Palo Alto Networks revenue jumps 34% on AI security demand

Palo Alto Networks reported fiscal fourth-quarter revenue of $3.41 billion, surpassing analyst expectations of $3.35 billion and marking a 34% increase from $2.54 billion a year earlier. The cybersecurity company posted adjusted earnings per share of $1.02, beating the 98-cent consensus estimate.

Shares declined roughly 2% in after-hours trading following a 5% drop during the regular session, according to CNBC, which first reported the results.

The company reported a net loss of $282 million, or 35 cents per share, compared to net income of $254 million, or 36 cents per share, in the year-ago quarter.

AI attacks accelerate customer spending

CEO Nikesh Arora told CNBC that the acceleration of AI-powered attacks is forcing customers to build faster and more sophisticated cyber defenses. He emphasized that while AI security concerns are already driving revenue growth, the trend represents a multi-year opportunity rather than a short-term spike.

"This is a long-term tailwind," Arora said. "It will not happen in one quarter, and it will not happen in two. It just underpins the long-term duration from a growth rate perspective for our business."

Palo Alto has conducted over 2,000 customer briefings on AI security risks, up from approximately 1,200 in the previous quarter. These briefings followed the launch of Anthropic's Mythos model and heightened concerns about agentic AI systems that can autonomously plan and execute cyberattacks.

The company's shares have nearly doubled this year as organizations seek tools to detect and respond to AI-driven threats. Recent incidents, including the OpenAI-Hugging Face breach, have demonstrated how AI agents can orchestrate sophisticated attacks with minimal human intervention.

Acquisition strategy expands

Palo Alto announced plans to acquire AI startup Console, continuing an aggressive dealmaking push under Arora's leadership. Over the past year, the company has completed major acquisitions including a $25 billion purchase of identity security firm CyberArk and a nearly $3.4 billion deal for Chronosphere.

Arora described the cybersecurity startup ecosystem as "a large lab where people are trying different things," noting that Palo Alto can acquire companies when internal development approaches fall short.

Guidance beats expectations

For the first quarter, Palo Alto expects revenue between $3.30 billion and $3.31 billion, above the analyst estimate of $3.22 billion. Full-year guidance calls for revenue of $14.10 billion to $14.20 billion and adjusted earnings per share of $4.16 to $4.19, surpassing consensus forecasts of $13.79 billion in revenue and $4.11 in EPS.

Why it matters

Palo Alto's results underscore how rapidly AI is reshaping the cybersecurity market. As AI models gain capabilities to autonomously conduct reconnaissance, exploit vulnerabilities, and evade detection, enterprises face pressure to upgrade legacy security infrastructure. The company's strong guidance and aggressive M&A strategy signal management's conviction that AI-driven security spending will sustain elevated growth rates for years, not quarters. Competitors including CrowdStrike and Okta have also reported surging demand, suggesting the AI security buildout is industry-wide rather than confined to a single vendor.

The financial details and executive comments were first reported by CNBC.