Palo Alto Networks Posts $766M Net Income in H1 FY2026, Up 24% Year-Over-Year

Palo Alto Networks (NASDAQ: PANW), a cybersecurity software and services company, reported net income of $766 million for the six months ending January 31, 2026, up from $618 million in the prior-year period. Revenue climbed 15% to $5.07 billion from $4.40 billion a year earlier. Read more earnings reports.

For the three months ending January 31, 2026, the company posted net income of $432 million, a 62% jump from $267 million in the same quarter of fiscal 2025. Quarterly revenue rose 15% to $2.59 billion from $2.26 billion.

Operating Performance Shows Margin Expansion

Operating income for the six-month period reached $706 million, compared with $527 million in the first half of fiscal 2025. Gross profit for the period totaled $3.75 billion, yielding a gross margin of 74%, versus $3.24 billion and a 74% margin the prior year.

Operating expenses for the six months increased to $3.04 billion from $2.72 billion, driven in part by research and development spending of $1.04 billion, up from $986 million. The company spent $511 million on R&D in the second quarter, roughly flat compared with $505 million in the prior-year quarter.

Balance Sheet and Cash Position

Total assets stood at $25.0 billion as of January 31, 2026, up from $23.6 billion at the end of fiscal 2025 on July 31, 2025. Cash and cash equivalents more than doubled to $4.16 billion from $2.27 billion over the same period.

Goodwill rose sharply to $6.93 billion from $4.57 billion at fiscal year-end, while intangible assets increased to $1.25 billion from $763 million. Total stockholders' equity climbed to $9.39 billion from $7.82 billion.

The company generated $2.33 billion in cash from operations during the six-month period, compared with $2.07 billion in the prior-year period. Cash used in investing activities totaled $332 million, down from $925 million a year earlier, while cash used in financing activities was $106 million versus $452 million.

Earnings Per Share and Share Count

Diluted earnings per share for the six months ending January 31, 2026, came in at $1.07, up from $0.87 in the prior-year period. For the second quarter, diluted EPS reached $0.61, compared with $0.38 a year earlier.

Weighted average diluted shares outstanding for the six-month period totaled 713 million, consistent with 709 million in the prior year. Common shares outstanding as of January 31, 2026, totaled 703 million, up from 668 million at the end of fiscal 2025.

Revenue Breakdown and Product Mix

The company reported product revenue of $1.32 billion for the six months ending January 31, 2026, up from $1.15 billion in the prior-year period. Subscription and support revenue, which includes cloud-based offerings and maintenance contracts, totaled $3.75 billion for the six-month period, compared with $3.24 billion a year earlier.

Liabilities Hold Steady

Total liabilities decreased slightly to $15.6 billion as of January 31, 2026, from $15.8 billion at fiscal year-end. Current liabilities edged up to $8.01 billion from $7.99 billion. Accounts payable rose to $262 million from $232 million.

Retained earnings increased to $3.25 billion as of January 31, 2026, from $2.48 billion at the end of fiscal 2025. The company had no preferred stock outstanding at the end of the reporting period.