Palo Alto (PANW) Q3 FY26: $177M Loss, Organic Profit +55%
Palo Alto Networks posted its first quarterly net loss since fiscal 2022 — $177 million, against $262 million of net income a year earlier — and the acquisitions explain essentially all of it. The filing quantifies the drag: the Chronosphere and CyberArk deals contributed $388 million of revenue but a $523 million operating loss in the quarter. Excluding them, operating income was about $340 million, up 55.3% from $219 million, on roughly $2,614 million of organic revenue (+14.2%). The real question is not this quarter's headline but the $7.28 billion of acquired intangibles now on the balance sheet, which carry a scheduled $1,078 million amortization charge in fiscal 2027 alone.
1. Consolidated Balance Sheet
1-1. Principal asset items
| Item | Jul 31, 2025 ($M) | Apr 30, 2026 ($M) | Change % |
|---|---|---|---|
| Cash and cash equivalents | 2,269 | 2,364 | +4.2% |
| Short-term investments | 635 | 747 | +17.6% |
| Accounts receivable, net | 2,965 | 2,852 | -3.8% |
| Long-term investments | 5,555 | 3,881 | -30.1% |
| Financing receivables (ST+LT) | 1,717 | 1,370 | -20.2% |
| Property and equipment, net | 387 | 506 | +30.7% |
| Operating lease right-of-use assets | 347 | 678 | +95.4% |
| Goodwill | 4,567 | 21,902 | +379.6% |
| Intangible assets, net | 763 | 7,283 | +854.5% |
| Total assets | 23,576 | 46,266 | +96.2% |
Total assets nearly doubled in nine months. Goodwill rose $17,335 million and net intangibles $6,520 million, from three deals: Chronosphere on January 29 for $2,951 million (closed in the prior quarter), CyberArk on February 11 for $21,061 million, and Koi on April 14 for $231 million.
Goodwill plus intangibles now total $29,185 million — 63.1% of assets, and more than total equity of $27,668 million. The funding shows on the asset side: long-term investments fell 30.1% and financing receivables 20.2%, liquidated toward $4,563 million of net cash paid for acquisitions. Borrowings remain minimal. The only financial debt is CyberArk's assumed 2030 convertible notes at $1,352 million fair value, with a 0.0% coupon. $160 million of the notes was surrendered for conversion and sat in current liabilities at quarter-end, settled in cash on May 7, 2026; the remaining $1.1 billion principal does not mature until June 2030, and cash interest for the nine months was nil.
