Analyst(s): Krista Case
Publication Date: August 20, 2025
Palo Alto Networks’ Q4 FY 2025 earnings highlight strong demand for integrated cybersecurity platforms and broad adoption across next-generation offerings. The company’s platformization strategy and its focus on AI-driven security continue to attract larger, more strategic deals.
What is Covered in this Article:
- Palo Alto’s Q4 FY 2025 financial results
- Platform momentum: large multi-platform deals, accelerating RPO, and rising NGS ARR.
- Network Security mix shift: stronger software and SASE traction, larger deal sizes, and margin tailwinds.
- SecOps and AI growth: XSIAM scale, faster MTTR, and expanding Cortex/Cloud ARR.
- Forward-looking guidance and management’s FY 2026 outlook for revenue and margins.
The News: Palo Alto Networks (NASDAQ: PANW) reported its Q4 FY 2025 financial results with revenue of $2.5 billion, up 16% year-on-year (YoY) and above the consensus estimate of $2.50 billion. Product revenue grew 19% YoY to $573.9 million, while subscription and support revenue rose 15% YoY to $2.0 billion. Non-GAAP net income stood at $673.0 million, or $0.95 per diluted share, above the consensus estimate of $0.95, up 16% YoY, and above street estimates by 7.4%.
“Demand for cybersecurity remains strong. Our customers are looking to us to help them secure their cloud and AI transformation journeys,” said Nikesh Arora, Chairman and CEO of Palo Alto Networks. “We continue to see GenAI conversations as it becomes imperative for our customers to deploy productivity tools, coding tools, or revamp their customer systems to enable natural language conversations.
Palo Alto Networks Q4 FY 2025 Earnings Show 16% Growth, Strong ARR Momentum
Analyst Take: Palo Alto Networks’ Q4 FY 2025 financials underscore a durable flywheel: customers are consolidating onto platforms, the mix is shifting toward software and SASE in Network Security, and SecOps growth is compounding with XSIAM – all while margins and free cash flow expand. The FY 2026 guide points to sustained double-digit top-line growth with continued operating leverage, supported by visibility in RPO and disciplined execution.
Platformization And RPO Acceleration Signal Durable Demand
Platformization is translating into larger, multi-tower wins and improved visibility. Q4 FY 2025 RPO rose 24% YoY to $15.8 billion, with Next-Generation Security (NGS) ARR up 32% to $5.6 billion. Management cited record net new platform-based deals in Q4 FY 2025 and a 120% net retention rate (NRR) with low single-digit churn among platform-based customers. Notable transactions included an over $100 million deal with a global consulting firm, a $60+ million deal with a leading European bank, and a $33 million deal with a U.S. insurer. The company also surpassed a $10 billion annualized revenue run-rate exiting FY 2025, underpinned by approximately $490 million net new NGS ARR in Q4 FY 2025 (up 12% YoY). These metrics highlight Palo Alto Networks’ platform-based approach as a durable growth driver, strengthening visibility and reinforcing the company’s role as a strategic security partner.
Software-Led Network Security And SASE Momentum
A higher software mix is driving differentiated growth in Network Security. Product revenue growth of 19% YoY in Q4 FY 2025 was supported by software form factors, with 56% of product revenue from software and Network Security NGS ARR of ~$3.9 billion (up ~35% YoY). More than 60% of Q4 FY 2025 Network Security bookings came from SASE and software, including the company’s largest-ever SASE deal ($60 million, ~200k seats). SASE ARR grew 35% YoY, SASE customers rose to ~6,300, and Prisma Access Browser passed 6 million seats (up more than 2x sequentially). This mix shift supports scale, speed of deployment, and margin performance into FY 2026. The accelerating shift toward software and SASE underscores Palo Alto Networks’ ability to capture scale while enhancing profitability and competitive differentiation.
SecOps And AI Scale With XSIAM And Cortex
Security Operations momentum continued, led by XSIAM. The company now counts ~400 XSIAM customers, an average ARR per customer >$1 million, and >60% of XSIAM customers achieving MTTR under 10 minutes – key proof points for AI-driven SOC outcomes. Management also highlighted AI ARR of approximately $545 million in Q4 FY 2025, up more than 2.5x YoY, and 30% growth in Cortex XDR deals >$1 million. New capabilities like Application Security Posture Management (ASPM) extend coverage into the full AI development life cycle, while XSIAM is broadening with modules like Exposure Management. These points reinforce Palo Alto’s expanding leadership in AI-driven security operations, with XSIAM and Cortex scaling as key growth engines.
Guidance And Final Thoughts
The FY 2026 outlook – revenue of $10.475 billion to $10.525 billion (up 14% YoY), non-GAAP operating margin of 29.2%–29.7%, non-GAAP EPS of $3.75–$3.85, and adjusted FCF margin of 38%–39% – assumes continued platformization, a higher software mix in Network Security, and scaling SecOps/AI adoption. Management also modeled Q1 FY 2026 revenue growth of 15% YoY, with product revenue growth expected at ~20% in Q1 FY 2025 and low-teens for FY 2026, consistent with software-led momentum. We view Palo Alto Networks’ Q4 FY 2025 results and guide as evidence of durable demand, pricing power in platform outcomes, and disciplined execution that should support above-peer growth and robust cash generation.
See the complete press release on Palo Alto Networks’ Q4 FY 2025 financial results on the company’s investor website.
Disclosure: Futurum is a research and advisory firm that engages or has engaged in research, analysis, and advisory services with many technology companies, including those mentioned in this article. The author does not hold any equity positions with any company mentioned in this article.
Analysis and opinions expressed herein are specific to the analyst individually and data and other information that might have been provided for validation, not those of Futurum as a whole.
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Author Information
Krista Case brings over 15 years of experience providing research and advisory services and creating thought leadership content. Her vantage point spans technology and vendor portfolio developments; customer buying behavior trends; and vendor ecosystems, go-to-market positioning, and business models. Her work has appeared in major publications including eWeek, TechTarget and The Register.
