Palo Alto Networks, Inc. PANW, a cybersecurity powerhouse, delivered stellar results for its first quarter of fiscal 2025, surpassing market expectations and solidifying its position as a leader in the evolving cybersecurity landscape. With robust financial performance, strategic advancements and an optimistic outlook, PANW presents a compelling investment opportunity. Here’s why you should consider buying Palo Alto Networks stock now.

PANW’s Impressive Q1 Earnings Beat Expectations

Palo Alto Networks reported non-GAAP earnings of $1.56 per share, exceeding the Zacks Consensus Estimate by 5.4% and improving 13% year over year. Revenues climbed to $2.14 billion, up 14% year over year, driven by strong growth in subscription and support revenues.

Palo Alto Networks’ Subscription and Support revenues, accounting for 83.5% of total revenues, surged 16% to $1.79 billion, reflecting growing demand for its Next-Generation Security (“NGS”) solutions. Product revenues rose 3.7% year over year to $353.8 million, supported by the increased adoption of its firewall appliances.

Palo Alto Networks reported better-than-expected results in all the trailing four quarters, the average surprise being 7.6%. Investors have already responded positively, with PANW's stock climbing nearly 35% in 2024 so far, outperforming broader indices such as the S&P 500’s 24.4% and the Zacks Computer & Technology sector’s 27.5%.

Shares of Palo Alto Networks have also outperformed its peers in the cybersecurity space, including Juniper Networks, Inc. JNPR and Check Point Software Technologies Ltd. CHKP. Year to date, Juniper Networks and Check Point Software Technologies have rallied 20.1% and 19%, respectively.

YTD Price Return Performance

Image Source: Zacks Investment Research

Strong NGS Performance Solidifies Growth Prospects

Palo Alto Networks Next-Generation Security Annualized Recurring Revenue (NGS ARR) reached $4.52 billion in the first quarter, reflecting 40% year-over-year growth. This robust performance underscores the company’s success in platformization and ability to meet customers' diverse cybersecurity needs through comprehensive offerings like Cortex, Prisma Cloud and XSIAM.

Image Source: Palo Alto Networks, Inc.

The hybrid cloud pipeline, now exceeding $1 billion, highlights Palo Alto’s increasing relevance in cloud-native security. With 6.6% sequential growth in NGS ARR, the company demonstrates resilience in an evolving cybersecurity landscape.

Long-Term Growth Catalysts for Palo Alto Networks

Palo Alto Networks is ideally positioned to benefit from the growing demand for cybersecurity solutions. As the digital landscape continues to evolve, cyber threats have become more frequent and sophisticated. In response, businesses are increasingly turning to advanced security solutions, and Palo Alto Networks is at the forefront of this trend.