Palo Alto Networks Inc (PANW) reported fiscal third-quarter results after Tuesday's closing bell, and the numbers were strong enough to send shares up more than 11% in after-hours trading. Here's what you need to know.

Q3 by the Numbers

Revenue came in at roughly $3 billion, topping the $2.94 billion analysts were expecting. Adjusted earnings hit $0.85 per share, beating the $0.80 consensus estimate. Total revenue grew 31% year-over-year, while remaining performance obligations — a key metric for future revenue — rose 36% to $18.4 billion.

The company's next-generation security annual recurring revenue (ARR) jumped 60% year-over-year to $8.1 billion, underscoring the shift toward its newer, AI-powered products. Palo Alto also generated $910 million in adjusted free cash flow and ended the quarter with about $2.36 billion in cash.

“Q3 was a standout quarter for Palo Alto Networks, with accelerating organic bookings growth as customers turn to us to secure their AI deployments at scale,” said CEO Nikesh Arora. “The latest advancements at the AI frontier have increased the level of urgency around cybersecurity and redefined the shape of the industry for the coming years.”

Guidance Gets a Boost

For the fourth quarter, Palo Alto expects revenue between $3.35 billion and $3.36 billion, above the $3.28 billion consensus. Adjusted earnings are seen at $0.96 to $0.98 per share, versus estimates of $0.94.

The company also raised its full-year fiscal 2026 outlook. Revenue is now expected to be $11.42 billion to $11.43 billion, up from a prior range of $11.28 billion to $11.31 billion and above the $11.30 billion consensus. Adjusted earnings guidance was lifted to $3.77–$3.79 per share, from $3.65–$3.70, versus estimates of $3.69.

Executives will discuss the quarter in more detail on an earnings call at 4:30 p.m. ET.

Market Reaction

Palo Alto shares were up 11.03% in after-hours trading at $329.94 as of Tuesday evening, according to market data. The move suggests investors are betting that the AI-driven cybersecurity boom is just getting started.