Cloud Security Leader Sees 30% Revenue Surge but Transitions to GAAP Loss

Palo Alto Networks Inc. (PANW) announced on June 2 that its third-quarter fiscal 2026 revenue, which ended April 30, reached $3.0 billion—approximately ₩3.9 trillion—a 31% year-over-year increase, driven in part by its recent CyberArk and Chronosphere acquisitions.

Under GAAP, the company reported a net loss of $177 million (about ₩230 billion), a turnaround from a profit a year earlier. On a non-GAAP basis, however, Palo Alto Networks delivered $684 million in net income and $910 million (roughly ₩1.2 trillion) in adjusted free cash flow, maintaining robust profitability. Next-generation security ARR and backlog also grew significantly, supporting guidance for the fourth quarter and full fiscal 2026.

On June 4, president William D. Jenkins Jr. internally disposed of a portion of his phantom stock units under the company’s deferred compensation plan to diversify his holdings. This transaction was classified as a change in compensation structure rather than an open-market sale.

Following the earnings release, leading brokerages including Rosenblatt and Cantor Fitzgerald raised their price targets for PANW, reflecting the strong Q3 results and upgraded fiscal 2026 outlook.

Meanwhile, a GlobalProtect VPN authentication-bypass vulnerability in PAN-OS-based firewalls has been exploited in the wild. Since mid-May, Palo Alto Networks has been rolling out version-specific security patches and urging customers to apply updates promptly.

Headquartered in Santa Clara, California, Palo Alto Networks is a global cybersecurity leader offering an AI-driven platform for network security, cloud security and security operations, with a leading share of the enterprise market. Its recent acquisitions of CyberArk and Chronosphere have extended its portfolio into identity security and data observability, positioning it as a go-to security stock amid growing consolidation demand in a threat landscape increasingly shaped by generative AI.