v3.26.1
Acquisition
 9 Months Ended
Apr. 30, 2026
Business Combination [Abstract]  
Acquisition Acquisitions
Chronosphere, Inc.
On January 29, 2026, we completed our acquisition of Chronosphere, Inc. (“Chronosphere”), a privately-held observability technology company. The acquisition resulted in forming our observability platform. The total purchase consideration for the acquisition of Chronosphere was $3.0 billion, which consisted of the following (in millions):
Amount
Cash$2,842 
Fair value of replacement awards109 
Total$2,951 
As part of the acquisition, we issued $525 million of replacement equity awards, of which the portion attributable to services performed prior to the acquisition date was allocated to purchase consideration. The remaining fair value was allocated to future services and will be expensed over the remaining service periods as share-based compensation. The replacement equity awards included 2 million shares of our restricted common stock. These restricted common stock vest over a period of two to three years from the date of issuance.
We have accounted for this transaction as a business combination and allocated the purchase consideration to assets acquired and liabilities assumed based on preliminary estimated fair values, as presented in the following table (in millions):
Amount
Goodwill
$2,364 
Identified intangible assets
565 
Cash
57 
Net liabilities assumed
(35)
Total$2,951 
Goodwill generated from this business combination is primarily attributable to the assembled workforce and expected post-acquisition synergies from integrating the Chronosphere observability platform into our business. The goodwill is not deductible for U.S. income tax purposes.
The following table presents details of the identified intangible asset acquired (in millions, except years):
Fair ValueEstimated Useful Life
Developed technology$300 5 years
Customer relationships255 
6 years - 10 years
Trade name and trademarks10 1 year
Total$565 
CyberArk Software Ltd.
On February 11, 2026, we completed our acquisition of CyberArk, an identity security company, forming our next-generation identity security platform. CyberArk shareholders received $45.00 in cash and 2.2005 shares of our common stock for each CyberArk share. The total purchase consideration for the acquisition of CyberArk was $21.1 billion, which consisted of the following (in millions):
Amount
Cash$2,308 
Common stock (112 million shares)
18,488 
Fair value of replacement awards265 
Total$21,061 
As part of the acquisition, we issued $945 million of replacement equity awards, of which the portion attributable to services performed prior to the acquisition date was allocated to purchase consideration. The remaining fair value was allocated to future services and will be expensed over the remaining service periods as share-based compensation.
We have accounted for this transaction as a business combination and allocated the purchase consideration to assets acquired and liabilities assumed based on preliminary estimated fair values, as presented in the following table (in millions):
Amount
Goodwill
$14,802 
Identified intangible assets
6,279 
Cash and cash equivalents743 
Accounts receivable, net of allowance for credit losses312 
Short-term and long-term investments1,217 
Net assets acquired
61 
Convertible senior notes
(1,303)
Deferred revenue(776)
Deferred tax liabilities
(274)
Total$21,061 
Goodwill generated from this business combination is primarily attributable to the assembled workforce and expected post-acquisition synergies from incorporating the CyberArk next-generation identity security platform into our business. Substantially all of goodwill is deductible for U.S. income tax purposes.
The following table presents details of the identified intangible asset acquired (in millions, except years):
Fair ValueEstimated Useful Life
Developed technology$2,537 
5 years - 7 years
Platform renewals
3,500 
12 years - 14 years
Customer contracts
219 2 years
Trade name23 1 year
Total$6,279 
For the three and nine months ended April 30, 2026, transaction costs related to CyberArk acquisition were $41 million and $56 million, respectively, which were primarily included in general and administrative expense on our condensed consolidated statements of operations.
In connection with our acquisition integration strategy, we initiated a plan to optimize the combined entity’s workforce for a total estimated cost of $59 million. The activities associated with this plan are expected to be substantially completed by the end of fiscal 2027. Employee severance costs are recognized upon notification. If service beyond the minimum retention period is required, expense is recognized ratably over the future service period. During the three and nine months ended April 30, 2026, we made cash payments of $12 million under the plan. As of April 30, 2026, a liability of $12 million related to the employee severance was included in accrued compensation on our condensed consolidated balance sheets.
The following table summarizes employee severance charges related to the CyberArk acquisition (in millions):
Three and Nine Months Ended April 30, 2026
Cash Compensation
Share-based Compensation
Total
Cost of subscription and support revenue $2 $— $2 
Research and development1 — 1 
Sales and marketing13 16 29 
General and administrative8 1 9 
Total$24 $17 $41 
Koi Security Ltd.
On April 14, 2026, we completed our acquisition of Koi Security Ltd. (“Koi”), a privately-held endpoint posture management company. We expect the acquisition to add agentic endpoint security capabilities to our security operations platform and enhance Prisma® AIRS™. The total purchase consideration for the acquisition of Koi was $231 million, substantially all of which is comprised of cash.
As part of the acquisition, we issued $61 million of replacement equity awards, which was allocated to future services and will be expensed over the remaining service periods as share-based compensation. The replacement equity awards included 0.3 million shares of our restricted common stock. These restricted common stock vest over a period of three years from the date of issuance.
We have accounted for this transaction as a business combination and allocated the purchase consideration to assets acquired and liabilities assumed based on preliminary estimated fair values, as presented in the following table (in millions):
Amount
Goodwill
$169 
Identified intangible assets
35 
Cash and restricted cash
20 
Net assets acquired
7 
Total$231 
Goodwill generated from this business combination is primarily attributable to the assembled workforce and expected post-acquisition synergies from integrating Koi’s technology into our platforms. The goodwill is deductible for U.S. income tax purposes.
The following table presents details of the identified intangible asset acquired (in millions, except years):
Fair ValueEstimated Useful Life
Developed technology$35 5 years
Portkey, Inc.
On April 30, 2026, we entered into a definitive agreement to acquire Portkey, Inc., a privately-held AI Gateway company (“Portkey”), in exchange for total consideration of $140 million in cash and replacement awards, subject to adjustments. We expect the acquisition will enhance the capabilities of Prisma AIRS. Refer to Note 17. Subsequent Events for additional information.
Additional Acquisition-Related Information
Since the date of acquisitions, the combined net impact of the Chronosphere and CyberArk acquisitions on our condensed consolidated statements of operations was revenue of $388 million and $391 million and operating loss of $523 million and $524 million for the three and nine months ended April 30, 2026, respectively.
The following unaudited pro forma financial information summarizes the combined results of operations for Palo Alto Networks, Chronosphere, and CyberArk, as though the companies were combined as of the beginning of our fiscal 2025 (in millions):
Three Months Ended April 30,Nine Months Ended April 30,
2026202520262025
Total revenue
$3,043 $2,621 $8,917 $7,598 
Net income (loss)$8 $(2)$134 $(178)
The unaudited pro forma financial information for the three and nine months ended April 30, 2026 and 2025 combines the historical results of Palo Alto Networks and Chronosphere for these periods with the historical results of CyberArk for the three and nine months ended March 31, 2026 and 2025, respectively. The unaudited pro forma financial information include adjustments attributable to our acquisition of Chronosphere and CyberArk, including amortization of acquired intangible assets, stock-based compensation expense from assumed replacement equity awards, acquisition-related transaction costs, employee severance costs under the workforce optimization plan, and income tax impact. The unaudited pro forma financial information is for informational purposes only and is not necessarily indicative of the results of operations that would have been achieved if the acquisitions had taken place at the beginning of our fiscal 2025 or of the results of our future operations of the combined business.
Additional information related to our acquisitions, such as that related to income tax and other contingencies, existing as of the acquisition date may become known during the remainder of the measurement period, not to exceed 12 months from the acquisition date, which may result in changes to the amounts and allocations recorded.