Palo Alto Networks Q3 strong as CEO says Mythos boosted demand

Palo Alto Networks reported strong fiscal third quarter earnings growth and raised its outlook.

The company reported a third quarter net loss of $177 million, or 22 cents a share, on revenue of $3 billion, up 31% from a year ago. The revenue figure included $388 million from the acquisitions of CyberArk and Chronosphere. Non-GAAP earnings for the quarter were 85 cents a share.

Wall Street was expecting third quarter non-GAAP earnings of 80 cents a share on revenue of $2.94 billion.

• Palo Alto Networks acquires Chronosphere for $3.35 billion, reports strong Q1
• Palo Alto Networks buys CyberArk in $25 billion bet on identity
• Palo Alto Networks acquires Koi, adds AI agent endpoint security, reports Q2

CEO Nikesh Arora said the third quarter was "a standout" with "accelerating organic bookings growth" as customers show an " increased the level of urgency around cybersecurity." Arora said Anthropic's Mythos model has juiced demand for cybersecurity.

"Mark my words, Mythos has increased the terminal value of the entire cybersecurity industry," said Arora.

On a conference call, Arora outlined the Mythos impact:

"Over the past quarter, frontier AI development reached a critical inflection point. We have entered the era of truly cyber capable systems where models like Mythos possess the autonomous capability to execute comprehensive attack campaigns from start to finish. This represents a fundamental paradigm shift for the cybersecurity industry.

We believe this is merely the opening act. As frontier AI development continues to accelerate, we anticipate a 3- to 6-month window before these systems evolve into more sophisticated hacking entities globally. Within a few years, we expect agentic AI to reach a level of autonomous execution that is truly unprecedented, scanning environments, generating bespoke exploits, and orchestrating end-to-end campaigns at machine speed without human intervention. That is the trajectory of the modern threat landscape."

Not surprisingly, Arora argued that platformization is the answer to keep up with machine speed threats. "We're transforming the industry by consolidating data onto a single platform, reducing breach response times from days to minutes through AI-driven preanalysis," he said.

Anthropic said it expanded its Mythos Preview-powered Project Glasswing.

• Claude Mythos and the New Cybersecurity Operating Model
• Anthropic launches Project Glasswing, Claude Mythos Preview in AI cybersecurity push
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Dipak Golechha, CFO of the company, said the company is ahead with its merger integration plans and on track for 40% adjusted free cash flow margin in fiscal 2028.

As for the outlook, Palo Alto Networks projected fourth quarter revenue of $3.345 billion to $3.355 billion, up 32% from a year ago. Non-GAAP earnings for the fourth quarter will be 96 cents a share to 98 cents a share.

Palo Alto Networks projected next-generation security annual recurring revenue growth of 59% to 60%.

For fiscal 2026, Palo Alto Networks said revenue will be $11.415 billion to $11.425 billion, up 24% from the previous year. Non-GAAP earnings will be between $3.77 a share to $3.79 a share.

Those projections were ahead of expectations.