New York, February 18, 2026, 17:43 EST — After-hours trading
- Palo Alto Networks dropped 6.8% after hours, with shares changing hands at $152.35.
- Integration costs are climbing, so the company cut its adjusted profit outlook for fiscal 2026. Still, it bumped up its revenue forecast.
- Investors want to see if the acquisitions actually lift recurring sales—without putting more pressure on margins.
Palo Alto Networks (PANW) dropped 6.8% to $152.35 in late trading Wednesday. The cybersecurity company slashed its outlook for the year, with deal expenses putting pressure on results.
The decline is notable—Palo Alto’s been using deals to expand its platform, right when customers want fewer vendors. Now, with profit guidance coming in softer, investors are zeroed in on the trade-off: chase growth and broaden offerings, or take the near-term hit to margins and cash flow.
Palo Alto is guiding for fiscal 2026 adjusted EPS of $3.65 to $3.70, a cut from its previous outlook of $3.80 to $3.90, as integration costs from recent acquisitions—like the $25 billion CyberArk deal—start to bite. Morgan Stanley lowered its price target to $223, though analysts there labeled the stock’s slide after earnings as “overdone.” Wedbush, still bullish, kept an outperform call and described Palo Alto as “one of our favorite cyber names to own in 2026.” Investopedia
The company bumped up its fiscal 2026 revenue outlook, now guiding to $11.28 billion to $11.31 billion, up from its previous range of $10.50 billion to $10.54 billion, as it angles to become a go-to provider for clients dealing with AI-fueled security risks. Profitability took a hit, mostly because of acquisitions, said Morningstar analyst Malik Ahmed Khan.
Palo Alto’s fiscal second quarter, which closed Jan. 31, saw revenue climb 15% to about $2.6 billion, with non-GAAP earnings hitting $1.03 per share. The company pointed to “continued strength in platformizations.” Next-Generation Security ARR—annual recurring revenue that tracks the subscription pace—jumped 33% to $6.3 billion. Remaining performance obligation, which reflects contracted revenue not yet booked, increased 23% to $16.0 billion. Looking ahead to fiscal 2026, Palo Alto is projecting a non-GAAP operating margin in the 28.5% to 29.0% range and expects an adjusted free cash flow margin of 37%. Adjusted metrics leave out stock-based compensation, acquisition-related costs, and similar items. SEC
Palo Alto announced just the day before that it’s buying Koi, describing the move as a way to protect AI agents and tools on endpoints that have wide data access. Chief Product and Technology Officer Lee Klarich referred to these AI tools as “the ultimate insiders.” After the transaction wraps up, the company intends to fold Koi’s capabilities into its Prisma AIRS platform and Cortex XDR. Palo Alto Networks
Cybersecurity names split directions at the bell—Fortinet slipped 1.2%, Check Point eased 0.6%. CrowdStrike and Okta squeezed out modest upticks.
The timeline is front and center for Palo Alto now—how soon can stronger recurring revenue and platform deals offset the costs of integrating products and teams? Traders are also zeroed in on subscription growth numbers, especially as clients consider larger “platform” buys.
Still, integration could drag on, or sales cycles might get even longer. Sharper discounting—especially across network, cloud, and identity security—remains a threat if competition heats up. A fresh reset on earnings would probably weigh on the stock, regardless of whether revenue stays intact.
Thursday, Feb. 19, brings the next hurdle at the U.S. open. Investors will be parsing fresh broker notes and scanning for updates on integration costs and when the deal might actually close.
