New York, Feb 18, 2026, 05:05 EST — Premarket.
- Shares slipped roughly 2% in premarket trading, as the company posted quarterly results that came with a more cautious profit forecast.
- Management bumped up its revenue outlook, but also pointed to increased costs tied to acquisitions and integration.
- Traders eye the 9:30 a.m. ET open for signs of follow-through, while keeping an ear out for new analyst downgrades.
Palo Alto Networks (PANW.O) slipped roughly 2% before the bell Wednesday, with shares recently quoted at $163.50. They’d finished the previous session at $166.76.
Shares slipped early, putting the spotlight back on a familiar worry: can clients’ cyber budgets keep pace with growing costs tied to M&A and folding in acquisitions? That tradeoff has drawn investor backlash throughout the software sector this year.
Palo Alto serves as something of a bellwether for overall security spending. The company’s “platformization” play—nudging clients to bundle more tools from fewer suppliers—lands right as boards get serious about cutting down gaps and trimming the stack of invoices.
The company’s fiscal second-quarter numbers are in: revenue climbed 15% to $2.6 billion, with adjusted profit coming in at $1.03 per share. Next-Generation Security ARR—money tied to the newer subscription line—hit $6.3 billion. As for RPO, the backlog sits at $16.0 billion. Chief Executive Nikesh Arora said customers want to “both modernize and normalize their cybersecurity stack.” CFO Dipak Golechha flagged this as the third consecutive quarter with adjusted operating margins topping 30%. (Sec)
Even so, Palo Alto’s updated guidance didn’t offer much cushion. The company is projecting adjusted earnings of $3.65 to $3.70 a share for fiscal 2026, with the third quarter seen at 78 to 80 cents. Revenue for the fiscal year is pegged between $11.28 billion and $11.31 billion. (Sec)
Timing is a central flashpoint. Palo Alto reported acquisition-related costs spiking to $24 million for the quarter—up sharply from $10 million a year earlier—and warned investors about a $2.3 billion cash hit coming in its third fiscal quarter for the CyberArk deal. The company also cited heavier spending in the wake of a string of cyberattacks targeting major firms such as F5 and UnitedHealth Group. (Reuters)
Palo Alto struck a deal to acquire Koi, rolling out what it’s branding as “Agentic Endpoint Security” in response to the growing risks from AI-powered tools on employee hardware. “AI agents are the ultimate insiders,” said Lee Klarich, the company’s Chief Product & Technology Officer. Over at Koi, CEO and co-founder Amit Assaraf argued that “traditional solutions are blind” when it comes to an “agentic-first world.” (Palo Alto Networks)
Some investors are viewing Palo Alto’s recent slide through the lens of vendor consolidation. In a note highlighted by Investopedia, Wedbush analysts pointed to Palo Alto, CrowdStrike, and Zscaler as names that could come out ahead, with companies expected to boost security spending as AI-driven threats pile up. (Investopedia)
Here’s the risk: If integration drags on, costs refuse to budge, and suddenly the main narrative turns into an earnings miss instead of top-line expansion. Heavy spending could also tie their hands if the market softens or rivals start slashing prices.
