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Palo Alto Networks (PANW) edged past 1Q26 EPS and revenue expectations, fueled by robust growth across key metrics and strong platformization momentum. Despite the robust Q1 results, investors' reaction has been muted, likely due to PANW’s in-line Q2 and FY26 guidance, following last quarter’s strong upside guidance.

• Next-Generation (NGS) ARR grew 29% yr/yr to $5.9 bln, led by software firewalls, SASE, and XSIAM platform wins.
• Remaining Performance Obligations (RPO) increased 24% yr/yr to $15.5 bln, supported by steady customer contract duration and strong platform adoption.
• Q2 and FY26 guidance was in line with expectations, following last quarter’s upside, leading to muted investor reaction.
• NGS ARR target was raised to $20 bln by FY30, driven by platform growth and recent acquisitions.
• The company is progressing toward closing its acquisition of CyberArk, a leader in identity security, anticipated in 3Q26, which complements PANW’s vision of making identity the next major platform area.
• Separately, PANW announced the $3.35 bln acquisition of Chronosphere, a cloud observability platform focused on cost-effective, scalable real-time observability at AI scale.
• Both acquisitions align with PANW’s aim to expand its total addressable market and enhance its platform through adjacent categories of identity and observability, which are gaining importance in the AI security landscape.

Briefing.com Analyst Insight:

PANW delivered a strong 1Q26 performance with significant growth in next-generation security ARR and RPO, demonstrating robust platformization momentum. However, the market’s muted reaction to the cautious Q2 and FY26 guidance suggests investors may have expected continued upside following last quarter’s strong outlook. The strategic acquisitions of CyberArk and Chronosphere position PANW well for the AI-driven future of cybersecurity and observability, potentially transforming its TAM and reinforcing its platform leadership. Execution on these integration plans and continued strength in core growth areas will be key to sustaining investor confidence and validating the raised FY30 ARR target of $20 bln. Given the long-term growth trajectory and strategic investments, PANW remains a key player to watch in cybersecurity’s AI transformation era.