PANW · 10-K · 2026A · Full report
Operating Expense Trends
Palo Alto Networks Inc · 2026-09-10 · Importance 64 · Surprise 56 · No source text
Total operating expenses increased to $7.382 billion in fiscal 2026 from $5.527 billion, rising to 64.3% of revenue from 59.9%. Research and development expense increased 29% to $2.552 billion, including a $429 million increase in personnel costs driven largely by headcount growth and acquisitions. Sales and marketing expense rose 27% to $3.931 billion, with personnel costs up $584 million and additional amortization of purchased intangibles from fiscal 2026 acquisitions. General and administrative expense increased primarily because personnel costs rose $253 million due to accelerated equity-award vesting, CyberArk severance, acquisition-related headcount, and higher acquisition costs.
Key facts
- Share-based compensation expected to be recognized as of July 31, 2026 is approximately $3.3 billion over a weighted-average period of approximately 2.5 years. source
- Research and development expense for fiscal 2026 was $2,552 million, or 22.2% of revenue. source
- Sales and marketing personnel costs increased by $584 million for fiscal 2026 compared to fiscal 2025, largely due to headcount growth including from acquisitions. source
- Total operating expenses for fiscal 2026 were $7,382 million, or 64.3% of revenue. source
- Sales and marketing expense for fiscal 2026 was $3,931 million, or 34.3% of revenue. source
- Research and development personnel costs increased by $429 million for fiscal 2026 compared to fiscal 2025, largely due to headcount growth including from acquisitions. source
- General and administrative personnel costs grew $253 million for fiscal 2026 compared to fiscal 2025, primarily due to accelerated vesting of certain equity awards, employee severance charges in connection with our CyberArk acquisition, and headcount growth including from acquisitions. source
- As of July 31, 2026, Palo Alto Networks had total operating lease obligations of $793 million recorded on the consolidated balance sheet, with lease terms expiring through fiscal 2040 and the most significant leases relating to the corporate headquarters in Santa Clara, California. source
Impact estimates
| metric | direction | stage | expected | basis |
|---|---|---|---|---|
| operating_income | negative | committed | -24.4% | Share-based compensation expected to be recognized as of July 31, 2026 is approximately $3.3 billion over a weighted-average period of… |
| operating_income | negative | realized | -5.1% | Sales and marketing personnel costs increased by $584 million for fiscal 2026 compared to fiscal 2025, largely due to headcount growth… |
| operating_income | negative | realized | -3.7% | Research and development personnel costs increased by $429 million for fiscal 2026 compared to fiscal 2025, largely due to headcount… |
| operating_income | negative | realized | -2.2% | General and administrative personnel costs grew $253 million for fiscal 2026 compared to fiscal 2025, primarily due to accelerated vesting… |
| operating_income | negative | realized | — | Research and development expense for fiscal 2026 was $2,552 million, or 22.2% of revenue. |
| liability | negative | realized | — | As of July 31, 2026, Palo Alto Networks had total operating lease obligations of $793 million recorded on the consolidated balance sheet,… |