Executive Summary

Q1 FY2026 delivered broad-based beats: revenue $2.474B (+16% y/y) and non-GAAP diluted EPS $0.93, both above guidance; non-GAAP operating margin reached 30.2% and total gross margin 76.9% .
Strategic catalysts: announced definitive agreement to acquire Chronosphere for $3.35B (ARR >$160M, triple-digit growth) to extend into observability, and reiterated pending CyberArk acquisition to expand identity security; management raised long-term ARR target to $20B by FY2030 .
Guidance raised at the FY level: FY2026 revenue to $10.50–$10.54B (from $10.475–$10.525B), non-GAAP EPS to $3.80–$3.90 (from $3.75–$3.85), and operating margin to 29.5%–30.0% (from 29.2%–29.7%); Q2 FY2026 guided to revenue $2.57–$2.59B and non-GAAP EPS $0.93–$0.95 .
Key demand signals: NGS ARR $5.9B (+29% y/y), RPO $15.5B (+24% y/y); product revenue grew +23% y/y, and software form factors now 44% of TTM product revenue; SASE ARR surpassed $1.3B (+34% y/y) .

What Went Well and What Went Wrong

What Went Well

Platformization wins and large deals across SASE and XSIAM, including a $100M deal with a U.S. telecom and a $33M U.S. federal SASE award; management emphasized faster MTTR and consolidation benefits driving share gains .
Profitability improved: non-GAAP operating margin reached 30.2% (second consecutive quarter above 30%), product gross margin expanded sequentially by 340 bps to 80.2%; adjusted free cash flow was $1.7B (+17%) .
AI and quantum positioning: Prisma AIRS 2.0 and Agentix launch underpin AI security momentum; IBM partnership to deliver quantum-safe readiness service enhances differentiation in post-quantum security .

What Went Wrong

RPO sequentially declined from $15.8B in Q4 FY2025 to $15.5B in Q1 FY2026, though still +24% y/y; management notes back-half weighting for net new ARR and revenue as platformization cycles lengthen .
GAAP EPS declined y/y to $0.47 (from $0.49), reflecting higher GAAP operating costs and tax provision; non-GAAP still grew to $0.93 .
Chronosphere integration and CyberArk timing introduce interim complexity; management expects ≥37% adjusted FCF margin in FY2026 including acquisitions (timing dependent), with 40%+ targeted by FY2028 .

Financial Results

Revenue and EPS (Quarterly)

Metric	Q3 2025	Q4 2025	Q1 2026
Total Revenue ($USD Billions)	$2.289	$2.536	$2.474
Non-GAAP Diluted EPS ($USD)	$0.80	$0.95	$0.93
GAAP Diluted EPS ($USD)	$0.37	$0.36	$0.47

Q1 2026 Actuals vs Wall Street Consensus (S&P Global)

Metric	Consensus	Actual
Total Revenue ($USD Billions)	$2.462*	$2.474
Non-GAAP Diluted EPS ($USD)	$0.891*	$0.93
EBITDA ($USD Millions)	$773.6*	$374.2*

*Values retrieved from S&P Global.

Segment Breakdown (Revenue)

Metric ($USD Millions)	Q3 2025	Q4 2025	Q1 2026
Product	$452.7	$573.9	$434.0
Subscription and Support	$1,836.3	$1,962.4	$2,040.0
Total	$2,289.0	$2,536.3	$2,474.0

KPIs

KPI	Q3 2025	Q4 2025	Q1 2026
NGS ARR ($USD Billions)	$5.1	$5.6	$5.9
RPO ($USD Billions)	$13.5	$15.8	$15.5

Margin Detail (Q1 2026)

Metric	Q1 2026
Total Gross Margin %	76.9%
Product Gross Margin %	80.2%
Services Gross Margin %	76.2%
Non-GAAP Operating Margin %	30.2%

Additional Q1 color: Americas +14%, EMEA +18%, JPAC +22% y/y; product revenue +23% y/y; subscription and support +14% y/y; software form factors are 44% of TTM product revenue (vs 38% TTM ending Q1 FY2025) .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue ($USD Billions)	FY 2026	$10.475–$10.525	$10.50–$10.54	Raised
Non-GAAP Operating Margin %	FY 2026	29.2%–29.7%	29.5%–30.0%	Raised
Non-GAAP Diluted EPS ($USD)	FY 2026	$3.75–$3.85	$3.80–$3.90	Raised
Adjusted FCF Margin %	FY 2026	38.0%–39.0%	38%–39%	Maintained
NGS ARR ($USD Billions)	FY 2026	$7.00–$7.10	$7.00–$7.10	Maintained
RPO ($USD Billions)	FY 2026	$18.6–$18.7	$18.6–$18.7	Maintained
Revenue ($USD Billions)	Q2 2026	N/A	$2.57–$2.59	New
Non-GAAP Diluted EPS ($USD)	Q2 2026	N/A	$0.93–$0.95	New
NGS ARR ($USD Billions)	Q2 2026	N/A	$6.11–$6.14	New
RPO ($USD Billions)	Q2 2026	N/A	$15.75–$15.85	New

Management further reiterated ≥37% adjusted FCF margin in FY2026 including CyberArk and Chronosphere depending on timing, and 40%+ by FY2028 .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3 & Q4)	Current Period (Q1 FY2026)	Trend
Platformization & ARR Scale	Crossed $5B NGS ARR; consolidator narrative . FY2025 exit at $10B+ revenue run-rate; RPO acceleration .	60 net new platformizations; NGS ARR $5.9B; large XSIAM/SASE deals .	Strengthening
AI Security (Prisma AIRS, Agentix)	Continued AI leverage in offerings (broad platform mentions) .	Prisma AIRS 2.0 momentum; Agentix launch for autonomous remediation; AIRS deals doubled q/q .	Accelerating
Identity Strategy (CyberArk)	Announced agreement to acquire CyberArk to expand identity .	Integration on track; identity as next platform; closing expected in fiscal Q3 .	Building
Observability (Chronosphere)	No prior observability asset; adjacencies discussed at high level .	$3.35B Chronosphere acquisition (ARR >$160M, triple-digit growth); combine with Agentix for agentic remediation .	New vector
Quantum-Safe Readiness	Delivered enterprise-wide quantum security in FY2025 .	IBM joint solution; PanOS 12.1 Orion; cipher translation; urgency (“harvest now, decrypt later”) .	Intensifying
Secure Browser Adoption	Limited disclosure previously.	7.5M browsers sold; bookings ~4x y/y; strategic endpoint for SASE .	Early but strong

Management Commentary

“We exceeded expectations across every guided metric... achieving our second straight quarter of 30-plus % operating margin.” — Nikesh Arora (CEO) .
“SASE had a phenomenal quarter. ARR grew 34% y/y and surpassed $1.3B... we now have ~6,800 SASE customers.” — Nikesh Arora .
“Total revenue reached $2.47B (+16%), product revenue grew 23% y/y... software form factors are 44% of TTM product revenue.” — Dipak Golechha (CFO) .
“Diluted non-GAAP EPS reached $0.93... adjusted free cash flow $1.7B... cash and cash equivalents now over $10B.” — Dipak Golechha .
“We are raising our expectations from $15B to $20B in ARR for FY2030.” — Nikesh Arora .
“Chronosphere... able to deliver full observability at a third of the cost... we will run it largely standalone post-close.” — Nikesh Arora and Dipak Golechha .

Q&A Highlights

Identity in an agentic future: Management argues true identity security hinges on privileged access controls; expects privilege concepts to extend to most identities over time, with CyberArk as the core platform .
Observability rationale (Chronosphere): Built to ingest petabytes at LLM scale with low latency and 1/3 cost; plan to combine observability signals with Agentix for autonomous remediation; CIO/CEO-level buyer focus .
Quantum urgency: Customers increasingly plan for “harvest now, decrypt later” risks; PANW’s Orion and cipher translation enable immediate quantum-safe posture, with IBM delivering services and roadmaps .
Secure browser ubiquity: 7.5M sold; browser is now the primary workspace and major threat vector; monetization tied to SASE with long-term ubiquity goals .
Profitability path with M&A: Management targets ≥37% adjusted FCF margin near term including acquisitions, and 40%+ by FY2028; expects relatively modest interim dilution impact given scale .

Estimates Context

Q1 FY2026 beat: Revenue $2.474B vs consensus $2.462B; non-GAAP EPS $0.93 vs consensus $0.891; EBITDA (SPGI methodology) was below consensus ($374.2M vs $773.6M), reflecting differing definitions versus reported non-GAAP operating metrics*.
Q2 FY2026: Consensus revenue $2.577B and EPS $0.939 align with company guidance ranges; minimal implied revision risk unless deal timing or macro changes*.
FY2026: Consensus revenue $10.523B and EPS $3.820 closely track updated guidance $10.50–$10.54B and $3.80–$3.90, suggesting limited estimate dispersion post-raise*.