3.41B (Est. $3.35B) 🟢; +34% YoY 🔹 Adj. EPS: $1.02 (Est. $0.98) 🟢; +7% YoY 🔹 NGS ARR: $9.1B; +63% YoY FY27 Guide: 🔹 NGS ARR: $11.08B-$11.18B (Est. $10.9B) 🟢 🔹 Revenue: $14.10B-$14.20B (Est. $13.79B) 🟢 🔹… pic.twitter.com/l69DN3M64B — Wall St Engine (@wallstengine) September 1, 2026”