Nikesh Arora, CEO of Palo Alto Networks, attends the 9th VivaTech trade show at Exposition Porte de Versailles on June 11, 2025 in Paris.
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palo alto networks announced plans to acquire cloud observability platform Chronosphere for $3.35 billion after the bell on Wednesday, beating Wall Street’s fiscal first-quarter expectations.
The stock price fell about 3%.
Here’s how the company performed against LSEG’s estimates:
Earnings per share: 93 cents adjusted, 89 cents expected; Revenue: $2.47 billion, $2.46 billion expected.
Sales increased 16% from $2.1 billion in the same period last year. Net income decreased to $334 million, or 47 cents per share, from $351 million, or 49 cents per share, in the year-ago period.
The transaction with Palo Alto’s Chronosphere is expected to close in the second half of fiscal 2026. The cybersecurity provider is also in the process of acquiring Israeli identity security company CyberArk for $25 billion in a deal by CEO Nikesh Arora.
He told investors on an earnings call that Palo Alto is making this simultaneous acquisition to address the rapidly moving AI cycle.
“This big wave of building AI computing is causing many AI players to think about new models for their future software and infrastructure stacks,” he said.
Palo Alto expected second-quarter sales of $2.57 billion to $2.59 billion, with the midpoint matching its forecast of $2.58 billion. For the full year, the company expects sales to be between $10.50 billion and $10.54 billion, compared to the previous estimate of $10.51 billion.
Capital expenditures for the period were $84 million, much higher than expected. StreetAccount had expected $58.1 million. Remaining purchase obligations, which track backlog, rose to $15.5 billion, higher than expectations of $15.43 billion.
The rise of artificial intelligence is driving increasingly sophisticated cyberattacks and contributing to customer-facing tools. The Santa Clara, California-based company introduced AI into its tools, launching an automated AI agent to help defend against attacks in October.
