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Palo Alto Networks Expands Cybersecurity Platform With Acquisitions
The company's recent deals strengthen its positioning but weigh on near-term earnings.
Published on Feb. 22, 2026
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Palo Alto Networks, the cybersecurity company, has been on an acquisition spree as it looks to expand its platformization strategy. The company recently closed deals to acquire Chronosphere, CyberArk, and Koi, which will add new cybersecurity solutions to its offerings. While these acquisitions strengthen Palo Alto's positioning in the cybersecurity space, they will also weigh on its earnings per share in the near term, primarily due to the stock component of the CyberArk deal.
Why it matters
Palo Alto's aggressive acquisition strategy is part of its effort to sell its solutions as one of three cybersecurity platforms instead of as point solutions. This platformization approach is intended to better position the company in the competitive cybersecurity market, but the near-term financial impact of the deals is a concern for investors.
The details
In its fiscal 2026 second-quarter, Palo Alto reported a 15% year-over-year increase in revenue to $2.59 billion, which was at the high end of its previous forecast. Service revenue grew 13%, with subscription revenue climbing 14% and support revenue up 12%. Product revenue climbed 22%, led by growth in software firewalls. The company's next-generation security annual recurring revenue (ARR) surged 33%, or 28% excluding acquisitions, to $6.33 billion. Its largest next-generation security solution, SASE, saw its ARR soar about 40% to more than $1.5 billion. Adjusted earnings per share jumped 27% year over year to $1.03, ahead of the company's guidance.
- Palo Alto closed its acquisition of Chronosphere in January 2026.
- Palo Alto completed its acquisition of CyberArk in early February 2026.
- Palo Alto announced it will acquire Koi, which provides agentic artificial intelligence (AI) enterprise endpoint security solutions, along with its Q2 earnings report.
The players
Palo Alto Networks
An American cybersecurity company that provides firewall and other cybersecurity solutions to enterprises.
What’s next
Palo Alto's recent acquisitions are expected to weigh on its earnings per share in the near term, but the company believes the deals will strengthen its cybersecurity platform and positioning in the long run.
The takeaway
Palo Alto Networks' aggressive acquisition strategy is aimed at expanding its cybersecurity platform and solutions, but the near-term financial impact of these deals is a concern for investors. The company's strong revenue and next-generation security growth suggest the long-term benefits of its platformization approach, though the stock's valuation may need to come down further to be an attractive buying opportunity.
