Palo Alto Networks reported results for its fiscal fourth quarter ended July 31, 2026. Palo Alto Networks, Inc. reported total revenue of $3.41 billion for the period, marking a 34% increase compared to the same time last year. The company also reported a $282 million GAAP net loss, which follows a profit of $254 million in the prior year. The company's remaining performance obligations stood at $21.2 billion, showing the revenue that is expected to be recognized over time. The company said NGS ARR reached $9.1 billion, up 63% from a year earlier.
Net new Next-Generation Security annual recurring revenue, known as NGS ARR, was approximately $970 million, according to Yahoo Finance. This metric excludes hardware, legacy subscriptions, support services, and professional services to focus on core software revenue. The increase in NGS ARR is not entirely organic, as the company added identity and observability businesses through acquisitions that were not part of last year's base. CFO Dipak Golechha said the company had added in one quarter roughly the amount of total NGS ARR it had reached in fiscal 2021.
The company believes AI-powered tools are still under development and unlikely to become uncontrollable in the near future, according to a bullish view on its platform. Palo Alto Networks added approximately $970 million in new NGS ARR, showing strong customer adoption of its platform. Cash generation remained robust despite the GAAP loss, with the company holding $2.51 billion in cash and cash equivalents to support its integration efforts. It also held $557 million in short-term investments at the end of the quarter.
The company's operating cash flow was $1.36 billion, compared to $1.02 billion in the previous year. Management noted that this cash provides flexibility for further expansion and integration of acquired businesses. The company's net revenue retention rate among platformized customers exceeded 120% in the fourth quarter. For fiscal 2027, Palo Alto Networks expects revenue of $14.10 billion to $14.20 billion, representing growth of 23% to 24%.
The company also reported that its remaining performance obligations grew to $21.2 billion, up from $15.8 billion in the previous year. Palo Alto Networks acquired Console, an AI-native platform designed to enhance Cortex with agentic workflows. The new platform aims to extend automated investigation and remediation capabilities across enterprise operations. Palo Alto Networks said Console will help security teams investigate signals, prioritize work and take action across their environments.
A bearish view suggests that the GAAP results reflect the high cost of building out this broader platform. The company's adjusted earnings per share were $1.02, excluding certain charges that affect GAAP profitability. The adjusted measure excludes share-based compensation, acquisition costs, amortization of intangible assets, and litigation-related charges. Non-GAAP net income was $853 million compared with $673 million a year earlier.
In the fourth quarter, share-based compensation added $487 million to operating expenses. Acquisition-related costs were $68 million and intangible amortization was $281 million. These expenses reflect the company’s strategy to grow through acquisitions and platform expansion. The company also recorded a $524 million change in the fair value of convertible senior notes and capped calls acquired through the CyberArk transaction.
Share-based compensation, while not tied to operational performance, can dilute earnings per share for existing shareholders. The company’s financial results show a balance between aggressive growth and the costs associated with building a more comprehensive cybersecurity platform. Investors are watching closely to see how these investments translate into long-term profitability and market share. CEO Nikesh Arora said advances in AI are putting cybersecurity higher on CIO priority lists and could provide a long-term tailwind for the company.