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Palo Alto Networks reported its fiscal Q3 2025 earnings this week, delivering results that beat expectations across revenue and earnings per share. Total revenue reached $2.29 billion, up 15% year-over-year, while adjusted EPS came in at $0.80, ahead of the $0.77 consensus. Despite the solid financials, the stock dropped nearly 7% in after-hours trading. The reaction was primarily due to slightly softer-than-expected remaining performance obligations (RPO), combined with a valuation premium that left little room for missteps in forward-looking metrics.

Central to Palo Alto’s performance is the continued expansion of its Next-Generation Security (NGS) offerings. NGS includes its cloud-delivered and AI-enhanced platforms—Prisma Cloud, Prisma Access, Cortex XDR/XSIAM, and autonomous security operations. NGS Annual Recurring Revenue (ARR) grew 34% year-over-year to $5.1 billion, now representing over half of the company’s total billings. This growth reflects enterprise demand for integrated, scalable security solutions as organizations move away from fragmented point products toward cloud-native platforms.

Palo Alto’s platformization strategy is gaining traction, with over 1,250 platform-based deals closed among its top 5,000 customers. More than 60% of deals valued at over $1 million now include multiple platform components—often spanning Strata (network), Prisma (cloud/SASE), and Cortex (operations). This consolidation provides customers with simplified vendor management, operational efficiencies, and lower total cost of ownership. The company’s unified approach positions it well to serve large enterprises prioritizing both breadth and depth in cybersecurity coverage.

While market sentiment was cautious in the short term, long-term prospects remain favorable. Palo Alto continues to invest in automation and AI, particularly through its XSIAM platform, which now serves over 850 customers. The company’s ability to drive multi-product adoption, expand into adjacent markets like browser security, and optimize supply chains through domestic manufacturing initiatives provides a strong foundation for sustainable growth. With revenue guidance reaffirmed and strategic execution on track, Palo Alto remains a leading force in modern enterprise security.