Palo Alto Networks (PANW) FY2026 10-K Risk Factors: 15 New, 10 Dropped

What the changes say

PANW added risks tied to consumption-based revenue, AI agents, identity security, cloud-native competition, integrations, uptime, cloud capacity, and hardware supply.
Cybersecurity vendor consolidation and native cloud security may intensify competition, while AI and observability expand PANW’s opportunity and execution risks.
Channel concentration changed: two distributors represented 30% of fiscal 2026 revenue, versus three representing 44.2% previously.
Israel exposure expanded materially through CyberArk, with escalation involving Iran now specifically identified.

What changed since the prior 10-K

New

NewRISKS RELATED TO OUR PRODUCTS AND TECHNOLOGY
Our consumption- or usage-based offerings may expose us to customer usage optimization behavior that could create revenue volatility
Customers, especially large enterprises and AI-native companies, may optimize or reduce usage of consumption-priced observability and AI offerings, causing revenue volatility.
NewRISKS RELATED TO OUR PRODUCTS AND TECHNOLOGY
The “identity security” market lacks a universally accepted definition, which could lead to mischaracterization of our offerings and adverse evaluations by industry stakeholders
Ambiguous definitions of identity security could lead analysts, customers, or competitors to mischaracterize PANW’s offerings and damage evaluations, reputation, and sales.
NewRISKS RELATED TO OUR PRODUCTS AND TECHNOLOGY
Customer trends toward vendor consolidation in cybersecurity may favor competitors offering broader platforms
Cybersecurity vendor consolidation may favor competitors bundling broader identity security, observability, and other capabilities into comprehensive platforms.
NewRISKS RELATED TO OUR PRODUCTS AND TECHNOLOGY
Cloud infrastructure providers and advanced AI companies increasingly offer native security and observability capabilities that compete directly with our offerings
Cloud providers and advanced AI companies may bundle native security and observability capabilities cheaply, using infrastructure access and telemetry to displace PANW.
NewRISKS RELATED TO OUR PRODUCTS AND TECHNOLOGY
We may have to pay cash, incur debt, or issue equity or equity-linked securities to pay for any future acquisitions, each of which could adversely affect our financial condition or the market price of our common stock and result in dilution to our stockholders
Future acquisitions may require cash, debt, or equity financing, potentially weakening finances, diluting stockholders, or failing to improve PANW’s competitive position.
NewRISKS RELATED TO OUR PRODUCTS AND TECHNOLOGY
The success of our strategy depends on maintaining a broad ecosystem of integrations with third-party technologies, which requires significant ongoing investment
PANW’s platform depends on costly, continuously maintained integrations with cloud, identity, security, and business-application technologies whose vendors may change or withdraw access.
NewRISKS RELATED TO OUR PRODUCTS AND TECHNOLOGY
The emergence of AI agents as a new class of identity presents both opportunities and risks that could impact our identity security offerings
AI agents create a new identity category requiring secure permissions, and PANW may fail to develop identity-security offerings that meet evolving customer and regulatory needs.
NewRISKS RELATED TO OUR PRODUCTS AND TECHNOLOGY
A significant network or data security incident may materially impact our reputation, financial condition, and operating results
Cyberattacks using AI, ransomware, supply-chain intrusions, or nation-state techniques could compromise PANW’s systems, products, data, or providers and damage its reputation.
NewRISKS RELATED TO OUR PRODUCTS AND TECHNOLOGY
Our shared responsibility security model relies on customers to configure and use our products securely, and customer errors could harm our reputation even when we are not at fault
Customer misconfiguration or insecure use under PANW’s shared-responsibility model could cause incidents and trigger reputational damage, claims, or regulatory scrutiny even without PANW fault.
NewRISKS RELATED TO OUR PRODUCTS AND TECHNOLOGY
Our subscription agreements typically contain service-level commitments, and failure to meet these commitments could reduce our revenue and harm our business
Missing uptime or response-time commitments could require credits, refunds, or subscription termination and could reduce renewals as SaaS offerings serve more critical uses.
NewRISKS RELATED TO OUR PRODUCTS AND TECHNOLOGY
We rely on data center facilities operated by third-party cloud service providers, and any limitations on capacity, or interference with our use could adversely affect our business, financial condition, and results of operations
Third-party cloud providers may restrict capacity, including specialized AI and machine-learning compute, limiting customer onboarding, usage expansion, performance, or reliability.
NewRISKS RELATED TO OPERATIONS
We depend on manufacturing partners and limited sources of supply for our hardware products, making us susceptible to manufacturing delays, supply shortages, pricing fluctuations, and international trade risks that could prevent timely shipment of customer orders and result in the loss of sales and end-customers
Reliance on Flex and limited component sources exposes hardware shipments to manufacturing delays, shortages, tariffs, trade restrictions, logistics disruptions, and higher costs.
NewRISKS RELATED TO OPERATIONS
Our products and subscriptions are subject to certification, testing, and regulatory approval requirements in foreign jurisdictions, and our failure to obtain or maintain such approvals could limit our ability to sell in those markets
NewRisks Related to Our Common Stock and Convertible Notes
We may not have the ability to raise the funds necessary to settle conversions of the 2030 Notes, repurchase the 2030 Notes upon a fundamental change, or repay the 2030 Notes in cash at their maturity, and our other debt may contain limitations on our ability to pay cash upon conversion or repurchase of the 2030 Notes
NewRisks Related to Our Common Stock and Convertible Notes
The Capped Calls may affect the value of the 2030 Notes and our common stock

Dropped

DroppedRISKS RELATED TO OUR GROWTH
Seasonality may cause fluctuations in our revenue
DroppedRISKS RELATED TO OUR PRODUCTS AND TECHNOLOGY
If we are unable to attract new customers, our future results of operations could be harmed
DroppedRISKS RELATED TO OUR PRODUCTS AND TECHNOLOGY
We may not complete the acquisition of CyberArk within the timeframe we anticipate or at all, which could negatively impact our future business and financial results
DroppedRISKS RELATED TO OUR PRODUCTS AND TECHNOLOGY
A network or data security incident may allow unauthorized access to our network or data, harm our reputation, create additional liability, and adversely impact our financial results
DroppedRISKS RELATED TO OPERATIONS
Managing the supply of our hardware products and product components is complex. Insufficient supply and inventory would result in lost sales opportunities or delayed revenue, while excess inventory would harm our gross margins
Seasonal spending patterns could cause higher second- and fourth-quarter revenue.
DroppedRISKS RELATED TO OPERATIONS
We generate a significant amount of revenue from sales to distributors, resellers, and end-customers outside of the United States, and we are therefore subject to a number of risks associated with international sales and operations
DroppedRISKS RELATED TO OPERATIONS
We are subject to international trade regulations and governmental export and import controls that could subject us to liability or impair our ability to compete in international markets
Failure to attract new customers could harm growth and profitability.
DroppedRISKS RELATED TO PRIVACY AND DATA PROTECTION
We may incur increased costs to comply with privacy and data protection laws and, if we fail to comply, we could be subject to government enforcement actions, private litigation and adverse publicity
DroppedRisks Related to Our Common Stock
The warrant transactions may affect the value of our common stock
DroppedRisks Related to Our Common Stock
Our failure to raise additional capital or generate the significant capital necessary to expand our operations and invest in new products and subscriptions could reduce our ability to compete and could harm our business

Reworded

84% rewrittenRISKS RELATED TO OUR PRODUCTS AND TECHNOLOGY
We are exposed to the credit and liquidity risk of our customers, and to credit exposure in weakened markets, which could result in material losses
Credit risk now expressly includes economic-downturn exposure and prior non-material customer insolvency losses, while reserves and monitoring may fail.
84% rewrittenRISKS RELATED TO OUR PRODUCTS AND TECHNOLOGY
We face intense competition and we may lack sufficient financial or other resources to maintain or improve our competitive position
Competition now covers observability and names additional competitors including Delinea, Okta, SailPoint, and Datadog, beyond enterprise security vendors.
Was: We face intense competition in our market and we may lack sufficient financial or other resources to maintain or improve our competitive position
79% rewrittenRISKS RELATED TO OUR PRODUCTS AND TECHNOLOGY
A portion of our revenue is generated by sales to government entities, which are subject to a number of challenges and risks
Government sales now emphasize longer sales cycles and disqualification or competitive disadvantage if certifications, standards, or technical requirements are late or unmet.
78% rewrittenRISKS RELATED TO OUR PRODUCTS AND TECHNOLOGY
If we are unable to sell new and additional products, subscriptions, and support offerings to existing end-customers or attract new customers, especially large enterprise customers, our future revenue and operating results will be harmed
Customer expansion risk now adds winning new customers, switching costs, deployment time, go-to-market strategy, and potentially ineffective platformization marketing.
Was: If we are unable to sell new and additional product, subscription, and support offerings to our end-customers, especially to large enterprise customers, our future revenue and operating results will be harmed
77% rewrittenRISKS RELATED TO OUR PRODUCTS AND TECHNOLOGY
Issues in the development, deployment, or use of AI may result in reputational harm, legal liability, and could adversely affect our business and operating results
AI risk now adds potentially inadequate returns on AI investments, stock-price pressure, and unanticipated liabilities.
Was: Issues in the development and deployment of AI may result in reputational harm and legal liability and could adversely affect our results of operations
75% rewrittenRISKS RELATED TO OUR PRODUCTS AND TECHNOLOGY
We rely on our channel partners to sell a substantial portion of our products, including subscriptions and support, and if these channel partners fail to perform, our ability to sell and distribute our products and subscriptions will be limited and our operating results will be harmed
Channel concentration declined from three distributors representing 44.2% of revenue to two representing 30%; one distributor represented 19% of receivables.
Was: We rely on our channel partners to sell substantially all of our products, including subscriptions and support, and if these channel partners fail to perform, our ability to sell and distribute our products and subscriptions will be limited and our operating results will be harmed
75% rewrittenRISKS RELATED TO OPERATIONS
We face risks associated with having operations and employees located in Israel
Israel operations meaningfully expanded through CyberArk, and the risk now specifically includes escalation involving Iran.
74% rewrittenRISKS RELATED TO OUR PRODUCTS AND TECHNOLOGY
The sales prices of our products, subscriptions, and support offerings may decrease, which may reduce our revenue and gross profits and adversely impact our financial results
Pricing risk now expressly covers subscriptions and support offerings, changes in product mix, and adverse financial and operational results.
72% rewrittenRisks Related to Our Common Stock and Convertible Notes
The market price of our common stock historically has been volatile, and the value of an investment in our common stock could decline
71% rewrittenTax, Accounting, Compliance, and Regulatory Risks
Our reputation and business could be negatively impacted by corporate responsibility matters, including our reporting of such matters
Was: Our reputation and/or business could be negatively impacted by corporate responsibility matters and/or our reporting of such matters
70% rewrittenRisks Related to Global Economic and Geopolitical Conditions
Our operating results may be adversely affected by unfavorable economic and market conditions and the uncertain geopolitical environment
69% rewrittenRISKS RELATED TO OUR PRODUCTS AND TECHNOLOGY
We rely on revenue from subscription and support offerings, and because we recognize revenue from subscription and support over the term of the relevant service period, downturns or upturns in sales or renewals of these subscription and support offerings are not immediately reflected in full in our operating results
67% rewrittenRISKS RELATED TO OPERATIONS
We are exposed to fluctuations in foreign currency exchange rates, which could negatively affect our financial condition and operating results
66% rewrittenRISKS RELATED TO OPERATIONS
If we are unable to attract, retain, and motivate our key technical, sales, and management personnel, our business could suffer
65% rewrittenRISKS RELATED TO OUR GROWTH
Our revenue growth rate in recent periods may not be indicative of our future performance, and we may not be able to maintain profitability, which could cause our business, financial condition, and operating results to suffer
65% rewrittenTax, Accounting, Compliance, and Regulatory Risks
Failure to comply with governmental laws and regulations could harm our business
60% rewrittenRISKS RELATED TO OUR PRODUCTS AND TECHNOLOGY
The occurrence of any of these risks could harm our business, financial condition, and operating results
Was: The occurrence of any of these risks could harm our business, operating results, and financial condition
59% rewrittenRisks Related to Our Common Stock and Convertible Notes
Our business is subject to the risks of earthquakes, fire, power outages, floods, health risks, climate change, and other catastrophic events, and to interruption by man-made problems, such as terrorism
Was: Our business is subject to the risks of earthquakes, fire, power outages, floods, health risks, and other catastrophic events, and to interruption by man-made problems, such as terrorism
56% rewrittenRISKS RELATED TO INTELLECTUAL PROPERTY AND TECHNOLOGY LICENSING
Our proprietary rights may be difficult to enforce or protect, which could enable others to copy or use aspects of our products or subscriptions without compensating us
56% rewrittenRisks Related to Our Common Stock and Convertible Notes
We cannot guarantee that our share repurchase program will be fully consummated or that it will enhance shareholder value, and share repurchases could affect the price of our common stock
53% rewrittenRISKS RELATED TO OUR GROWTH
Our operating results may vary significantly from period to period, including due to seasonality, which makes our results difficult to predict and could cause our results to fall short of expectations
Was: Our operating results may vary significantly from period to period, which makes our results difficult to predict and could cause our results to fall short of expectations, and such results may not be indicative of future performance
53% rewrittenRISKS RELATED TO OUR GROWTH
Our business and operations have experienced growth in recent periods, and if we do not effectively manage our future growth or are unable to improve our systems, processes, and controls, our business and operating results could be adversely affected
Was: Our business and operations have experienced growth in recent periods, and if we do not effectively manage any future growth or are unable to improve our systems, processes, and controls, our operating results could be adversely affected
51% rewrittenRISKS RELATED TO INTELLECTUAL PROPERTY AND TECHNOLOGY LICENSING
Claims by others that we infringe their intellectual property rights could harm our business
46% rewrittenRISKS RELATED TO OUR PRODUCTS AND TECHNOLOGY
As a result of the CyberArk acquisition, the scope and size of our business have substantially changed, which resulted in certain incremental risks, including increased competition
Was: As a result of the CyberArk acquisition, we anticipate that the scope and size of our business will substantially change and result in certain incremental risks, including increased competition
37% rewrittenRISKS RELATED TO INTELLECTUAL PROPERTY AND TECHNOLOGY LICENSING
Our use of open source software in our products and subscriptions could negatively affect our ability to sell our products and subscriptions and subject us to possible litigation
35% rewrittenRisks Related to Our Common Stock and Convertible Notes
The issuance of additional common stock in connection with financings, acquisitions, investments, our stock incentive plans, convertible notes, or otherwise will dilute the stock held by all other stockholders
Was: The issuance of additional stock in connection with financings, acquisitions, investments, our stock incentive plans, exercise of the 2025 Warrants, or otherwise will dilute stock held by all other stockholders
33% rewrittenTax, Accounting, Compliance, and Regulatory Risks
We may have exposure to tax liabilities that are greater than anticipated

All 45 risk factors

Headings as the filing states them, in filing order.

Risks Related to Global Economic and Geopolitical Conditions

01Our operating results may be adversely affected by unfavorable economic and market conditions and the uncertain geopolitical environment70% rewritten

RISKS RELATED TO OUR GROWTH

02Our business and operations have experienced growth in recent periods, and if we do not effectively manage our future growth or are unable to improve our systems, processes, and controls, our business and operating results could be adversely affected53% rewritten
03Our revenue growth rate in recent periods may not be indicative of our future performance, and we may not be able to maintain profitability, which could cause our business, financial condition, and operating results to suffer65% rewritten
04Our operating results may vary significantly from period to period, including due to seasonality, which makes our results difficult to predict and could cause our results to fall short of expectations53% rewritten

RISKS RELATED TO OUR PRODUCTS AND TECHNOLOGY

05If we are unable to sell new and additional products, subscriptions, and support offerings to existing end-customers or attract new customers, especially large enterprise customers, our future revenue and operating results will be harmed78% rewritten
06We rely on revenue from subscription and support offerings, and because we recognize revenue from subscription and support over the term of the relevant service period, downturns or upturns in sales or renewals of these subscription and support offerings are not immediately reflected in full in our operating results69% rewritten
07Our consumption- or usage-based offerings may expose us to customer usage optimization behavior that could create revenue volatilityNew
08The sales prices of our products, subscriptions, and support offerings may decrease, which may reduce our revenue and gross profits and adversely impact our financial results74% rewritten
09We rely on our channel partners to sell a substantial portion of our products, including subscriptions and support, and if these channel partners fail to perform, our ability to sell and distribute our products and subscriptions will be limited and our operating results will be harmed75% rewritten
10We are exposed to the credit and liquidity risk of our customers, and to credit exposure in weakened markets, which could result in material losses84% rewritten
11A portion of our revenue is generated by sales to government entities, which are subject to a number of challenges and risks79% rewritten
12We face intense competition and we may lack sufficient financial or other resources to maintain or improve our competitive position84% rewritten
13The “identity security” market lacks a universally accepted definition, which could lead to mischaracterization of our offerings and adverse evaluations by industry stakeholdersNew
14Customer trends toward vendor consolidation in cybersecurity may favor competitors offering broader platformsNew
15Cloud infrastructure providers and advanced AI companies increasingly offer native security and observability capabilities that compete directly with our offeringsNew
16We may have to pay cash, incur debt, or issue equity or equity-linked securities to pay for any future acquisitions, each of which could adversely affect our financial condition or the market price of our common stock and result in dilution to our stockholdersNew
17As a result of the CyberArk acquisition, the scope and size of our business have substantially changed, which resulted in certain incremental risks, including increased competition46% rewritten
18The occurrence of any of these risks could harm our business, financial condition, and operating results60% rewritten
19The success of our strategy depends on maintaining a broad ecosystem of integrations with third-party technologies, which requires significant ongoing investmentNew
20Issues in the development, deployment, or use of AI may result in reputational harm, legal liability, and could adversely affect our business and operating results77% rewritten
21The emergence of AI agents as a new class of identity presents both opportunities and risks that could impact our identity security offeringsNew
22A significant network or data security incident may materially impact our reputation, financial condition, and operating resultsNew
23Our shared responsibility security model relies on customers to configure and use our products securely, and customer errors could harm our reputation even when we are not at faultNew
24Our subscription agreements typically contain service-level commitments, and failure to meet these commitments could reduce our revenue and harm our businessNew
25We rely on data center facilities operated by third-party cloud service providers, and any limitations on capacity, or interference with our use could adversely affect our business, financial condition, and results of operationsNew

RISKS RELATED TO INTELLECTUAL PROPERTY AND TECHNOLOGY LICENSING

26Claims by others that we infringe their intellectual property rights could harm our business51% rewritten
27Our proprietary rights may be difficult to enforce or protect, which could enable others to copy or use aspects of our products or subscriptions without compensating us56% rewritten
28Our use of open source software in our products and subscriptions could negatively affect our ability to sell our products and subscriptions and subject us to possible litigation37% rewritten
29We license technology from third parties, and our inability to maintain those licenses could harm our business

RISKS RELATED TO OPERATIONS

30We depend on manufacturing partners and limited sources of supply for our hardware products, making us susceptible to manufacturing delays, supply shortages, pricing fluctuations, and international trade risks that could prevent timely shipment of customer orders and result in the loss of sales and end-customersNew
31If we are unable to attract, retain, and motivate our key technical, sales, and management personnel, our business could suffer66% rewritten
32Our products and subscriptions are subject to certification, testing, and regulatory approval requirements in foreign jurisdictions, and our failure to obtain or maintain such approvals could limit our ability to sell in those marketsNew
33We are exposed to fluctuations in foreign currency exchange rates, which could negatively affect our financial condition and operating results67% rewritten
34We face risks associated with having operations and employees located in Israel75% rewritten

Tax, Accounting, Compliance, and Regulatory Risks

35We may have exposure to tax liabilities that are greater than anticipated33% rewritten
36Our reputation and business could be negatively impacted by corporate responsibility matters, including our reporting of such matters71% rewritten
37Failure to comply with governmental laws and regulations could harm our business65% rewritten

Risks Related to Our Common Stock and Convertible Notes

38The market price of our common stock historically has been volatile, and the value of an investment in our common stock could decline72% rewritten
39The issuance of additional common stock in connection with financings, acquisitions, investments, our stock incentive plans, convertible notes, or otherwise will dilute the stock held by all other stockholders35% rewritten
40We cannot guarantee that our share repurchase program will be fully consummated or that it will enhance shareholder value, and share repurchases could affect the price of our common stock56% rewritten
41We do not intend to pay dividends for the foreseeable future
42Our charter documents and Delaware law could discourage takeover attempts and lead to management entrenchment, which could also reduce the market price of our common stock
43We may not have the ability to raise the funds necessary to settle conversions of the 2030 Notes, repurchase the 2030 Notes upon a fundamental change, or repay the 2030 Notes in cash at their maturity, and our other debt may contain limitations on our ability to pay cash upon conversion or repurchase of the 2030 NotesNew
44The Capped Calls may affect the value of the 2030 Notes and our common stockNew
45Our business is subject to the risks of earthquakes, fire, power outages, floods, health risks, climate change, and other catastrophic events, and to interruption by man-made problems, such as terrorism59% rewritten

Other Palo Alto Networks 10-Ks

FY2025 10-K risk factors
40 risks
Palo Alto Networks faces intense competition in enterprise security and relies heavily on channel partners and subscription models. Growth depends on platformization strategies and successfully completing the CyberArk acquisition.
Filed Aug 29, 2025

About this page

The headings are the filing's own. The one-line readings and the overview are automated and can be wrong: read Item 1A of the 10-K for the exact wording.