Palo Alto Networks Shares Slide After Weak Guidance

Cybersecurity firm's stock drops despite solid Q2 results as outlook disappoints Wall Street

Published on Feb. 21, 2026

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Palo Alto Networks, a leading cybersecurity software provider, reported better-than-expected fiscal second-quarter financial results, but its stock is selling off sharply due to weaker-than-anticipated guidance for the current quarter and full fiscal year. The company posted adjusted earnings of $1.03 per share on revenue of $2.594 billion, beating analyst estimates, but projected adjusted EPS of $0.78 to $0.80 for the current quarter, well below the $0.92 consensus.

Why it matters

Palo Alto Networks is a bellwether in the cybersecurity industry, and its performance and outlook are closely watched by investors. The company's weaker guidance, despite solid quarterly results, suggests potential challenges in the broader cybersecurity market, which could have implications for other industry players like CrowdStrike.

The details

Palo Alto's next-generation security annual recurring revenue (ARR) grew 33% to $6.3 billion, and remaining performance obligation (RPO) increased 23% to $16 billion. However, the company's revenue guidance for the current quarter of $2.941 billion to $2.945 billion and adjusted EPS guidance of $0.78 to $0.80 fell short of Wall Street's expectations. For the full fiscal year, Palo Alto expects revenue of $11.28 billion to $11.31 billion and adjusted EPS of $3.65 to $3.70, also below analyst estimates.

  • Palo Alto Networks reported its fiscal Q2 results on Tuesday, February 18, 2026.
  • The company provided guidance for the current quarter and full fiscal year on the same day.

The players

Palo Alto Networks

A leading cybersecurity software provider that offers a range of security solutions to protect organizations from cyber threats.

Nikesh Arora

Chairman and CEO of Palo Alto Networks.

CrowdStrike

A major competitor in the cybersecurity industry that is also closely watched by investors.

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What they’re saying

“We saw continued strength in platformizations, a trend that is accelerating due to AI - customers are keen to both modernize and normalize their cybersecurity stack, aligning them to our approach. We also saw steady and strong adoption of AI security, which we expect will be a long-term trend.”

— Nikesh Arora, Chairman and CEO, Palo Alto Networks (Palo Alto Networks press release)

What’s next

Palo Alto Networks' stock performance and guidance will continue to be closely monitored by investors, especially as the company integrates its recent acquisitions of Chronosphere and CyberArk. CrowdStrike, a key competitor, is also set to report earnings in the coming weeks, which could provide further insights into the state of the cybersecurity market.

The takeaway

Palo Alto Networks' weaker-than-expected guidance, despite solid quarterly results, highlights the potential challenges facing the cybersecurity industry. While the company remains a leader in the space, the market's reaction suggests investors are concerned about the broader industry outlook, which could have implications for other players like CrowdStrike.