Cybersecurity platform provider Palo Alto Networks (NASDAQ: PANW) met Wall Street’s revenue expectations in Q4 CY2025, with sales up 14.9% year on year to $2.59 billion. The company expects next quarter’s revenue to be around $2.94 billion, coming in 13.1% above analysts’ estimates. Its GAAP profit of $0.61 per share was 32.2% above analysts’ consensus estimates.
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Palo Alto Networks (PANW) Q4 CY2025 Highlights:
- Revenue: $2.59 billion vs analyst estimates of $2.58 billion (14.9% year-on-year growth, in line)
- EPS (GAAP): $0.61 vs analyst estimates of $0.46 (32.2% beat)
- The company lifted its revenue guidance for the full year to $11.3 billion at the midpoint from $10.52 billion, a 7.4% increase
- Full year guidance for Next-Generation Security ARR and Remaining performance obligations beat
- Operating Margin: 15.3%, up from 10.6% in the same quarter last year
- Market Capitalization: $116.4 billion
Company Overview
Founded in 2005 by security visionary Nir Zuk who sought to reimagine firewall technology, Palo Alto Networks (NASDAQ: PANW) provides AI-powered cybersecurity platforms that protect organizations' networks, clouds, and endpoints from sophisticated threats.
Revenue Growth
A company’s long-term sales performance is one signal of its overall quality. Any business can have short-term success, but a top-tier one grows for years. Luckily, Palo Alto Networks’s sales grew at a decent 21.2% compounded annual growth rate over the last five years. Its growth was slightly above the average software company and shows its offerings resonate with customers.
We at StockStory place the most emphasis on long-term growth, but within software, a half-decade historical view may miss recent innovations or disruptive industry trends. Palo Alto Networks’s recent performance shows its demand has slowed as its annualized revenue growth of 14.6% over the last two years was below its five-year trend. We’re wary when companies in the sector see decelerations in revenue growth, as it could signal changing consumer tastes aided by low switching costs. 
This quarter, Palo Alto Networks’s year-on-year revenue growth was 14.9%, and its $2.59 billion of revenue was in line with Wall Street’s estimates. Company management is currently guiding for a 28.6% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 13.1% over the next 12 months, a slight deceleration versus the last two years. This projection doesn't excite us and indicates its products and services will face some demand challenges. At least the company is tracking well in other measures of financial health.
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Customer Acquisition Efficiency
The customer acquisition cost (CAC) payback period measures the months a company needs to recoup the money spent on acquiring a new customer. This metric helps assess how quickly a business can break even on its sales and marketing investments.
Palo Alto Networks is extremely efficient at acquiring new customers, and its CAC payback period checked in at 21.5 months this quarter. The company’s rapid recovery of its customer acquisition costs means it can attempt to spur growth by increasing its sales and marketing investments.
Key Takeaways from Palo Alto Networks’s Q4 Results
We were impressed by Palo Alto Networks’s optimistic revenue guidance for next quarter, which blew past analysts’ expectations. We were also glad its full-year revenue guidance trumped Wall Street’s estimates. Zooming out, we think this was a good print with some key areas of upside. The market seemed to be hoping for more, and the stock traded down 5.2% to $155.08 immediately after reporting.
So do we think Palo Alto Networks is an attractive buy at the current price? What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here (it’s free).
