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Palo Alto Networks Raises Sales Outlook After Q2 Beat as EPS Cut and Deal Costs Hit Shares

Investors are focusing on integration costs from recent acquisitions that lowered EPS guidance even as management boosts its full-year revenue view.

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Overview

  • Palo Alto posted fiscal Q2 revenue of $2.59 billion and adjusted EPS of $1.03, topping its guidance range for earnings.
  • The company raised full-year revenue guidance but trimmed EPS due to expenses tied to integrating Chronosphere and CyberArk and its planned purchase of Koi.
  • Next‑generation security ARR grew 33% year over year to $6.33 billion, with SASE ARR up about 40% to more than $1.5 billion.
  • The stock has fallen more than 25% over the past year and slid further after the update, with analysts highlighting high valuation metrics such as a P/E near 90.
  • CEO Nikesh Arora said customers are modernizing for AI and that Palo Alto will accelerate AI integration, while Jim Cramer called the quarter misunderstood and backed the long‑term thesis.