Palo Alto Networks Profit Guidance Falls Short, Shares Slip

The cybersecurity firm also announced the acquisition of Israeli startup Koi.

Published on Feb. 19, 2026

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Palo Alto Networks reported better-than-expected fiscal second-quarter results, but its profit guidance for the third quarter fell short of Wall Street estimates, causing the stock to fall 6%. The company also announced it is acquiring Israeli cybersecurity startup Koi to bolster its AI security offerings.

Why it matters

Palo Alto Networks is a major player in the cybersecurity industry, and its financial performance and strategic moves are closely watched by investors. The company's disappointing profit guidance and acquisition activity highlight the competitive and rapidly evolving nature of the cybersecurity market.

The details

Palo Alto Networks reported revenue of $2.94 billion to $2.95 billion for the fiscal third quarter, topping analyst estimates. However, its earnings guidance of 78 cents to 80 cents per share fell short of the 92 cents per share expected. The company also announced it is acquiring Israeli startup Koi to strengthen its AI-powered security offerings as cyberattacks become more sophisticated. Palo Alto has been on an acquisition spree under CEO Nikesh Arora, having completed over 20 deals since he joined in 2018, including a $25 billion purchase of CyberArk earlier this month.

  • Palo Alto Networks reported its fiscal second-quarter results after the market close on Tuesday, February 17, 2026.
  • The company provided its fiscal third-quarter profit guidance on the same day, February 17, 2026.

The players

Palo Alto Networks

A major cybersecurity company that provides firewall, cloud security, and other security solutions to enterprises.

Nikesh Arora

The CEO of Palo Alto Networks since 2018, who has overseen the company's aggressive acquisition strategy.

Koi

An Israeli cybersecurity startup that Palo Alto Networks is acquiring to bolster its AI-powered security offerings.

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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.”

— Nikesh Arora, CEO, Palo Alto Networks (CNBC)

What’s next

Palo Alto Networks' acquisition of Koi is expected to close in the coming months, pending regulatory approval. The company's financial performance and strategic moves will continue to be closely watched by investors as it navigates the evolving cybersecurity landscape.

The takeaway

Palo Alto Networks' mixed quarterly results and acquisition activity highlight the competitive pressures and rapid technological changes in the cybersecurity industry. The company's ability to adapt its offerings and execute on its acquisition strategy will be crucial in maintaining its position as a leading player in the market.