New York, Feb 18, 2026, 10:28 (EST) — Regular session in progress
- Palo Alto Networks slid roughly 8% after the company trimmed its full-year profit forecast, pointing to integration costs from recent acquisitions. (Reuters)
- The cybersecurity company bumped up its revenue outlook for fiscal 2026, though it narrowed its adjusted (non-GAAP) earnings forecast. (Reuters)
- Investors are eyeing whether the company can stabilize its margins while digesting major acquisitions, ahead of Fed minutes expected later Wednesday. (Reuters)
Palo Alto Networks stock dropped Wednesday as the company trimmed its full-year profit outlook, blaming increased integration expenses tied to recent acquisitions. (Reuters)
This decline hits as the company pushes a “platform” strategy to Wall Street—essentially, trying to package more products together—right when customers are ramping up security budgets to fend off AI-related threats. Larger contracts have the potential to boost growth down the line, but they’re also notorious for squeezing margins at the outset. (Reuters)
Palo Alto shares slid 7.7% to $150.95 in early trading, erasing nearly all of the gains seen after Tuesday’s post-earnings swing. (Reuters)
Palo Alto trimmed its fiscal 2026 adjusted EPS guidance late Tuesday, now seeing $3.65 to $3.70, down from the prior $3.80 to $3.90 range. On the other hand, revenue expectations got a bump—to $11.28 billion to $11.31 billion. “Adjusted” here means numbers leave out things like acquisition costs and stock-based comp. (Reuters)
The company is projecting fiscal third-quarter revenue between $2.941 billion and $2.945 billion. Still, its outlook for adjusted earnings—78 to 80 cents per share—missed the mark set by analysts polled by LSEG. (Reuters)
Palo Alto reported second-quarter revenue up 15% at $2.6 billion, pointing to a boost in annual recurring revenue, or ARR—its metric for yearly contracted subscription sales. The company also flagged an increase in remaining performance obligations, which tracks booked deals still pending recognition as revenue. (SEC)
CEO Nikesh Arora pointed to a pickup in “platformizations,” with customers moving to modernize and standardize their cybersecurity tools—and flagged growing interest in AI security. Over on the financial side, CFO Dipak Golechha said Palo Alto intends to roll out its “operational excellence” strategy to CyberArk and Chronosphere once those deals wrap up. (SEC)
Palo Alto reported acquisition-related costs jumping to $24 million for the quarter, up from $10 million last year. The company also flagged a planned $2.3 billion cash spend in its fiscal third quarter tied to the CyberArk deal. (Reuters)
Views diverged on how much pain was coming in the short run. Malik Ahmed Khan at Morningstar chalked up the margin squeeze to Palo Alto’s recent string of deals, saying the company might still turn those buys to its advantage by pitching new services to its current client base. (Reuters)
Some observers highlighted the rationale, with TD Cowen analysts noting that the CyberArk and Chronosphere acquisitions underscore Palo Alto’s push to turn identity security into a “central pillar” of its platform. The moves, they said, also boost visibility spanning applications and infrastructure. (Reuters)
The risk here is clear: integration drags on, expenses don’t budge, and the cross-sell payoff stalls—leaving margins exposed. All this gets tougher if companies ease up on security spending once the spate of headline cyberattacks fades. (Reuters)
Investors are waiting to see whether management offers any convincing updates on integration and if there’s the slightest hint of margin stabilization. Broader risk sentiment could swing when the Federal Reserve’s meeting minutes land at 2 p.m. ET Wednesday. (Reuters)
