Palo Alto Networks Inc. reported its fiscal third-quarter earnings, surpassing Wall Street's expectations with adjusted earnings per share of $0.80, compared to the consensus estimate of $0.77. Revenue for the quarter reached $2.29 billion, slightly above the anticipated $2.28 billion, marking a 15% increase year-over-year. The company's operating income also saw a 23% rise on a non-GAAP basis. Despite the positive earnings and revenue figures, the company's stock experienced a decline of over 4% in after-hours trading. This drop was attributed to a non-GAAP gross margin of 76%, which fell short of the expected 77.2%. Net income for the quarter decreased by 6% to $262.1 million, or $0.37 per share, from the previous year's $278.8 million, or $0.39 per share. Palo Alto Networks provided guidance for the fourth quarter, forecasting adjusted earnings per share to be between $0.87 and $0.89, with revenue expected to range from $2.49 billion to $2.51 billion. For the full fiscal year 2025, the company anticipates adjusted earnings per share of $3.26 to $3.28 on revenue of $9.17 billion to $9.19 billion. The company highlighted significant growth in its Next-Generation Security offering, with annual recurring revenue increasing by 34% year-over-year to $5.09 billion. Additionally, Palo Alto Networks reported a 19% rise in remaining performance obligations, reaching $13.5 billion. The company's AI business grew by more than 2.5 times year-over-year, reaching $400 million in annual recurring revenue. Palo Alto Networks also announced the acquisition of Protect AI for over $500 million, the launch of Cortex Cloud, enhancements to Cortex XSIAM, the introduction of Prisma Access Browser 2.0, and the Prisma AIRS platform. During the quarter, 90 customers standardized on Palo Alto Networks' solutions, and 44 customers had more than $10 million in annual recurring revenue on next-gen security.