Palo Alto Networks’ Earnings Beat Overshadowed by $3.35B Chronosphere Acquisition

Palo Alto Networks delivered a solid fiscal first-quarter performance, with adjusted earnings of 93 cents per share surpassing Wall Street's 89-cent estimate. Revenue climbed 16% year-over-year to $2.47 billion, narrowly exceeding the $2.46 billion consensus.

The cybersecurity firm's results were eclipsed by its $3.35 billion acquisition of cloud observability platform Chronosphere, priced at approximately 21 times annual recurring revenue. Shares dipped 3% in after-hours trading as investors weighed the deal's premium against Palo Alto's raised full-year guidance of $10.50-$10.54 billion in revenue and $3.80-$3.90 adjusted EPS.

Market reaction reflects concerns about acquisition timing, coming just before the anticipated close of Palo Alto's $25 billion CyberArk deal in fiscal 2026's second half. The dual transactions position the company for broader security platform dominance but introduce execution risk during integration.