Palo Alto Networks lowered its annual profit forecast after rising costs tied to recent acquisitions aimed at strengthening its artificial intelligence-driven cybersecurity capabilities.
The company recently acquired Israeli startup Koi, following last year’s major purchases of CyberArk Software and Chronosphere. These deals are part of its strategy to combat increasingly sophisticated AI-powered cyber threats.
Acquisition-related expenses rose significantly, reaching $24 million in the second quarter compared to $10 million a year earlier. The company also expects to spend $2.3 billion in cash during the third fiscal quarter related to the CyberArk deal.
As a result, Palo Alto now projects adjusted earnings per share for fiscal 2026 between $3.65 and $3.70, below its earlier forecast.
Despite the profit downgrade, the company raised its revenue outlook, expecting annual sales between $11.28 billion and $11.31 billion. Demand for advanced security solutions continues to grow as global firms increase investments in modernizing cyber defenses amid a rise in major cyber incidents.
