Palo Alto Networks reported fourth-quarter revenue of $3.41 billion, beating analyst estimates of $3.35 billion, and raised full-year fiscal 2027 guidance across revenue, earnings and subscription ARR, according to the company's announcement. Net New Generation Security ARR grew 63% year-over-year to $9.1 billion in the quarter.
The company's next-generation security business is now the highest-margin segment and the engine of growth at Palo Alto. NGS ARR added roughly $1 billion in new annualized revenue in a single quarter, a pace that forced management to lift full-year targets. FY27 NGS ARR guidance now sits at $11.08 billion to $11.18 billion, versus prior Street consensus of $10.9 billion.
Adjusted earnings per share came in at $1.02 for Q4, beating the $0.98 estimate and climbing 7% year-over-year. The company guided FY27 adjusted EPS to $4.16 to $4.19, above the $4.11 consensus. Revenue guidance for the full fiscal year now spans $14.10 billion to $14.20 billion, up from consensus expectations of $13.79 billion. Q1 FY27 revenue is expected to land between $3.30 billion and $3.31 billion, also ahead of the $3.22 billion Street view.
Cash generation accelerated. Adjusted free cash flow hit $1.3 billion in Q4, yielding a 37.8% FCF margin for the quarter. Management said it is confident in achieving a 40% adjusted FCF margin target in fiscal 2028. Non-GAAP operating margin landed at 29.5% in Q4.
Palo Alto also acquired Console, an AI-native platform for agentic workflows in enterprise operations. The deal adds autonomous security capabilities to Palo Alto's suite.
The beat and raise reset market expectations for the fiscal year. Palo Alto's Q4 revenue beat the estimate by $60 million, or 1.8%, while NGS ARR growth of 63% year-over-year outpaced the prior three-quarter median of 52%. The company is transitioning from point products to platform bundling, where customers pay recurring fees for unified security stacks rather than switching between vendors.
Palo Alto now projects FY27 revenue of $14.10 billion to $14.20 billion, a midpoint of $14.15 billion; the prior consensus was $13.79 billion, a gap of $360 million or 2.6%. If the company hits the midpoint and sustains NGS ARR at $11.13 billion, the subscription segment will represent roughly 78.5% of total revenue, with subscriptions accounting for most revenue instead of perpetual licensing.
The watch is whether NGS ARR growth sustains above 60% in FY27. Console's agentic capabilities must deliver meaningful upsell velocity in the installed base, or the $1 billion quarterly pace of new NGS ARR will slow.
