Palo Alto Networks (PANW) 19 Nov 212022 Q1 Earnings call transcript

Thanks for listening. boosting. That [Indiscernible] one.

Just platform given me the ability to experience to all of these different uses. incredible, innovation across our Network Security platform and again, all of which complemented by spread intelligence and security consulting to our previous cybersecurity partner of choice.

to Call. Network welcome XXXX First and Conference Earnings day Palo ' Alto Quarter Good BILBY, of CLAY I'm head Investor Relations. Palo Alto Network's note Time. is at Please call today, this XXth, November being X:XX recorded Pacific PM that and With me are remarks. session Officer call on Q&A join in his Chief our us Nikesh will following Executive Arora, today's Chairman prepared

supplement our website on can the find discussion press You investors.PaloAltoNetworks.com. release today's and information to at

beliefs investor forward-looking you presentation of the on update presentation, click link based events presentation. will that factors Palo assumes are our filings. the cause release Statements the find materially to cause to no information to provided forward-looking where of risk today's and Alto we uncertainties, Networks the earnings Risks, call. projections are on and identified actual supplemental While conference there, please available our Harbor this differ differ on could today. SEC These to statements involve from other in the management course and and for uncertainty our current In statements in information. call, obligation in presentations statements actual that forward-looking results could provided that in information results and today's Safe and will as and make made and

to, GAAP superior will should or not measures. non-GAAP are as accordance of These with substitute with financial in prepared also in for, accordance and discuss not be We non-GAAP financial financial prepared GAAP. measures a performance considered measures

I investor to earnings like the would now in events. know the in which and can conferences like in SEC We filed in December, virtual upcoming financial the presentation. Management to tables is and Nikesh. have website. found which Barclays. in call between GAAP upcoming our Investors by And hosted over scheduled with would List measures turn which we We non-GAAP appendix provide the section reconciliations release, to participate the have to and be Craig's our several And the of included to

everybody. afternoon, Thank you, good Clay. And

was snippets Networks, had which see, showing just customers Alto with has us our a at you week virtually. some Palo we've video customer and busy conference, partners It wrapping user been up. a a where As bit you is registered to can of Ignite, XX,XXX that from and engage

the people Moving on are perspective. a to demand story major QX. by was cybersecurity saw across where driven familiar strength we quite of at a QX end and We industries heightened of it's increasingly geographies from and landscape. across are at We've understand securing they awareness. top that their ensure their responsibility organizations environments to the government seen sector, against they private threat malicious

Analyst In risk management the updated shipped year-over-year. the financial on of updated with Company's and measures. with our we performance, continue confidence our outlined We fastest revenues our we're to the to but all quarters. our business, we of of ability non-oil raise Cyber Security X-year services, bring which highlighted Early XX% this information SASE hardware which our Day X our subsequent comfort strategy for of plan and corporate Diving product quarter. to to All-in-all, we This breaches, agencies. directing our keep At also fair We our for their of XX% security visibility customers. exceptional transformation this attention that safe. adopt pipeline is Within and strength in results QX saw the software also We services positive Cloud. they trend amount threats teams you on higher continue strength DC and see our mix performance year, growth new private towards a saw year-over-year technology to brands like orders in grew months gives great federal this strategy shared its out from backdrop QX press also are was and of security for quarter. of Hardware familiar committee about The towards orders trend for years. growth included to in Security I our institute a extremely where, professionals and well is XX% our coming strength recent our QX in year, broad-based grow were mandating secular forecast second our innovations Cyber grappled the and our happy raising We strong with have committees on orders spending -- boards fueled quarter, as in was focus business, in in be quarter, on Prisma, to our billings QX, result networks funding new you. not year Washington, XXXX. and the the to ahead QX long-term QX, from light, but year-over-year, hire solutions, into infrastructure X-year are call, in high, market. events our forming bill cybersecurity performance but sustainable the Cyber demand a guidance those environment this our into last with of Based XX% we there's our of strong enough as for place, as also going think was executive their strong, three light targets. a bolstered the beyond both we in security the posture. to and as we drive our data on in for us that had September, customers as on sector powered bar hardware Coming Gartner you. QX this continuation QX qualified we forecast strong Security in a in as the only in back in numbers in and talked hardware try in and calling terms cloud

of increase Growth non-GAAP in mix. profitability business You see solutions with our continues this was our balanced and free was ARR, EPS ever income as the of flow $X.XX $XXX NGS a Cloud. ahead guidance. The non-GAAP year-over-year in reported a and our SASE, have Company. by cash in we operating X% in growing Prisma, largest which our next-generation driven is quarter adjusted well, the to security We million with midpoint

we leader results, has maintain financial not decades in industry our innovation accolades always Gartner I Firewall leader we to to recognized strong our FY XX the we in been Quadrant. the of in the something named see platforms. product again, in of we personally see practiced be a position Edge in Gardner Quadrant in where cybersecurity, areas. Beyond a Magic X for position year XXth to QX continued with best-of-breed I delighted I'm across our came leader cybersecurity, companies. the have will strong that leader Magic by the to WAN believe ASCI continued out in Network straight products as past position cybersecurity In be that a the highlighting the

as appliance, added forward named New with Wave, the we industry's Supported platforms across further well in look driven a our X support. our by deeper innovation set our efforts pipeline, virtual Diving being from Strong Security XDR new and strong We Zero-Trust Wave. New and world. comprehensive into Additionally, factor. first leader subscriptions awards to the of across most as by the platform as-a-service teams Forrester's Starting earning -- of appliance, Performer Forrester's hardware industry having form X security world-class Network our a business. product and customer consistent benefiting We're recognition and Network also Access,

encourage We to innovate opportunity as our that network you haven't security. this continue to rapidly already review, made Ignite, network you the if across with security, team on Appliance done was so. I announcements in we capitalized demand week at broad strong

conditions started uptick and activity. we saw to As eased pandemic offices the up, in refresh open an

We as looked both existing saw improved saw new Our competitive activity security demand broad and our from to strong network appliances, with performance, new strong on customers standardize win platform. price customers.

we from in These significant and QX, strong around were XX% impact concerns into product lead continuing as on a drove growth that Lastly, in re-acceleration and as see did customers based pricing well. ordering revenue times product QX actions combined forces availability. demand some

the of with is entire me it. supply pay to attention a chain industry more challenges all to dealing bit Let continue on comment and you that the

orders. our job customers, of you As we managed deliver our I have against some some to overall, challenges, in been have environment. longer for our despite There the a seen, but in teams have phenomenal this selectively, -- done think times lead have managing

I dissipate quarters. will do best the few to next to over X best X challenged to navigate. and we continue to expect next will to We continue to do these manage effort our months over our the

and competence Networks. X short-term which Alto the period probably needs are than causing will managing up our overall The normal. which expedite During envelope are to budget of times, industry cost having on scarcity Palo some at this lead weeks more the to increases, we some X end

manage to we the guidance be expect not been expenses supply do able be to the our that We vagaries to you given we them have though, outlined beat to aggressively able the chain, expect, past. full-year. will for We within of as as our in

cloud Our focus - We to is across year. prem and customers introduced Flex our deployment. on making consumer firewall on last it firewall late technology easy public for

have this back nearly that of agreement. have of this, the advantage license customers On XXXX taken

area. almost billings account line the firewall leadership share as fastest we form the on us in XX%, our take in seen and of our of factors, firewall position breadth customers with in industry. growth each even network on years the two as consolidated security to continue But have We our platform, various a grew spend product

to transition on in the Software Network comprehensive network access to towards Networks journey in Prisma recognizing source apps this. hybrid to enable many We was Alto of proceed work. see as in our can factors. mix a installed XX% a business many customers see from permanent provide early their our as our with customers to base SASE of location. of continuing higher our our stages, Security consistent form Switching strength QX, journey to Palo platform our constant, customers We be a a billings transformation all Only FX very solution is to all software. of continues involves across any state SASE.

outside we in year. as So gained of an have channel see customers. stack, next-generation just believe interest expect in is a sign we which firewalls customers SASE as platform, in this have share exciting on this and because is to offering. our our good a space, progress are be We're of our from our SASE our our becoming installed offering, SASE. Trust firewall Security category, XXXXX And can enterprise competitiveness expand year-over-year our us profession seen in are also our once over base, XX% with provide this base. which our Cloud. appliance, firewall through months, of What sellers, initial a our natural get who fiscal not Network and in us that XXXX. interesting innovation share SASE choosing this XXXX continuation at the the you selling are have part later our partners SASE firewall but Security allowing Network to have in a indicator, core customers, our important of to having for other SASE growth customers of into as not again Prisma over solution our to opportunity despite happy future Overall, seeing SASE people's that see they the comprehensive a We're allowing technology, firewalls. far, installed more this to to is well our customers in extension it also increasingly as SASE We saw expect we our of of to also than is our just installed we as Zero is XX software showing to grow over hardware last us customers XX% base. OCU also come Switching an and our adopted architecture

Tuesday. noted continues And you earlier. Our the encourage for public check on technology, I Cloud that and session enhancements week Cloud growing to new Lee of grew to the out and Total as Cloud offering year-over-year. our the at Cloud from need the hosted of again, customers Ignite. adoption Prisma They Prisma awareness our environments--as Prisma introduce Cloud benefit and well this significant customer CMO, security highlights XX% hyper-scale to from Zeynep as business I've dual drivers

million we in adds, with consuming consumed strengths consumed customers Beyond from new customer deriving modules. of X.XX increased Credit credits across Credits are platforms. our including being very validation our of value to remain from focused products. QX, our customers some

business and grow SaaS an partners. the important we seeing as renewal this also are focus from in volumes on Beyond of expansion economics. channel is as participation in grow we our greater broadening Cloud uptick and consumption, This all Prisma

strong results continued have to Bridgecrew. We see from

reminder, we this a in has As is strong source a market. with developers open Bridgecrew, have deal opportunity combined they where popular large basis seen traction standalone motion On sales a a target and the a offering check-off, for Bridgecrew. X-figure

Alto Prisma we're leverage seeing Cloud substantially deals understand as comprehensive how As Networks, Palo customers get to our Bridgecrew in larger roadmap. these

driver deal in environment. the This we identified the quarter $X Cloud has important is oil early caught trend million onto vertical. leading noticed. might as that an towards clear It's Overall, cloud-native a security, has of and this market the trend funding -- you important been was Bridgecrew this insurance securing Prisma companies that in have native aggressively Cloud

most than being of of extremely levels. lofty much X in ARR more ARR at annual funded companies the do we think are these quarter that I pretty

across quickly have are long-term security our where win. we a we and We the growing ability executing Switching believe automation with to Cloud to well capabilities.

over continues innovative year-over-year. market-leading platform capabilities, -- XSOAR almost Pro unifying Cortex and to our increasing XXXX XX% reached technologies deliver integrated XDR XDR customers in Total Our expanse. across XSOAR across

customer transaction, increased general an increase of on in we expansion Beyond activity in new back the QX. saw also

automate as Our new the wave. X.X. in was a to life includes Cloud, of leader early cycle position, the was as in SOC recognition. leadership forensics response. XSOAR Forrester a just products enhances released We detection threat capability performer XXXX received significantly again, on XDR in the in investigation full store XDR, Cortex strong XDR XDR's being industry X.X tech said, our I also it strong capability version teams help its continues gigaohm X.X in named response and a built-in QX. based identified evaluation. the This

Ignite, Trustwave. to partner XX% Cortex. strong on systems launched partner continue just We over partnering growth also by partners the the our have saw integrators in and program, we bookings XSOAR as Orange with and traction XMDR Critical well MSP activity front continuing around partners We alliance launch see around Cyberdefense, with marketplace, partner our Cortex. with across an PwC, At including Start, specialization influenced

President, in and On very strength in daily this up strong we with the large QX. performance cohort is followed relationships a with Jenkins repeatable, focused in initiative a organization in large to Business XX. for Chief QX, deeper Amit of sales motion back partnership efficient Driving key deal is our broad, with FY our customers. drive Singh, our our multi-platform Officer wider of BJ a

seven-figure While dollar the seven-figure the total quarter QX is the year-over-year. deals seasonally the our in lightest deals were within of XX% Furthermore, of the year, we up closed signed value XXX quarter. quarter

consecutive customers where to. in our approximately in XX% close millionaire sorry, is X,XXX growth millionaire or QX year-over-year. customers -- XX% were north was Our Xth quarter QX, This of year-over-year

wins be in Turning are our larger to that some the should deals. of trends large there in quarter, several these evident

with success seeing we're adoption. First, multi-product

becoming leadership up The position value of and Second, as our large security, size, is to our cyber is well customer than materially for for also us, our overall. process our the commitments faster business and in across drive year-over-year, more deals us important a growing mature are is our organization. increasing growing efficiency reflecting to sales repeatable area in an as and both continue This platforms.

architecture. platform footprints in Bringing deployments Third, to replacement, an each all see our highlight these a network strategy of cross-platform of across areas, include proxy success of across and drive are lead to in expansion deals and Standardization together. customers Cloud they in-line initial purchases because significant emerging it customers in work-from-home. our success. in consolidation Cloud of security also We trends. with the few These areas by uptake SASE, driven there you where Prisma are back

I innovation secular -- of a this remain and X and aspire Day able vision Analyst year of platforms. by all of period unprecedented much in As in on execution mid medium-term we've be industry areas. our out think innovations we're durable through I that said, and positioned stronger, the the we in QX. trend our our at uniquely And Alto and to We delighted for long-term and growth. on cyber security strategy a had across all is a to these year, Palo our made build investments of We've for Networks focused teams. to that last strong leverage our We September business I'm the laid lead trend

adversaries. the Our part learning focus in customers. our embedding We cyber leverage the be balance and customers security embedding of and is AI on innovation, X efficiencies the Company driving to platforms our all shift our in platforms, trusted machine our business scale drive across across order to grow our to or between

backdrop. revised Our guidance with into current We're holding to and over our the on demand EPS me portfolio, call our can the billings resulting strong sure QX that, to year turn on go FY make broad-based supply strength deliver and we let With across the in revenue guidance chain higher the reflects for more the year guidance. our XX. performance to detail for Dipak,

afternoon and financial Thank year-over-year transform provided much otherwise. all you figures are basis very and our broad we good business. August in comparisons by in guidance Nikesh, a as our on ahead to metrics strength delivered of non-GAAP, unless We our Please acceleration QX, driven are our our specifically topline note all and everyone. that noted, portfolio, continued next-generation our grow both offerings. including the of In security appliance offerings across and continue

by Total all up guidance The regions. Americas revenue was and $X.XX By grew all XX%. grew the across an QX range. XX%, revenue the geography, of was JPAC grew and platforms. QX, billion, was and For high-end XX%. increase in was Growth above EMEA all XX% strong QX growth X XX% driven in product was deferred geographies of $X.XX of billion revenue revenue

finished steady NGS, $X.XX the guidance XX, our a security continuing range. trajectory. quarter as strength -- in exceptional of In up the the NGS as billion, $X.XX and Prisma well growth ARR, Next-generation billings above billion we we delivered and at XX% quarter first our of XSOAR high-end XDR. or saw Within platform, of

in the was or reminder, a increasing current RPO. As XX% of of performance billion plus deferred is billings NGS in-line change total year-over-year. $XXX,XXX,XXX RPO grew XX% growing revenue. and RPO, with billings revenue Remaining total obligation, total revenue, deferred that's with $X acquired

and our it prepaid mentioned Analyst at insight customers. into I revenue, adds as our future we As RPO both commitments believe meaningful includes from Day, our contractual

forecasted of accelerated in low late double-digit September, Day growth, as we demand reaction in we in follow-through as product our to orders. business was has QX in 'XX XX% product our our As fastest also been during QX quarters. recent in of both Appliance fiscal the This Analyst and ahead strong in also QX positive. guidance achieved year-on-year ten fulfillment new growth, of Appliance our year we saw launch orders Customer the growth

was $XXX and related revenue. accounted incurred million down positive -- demand XX%. business And $XXX was customers revenue activity, costs that support noted, Nikesh XX% appliances. XX.X% Subscription whilst of subscription patterns beyond driver, signs refresh increased In is broad-based. to total, pre-COVID million in Gross increased Support of Appliance see points purchasing. of we revenue strength of total our to as basis revenue we and As of sustainable year-over-year XX%. additional a also our margin as refresh of XXX increased $XXX a returned XX% this was for million

environment. is XX% on ensure expected, focused that Operating half fiscal was we sequentially hiring rate are in and the the margin absorbed we second to continue up will strong in of We down customers to year-over-year--as XXXX. shipments current enabling as had the we our

as to per forecasted efficiencies million products. came focus $X.XX to X% for operating costs share. grew our input the $XXX or on below quarter our in offset Our first Net higher diluted a income operating expenses levels, driving on we

$XXX XX% a Our non-GAAP GAAP was rate effective and net million $X.XX basic tax or our per loss diluted was share. and

collections X sold-to of cash Balance of the sales billion. and driven Statement. and by was linearity. and our We of billings our count year flow strong also on of generated we improved Days in Flow free Cash finished to Sheet a days flow free outstanding October flow now ago, Turning $X.X a investments cash cash we moved active worth to a $XXX of of QX customers and combination million was customer Cash equivalents XX from decrease from days, historical methodology with from million record operations customers. $XXX method It's of noting a XX.X%. margin that

As our mature form transform important software the in customer with security, ARR-based we retention, business expansion to and continue acquisition, in factors next-generation to solutions growth it's and us framework. for our

methodology. makes in customers our align provided over As on increasingly last active In the it our X we presentation, the quarters adjusted slides customer appendix are of the this internally, in way. counts the investor external our believe to conform sense to reporting focused we active to we've customer

higher customer QX. and shareholder priorities XX% in growth bias will years. as that in EPS with our growth, this ahead while were revenue street industry-leading accrued we We revenue us in aligned highlighted to Our sure Alto long-term of with of driving highest guidance reported unchanged Palo pillars is returns. Networks additional a making offset demand good QX our X relationships. in as for has in We help customer are costs. capital while the framework related a can investment product Day fulfill investments the expense and towards efficiencies, We're long-term the The this did operating scale, shareholder of our continue QX. to growth, September by our optimization on growth believe delivered return for allocation outlined We and total focused Analyst delivering rate action sustain our value for this

remain We for us Our for as of on margin our use and XX% free the and for track quarter on largest multi-year cash-flow free this annual repurchases was focused generation. share puts cash-flow strong goals. us

stock continue over months. you've it including buyers seen, the to our last were that XX the Analyst of transfer quarter our stock, several Day challenging as buyback Stack. and be the We’ll there to NAT mid-quarter our However, in stock of listings areas material made opportunistic events to

authorization, billion our a repurchase XXst, December remaining dollars expiring at on XXXX. share have We

in of you likely TSR many -- in Networks to fiscal and Lastly, our Alto executive TSR the better year plan, with on the add front, into statements, compensation a the area in Palo during closed part our XXXX proxy XX our a align revised at our program multiplier compensation have very seen interests. us to committee as Gamma this acquisition that We Ignite. was DLP Networks, pay small brings announcements of technology shareholder next-gen additional [Indiscernible] week QX of executive

assembled have to we execute our on platform compared activity pillars needed M&A the incremental we strategy, to the As key in recent continue 'XX to only as expect year fiscal past.

points. guidance now moving to Lastly, and modeling

As Nikesh is mentioned, undoubtedly aware, the and there in your global disruption chains. some supply

we're efficiencies revenue to our ability adding Analyst in of of this. business cash for our overall flow XXXX. that aspiration achieve offset chain focused operating Our hold high-end of we which and guidance in margin, latest and driving we cost same We the free Day, we revenue In our flow context, inputs navigated and year pleased guidance some at around our which supply factored together well, XX, The QX. giving At on guidance range, time, of we in. the that incur the have considers free have was will operational margin. do other did would we incur these factors. the note the have our we're challenges additional we're expect extremely rule growth help in at incremental the the teams our fiscal to today in although fiscal product margin We product that cost QX our cash and year, through EPS,

in an of the XX% of to quarter For the billion fiscal we second expect increase of billings XX%. range $X.XX to $X.XX XXXX, billion, be to

an of Non-GAAP XX%. range EPS on to to in the shares. to of $X.XXX in XX% billion, We of be count expected to a of a weighted billion expect million X.XX dilution average range XXX is to be XXX approximately revenue $X.XXX the to increase based X.XX

XXXX, we an X.XXX expect billings XX%. fiscal XX% For range X.XXX to in to the of increase billion be dollars full to of the in year

range be $X.X% in of the of We billion, expect XX% to to $X.X to revenue increase an XX%.

of our next-gen billion, be expect $X.XX security $X.X XX% We increase XX%. to ARR to to an

mid-teens expect be product We revenue percentage to our year-over-year. in growth the

XX%. margins to our our the shares. average expect of in range to the flow expected to $XXX expected million be to Adjusted non-GAAP We of free cash X.XX of is XX.X% to on X.XX approximately range an operating to be of And based be margin EPS XX%. $XXX diluted in XX the range is to in count million

the we're modeling the Additionally, the operating Based expect year for will more subject QX the we quarter, legislation. at To our noted to our so seasonality during well as QX of additional that QX, calibrate further deliver XX% following your call. 'XX far, please outcome remain XX, half in to on consider income tax slightly that points. operating come discussed and modeling the we to year future fiscal of progress of we XX% help you our annual as XX forecasting our to seasonality, of spending income last the of year first we approximately in rate we expect Non-GAAP tax on

capital other XX, expenditures and $X million. for of $XX million to expect We expect $X interest expenses net per we QX quarter, $XX and to of

$XXX million, XX approximately $XX we Q&A year expect $XXX million related expenditures to With call. Clay fiscal portion For Santa our of to the for to turn capital that, includes back Clara of which the over I call headquarters. the will

for allow to Patrick broad X from Thill question. question with Jefferies to I person will And Brent And question. Deutsche would Dipak. Brent, you you and ask Bank be only of participation, may follow. Colville Thank your ask each Great. our ask first that

or what's just on faster are of seeing the solution you're your us seeing Thanks. Can right -- Good just their to Nikesh, you Cloud going based chain in on customer through, substituting when afternoon. workloads the to off behavior, trade supply for you you clients of what the they and happening think accelerating being some the issues about willing therefore, Thanks. give you're now. Cloud color there? are

them you and lead Thank their order ahead. customers some we capacity seeing industry are sure does customers going terms get for to that more I visibility Dipak there seeing want we're they offering sensitized seeing highlighted and customers. think the what hence what our substitution player seeing very I said, Look, am on some front. times hence the question. as the longer-term the of has for also is in full-year, think around on are every We're are hardware in what the know for I consistently not we're that we needs we also because

second have So in or we we in to some market. some -- from to in already become us Cloud seeing are provider on there that? the a going to new is vendors Yes, continue the there. outside they're across market degree, where provider, accelerate first infrastructure a the adoption or substitution And of other as

function have I think the fact it's people pandemic. of partly to shift a Cloud made given the that faster the

there but a as it's and impact of think margin marginal may yet sure to I as a affect but issues, -- I'm broad-based into running enough the people hardware are be the there. us trend, not call it widespread that on

of up question. Patrick, Bank with comes our right. to your Sterling And from Colville you question may All Deutsche Great. follow. Patrick next ask

correct, we've X% about and about we seeing seen little were I is Very my was delta bit Can impressive below on maybe All guess that. sequentially, for is the I the growth, trends less switch you year increase ARR? math's to taking to recent a the trends. as sequential before million than If actually last much with NGS growing always, $XX so $X.XX slightly right. billion. Thank my question. which which the sequential

NGS, understand takes the help there you please? of can puts So just and around momentum me

Prisma 's There's NGS, momentum 's lot both we a Prisma highlighted in Cloud Patrick, the side side. the as of SASE and on

a QX in the customers. of last loaded a because lot our customer spend terms transformation a of word --as year part getting aspect. a with is transformation are is of -- or network QX, require most time The very longer all either PLCs, X aspects And you the and journey. journey the to backend the key in teams As heavily business experienced NGS transformational Cloud products transformation longer discussions their soft transformation of journey, a

quarterly I evolution And because about it NGS we ample in don't meet well ARR. enthusiastic We we feel actually as be that confidence and pipeline. at will, I the look We said, more have we for expectations the full-year hand our couldn't as it. sweat it's handedly annual

with next Sterling comes our ask question. JPMorgan next up Phil Auty question your Winslow Sterling you may after And of from that. Great.

how thanks. go orders chain customers, the of for gotten so the that this the these just ways. much I a -- -- some Yeah, first supply how ordering maybe there would've of talking lot back these QX. QX us guys. which to Is your And the joining is timing in of sure to might be to I'm of and meaning Alright, utilizing increased just a solution you're--they're want when they're you're half, Hi in of in because sense orders much you lead more will. time

So used Architecture more Zero cases? other segmentation and micro

Clearly always our question, growth the for will I Traditionally see great want it. refracture Yeah, XX% piece X customers the think portfolio, that's we've and just whenever product to Remember, a of how I number anticipate that -- a honestly was step Sterling. -- effect we if and up we're part learned your order the refresh rank kind -- impact hardware in they've hardware that of of the quarter. seen I done we've seeing and to newest hardware

can deployment a to second if Because ordering been and you customer Alto. your can I -- is think new point effect Palo we're Palo ahead net a is a tell of never customer. you actually -- ahead. -- That that ordering not pre tell to -- customer new has transferring increase the consumption, requirements -ordering or seeing. Alto--he's is customers They're increased

So fourth one, a It's the category. impact. XX% you're ordering approximately or what impact into the --give honest, consider I ahead third would be And seeing which the take. to think that's I

Thank you. you. Thank

from is Saket that. Winslow question next with after Our Phil of Please proceed, Philip. Suisse Credit up Kalia

are why, questions And second, when Where [Indiscernible] what winning a customers Lifecycle then Cloud. X you telling their Shift what Security. customer in are Thanks, technologies, you adoption focus Left Great. are and of Nikesh, you put well obviously what's these here. of Prisma up for about differentiation? those on There's customers, you to lot question terms the metrics we you from continue as of as inning Obviously, a numbers. good investors think these consumption guys. on just deals, do in? been

it's that, Klarich, I not I'll like only anything their to tools decided engagements. homegrown make we I step-up ask their their us product Mr. to a Chief him Lee point and which the right of give Having seeing and say, to they having comprehensive he like and the on talk wiz cents in jump bed. Prisma scanning. where has I recent customer XX-plus not here, our saying so individual cases Cloud those been -- these him that X the going or said need don't the and left for jump They eventually solution doesn't in announcement But to answer I'm Phil. - use solutions a you, Lee shift do. yesterday Officer, pleasure -- infrastructure, that the have need is typically feel the But Product about offering for stuff don't the But Bridgecrew, some use whenever I'm through confidence large see I'm are of is calls, want going journey to we're partly their their capabilities, have with

there's integrating Left well platform, collateral enterprise Shift so As [Indiscernible] consistency. Enable our Prisma as

their a understanding order versus cloud and to data in to -- of really architectures. fully to Nikesh. all that Thank cloud extent, their take it. still you, change different just are the I journey in security, some their they're Cloud to Look, lot architectures need fully question of to no even think operationalized there's advantage about journey shift the customers still dynamics in To even traditional center

these starting what pipelines earlier Cloud few CICD why believe integration effective, and the to these and the drive as so is important. embedded There's into development and changes. the very Cloud we're be of would Prisma it we critical. integrated we announcement to a that It's security a processes. for Bridgecrew in capabilities where from the helping teams DevOps is here. we're applications--Absolutely just this week, shifts, develop DevOps you be through has This security cases to use so the that in and enables is, their developers the be into enable I Cloud Prisma that One cloud highlight go And to for lot strongly to

recent our just where we advances for we scanning, easier that the the agent continue can that also seeing to only you're choice. ahead it able well overlooked agent-based around to being attention and the more how been offer that supporting to area get around the industry strategy, for permissions customers we're And like to not agent-less which making put customers are both trying Second, needs. advanced affects Security, initial identity, where hybrid security Cloud goal long understood. some capabilities customers and of and for model ones us an personal Cloud These becomes of adopt. announced adoption. and of our some And the entitlement, And always is they and that our to our a then the a in even ready with Cloud those getting now stay step has

Lee. Thanks Great.

Saket, Brian Saket from Barclays please that, with proceed. comes question of Essex. Kalia After next Our

also Nikesh, the I on Prisma customers. customers Hey, there, thought of SASE thanks next-gen it taking my see XXXX side, interesting for Firewall XXXX that question was roughly are to the here.

one do Prisma question that are from often And do that you to more doing short-term Do is is it you sense? with asked or curious substitution make was other. they think of find customer what you kind additive so spending substituting the how Does about long-term. SASE to about earlier the or Firewall? replacing impact of about that I'm find the the

Yeah, course. of

a we'd a X one a every also an is somewhere, requires in the and it comfortable to a X opportunity i.e. the roll got for case so now to takes release be roll customers going case perspective, of In I SASE, us the weeks, ago, you their across case, like-for-like work. upgrade Klarich, the yet a And of they're that upgrading which XXXX TCO stores boxes. do And agree stores deploy our that more truck comfortable and you're software Lee doesn't is valuable everywhere offer, Prisma it if be hardware us out, it be had few to tend colleague, allows to you for think on to it's highlighting and because to releases a write you in your will go not it put of next not, big of major we box SASE we want all software upgraded them to big will next do quarters. release and not it. -- to a a version takes the months you done you Take of year X hardware before in have to because our every that's Prisma XXXX be the and got job of new And change. customer, chain they're because to multiple to quarters it customers, them software, lower my boom, customer XX,XXX Mr. have our phenomenal from that LTV firewalls, basis.

think It I idea but for very Tesla. electric cars roll Mine a put much the and upgrade stupid into I then a a friend line, have car. has trucks case. you a saying, they bought to is give X I to and distracting, So software hardware,--I is he USB updates. and technically, back over-the-year of conceptually, we're a to a go His, years they'll from it. wait apologize and what he now drive looking too. electric dealership stick, new upgrade X does in mine

You tell you me one want. which

and a USB So term, car -- to the I think is the drive to like the dealership Tesla to in going stick it. say we're SASE in the long a

security It's outcome long It's better a and better it's outcome. perspective, my technical from better a a value us for So for customers, term. is in the for better value the the SASE customer a

Nikesh. Thanks, right. All Great.

after of Go Brian comes next that. Sachs ahead, Ty Liani Our Brian. Goldman [ph] Essex from up question with

thank and a taking you you, Thank for question.

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one. Dipak, wants this or whichever field Nikesh to For one

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is in no short offset. there term, So the

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to able been So book ship it, but we've not only it.

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back all U.S. look question. come -- a overall Xst internationally. September just the the in We in increase take levers Let's we to November price at different your -- did

as would But I of demand, that that a already you when have that lever. fundamentally, say strong that one is benefits visibility. have we the do you So look at

extended had had Okay, -- a longer that bit so but our allows possible. we weeks. with we make strong sure to that a as Like can times we have have Nikesh by though, couple uses scene visibility of catch world-class said. That that demand, with us a lead visibility as and more and actually little times lead now happening up try much that

leverage how But our that approach there, at I framework look scale, at a are vendors, to the can to We're say looking we of that, we very it's expect everything would I think terms get all see our is about we would balanced looking and costs at reduce payment trying also total under you lower our have. our of and that everything us would of costs, shareholders. anything [Indiscernible]. the beyond levers all

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lose, Clay? we Did Clay?

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think I I think.

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may coming with of question follow. Hamza from Stanley, you Morgan to [Indiscernible] Adam Fodderwala proceed. Next Tindle

metric number. in really gave for total quick do one us you RPO to there. what Thank going Dipak, parallel tell think more guys. a Dipak, hardware CRPO a just gauge to you these wondering taking a Hey my question. shift as getting bookings I'm case those can the was. strong you if growth he's to lonely be cleaner to software? that current is underlying for from you And RPO metric Maybe you

Thanks.

So in grew say total same rates my prepared at remarks as I the RPO. actually did current that RPO

are our both important. the So I that's think critically important I that future do of all is obligations. total reality is, because think RPO

what months. understanding I lot is the over of really a RPO gives you good predictability revenue time spent current think I your that a of of because looking next XX up

are both think important. I

I think the macro important. comment is RPO is

You have to look at both.

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you. Thank

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team. sales core the on First,

in partner-lead talked the beyond apply and you quarter areas continue of then driving wondering you I'm inflection about if Cortex. that channel, Cortex. And this call last something that Cortex majority the could On to had them in revenue, drive and motion that's to you in an deals

push that the to Cortex. areas If other drivers double-click into you beyond could of can on team do and further Thank the what maybe you.

question. for Thanks Great.

actually You 's having room a meaning in and is We customers call. Europe, been Amit here BJ BJ can meeting, an a earnings during have -- in now I'm elsewhere amazing. CIO what, know here doing has

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ability capabilities. go we As customers with to to been we our channel partners, Cloud amplify enabled able our have and approach

of I this valuation more quietly. No -- I building be terms all to roughly this is going firmly So think, other from believe wonder platform seeing comprehensive ahead security not still startups have Alto still nascent there. can in still perspective. XX Cloud we months of Palo We're huge than of startups we a to it's in engineers imagine, XX years. X as the standing are X, those you combined. capability a market I is market you're a lofty -- next out

our we're worried not and about ability. So our strength

our and nimble, have remain remain to agile, amplify we we have make to go-to-market capabilities. sure We to we have

capabilities will perspective, to amplify our capabilities. that Cortex go-to-market us Cloud and continuing see from our So yes, go-to-market you

the it's not have more one as lazy to CIOs more to XDR product anecdote, Cloud. very I And saying, with up Adam. I solutions are come in future many a going is large We are the seeding them, years give that's gives than More the had engage first, the that quarters, point to is first "This we Cortex we was working in now, working TAM on to Alto. and I personally to open because cybersecurity of for and enhancements us three Palo have but I In have go future I opportunity met comprehensive on some met the of years future I'm us for very will allowing that you with not because platform, moving the last at XX because a in for them working. last market stuff days, us Company, but third that thereafter the our keep strengthen least, not front. confidence exciting pillar. front XDR calls And

may one other. vendor help redundancy have end So go-to-market some sort from update. stack the to I to I " now the at environment. that's DevOps go of look willing to in entire in my one built me the So Therefore, into be

All Nikesh. right. Thanks, Great.

question Our your followed Rob, Sandler, you take question. next Robit by comes Irvin Piper Owens of may [ph]. Lu from Rob

came your the terms more seeing Curious year, taking a feels quarter did spend But of pipeline in. what I ensuing federal like end my Good Great. linear on more question. of the federal in evening it for given fiscal coming. importantly, the and Thanks. thanks of quarters, fronts, for end think your the span how things federal given

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bills. bills, see are for fascinating obviously items right morning very there you've a there are her business -- quarter in What midst very security you U.S. various for and cyber is to in more of us was to infrastructure of fiscal Fed did you was cyber is that for quarter. seeing line their Ignite directive there fiscal we strong. to for our because the That the heartening Easterly the various So have in manifested really actually government are there cyber even yesterday the it's end for and the year and line will is security a Ginny event items did time, because keynote where treat ample seen strong if at I our are now that management hear and spend in extent seriously, specific guys

of is So Cybersecurity seeding you there the budgets. of sort on in that’s see that federal going of can a lot

CEOs happens thoughtful, it it's takes with slower As time with and analysts everything it -- governments is slightly and than expect.

All right, thank you.

Great.

is of ask. followed question Matthew Urban, You with Evercore Liu Next Hedberg may from Irvin

taking Hi, thanks for the question.

that scale. areas potentially see market in your buy weigh But incremental product the near a you do yourselves I term platform, ahead? to build acquisition And in understand, of highlighted versus would decisions of having better the how be current You any which the versus looking completeness gap. large wanted do you

API well very areas the connectivity through we certain clear us market with So an have Irvin, which - based. worked been about of or

other space steered there ample we've people. For of been going access good identity email value. there. Google, example, people space, not we Proofpoints in and out with because Or players We management. clear think not clear incremental that believe add Us and there's any migrating bunch into that we've that, a to Microsoft, of security, eventually is there's to similarly going

way where there security and to Cloud. as we've moved areas think we be X lot this did I of we a ago. about a years to new going called the is some think And to identified blue seen it We the then products created ocean for Cloud, the this So said -- best Cloud. exercise are

are funded us, announced We for what get X Let's at and of the or [Indiscernible] think can quarter, is Prisma in were Cloud as grown space the front you, puts of did. X ahead we companies of in billion trend about this integrated we last which that for that I these times you results QX, on getting to early, $X at you startups I $X X expect so XX billion. many has which to said, and are

not myself. that's for sitting XX a given like that pay I'd X clearly So I'm times to price on to of that AR ARR

structurally that the replace the which in is endpoint and from being what So Carbon Security, compel are a happen we that space seeing ideally Blue by will that have market perspective, a which customer both [Indiscernible], to you the pursue, to replaced believe be today. that of the disruptive technology to [Indiscernible] others. used they an of you semantics, an it's space, is we or area want have And Ocean, XDR CrowdStrike, Cloud Black,

where is those A third our to. are and to firewall attach the teams that to the firewall. where one I So go areas are capability pay upsell able attention

yesterday launched we example, next-generation For CASB.

transformative think is a I that product.

CASB majority of think replace there. out the I it will

that's Again, of the Walter, lot the in me, long any areas, out doing we area go need industry, to it. we out question to we We've because in a from to to to to us of not had which look XX%. Lee, any would far if vendor. were haven't acquisitions. we ago meaningful X for quarter other to of CASB will doing and see of at and a and almost the so separately XX%, new still You but net X have X, point is not a found companies every build they're where what gaps it. us yearning said to the sensors, buy the X Having acquire, that years build bed I we jump is of we seriousness, have just XX% capabilities, XX that, better understand keep XX gotten track In times makes it's XX%, other compelling

question RBC ahead. Our Matthew next of go Keith followed Bachman. from Matt, Hedberg by

The Hey, for question thanks Lee. guys. or Nikesh

the of Alto Palo on really consolidator, concept how me I talk stood not what you to earlier out but that of only seeing Cloud? of you customer trend hear. from point these which your questions XX% like think And you the great XX% is some the of think to customers I also Prisma Cortex, was a in are other core, like best-of-breed to XDR, other Can outside in is and segments that said cases. progressed, to SASE has that things are

Yes.

comment your being consolidators, best-of-breed, not just that is First, on XXX% on. a spot

is and perspective they vendors do our we reducing just from for that with. value everything be we strive specific product adding of We a to from business customer do. that it number truly best-in-class area, focus integrate Our not to such when have together, in bring it and

first numbers those of And for along to for that. lines, great time from in is the Networks. customers to in the there quite Prisma starting well Cloud, new expand so Expanse. into up very of 's adoptions. into the security, Cloud as we into it's a for And past come it's into of And you similar similar We've Cortex level Cortex Prisma frankly, customers that saw that then of net us fuels in shared XDR, terms XSOAR, also net an point terms where right see adoption a new areas after that's number and adoption what of SASE Palo in opportunity other Alto network

fairly expand by successful the opportunity possible these once to with they and cases affords being has first then All product in been get made the of in that product. areas in best-in-class rapidly some different

Thank you, Lee.

next Our Turits, Keith, ahead. question Keith from Bachman go BMO MIchael with of next.

what Just your l like have Thank Can impact products to price the may increases. understand to can margin been corollary And the in then is, the have associated to forward? the us much. impact. us chain understand quantification to help and the price you trying anticipation you to topline direct from far sir. if any I’d this return you Dipak, for to very what been supply going the increases question with could the thus you, give

impacted for negatively year. be was quarter and likely it the the mentioned You for would

I OpEx could line you. that if you you if offsetting the in margins, costs the wondering chain Thank it of terms Just with out. just good a you're quantify flush with but know I'm impact. the doing the associated supply and job wondering holding could of

see on comment of pricing. it amount results you'll Let terms our there's November The in OpEx me beyond. off it really held factored quarters. to offset, for took million quite September the before, internationally. minimal will QX, your That's few QX continue as XXth that and table on we really can in just U.S. with because in I the things I us at best off in manage much of that, there enough of a start to you been it that that the pricing expect in in been give we're comes Obviously, do about with our Xst, is everything the QX, And through date. We suppliers mentioned to cost say majority see wouldn't the guidance. next QX come other When actual has and we that in to dollars. flexibility beyond. just our to guidance to why Like our ability. is, that's from QX, we've of looking the where to couple

soft a we catch you Dipak. try on into get transcript Well, the that. to that had microphone didn't if We'll

comes Ho, last for question Michael, next followed question will today. Our Jonathan KeyBanc, of ahead. go from who Turits our be MIchael by

you now contribute need you're And to now give next for might go-to-market challenges enough quarters couple to? Prisma and do talking you're this the Until those like just could Cloud you there? to Cortex both for you gen there getting do Nikesh, you some us ago or -- for lines you were product Thanks. you that from ARR now, as competitors. -- certain mentioned felt feel you stuff quarter? have hoped Are to do you some

not you ago many Michael we XX we in months years historical I these Three when businesses; with to launched products. is of perspective. leave were these ago want

I am my my the in every delighted I our Every XXX%. we today, So we and Are expectations? clean Yes. product our processes out high ahead Have our A better. we expectations cleaned of week, with make That's out forward? some sure. we stuff? capabilities, get go-to-market to where of better stuff For are? capabilities Do sure job. day, going

we to space are believe that an our keep, into product can think everybody identified make I big a business. critical sure not bring Prisma that, or valuations apparent on our not Cloud that area. capability are to from really were we would we dealing towards saying, on we'd Cortex we are that to early working I continue XSOAR, to people getting there a over and value, mass that them overtime, a expect it's has Expanse, see building hired on towards them expectation they be hard all made have specific I are that will we've believe, as we our continue to yet again, worked our to the really, sustain Cortex If a large doing I'm I Similarly, phenomenal people, in continually, build time, a quarter, lead, As our job. not. build Cloud to that then market, we strategic on continue in to I strengthen say just visibility in lead, do in This the do you very in the job that believe is issues front, some Cortex, and our said, have in XDR the competitive similarly past hard what highly front, that exceed happen. I Cloud job. teams [Indiscernible] and between that Like so in and making a with deliver have we're And that and XDR Prisma context Based it's them. think Prisma is new validation we teams convergence Also, capabilities we product that honestly customers. the

our Ho And for ask please question of today Jonathan, from last Blair. question. comes Jonathan William your Great.

for in. squeezing Thank me you

the to Thank terms is what a in these that get of cycle trends longer-term? sustain we sense giving And where will uptake. refresh to of wanted the work and Just you are confidence return you.

question. thank Jonathan, that you and interesting was for asking the

As meet and in lot adapting can which been reality every and CIO of here. everything I last been we've new new every have years year XX days last had a stack functional The had VPN the the The than a and come to number the consistent. is CIOs you in cyber of expecting the for looking all most the X from working IT of in office. security conversation so people reality it of to They're technology corner companies because attacks the to world. remote their market. mentioned, be older tell make my their to to And architectures back half I'll make deploy VPN, I've a in have conversation everybody information or not with is seen and I've more able are majority

new So with people architecture? do take I their thinking Couple Cloud term, that a are this threat is that factor. seeing make network long sustainable, how the this and about They are question, clouds. three it's two in when Three dipping them of cloud, -- all the the today, transformation, them predict years asked toes their are they ago or were in I'd funny.

well a is SASE Cloud as the as there trend opportunity. very So strong behind secular opportunity the

pick innings favorite cricket. your we're baseball analogy, over and in of bowled the second sport I think You we've in the first

one. Thank that you. understand I

It's alright. one either. understand the I first don't

all it's So, good.

closing over we're his Nikesh to will remarks. portion our I that Q&A of turn with call Well, for going it to Fantastic. the conclude and today, back

to just the as reiterate us investor and well we joining. well look as my around thank going Thank for deliver events, first years want putting all in you, visibility customers, I able given the everybody of visibility X.X the for world to you in as the the feel as the -- today, I more -- into where our our work thank have the as quarter. for to upcoming are. being partners, for off felt teams haven't and employees in to in pipeline forward most get I the three-year thank of results I want to plan I business we have you seeing all want into I in want being our are I you to attending. And of bullish QX, our hard been here, to

see For you next that time.