Q1 2026 Palo Alto Networks Inc Earnings Call

November 19, 2025

To make sure they are not leaking sensitive data to third party, Chris My error on time functionality is not just protecting us against the prompt injection data poisoning jailbreaking or deaths, but at the same time all the all the issues the data leak prevention DLP, the malware detection and prevention all of those are still relevant.

In order to networks is providing the visibility to the customer about all usages of journey II within their environment protecting what kind of data can lead to the LLS what kind of data is coming back from the LNR is potentially bringing in malware you need to work with the security vendors, who can keep pace with their tankers, that's where you want to partner.

With completely focused company like Palo Alto Palo Alto networks has the strongest solution in the market.

Hamza Fodderwala: Good day, everyone, and welcome to Palo Alto Networks' first fiscal quarter 2026 earnings conference call. I am Hamza Fodderwala, Senior Vice President of Investor Relations and Strategic Finance. Please note that this call is being recorded today, Wednesday, 19 November 2025, at 1:30PM Pacific Time. With me on today's call to discuss our fiscal first quarter results are Nikesh Arora, our Chairman and Chief Executive Officer, and Dipak Golechha, our Chief Financial Officer. Following our prepared remarks, Lee Klarich, our Chief Product and Technology Officer and board member, will join us for the question-and-answer portion. You can find the press release and other key information to supplement today's discussion on our website at investors.paloaltonetworks.com. While there, please click on the link for quarterly results to find the Q1 2026 supplemental information and Q1 2026 earnings presentation.

Good day, everyone and welcome to Palo Alto networks first fiscal quarter 2026 earnings conference call.

Using AI for generating code, you got to make sure that you are free of any malicious code. Any malware at the same time, you got to make sure you're not leaking. Sensitive data to third party, Prisma are AI. Runtime functionality is not just protecting us against the prompt injection data poisoning jailbreaking attacks, but at the same time, all the older issues, the data leak, prevention, the DLP, the malware detection and prevention, all those are still relevant.

Hamzah firewall senior Vice President of Investor Relations and strategic finance.

Please note that this call is being recorded today Wednesday November 19th 2025 at 130 PM Pacific time.

With me on today's call to discuss our fiscal first quarter results are in the catch aura, our chairman and Chief Executive Officer, and Deepak Malecha, Our Chief Financial Officer. Following our prepared remarks, Lee Klarich, our chief product and Technology Officer and Board member will join US for the question and answer portion.

Follow to Networks is providing visibility to the customer about all usages of GenAI within their environment. Protecting what kind of data can lead to the LMS? What kind of data is coming back from the LM that is potentially bringing in malware? You need to work with a security vendor who can keep pace with the attackers. That's where you want to partner with companies like Palo Alto Networks, which has the strongest solution in the market.

You can find the press release and other key information to supplement today's discussion on our website at investors <unk> Palo Alto networks Dot com.

I am Hamza Fodderwala, Senior Vice President of Investor Relations and Strategic Finance.

While there.

Click on the link for quarterly results to find the Q1 'twenty six supplemental information in Q1 'twenty earnings presentation.

Hamza Fodderwala: During the course of today's call, we will be making forward-looking statements and projections regarding the company's business operations and financial performance, as well as the company's pending acquisitions. These statements made today are subject to a number of risks and uncertainties that could cause our actual results to differ from these forward-looking statements. Please review our press release and recent SEC filings for a description of these risks and uncertainties. We assume no obligation to update any forward-looking statements made in the presentation today. This presentation contains non-GAAP financial measures and key metrics relating to the company's past and future expected performance. Non-GAAP financial measures should not be considered a substitute for financial measures prepared in accordance with GAAP. The most directly comparable GAAP financial metrics and reconciliations are in the press release and the appendix of the investor presentation.

During the course of today's call, we will be making forward-looking statements and projections regarding the company's business operations and financial performance, as well as the company's pending acquisitions. These statements made today are subject to a number of risks and uncertainties that could cause our actual results to differ from these forward-looking statements. Please review our press release and recent SEC filings for a description of these risks and uncertainties. We assume no obligation to update any forward-looking statements made in the presentation today. This presentation contains non-GAAP financial measures and key metrics relating to the company's past and future expected performance. Non-GAAP financial measures should not be considered a substitute for financial measures prepared in accordance with GAAP. The most directly comparable GAAP financial metrics and reconciliations are in the press release and the appendix of the investor presentation.

During the course of today's call, we will be making forward looking statements and projections regarding the company's business operations and financial performance as well as the company's pending acquisitions.

With me on today's call to discuss our fiscal first quarter results are Nikesh Arora, our Chairman and Chief Executive Officer, and Dipak Golechha, our Chief Financial Officer.

These statements made today are subject to a number of risks and uncertainties that could cause our actual results to differ from these forward looking statements.

Following our prepared remarks, Lee Clarage, our Chief Product and Technology Officer and board member, will now speak.

We'll join you for the question-and-answer portion.

Please review our press release and recent SEC filings for a description of these risks and uncertainties, we assume no obligation to update any forward looking statements made in the presentation today.

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

This presentation contains non-GAAP financial measures and key metrics relating to the pump these past and future expected performance.

While there, please click on the link for quarterly results to find the Q1 2026 supplemental information and Q1 2 earnings presentation.

non-GAAP financial measures should not be considered a substitute for financial measures prepared in accordance with GAAP. The most directly comparable GAAP financial metrics and reconciliations are in the press release and the appendix of the Investor presentation.

During the course of today’s call, we will be making forward-looking statements and projections regarding the company’s business operations and financial performance, as well as the company’s pending acquisitions.

Hamza Fodderwala: Unless specifically otherwise noted, all results and comparisons are on a fiscal year-over-year basis. We also note that management is scheduled to participate in the UBS conference this quarter. I will now turn the call over to Nikesh.

Unless specifically otherwise noted, all results and comparisons are on a fiscal year-over-year basis. We also note that management is scheduled to participate in the UBS conference this quarter. I will now turn the call over to Nikesh.

Unless specifically otherwise noted all results in comparisons are on a fiscal year over year basis.

These statements made today are subject to a number of risks and uncertainties that could cause our actual results to differ from these forward-looking statements.

We also note that management is scheduled to participate in a UBS conference. This quarter I will now turn the call over to the cash.

Nikesh Arora: Thank you, Hamza. Good afternoon, and thank you, everyone, for joining us for our earnings call today. As you can see, we had a strong start to the year in Q1. We exceeded expectations across every guided metric. Demand across our core business remains robust, and customers continue to platformize with us. Year over year, RPO grew 24%, NGS ARR was up 29%, and total revenue was up 13%. We saw strength across our portfolio in SASE, XIM, software firewalls, and even saw early traction in our AI security platform, Prisma AIRS. Our top-line growth was complemented by continued improvement in profitability, achieving our second straight quarter of 30-plus% operating margin. These results are a direct outcome of our strategy too. By delivering better security outcomes, our platform is earning more and more of the trust that used to be fragmented across dozens of point products.

Please review our press release and recent SEC filings for a description of these risks and uncertainties. We assume no obligation to update any forward-looking statements made in the presentation today.

Thank you Hamzah good afternoon, and thank you everyone for joining us for our earnings call today.

As you can see we had a strong start to the year in Q1.

This presentation contains non-GAAP financial measures and key metrics relating to the company's past and future expected performance.

Z to expectations across every guided metric demand across our core business remains robust and customers continue to platform is with us.

Year over ear, ARPA grew 24% and G. S Air was up 29% and total revenue was up 16% we.

Non-GAAP financial measures should not be considered a substitute for financial measures prepared in accordance with GAAP. The most directly comparable GAAP financial metrics and reconciliations are in the press release and the appendix of the investor presentation.

We saw strength across our portfolio and SaaS E X I am software firewalls, and even this early traction and our AI security platform because my heirs.

Unless specifically noted otherwise, all results and comparisons are on a fiscal year-over-year basis.

We also note that management is scheduled to participate in the UBS conference this quarter.

Our topline growth was complemented by continued improvement in profitability, achieving our second straight quarter of 30 plus percent operating margin.

I will now turn the call over to the cash.

Thank you, Hamza. Good afternoon and thank you to everyone joining us for our earnings call today.

These results are a direct outcome of our strategy by delivering better security outcomes. Our platform is earning more and more of the trust that used to be fragmented across dozens of point products.

As you can see, we had a strong start to the year in Q1. We exceeded expectations across every guided metric.

Nikesh Arora: At the same time, the threat landscape continues to evolve faster than we expected because of AI. As many of you saw last week, with one of the major AI platforms, AI hackers aren't a future threat; they're here now. This was the first reported case of an AI agent autonomously conducting a large-scale nation-state cyber attack. The attacker was able to manipulate an agent to take steps on its own with minimal human intervention. This is a turning point, proof that attackers are already weaponizing AI agents at scale. Even more importantly, they're able to attack fast, and exfiltrate will be able to exfiltrate faster. AI is exposing the cracks in our enterprise architectures, which do not have robust security. Patches are incomplete, platforms are missing, and there is a plethora of point products across the enterprise. This gap is exactly where attackers thrive.

At the same time, the threat landscape continues to evolve faster than we expected because of AI. As many of you saw last week, with one of the major AI platforms, AI hackers aren't a future threat; they're here now. This was the first reported case of an AI agent autonomously conducting a large-scale nation-state cyber attack. The attacker was able to manipulate an agent to take steps on its own with minimal human intervention. This is a turning point, proof that attackers are already weaponizing AI agents at scale. Even more importantly, they're able to attack fast, and exfiltrate will be able to exfiltrate faster. AI is exposing the cracks in our enterprise architectures, which do not have robust security. Patches are incomplete, platforms are missing, and there is a plethora of point products across the enterprise. This gap is exactly where attackers thrive.

At the same time the threat landscape continues to evolve faster than we expected because of AI.

Demand across our core business remains robust, and customers continue to partner with us.

As many of you saw last week with one of the major AI platforms hackers are the future threat, they're here now.

This is the first reported case of an AI agent autonomously conducting a large scale nation state cyber attack the.

Year-over-year, we saw strength across our portfolio in SASE, XDR, software firewalls, and certainly traction in our AI security platform, Prisma Aires.

<unk> was able to manipulate and agent to take steps on its own with minimal human intervention.

This is a turning point.

Our top-line growth was complemented by continued improvement in profitability, achieving our second straight quarter of 30-plus percent operating margin.

Roof that attackers are already <unk> the agents at scale.

More importantly, they are able to attack fast and <unk> will be able to exfiltrate faster.

These are all centered direct outcomes of our strategy to deliver better security outcomes. Our platform is learning more and more of the trust that used to be fragmented across dozens of point products.

AI is exposing the cracks and our enterprise architectures, which do not have robust security.

At the same time, the threat landscape continues to evolve faster than we expected because of AI.

Bachelor's or incomplete platform, you're missing there is a plethora of point products across the enterprise.

Nikesh Arora: They're testing how far they can exploit a model. They're running prompt injections, jailbreaks, model manipulation, and now we're seeing the next phase: autonomous AI agents being leveraged into the attack chain. AI is here, and with it, AI attackers are here too. Our message to customers is clear: real-time visibility and security are essential for your infrastructure. This reality necessitates a paradigm shift in the industry. We must move away from today's fragmented security landscape and towards platformization. AI requires a seamless cyber data strategy. This platform approach allows security agents to be utilized effectively by the good guys to detect attacks, protect customers, and remediate security concerns. Fragmentation creates friction, which in turn causes latency. Latency is a critical enemy of real-time cybersecurity. This is the backdrop that informs our strategy as we go forward. Now, let's get into the quarter.

They're testing how far they can exploit a model. They're running prompt injections, jailbreaks, model manipulation, and now we're seeing the next phase: autonomous AI agents being leveraged into the attack chain. AI is here, and with it, AI attackers are here too. Our message to customers is clear: real-time visibility and security are essential for your infrastructure. This reality necessitates a paradigm shift in the industry. We must move away from today's fragmented security landscape and towards platformization. AI requires a seamless cyber data strategy. This platform approach allows security agents to be utilized effectively by the good guys to detect attacks, protect customers, and remediate security concerns. Fragmentation creates friction, which in turn causes latency. Latency is a critical enemy of real-time cybersecurity. This is the backdrop that informs our strategy as we go forward. Now, let's get into the quarter.

This gap is exactly where attackers tribes that.

They are testing how far they can exploit a model, they're running prompt injections jailbreaks Marlin manipulation and now we're seeing the next phase autonomous AI agents is being leveraged into the attack chain.

This is the first reported case of an AI agent autonomously conducting a large-scale nation-state cyber attack.

The attacker was able to manipulate an agent to take steps on its own with minimal human intervention.

Yeah. He is here and with it yeah attackers are here too.

This is a turning point.

Our message.

To customers, it's clear real time visibility and security are essential for infrastructure.

This reality necessitates a paradigm shift in the industry, we must move away from today's fragmented security landscape and towards <unk>.

Proof that our weaponizing agents at scale, even more importantly, enable backfist, and it will be able to exit faster.

If it cracks in enterprise architectures that do not have robust security.

AIA requires a seamless cyber data strategy.

Patches are incomplete; platforms are missing. There is a plethora of point products across the enterprise.

This platform approach allows security is to be utilized effectively by the good guys to detect attacks protect customers and an immediate security concerns.

Fragmentation creates friction which in turn causes latency latency is critical.

This gap is exactly where attackers thrive in their testing: how far they can exploit a model. They're running prompt injections, jailbreaks, and model manipulation, and now we're seeing the next phase—autonomous AI agents—being leveraged into the attack chain.

Enemy of realtime cyber security.

This is the backdrop that informs our strategy as we go forward now let's get into the quarter.

Nikesh Arora: In Q1, platformization once again drove large deals across multiple industry verticals. This included US Federal, where we had a strong quarter and notable competitive wins. One example was a $32 million SASE deal with a US cabinet agency securing 60,000 seats. This agency displaced a major SASE incumbent as they needed a platform to provide unified visibility across both their firewall estate and remote endpoints. Another example was a $100 million deal with a large US telecom provider. This included an $85 million commitment to XIM, which is our largest XIM deal ever. This customer chose us to consolidate their disparate point products based on the ability of our platform to deliver materially faster meantime to respond. The common theme across these large transactions is clear. Customers are moving from managing vendor sprawl to demanding superior demonstrable security outcomes through platformization.

In Q1, platformization once again drove large deals across multiple industry verticals. This included US Federal, where we had a strong quarter and notable competitive wins. One example was a $32 million SASE deal with a US cabinet agency securing 60,000 seats. This agency displaced a major SASE incumbent as they needed a platform to provide unified visibility across both their firewall estate and remote endpoints. Another example was a $100 million deal with a large US telecom provider. This included an $85 million commitment to XIM, which is our largest XIM deal ever. This customer chose us to consolidate their disparate point products based on the ability of our platform to deliver materially faster meantime to respond. The common theme across these large transactions is clear. Customers are moving from managing vendor sprawl to demanding superior demonstrable security outcomes through platformization.

In Q1.

AI is here. And with it, AI attackers are here, too. Our message to customers is clear: real-time visibility and security are essential for your infrastructure.

Amortization once again drove large deals across multiple industry verticals.

This included U S Federal where we had a strong quarter and notable competitive wins. One example is a $36 million sassy deal with a U S Cabinet agency Securities 60000 seats.

This reality necessitates a paradigm shift in the industry. We must move away from today's fragmented security landscape and towards platformization.

This agency displaced imager sassy incumbent.

They needed a platform to provide unified visibility across both their firewall estate in remote endpoints. Another example.

AI requires a seamless data strategy. This platform approach allows security agents to be utilized effectively by the good guys to detect attacks, protect customers, and address immediate security concerns.

For 100 million dollar deal with all U S telecom provider this.

Fragmentation creates friction, which in turn causes latency. Latency is critical.

This include in that $85 million commitment to X I am which is our largest <unk> deal ever.

enemy of real-time cyber security.

This customer chose us to consolidate the disparate point products based on the ability of our platform to deliver materially faster mean time to respond.

This is the backdrop that informs our strategy as we go forward. Now, let's get into the quarter.

The common theme across the large transactions is clear customers are moving from managing vendor sprawled intervallic superior demonstrable security outcomes through personalization.

Nikesh Arora: The natural place for customers to start their journey is network security, which remains our largest business. In Q1, we continue to see strength in our next-generation software form factors. SASE had a phenomenal quarter. ARR grew 34% year over year and surpassed $1.3 billion in Q1, making us the fastest-growing SASE provider at scale. We now have approximately 6,800 SASE customers, including 1/3 of the Fortune 500, including leading technology companies like IBM and Oracle. Even though it's early days, we continue to see strong momentum with secure browsers. The arrival of AI and agentic browsers will expose security cracks in them and focus the enterprise on ensuring widespread adoption of secure browsers. In Q1, we crossed 7.5 million browsers sold, while our bookings nearly quadrupled year over year.

The natural place for customers to start their journey is network security, which remains our largest business. In Q1, we continue to see strength in our next-generation software form factors. SASE had a phenomenal quarter. ARR grew 34% year over year and surpassed $1.3 billion in Q1, making us the fastest-growing SASE provider at scale. We now have approximately 6,800 SASE customers, including 1/3 of the Fortune 500, including leading technology companies like IBM and Oracle. Even though it's early days, we continue to see strong momentum with secure browsers. The arrival of AI and agentic browsers will expose security cracks in them and focus the enterprise on ensuring widespread adoption of secure browsers. In Q1, we crossed 7.5 million browsers sold, while our bookings nearly quadrupled year over year.

A natural place for customers to start their journey is network security, which remains our largest business.

Okay.

In Q1, we continue to see strength in our next generation software form factors sassy had a phenomenal quarter.

Was a $100 million deal with a large U.S. telecom provider.

<unk> grew 34% of your ear and surpassed $1 billion in Q1, because the fastest growing SaaS provider at scale.

We now have approximately 6000 800000 customers, including one third of the Fortune 500, including leading technology companies like IBM and Oracle.

This included an $85 million commitment to XIM, which is a lot of products and the ability of Life Form to deliver materially faster mean time to respond.

Even though it's early days, we continued to see strong momentum with secure browsers.

Arrival of AI and agenda browsers will expose security cracks on them and focus to enterprise and ensuring widespread adoption of secure browsers and.

The common theme across these large transactions is clear: customers are moving from managing vendors to all-automatic, superior, demonstrable security items to reap formation. The next place for customers to start their journey is network security, which remains our largest business.

In Q1.

<unk> seven 5 million browsers sold.

In Q1, we continue to see strength in our next-generation software form factors. Sassy had a phenomenal quarter.

While our bookings nearly quarter both year over year.

Nikesh Arora: One more product which I'm getting more and more excited about recently is a shift I'm observing in our customers deploying more and more software firewalls, and it's beginning to show in our results. Product revenues grew 23% year over year. Today, nearly half of our product revenues are driven by the software form factor. We now have over 12,500 customers and maintain our leading market position in software firewalls. As AI transformation accelerates, growth in cloud workloads, the software firewall provides essential runtime protection with a new AI data center, and with its recent ability to step up and protect AI, we expect continued momentum. Talking about protecting AI, let's talk for a bit about Prisma AIRS. As I mentioned earlier, AI is moving faster than expected. This creates a critical moment for enterprise innovation.

One more product which I'm getting more and more excited about recently is a shift I'm observing in our customers deploying more and more software firewalls, and it's beginning to show in our results. Product revenues grew 23% year over year. Today, nearly half of our product revenues are driven by the software form factor. We now have over 12,500 customers and maintain our leading market position in software firewalls. As AI transformation accelerates, growth in cloud workloads, the software firewall provides essential runtime protection with a new AI data center, and with its recent ability to step up and protect AI, we expect continued momentum. Talking about protecting AI, let's talk for a bit about Prisma AIRS. As I mentioned earlier, AI is moving faster than expected. This creates a critical moment for enterprise innovation.

One more product, which I'm getting more and more excited about recently is the shift I'm observing and our customers to deploy more and more software firewalls and is beginning to show in our results product revenues grew 22% year over year today nearly half of our product revenues are driven by the software form factor.

There are good 34% of your year and surpass $1.3 billion in Q1 because we are the fastest growing SaaS provider at scale.

We now have approximately 6,800 taxi customers, including one-third of the 14,500, which includes leading technology companies like IBM and Oracle.

We now have over 12500 customers.

Even though it's early days, we continue to see strong momentum in secure browsers.

<unk> maintained our leading market position and sulfur firewalls.

As the it transformation accelerates.

Growth in cloud cloud workloads to software apparel provides essential runtime protection with new AI data center and with its recent ability step of predictive AI, we expect continued momentum.

The arrival of AI has gently exposed security cracks in the industry and focused the enterprise on ensuring widespread adoption of security browsers.

In q1.

We crossed 7 and a half million browsers, sold.

While our bookings nearly quadrupled year over year.

Talking about protecting yeah, let's talk a bit about prisma airs.

As I mentioned earlier.

<unk> is moving faster than expected.

Nikesh Arora: The reality is that while 78% of organizations are embracing AI transformation, a staggering 94% still lack the necessary security guardrails, presenting a massive risk. With our acquisition of Protect AI now fully integrated, we introduced Prisma AIRS 2.0 in Q1, the industry's most comprehensive end-to-end platform to secure AI, protecting everything from autonomous agents to the models that power them. And I predict here that AI agents will become a problematic insider threat if not secured. Prisma AIRS is the essential circuit breaker layer to stop them. It unites deep model inspection, real-time agent defense against threats like prompt injection, and continuous autonomous AI red teaming in one platform. And once our acquisition of CyberArk closes, the addition of identity security will be critical to this mission, providing the essential privilege controls to govern these new autonomous insider threats and prevent agent identity impersonation.

The reality is that while 78% of organizations are embracing AI transformation, a staggering 94% still lack the necessary security guardrails, presenting a massive risk. With our acquisition of Protect AI now fully integrated, we introduced Prisma AIRS 2.0 in Q1, the industry's most comprehensive end-to-end platform to secure AI, protecting everything from autonomous agents to the models that power them. And I predict here that AI agents will become a problematic insider threat if not secured. Prisma AIRS is the essential circuit breaker layer to stop them. It unites deep model inspection, real-time agent defense against threats like prompt injection, and continuous autonomous AI red teaming in one platform. And once our acquisition of CyberArk closes, the addition of identity security will be critical to this mission, providing the essential privilege controls to govern these new autonomous insider threats and prevent agent identity impersonation.

This creates a critical moment for enterprise innovation.

The reality is that while 78% of organizations that are embracing AI transformation, a staggering, 94% still lack the necessity security guard rails, presenting a massive risk.

One more product that I'm getting more and more excited about recently is a shift in time observing, and our customers are deploying more and more software firewalls, and it's beginning to show in our results. Product revenue grew 23% year-over-year today. Nearly half of our product revenue is driven by the software firewall.

We now have over 12,500 customers.

and maintained our leading Market position in software firewalls

With our acquisition of protecting our fully integrated we introduced <unk> two <unk> in Q1 Linda.

as AI transformation accelerates.

The industry's most comprehensive end to end platform, particularly at protecting everything from autonomous agents the model that power them.

Growth in crowd work and cloud workloads. The software power will provide essential runtime protection with the new AI Data Center. With its recent ability to step up and protect AI, we expect continued momentum.

But I would predict here that AI agents will become a problematic insider threat if unsecured.

Talking about protecting AI. Let's talk for a bit about Prisma Aires.

Cause Myers is essential circuit breaker layer to stop them.

The United steep model inspection realtime agent defense against threats like pump injection and continuous autonomous AI red teaming in one platform.

As I mentioned earlier, AI is moving faster than expected.

This creates a critical moment for enterprise innovation.

Once our acquisition of Ciber. Our closes. The addition of identity security will be critical to this mission, providing the essential berlitz controls to government. These new autonomous insider threats and prevent agent identity impersonation.

The reality is that while 78% of organizations are embracing AI transformation, a staggering 94% still lack the necessary security guardrails, presenting a massive risk.

Nikesh Arora: Our commitment to AI security is driving new high-value partnerships, including a collaboration with NVIDIA to secure the AI factory with Prisma AIRS on BlueField and tight integrations with platforms like Glean, IBM, Factory, and ServiceNow in securing the exploding number of agentic AI workflows. Early customer traction is strong, reflecting the general market need. The number of AIRS deals in Q1 more than doubled versus last quarter. We believe we are the furthest ahead in AI security with marquee customers signing up with Palo Alto Networks. As they move from traditional to AI workloads, we believe we are going to continue to be in the pole position. In the same way AI surprised the world with its pace, I want to talk about something else that is going to become relevant from a technology shift and security perspective: quantum. Quantum computing has seen significant innovation over the last year.

Our commitment to AI security is driving new high-value partnerships, including a collaboration with NVIDIA to secure the AI factory with Prisma AIRS on BlueField and tight integrations with platforms like Glean, IBM, Factory, and ServiceNow in securing the exploding number of agentic AI workflows. Early customer traction is strong, reflecting the general market need. The number of AIRS deals in Q1 more than doubled versus last quarter. We believe we are the furthest ahead in AI security with marquee customers signing up with Palo Alto Networks. As they move from traditional to AI workloads, we believe we are going to continue to be in the pole position. In the same way AI surprised the world with its pace, I want to talk about something else that is going to become relevant from a technology shift and security perspective: quantum. Quantum computing has seen significant innovation over the last year.

Our commitment to add securities driving new high value partnerships, including our collaboration with Nvidia to secure the factory with Prisma airs on Bluefield and tight integrations with platforms like glean I B M factory in service now and securing the exploding number of agenda care workflows.

With our acquisition of Protecting and our full integration, we introduce Prisma S 2.0 in Q1. The industry's most comprehensive end-to-end platform to secure AI, protecting everything from autonomous agents to the models that power.

And I'll predict here, that AI agents will become a problematic inside a threat, if not secured.

Because my air is the essential circuit breaker layer to stop them.

Early customer traction is strong, reflecting the German market need and the number of <unk> deals in Q1 more than doubled versus last quarter. We believe we are the farthest ahead and AI security with marquee customers signing up with Palo Alto networks as they move from traditional to AI workloads. We believe we're going to continue to be in the pole position.

Injection and continuous autonomous AI red teaming and one platform.

And the same way a surprise awarded this pace I want to talk about something else that is going to become relevant from a technology shift and security perspective quantum.

And once our acquisition of Cyber is closed, the addition of identity security will be critical to this mission, providing the essential privilege controls to govern these new autonomous insider threats and prevent agent identity impersonation.

Condom computing.

Nikesh Arora: We're getting more and more optimistic on the arrival of quantum and expect it to be commercialized by 2029. As is widely known, quantum computing has the ability to break current encryption across technology stacks. Enterprises have less than five years to get their estates to quantum readiness. There is a fear that some nation-states will have quantum compute capability sooner than 2029. Just last month, our partner IBM announced they were able to run a key quantum error correction algorithm on commonly available chips. The US government and many other nations are emphasizing PQC, or post-quantum cryptography, to drive new cryptographic standards that are resistant to attacks from future large-scale quantum computers. To address this, we have launched and are going to be delivering a complete quantum-safe strategy. First, we help you discover.

We're getting more and more optimistic on the arrival of quantum and expect it to be commercialized by 2029. As is widely known, quantum computing has the ability to break current encryption across technology stacks. Enterprises have less than five years to get their estates to quantum readiness. There is a fear that some nation-states will have quantum compute capability sooner than 2029. Just last month, our partner IBM announced they were able to run a key quantum error correction algorithm on commonly available chips. The US government and many other nations are emphasizing PQC, or post-quantum cryptography, to drive new cryptographic standards that are resistant to attacks from future large-scale quantum computers. To address this, we have launched and are going to be delivering a complete quantum-safe strategy. First, we help you discover.

As seen significant innovation in the last year.

We're getting more and more optimistic on the arrival of quantum and expected to be commercialized by 2029.

Commitment to our security is driving new, high-value partnerships, including a collaboration with Nvidia to secure the AI Factory with Prisma airs on Bluefield, and tight integrations with platforms like Glean, IBM, Factory, and service. Now in securing the exploring number of authentic workflows.

As is widely known quantum computing has the ability to break current encryption across technology stacks.

Enterprise there are less than five years to get their states to quantum readiness that is a fear that some nation states will have quantum compute capability sooner than 2029.

Just last month, our partner IBM announced they were able to run a key quantum error correction algorithm on commonly available chips U S government and many other nations that emphasizing PTC or post quantum cryptography to drive new cryptographic standards that are resistant to attacks from future large scale quantum computers.

Section is strong. If the general market needs a number of deals in Q1, we more than doubled versus the last quarter. We believe we are the furthest ahead in AI security, with marquee customers signing up with Palo Alto Networks. As they move from traditional to AI workloads, we believe we are going to continue to be in the pole position.

And the same way I surprised the world with its pace, I want to talk about something else that is going to become relevant from a technology shift and security perspective: quantum.

Quantum computing.

Has seen significant innovation over the last year.

To address this we have.

Launched a really are going to be delivering a complete quantum save strategy first we help you discover in August we launched a new version of Pan OS 12, Dot one Orion, which provides a quantum readiness solution to give customers an automated inventory of their cryptographic risk.

We are getting more and more optimistic on the arrival of quantum and expect it to be commercialized by 2029.

Nikesh Arora: In August, we launched our new version of PAN-OS 12.1 Orion, which provides a quantum readiness solution to give customers an automated inventory of their cryptographic risk. Second, we help you protect. We launched our new 5th-generation firewalls, which are optimized for quantum security. Third, we help you accelerate. Our platform's unique cipher translation capability can make legacy systems quantum-safe immediately, even if the application itself cannot be upgraded. Beyond this, we have just announced that we're deepening our partnership with IBM to deliver the quantum-safe readiness and remediation service, a complete end-to-end solution for PQC migration. Now moving to Cortex, which is a pillar of our security operations center strategy. XSIAM continued its incredible trajectory in Q1. We now have approximately 470 customers, with the average customer paying over $1 million in ARR. This includes large, referenceable customers in every major industry. The success is no coincidence.

In August, we launched our new version of PAN-OS 12.1 Orion, which provides a quantum readiness solution to give customers an automated inventory of their cryptographic risk. Second, we help you protect. We launched our new 5th-generation firewalls, which are optimized for quantum security. Third, we help you accelerate. Our platform's unique cipher translation capability can make legacy systems quantum-safe immediately, even if the application itself cannot be upgraded. Beyond this, we have just announced that we're deepening our partnership with IBM to deliver the quantum-safe readiness and remediation service, a complete end-to-end solution for PQC migration. Now moving to Cortex, which is a pillar of our security operations center strategy. XSIAM continued its incredible trajectory in Q1. We now have approximately 470 customers, with the average customer paying over $1 million in ARR. This includes large, referenceable customers in every major industry. The success is no coincidence.

As is widely known, quantum computing has the ability to break current encryption across technology stacks.

We helped protect we launched our new fifth generation firewall, which are optimized for quantum securities third we help you accelerate our platform. So unique cipher translation capability can make legacy systems condensate immediately even if the application itself cannot be upgraded.

Enterprises are less than 5 years away from achieving Quantum Readiness. There is a fear that some nation-states will develop quantum computing capabilities sooner than 2029.

Beyond this there.

Just announced that we're deepening our partnership with IBM to deliver the quantum save readiness and remediation service. The complete end to end solution for PTC migration.

Just last month, our partner IBM announced they were able to run a key quantum error correction algorithm on commonly available chips. The U.S. government and many other nations are emphasizing PQC, or post-quantum cryptography, to drive new cryptographic standards that are resistant to attacks from future large-scale quantum computers.

Now moving to cortex, which is a pillar of our security operations Center strategy.

<unk> continued its incredible trajectory in Q1.

To address this, we have launched, or will be delivering, a complete Quantum-safe strategy. First, we help you discover. In August, we launched our new version of PanOS 12.1 Orion, which provides a Quantum Readiness solution to give customers an automated inventory of their cryptographic risk.

Now there are approximately 470 customers with the average customer being over a million dollars and there are distinct.

This includes large reference customers in every major industry.

Nikesh Arora: XIM was built for large-scale data processing, organizing it, normalizing it, and making sense of it in real time. Today, we're processing 15 petabytes of telemetry on a daily basis. The result is demonstrable security outcomes. Over 60% of our deployed XIM customers have reduced their MTTR, or median time to respond, from days or weeks down to minutes. I am also thrilled to announce the launch of Agentix this quarter. Agentix brings powerful AI agents directly to the core of enterprise security challenges. In the future, the only effective countermeasure against hacker AI will be our own AI agents, purpose-built for advanced security detection and remediation. For years, the industry has struggled with two defining issues: overwhelming alert fatigue and a massive global talent shortage. Agentix is our definitive answer. There's a leap beyond mere automation. This is true autonomy.

XIM was built for large-scale data processing, organizing it, normalizing it, and making sense of it in real time. Today, we're processing 15 petabytes of telemetry on a daily basis. The result is demonstrable security outcomes. Over 60% of our deployed XIM customers have reduced their MTTR, or median time to respond, from days or weeks down to minutes. I am also thrilled to announce the launch of Agentix this quarter. Agentix brings powerful AI agents directly to the core of enterprise security challenges. In the future, the only effective countermeasure against hacker AI will be our own AI agents, purpose-built for advanced security detection and remediation. For years, the industry has struggled with two defining issues: overwhelming alert fatigue and a massive global talent shortage. Agentix is our definitive answer. There's a leap beyond mere automation. This is true autonomy.

The success in local incidents Exxon was built for large scale data processing organizing it normalizing it making sense of it in real time today for processing 15, petabytes of telemetry on a daily basis.

Second, we help you protect. We launched our new fifth-generation firewalls, which are optimized for Quantum Security. Third, we help you accelerate. Our platform has a unique cipher translation capability that can make legacy systems quantum-safe immediately, even if the application itself cannot be updated.

The result is demonstrable security outcomes.

Over 60% of our deployed Exxon customers have reduced their MTT. Our median time to response from days or weeks down to minutes.

Beyond this, we are just announcing that we're deepening our partnership with IBM to deliver the quantum-safe Readiness and Remediation service to complete an end-to-end solution for PQC migration.

Now, moving to Cortex, which is a pillar of our Security Operations Center strategy.

I'm also thrilled to announce the launch of a gentex this quarter, a gentex brings powerful AI agents directly to the core of enterprise security challenges in the future. The only effective countermeasure against hacker AI will be our own AI agents purpose built for advanced security detection and remediation.

Exam continued; its incredible trajectory in Q1.

We now have approximately 470 customers, with the average customer paying over $1 million. This includes large, referenceable customers across every major industry.

Years, the industry has struggled with two defining issues.

The success is no coincidence. XI was built for large-scale data processing, organizing it, normalizing it, and making sense of it in real time.

We're running alert fatigue, and a massive global talent shortage, a gentex is a definitive answer does the leap beyond mere automation this is to autonomy.

Today, we are processing 50 terabytes of telemetry on a daily basis.

Nikesh Arora: The ability to use predefined agents or build custom agents to secure enterprise is a step change in how security will work in the future. We are fundamentally transforming security operations and optimization by deploying autonomous AI agents that deliver enhanced speed, superior efficiency, and greater control for security practitioners. Right out of the box, Agentix leverages a broad integration ecosystem, connecting with thousands of existing security and IT tools, and third-party environments. It provides customers with an intelligent, fully governed, and completely transparent teammate across the enterprise. Ready to operate on day one, Agentix accelerates response, elevates quality, and frees up scarce human talent to focus on higher-order strategic work. Now, shifting gears, I am pleased to announce our CyberArk integration plans remain fully on track, and we're proud to have received overwhelming shareholder support for the acquisition, which is now expected to close in fiscal Q3.

The ability to use predefined agents or build custom agents to secure enterprise is a step change in how security will work in the future. We are fundamentally transforming security operations and optimization by deploying autonomous AI agents that deliver enhanced speed, superior efficiency, and greater control for security practitioners. Right out of the box, Agentix leverages a broad integration ecosystem, connecting with thousands of existing security and IT tools, and third-party environments. It provides customers with an intelligent, fully governed, and completely transparent teammate across the enterprise. Ready to operate on day one, Agentix accelerates response, elevates quality, and frees up scarce human talent to focus on higher-order strategic work. Now, shifting gears, I am pleased to announce our CyberArk integration plans remain fully on track, and we're proud to have received overwhelming shareholder support for the acquisition, which is now expected to close in fiscal Q3.

The ability to use predefined agents or build custom eases to secure enterprise is a step change in how security will work in the future.

The result is demonstrable security outcomes: over 60% of our deployed customers have reduced their MTTR, or median time to respond, from days or weeks down to minutes.

They are fundamentally transforming security operations and optimization by deploying autonomous agents that deliver enhanced speed superior efficiency and greater control for security practitioners.

We're out of the box <unk> Leverages, a broad integration ecosystem connecting with thousands of existing secured 90 twos and third party environments. It provides customers with an intelligent fully governed and completely transparent teammate across the enterprise.

I'm also thrilled to announce the launch of a genetics initiative this quarter. Eugenics brings powerful AI agents directly to the core of enterprise security challenges in the future. The only effective countermeasure against hackers will be our own AI agents, purpose-built for advanced security detection and remediation.

Ready to operate on day, one a gentex accelerates response elevates quality and frees up scarce human talent to focus on higher order strategic work.

For years, the industry has struggled with two defining issues: overwhelming alert fatigue and a massive global talent shortage. Agentic is our definitive answer. This is a leap beyond mere automation. This is true autonomy.

Now shifting gears.

I am pleased to announce our <unk>.

The ability to use predefined agents or build custom agents to secure the enterprise is a step change in how security will work in the future.

Ciber our integration plans remain fully on track and we're proud to have received overwhelming shareholder support for the acquisition, which are not expected to close in fiscal Q3.

Nikesh Arora: Since our announcements in July, we've spent more time with the CyberArk team. We are even more excited about the growth opportunity in future product roadmap. This includes our vision of democratizing identity security across the enterprise and making identity the next platform for Palo Alto Networks. Anecdotally, our customers share in our enthusiasm, and the early feedback has been encouraging. As many of you saw, CyberArk's business continues to execute, achieving record net new ARR in their most recent quarter. Even as we invest ahead of the curve, our long-term financial model remains intact. The scale of our platforms and operating leverage in our business reinforces our confidence in achieving 40-plus percent pre-cash flow margins by FY28, inclusive of both the pending CyberArk and Chronosphere acquisitions. We are executing from a position of strength, and we see a clear path to drive both innovation and financial discipline.

Since our announcements in July, we've spent more time with the CyberArk team. We are even more excited about the growth opportunity in future product roadmap. This includes our vision of democratizing identity security across the enterprise and making identity the next platform for Palo Alto Networks. Anecdotally, our customers share in our enthusiasm, and the early feedback has been encouraging. As many of you saw, CyberArk's business continues to execute, achieving record net new ARR in their most recent quarter. Even as we invest ahead of the curve, our long-term financial model remains intact. The scale of our platforms and operating leverage in our business reinforces our confidence in achieving 40-plus percent pre-cash flow margins by FY28, inclusive of both the pending CyberArk and Chronosphere acquisitions. We are executing from a position of strength, and we see a clear path to drive both innovation and financial discipline.

We are fundamentally transforming security operations and optimization by deploying autonomous AI agents that deliver enhanced speed, superior efficiency, and greater control for security practitioners.

Since our announcement in July we spend more time with the cyber our team there.

Even more excited about the growth opportunity in future product roadmap that didn't lose our vision of democratizing identity security across the enterprise and making identity. The next platform for volatile networks.

Right out of the box, Agentic leverages a broad integration ecosystem, connecting with thousands of existing security and IT tools and third-party environments. It provides customers with an intelligent, fully governed, and completely transparent teammate across the enterprise.

Anecdotally, our customers share in our enthusiasm and the early feedback has been encouraging.

As many of you saw cyber our business continues to execute achieving record net new air or in the most recent quarter.

Ready to operate on Day 1, a genetics accelerates response, elevates quality, and frees up scarce human talent to focus on higher orders: strategic work.

Now, shifting gears.

And even as we invest ahead of the curve our long term financial model remains intact. The scale of our platforms and operating leverage in our business reinforces our confidence in achieving 40 plus percent free cash flow margins by FY 'twenty eight inclusive of both the pending cyber Ark and conifer acquisitions.

I am pleased to announce our Cyber Arc. Integration plans remain fully on track, and we're proud to have received overwhelming shareholder support for the acquisition, which is now expected to close in fiscal Q3.

We are executing from a position of strength and we see a clear path to drive both innovation and financial discipline.

Nikesh Arora: Now, let's talk about our new announcement. I'm sure all of you are wondering why Palo Alto Networks, who is in the midst of a large acquisition of CyberArk, would engage in an acquisition at the same time of Chronosphere. I think it's important to understand where we are in the AI cycle. The AI cycle is moving fast. There is never a day that goes by without significant announcements on investments in AI data centers, AI infrastructure. This large surge towards building AI compute is causing a lot of the AI players to think about newer models for software stacks and infrastructure stacks in the future. The 17-year-old observability industry was not designed for the AI era. AI requires always-on comprehensive observability at gigawatt scale. The challenge so far has been that full observability is cost-prohibitive for the customer. Chronosphere is one of the fastest-growing software companies in history.

Now, let's talk about our new announcement. I'm sure all of you are wondering why Palo Alto Networks, who is in the midst of a large acquisition of CyberArk, would engage in an acquisition at the same time of Chronosphere. I think it's important to understand where we are in the AI cycle. The AI cycle is moving fast. There is never a day that goes by without significant announcements on investments in AI data centers, AI infrastructure. This large surge towards building AI compute is causing a lot of the AI players to think about newer models for software stacks and infrastructure stacks in the future. The 17-year-old observability industry was not designed for the AI era. AI requires always-on comprehensive observability at gigawatt scale. The challenge so far has been that full observability is cost-prohibitive for the customer. Chronosphere is one of the fastest-growing software companies in history.

Now, let's talk about our new announcement I'm sure. All of you are wondering why Palo Alto networks, who is in the midst of a large acquisition of cyber Ark. We're engaged in an acquisition at the same time of cornerstone.

Across the enterprise and making identity the next platform for political networks.

Anecdotally, our customers share in our enthusiasm, and the early feedback has been encouraging.

I think it's important to understand where we are in the AI cycle.

<unk> cycled is moving fast there's never a day that goes by without significant announcements on investments in AI data centers are infrastructure. This large.

The surge towards building AI compute is causing a lot of the AI players to think about newer models for software stacks and infrastructure stacks of the future.

As many of you saw, Cyber ARS business continues to execute, achieving record net new ARR in their most recent quarter. You know, even as we invest ahead of the curve, our long-term financial model remains intact. The scale of our platforms and operating leverage in our business reinforces our confidence in achieving 40% plus free cash flow margins by FY28, inclusive of both the CyberArk and Chronosphere acquisitions.

We are executing from a position of strength, and we see a clear path to drive both innovation and financial discipline.

The 17 year old observer ability industry was not designed for the AI era.

It requires always on comprehensive of durability at gigawatt scale. The challenge. So far has been that full of durability is cost prohibitive for the customer.

Now let's talk about our new announcement. I'm sure all of you are wondering why Palo Alto Networks, who is in the midst of a large acquisition of cyber art, would engage in an acquisition at the same time of Chronosphere.

Nikesh Arora: The observability solution from Chronosphere has already been deployed and has demonstrated scale at a large frontier model where they continue to move workloads across. Leading born-in-the-cloud consumer platforms are applying full comprehensive observability, offering 99.9+% availability to their customers. Chronosphere is able to deliver this capability at 1/3 of the cost of other industry-leading solutions. Yes, a third. With $1.5 trillion of compute coming online over the next few years, there will be continued demand for next-generation observability led by Chronosphere. We're really excited about the possibility of delivering remediation to the observability category by bringing together capabilities of Chronosphere and our newly announced Agentix platform. Chronosphere also recently had acquired a company called Calyptia, a data pipeline provider. That was complementing their focus on observability and ensuring the right data got onto their observability platform.

The observability solution from Chronosphere has already been deployed and has demonstrated scale at a large frontier model where they continue to move workloads across. Leading born-in-the-cloud consumer platforms are applying full comprehensive observability, offering 99.9+% availability to their customers. Chronosphere is able to deliver this capability at 1/3 of the cost of other industry-leading solutions. Yes, a third. With $1.5 trillion of compute coming online over the next few years, there will be continued demand for next-generation observability led by Chronosphere. We're really excited about the possibility of delivering remediation to the observability category by bringing together capabilities of Chronosphere and our newly announced Agentix platform. Chronosphere also recently had acquired a company called Calyptia, a data pipeline provider. That was complementing their focus on observability and ensuring the right data got onto their observability platform.

Curtis phase one of the fastest growing software companies in history.

Observers solution for Kratos fir has already been deployed and has demonstrated scale at a large frontier model, where they continue to move workloads across.

I think it's important to understand where we are in the AI cycle. The AI cycle is moving fast; there's never a day that goes by without significant announcements on investments in AI, data centers, and AI infrastructure. This large...

Leading born in the cloud consumer platforms that are buying full comprehensive absorbability offering 99.9 plus percent availability for their customers transfer is able to deliver this capability at a third of the cost of other industry, leading solutions, yes, a third.

Search towards building. AI compute is causing all the AI players to think about newer models for software stacks and infrastructure stacks in the future.

The 17-year-old observability industry was not designed for the AI era.

What are the half trillion dollars of compute coming online over the next few years there'll be continued demand for next generation Absorbability led by Kronos were really excited about the possibility of delivering remediation to the observed bootie category by bringing together capabilities chromosphere and our newly announced Gentex platform.

AI requires always-on comprehensive observability at gigawatt scale. The challenge so far has been that full observability is cost-prohibitive for the customer.

Hello, Sir also recently.

They had acquired a company called clipped here a data pipeline provider.

Grows Fair is one of the fastest-growing software companies in history. The observable solution for growth Fair has already been deployed and has demonstrated scale at a large Frontier Model, where they continue to move workloads across.

That was complementing their focus on observed body and ensuring the right data got onto the observatory platform Phillips.

Nikesh Arora: Calyptia, integrated with XSIAM, will enable us to offer our XSIAM customers comprehensive security data pipelining capabilities in line with current industry trends. This acquisition perfectly aligns with our strategic playbook. We acquired the best technology at an inflection point in industry. We invested in its development, utilized our go-to-market scale to quickly deliver this game-changing innovation to our customers. Remember, this is barely 2.5% of our market cap, which is consistent with our tuck-in strategy over the last seven years of acquiring companies. To summarize, we had a strong start of the year. Our core business is firing on all cylinders. Platformization continues to take hold, and overall demand is strong. Over the last years, we have shown our ability to scale a billion-dollar-plus ARR business in SASE and Cortex. Looking ahead, we think software firewalls are our hidden gem and possibly the next billion-dollar opportunity.

Calyptia, integrated with XSIAM, will enable us to offer our XSIAM customers comprehensive security data pipelining capabilities in line with current industry trends. This acquisition perfectly aligns with our strategic playbook. We acquired the best technology at an inflection point in industry. We invested in its development, utilized our go-to-market scale to quickly deliver this game-changing innovation to our customers. Remember, this is barely 2.5% of our market cap, which is consistent with our tuck-in strategy over the last seven years of acquiring companies. To summarize, we had a strong start of the year. Our core business is firing on all cylinders. Platformization continues to take hold, and overall demand is strong. Over the last years, we have shown our ability to scale a billion-dollar-plus ARR business in SASE and Cortex. Looking ahead, we think software firewalls are our hidden gem and possibly the next billion-dollar opportunity.

Philips yet integrated with X I am will enable us to off Rx I'm customers comprehensive security data pipelining capabilities in line with current industry trends.

Leading burn. The cloud consumer platforms are applying full comprehensive observability, offering 99.9% plus availability to their customers. Jonas. Fair is able to deliver this capability at a third of the cost of other industry-leading solutions. Yes, a third.

This acquisition perfectly aligns with our strategic playbook.

The best technology at an inflection point in industry, we invested as development utilize our go to market scale to quickly deliver this game changing innovation to our customers. Remember this is barely two 5% of our market cap, which is consistent with our tuck in strategy over the last seven years or acquiring companies.

Would you want to have a trillion dollars of compute coming online over the next few years? There will be continued demand for the next generation of observability, led by Kronos. I am really excited about the possibility of delivering a mediation to the observability category by bringing together capabilities from Chronosphere and our newly announced Agentic platform.

Transfer also recently.

Had acquired a company called Calpia, a data pipeline provider.

To summarize.

We had a strong start there our core business is firing on all cylinders, but from Ization continues to take hold and overall demand is strong.

That was complimenting their focus on observability and ensuring the right data got onto their observability platform.

For the last years, we have shown our ability to scale a billion dollar plus air business and sassy and Cortez looking ahead, we think software firewalls is a hidden gem and possibly the next billion dollar opportunity.

Calpia, integrated with Xim, will enable us to offer Xim customers comprehensive security data pipelines and capabilities in line with current industry trends.

Nikesh Arora: We maintain a relentless focus on innovation by tackling new challenges in AI security and quantum. Finally, our ambitions continue to grow. This year, we will be significantly expanding our opportunity in new markets as we close the acquisition of CyberArk and Chronosphere in both categories of identity, and observability, which we believe are in the midst of inflection due to AI. We are less than 5% penetrating into a TAM reaching nearly $300 billion in the next three years. As such, we are raising our expectations from $15 billion to 20 billion in ARR for FY30. With that, I will hand over the call to Deepak to review the quarterly results in detail. Thank you, Nikesh, and good afternoon, everybody. We have an exciting opportunity ahead of us.

We maintain a relentless focus on innovation by tackling new challenges in AI security and quantum. Finally, our ambitions continue to grow. This year, we will be significantly expanding our opportunity in new markets as we close the acquisition of CyberArk and Chronosphere in both categories of identity, and observability, which we believe are in the midst of inflection due to AI. We are less than 5% penetrating into a TAM reaching nearly $300 billion in the next three years. As such, we are raising our expectations from $15 billion to 20 billion in ARR for FY30. With that, I will hand over the call to Dipak to review the quarterly results in detail.

We maintain a relentless focus on innovation by tackling new challenges in the ice security and content. Finally, our ambitions continue to grow this year will be significantly ambac, expanding our opportunity in new markets. As we closed the acquisition of cyber Ark chromosphere in both categories of identity and observe ability because you believe are in the midst of inflection due to AI.

This acquisition perfectly aligns with our strategic playbook. We require the best technology at an inflection point in the industry. We invest in its development and utilize our go-to-market scale to quickly deliver this game-changing innovation to our customers. Remember, this is barely 2.5% of our market cap, which is consistent with our tuck-in strategy over the last 7 years of acquiring companies.

To summarize.

We are less than 5% penetrated into a time, reaching nearly $200 billion in the next three years as such we are raising our expectations from $15 billion to $20 billion in IRR.

We are seeing a strong start to the year. Our core business is firing on all cylinders. Platformization continues to take hold. Overall demand is strong.

For FY 30, with that I will hand over the call Deepak to review the quarterly results in detail.

Dipak Golechha: Thank you, Nikesh, and good afternoon, everybody. We have an exciting opportunity ahead of us.

Over the last few years, we have shown our ability to scale billion dollar plus businesses at Sassy and Cortex. Looking ahead, we think software firewalls are a hidden gem and possibly the next billion dollar opportunity.

Thank you and our cash and good afternoon everybody.

Nikesh Arora: We continue to execute with excellence, and our TAM is expanding through the pending acquisition of two category leaders in CyberArk and Chronosphere. Given that, I would like to provide some additional color around our announced acquisition of Chronosphere, as well as an update on the CyberArk integration planning, before moving into detail on our Q1 financial results and guidance. As Nikesh mentioned, we announced our intent to acquire Chronosphere for a total consideration of $3.35 billion in cash and replacement equity awards. Chronosphere's co-founders, Martin Mao and Rob Skillington, and their employees will join Palo Alto Networks post-close. While Chronosphere does have significant ARR relative to most of our other acquisitions, we view this transaction to be more in line with the tuck-in acquisitions that we have done over the past eight years.

We continue to execute with excellence, and our TAM is expanding through the pending acquisition of two category leaders in CyberArk and Chronosphere. Given that, I would like to provide some additional color around our announced acquisition of Chronosphere, as well as an update on the CyberArk integration planning, before moving into detail on our Q1 financial results and guidance. As Nikesh mentioned, we announced our intent to acquire Chronosphere for a total consideration of $3.35 billion in cash and replacement equity awards. Chronosphere's co-founders, Martin Mao and Rob Skillington, and their employees will join Palo Alto Networks post-close. While Chronosphere does have significant ARR relative to most of our other acquisitions, we view this transaction to be more in line with the tuck-in acquisitions that we have done over the past eight years.

We have an exciting opportunity ahead of us we continue to execute with excellence and all time is expanding with the pending acquisition.

Category leaders and cyber Ark in front of us there.

Given that I would like to provide some additional color around our announced acquisition of Kronos here as well as an update on the sidebar out integration planning before moving into detail on our Q1 financial results and guidance.

We maintain a relentless focus on innovation by tackling new challenges in AI security and quantum. Finally, our ambitions continue to grow this year, which will significantly impact our expansion opportunities in new markets. We have closed the acquisition of Cyber Arctic Tonos in both categories of identity and observability, which we believe are in the midst of inflection due to AI.

As Nick has mentioned, we announced our intent to acquire chromosphere for total consideration of $3 $335 billion in cash and replacement equity awards.

We are less than 5% penetrating into a time reaching nearly $300 billion in the next 3 years. As such, we are raising our expectations from $15 billion to $20 billion in ARR.

For Phi, 30. With that, I will hand over the calls. Debug to review the quarterly results in detail.

Chromosphere co founders market, now and Rob skeleton and their employees will join Palo Alto networks post close.

While chromosphere does have significant AR relative to most of our other acquisitions. We view this transaction to be more in line with the tuck in acquisitions that we've done over the past eight years.

Thank you, Nikesh, and good afternoon, everybody. We have an exciting opportunity ahead of us. We continue to execute with excellence, and our team is expanding through the pending acquisition of two category leaders in Cyber Rock and Pronos.

Nikesh Arora: The business has just over 250 employees, with a customer base focused on large AI and born-in-the-cloud enterprises. The momentum Chronosphere has achieved to reach over $160 million in ARR with triple-digit growth has been impressive. For that reason, we expect Chronosphere to remain largely standalone post-close and in the near term, enabling us to balance integration timelines with the pending CyberArk acquisition. We expect this transaction to close in the second half of our fiscal year 2026. On CyberArk, our integration planning is proceeding exceptionally well, reflecting the strong collaborative spirit between our teams. We've had excellent cross-functional collaboration at multiple levels, including dozens of integration planning workshops across various functions. We are firmly on track to hit the ground running post-deal close, which we expect in fiscal Q3, subject to customary closing conditions.

The business has just over 250 employees, with a customer base focused on large AI and born-in-the-cloud enterprises. The momentum Chronosphere has achieved to reach over $160 million in ARR with triple-digit growth has been impressive. For that reason, we expect Chronosphere to remain largely standalone post-close and in the near term, enabling us to balance integration timelines with the pending CyberArk acquisition. We expect this transaction to close in the second half of our fiscal year 2026. On CyberArk, our integration planning is proceeding exceptionally well, reflecting the strong collaborative spirit between our teams. We've had excellent cross-functional collaboration at multiple levels, including dozens of integration planning workshops across various functions. We are firmly on track to hit the ground running post-deal close, which we expect in fiscal Q3, subject to customary closing conditions.

The business has just over 250 employees with our customer base focused on large AI and born in the cloud enterprises.

Given that I would like to provide some additional color around our announced acquisition of Kronos, as well as an update on the cyborg integration planning, before moving into detail on our Q1 financial results and guidance.

The momentum chromosphere was achieved to reach over $160 million in era with triple digit growth has been impressive.

That reason, we expect Kronos fats remained largely standalone post close and in the near term, enabling us the balance integration timelines with the pending <unk> acquisition.

As in the cash mentioned, we announced our intent to acquire Chronosphere for a total consideration of $3.335 billion in cash and replacement equity awards. Chronosphere co-founders, Martin Mao and Rob Skillington, and their employees will join Palo Alto Networks.

We expect this transaction to close in the second half of our fiscal year 2026.

On cyber Ark, our integration planning is proceeding exceptionally well, reflecting the strong collaborative spirit between our teams we've had excellent cross functional collaboration at multiple levels, including thousands of integration planning workshops across various functions.

View this transaction to be more in line with the tuck-in acquisitions that we have done over the past eight years.

The business has just over 250 employees, with a customer base focused on large AI and born-in-the-cloud enterprises.

We are firmly on track to hit the ground running post deal close, which we expect in fiscal Q3 subject to customary closing conditions.

The momentum chronosphere is achieved to reach over 160 million in ARR with triple digit, growth has been impressive.

Nikesh Arora: As you can tell from our Q1 results, we're pursuing these acquisitions from a position of strength. With that, let's dive deeper into the quarter. Remaining performance obligation, or RPO, grew 24% to $15.5 billion. This metric is a key indicator of long-term revenue predictability and the scale of our committed business. Note that our RPO from Q1 last year included $68 million acquired from our QRadar acquisition, which took place in that period. Our current RPO, which reflects near-term revenue realization, stood at $6.9 billion, representing 16% growth. Reflecting stability in both the quality of our RPO and customer commitments, the average new contract duration remained consistent at approximately three years. NGS ARR ended the quarter at $5.85 billion, achieving 29% growth and exceeding the high end of our guidance.

As you can tell from our Q1 results, we're pursuing these acquisitions from a position of strength. With that, let's dive deeper into the quarter. Remaining performance obligation, or RPO, grew 24% to $15.5 billion. This metric is a key indicator of long-term revenue predictability and the scale of our committed business. Note that our RPO from Q1 last year included $68 million acquired from our QRadar acquisition, which took place in that period. Our current RPO, which reflects near-term revenue realization, stood at $6.9 billion, representing 16% growth. Reflecting stability in both the quality of our RPO and customer commitments, the average new contract duration remained consistent at approximately three years. NGS ARR ended the quarter at $5.85 billion, achieving 29% growth and exceeding the high end of our guidance.

As you can tell from our Q1 results with pursuing these acquisitions from a position of strength.

With that let's deep dive deeper into the quarter.

For that reason, we expect Chronosphere to remain largely standalone post-close and in the near term, enabling us to balance integration timelines with the pending CyberArk acquisition.

We expect this transaction to close in the second half of our fiscal year 2026.

Remaining performance obligation or a P. O grew 24% to $15 $5 billion. This metric is a key indicator of long term revenue predictability and the scale of our committed business.

Note that our IPO from Q1 last year included $68 million acquired from our key radar acquisition, which took place in that period.

Our current top Po, which reflects near term revenue realization, so that $6 9 billion, representing 16% growth.

On CyberArk, our integration planning is proceeding exceptionally well, reflecting the strong collaborative spirit between our teams. We've had excellent cross-functional collaboration at multiple levels, including dozens of integration planning workshops across various functions. We are firmly on track to hit the ground running post-close, which we expect in fiscal Q3, subject to customary closing conditions.

Reflecting stability in both the quality of our Apio and customer commitments. The average new new contract duration remained consistent at approximately three years.

As you can tell from our Q1 results, we're pursuing these acquisitions from a position of strength.

With that, let's deep dive deeper into the quarter.

N G. S era ended the quarter at $585 billion, achieving 29% growth and exceeding the high end of our guidance.

Nikesh Arora: Adjusting for the $74 million contribution from the QRadar acquisition in the comparable prior period, our net new ARR in Q1 grew over 20%. The momentum was broad-based, with strength from software firewalls, SASE, and XSIAM. It is important to note that our NGS offerings drive all of our revenue line items, including product revenue, nearly half of which is from software over the last year, subscription revenue, and a growing portion of our support revenue. Total revenue reached $2.47 billion, representing 16% growth, which exceeded the high end of our guided range. Product revenue grew 23% year over year. 44% of our trailing 12-month product revenue came from software form factors, an increase from 38% in the trailing 12 months ending Q1 2025. This acceleration is fueled by growth in our software firewalls and PAN-OS SD-WAN within product revenue.

Adjusting for the $74 million contribution from the QRadar acquisition in the comparable prior period, our net new ARR in Q1 grew over 20%. The momentum was broad-based, with strength from software firewalls, SASE, and XSIAM. It is important to note that our NGS offerings drive all of our revenue line items, including product revenue, nearly half of which is from software over the last year, subscription revenue, and a growing portion of our support revenue. Total revenue reached $2.47 billion, representing 16% growth, which exceeded the high end of our guided range. Product revenue grew 23% year over year. 44% of our trailing 12-month product revenue came from software form factors, an increase from 38% in the trailing 12 months ending Q1 2025. This acceleration is fueled by growth in our software firewalls and PAN-OS SD-WAN within product revenue.

Adjusting for the 74 million contribution from the radar acquisition in the comparable prior period, our net new <unk> in Q1 grew over 20%.

Remaining performance obligation (RPO) grew 24% to $15.5 billion. This metric is a key indicator of long-term revenue predictability and the scale of our committed business.

Note that our RPO from Q1 last year included $68 million acquired from our Q Radar acquisition, which took place in that period.

The momentum was broad based with strength on software firewalls, sassy and Exxon.

It is important to note that our NCS offerings drive all of our revenue line items, including product revenue nearly half of which is from software over the last year.

Scripts and revenue and a growing portion of our support revenue.

Our current RPO, which reflects near-term Revenue, realization that it was the quality of our RPO and customer commitments. The average new new contract duration, remained consistent to the approximately 3 years,

Total revenue reached $2.47 billion, representing 16% growth, which exceeded the high end of our guided range.

NGS, ARR ended the quarter at $5.85 billion, achieving 29% growth and exceeding the high end of our guidance.

Product revenue grew 23% year over year.

44% of our trailing 12 month product revenue came from software form factors and increase from 38% in the trailing 12 months ending Q1 25.

Adjusting for the $74 million contribution from the curator acquisition in the comparable prior period, our net new ARR in Q1 grew over 20%.

The momentum was broad-based, with strength from software, firewalls, SASE, and XIM.

This acceleration is fueled by growth in our software firewalls and panel as SD Wan.

Nikesh Arora: We continue to see stability in hardware appliances and early interest in our newly launched Gen-5 firewalls. Total services revenue grew 14%. Within this, both subscription and support revenues grew 14%. Geographically, we saw broad-based strength across all major theaters, with Americas growing 14%, EMEA up 18%, and JPAC growing 22%. Having discussed our top-line strengths, I'd like to take a moment to give an update on our platformizations in Q1. As Nikesh highlighted, platformization continues to take hold as customers look for a strategic security partner that can continually adapt and innovate with shifts in the cybersecurity threat landscape. Our ability to deliver best-in-class products through our unified platforms, Prisma SASE and Quantum Security in Q1, for example, is a critical motivation for customers to platformize with us. We completed approximately 60 net new platformizations this quarter.

We continue to see stability in hardware appliances and early interest in our newly launched Gen-5 firewalls. Total services revenue grew 14%. Within this, both subscription and support revenues grew 14%. Geographically, we saw broad-based strength across all major theaters, with Americas growing 14%, EMEA up 18%, and JPAC growing 22%. Having discussed our top-line strengths, I'd like to take a moment to give an update on our platformizations in Q1. As Nikesh highlighted, platformization continues to take hold as customers look for a strategic security partner that can continually adapt and innovate with shifts in the cybersecurity threat landscape. Our ability to deliver best-in-class products through our unified platforms, Prisma SASE and Quantum Security in Q1, for example, is a critical motivation for customers to platformize with us. We completed approximately 60 net new platformizations this quarter.

Within product revenue.

We continue to see stability in hardware appliances and early interest in our newly launched Gen five firewalls.

It is important to note that our NGS offerings have all of our revenue line items, including product revenues, nearly half of which is from software over the last year subscription revenue.

Total services revenue grew 14% within this both subscription and support revenues grew 14%.

Geographically, we saw broad based strength across all major theaters with Americas, growing 14%, EMEA up 18% and Jay Pat growing 22%.

Total revenue reached $47 billion, representing 16% growth, which exceeded the high end of our guided range.

Having discussed our topline strength I'd like to take a moment to give an update on our part for amortization in Q1.

12-month product revenue came from software form factors, an increase from 38% in the trailing 12 months. In Q1, the revenue was $255 million.

As Nick has highlighted optimization continues to take hold as customers look for a strategic security partner that can continually adapt and innovate with shifts in the cyber security threat landscape.

This acceleration is fueled by growth in our software firewalls and PAN-OS SD-WAN within product revenue.

We continue to see stability in hardware appliances and early interest in our newly launched Gen 5 firewalls.

Our ability to deliver best in class products to our unified platforms.

Prison, whereas in constant security and he won't for example is a critical motivation for customers to optimize with us.

Total services revenue grew 14%, with both subscription and support revenues also increasing by 14%.

We completed approximately 16 net new <unk> this quarter.

Nikesh Arora: This momentum was driven by strength in XIM, where platformizations more than doubled year over year, affirming that customers are actively moving towards simplicity and integration to have real-time outcomes. We now have nearly 170 customers with NGS ARR over $5 million and 50 customers with NGS ARR over $10 million, both growing about 50% year over year. These results reinforce our target of $20 billion in NGS ARR by fiscal year 2030, inclusive of the pending CyberArk and Chronosphere acquisitions. Moving down the income statement, our disciplined focus on profitability and operational leverage is clearly visible in the performance metrics we delivered. Total gross margin for the quarter was 76.9%. We delivered product gross margins of 80.2%, an increase of 50 basis points year over year, and reflected a significant sequential improvement of 340 basis points compared to Q4 2025.

This momentum was driven by strength in XIM, where platformizations more than doubled year over year, affirming that customers are actively moving towards simplicity and integration to have real-time outcomes. We now have nearly 170 customers with NGS ARR over $5 million and 50 customers with NGS ARR over $10 million, both growing about 50% year over year. These results reinforce our target of $20 billion in NGS ARR by fiscal year 2030, inclusive of the pending CyberArk and Chronosphere acquisitions. Moving down the income statement, our disciplined focus on profitability and operational leverage is clearly visible in the performance metrics we delivered. Total gross margin for the quarter was 76.9%. We delivered product gross margins of 80.2%, an increase of 50 basis points year over year, and reflected a significant sequential improvement of 340 basis points compared to Q4 2025.

Momentum was driven by strength in X I am well.

<unk> has more than doubled year over year affirming that customers are actively moving towards simplicity and integration to have real time outcomes.

We now have nearly 170 customers with Ngls era over $5 million 50 customers with NDS era over $10 million, both growing about 50% year over year.

Geographically, we saw broad-based strength across all major theaters, with Americas growing 14%, EMEA up 18%, and JPACK growing 22%.

The continually shifting landscape of cyber threats.

These results reinforce our target of $20 billion and Ngls are all by fiscal year 30 inclusive of the pending cyber opt in process acquisitions.

Moving down the income statement, our disciplined focus on profitability and operational leverage is clearly visible in the performance metrics we delivered.

Total gross margin for the quarter was 76, 9%, we delivered product gross margins of 82% an increase of 50 basis points year over year and reflected a significant sequential improvement of 340 basis points compared to Q4 'twenty five.

The best-in-class products through our unified platforms, um, PRIS and Quantum Security in Q1, for example, are critical survey tests, and there's the promise with us. We completed approximately 16, net was driven by strength and AMIZ more than doubled year-over-year, affirming that customers are actively moving towards simplicity and integration to have real-time outcomes.

Nikesh Arora: The services segment also demonstrated positive margin trajectory, reaching 76.2%, which constitutes a sequential increase of 70 basis points. We continue to be pleased by the continued growth of our SaaS offerings and remain actively engaged in executing cloud cost efficiencies. We delivered an operating margin of 30.2%, achieving expansion of 140 basis points year over year, and our second consecutive quarter above 30%. This strong expansion reflects not only improvements in gross margins, but critically our ability to drive sustained scale and efficiency across all of the OpEx line items. We continue to apply an AI-first lens to all of our processes and functions. Notably, we have been able to deploy AI in our global customer support organization to drive three consecutive quarters of case volume reduction and reduce time to resolve for 11 consecutive quarters.

The services segment also demonstrated positive margin trajectory, reaching 76.2%, which constitutes a sequential increase of 70 basis points. We continue to be pleased by the continued growth of our SaaS offerings and remain actively engaged in executing cloud cost efficiencies. We delivered an operating margin of 30.2%, achieving expansion of 140 basis points year over year, and our second consecutive quarter above 30%. This strong expansion reflects not only improvements in gross margins, but critically our ability to drive sustained scale and efficiency across all of the OpEx line items. We continue to apply an AI-first lens to all of our processes and functions. Notably, we have been able to deploy AI in our global customer support organization to drive three consecutive quarters of case volume reduction and reduce time to resolve for 11 consecutive quarters.

The services segment also demonstrated positive margin trajectory, reaching 76, 2%, which constitutes a sequential increase of 70 basis points.

We now have over $5 million and 50 customers with NGS, and over $10 million, both growing about 50% year-over-year.

We continue to be pleased by the continued growth of our SaaS offerings and remain actively engaged in executing cloud cost efficiencies.

In NGS, our fiscal year 30 includes dependencies on Cyber Ops and Croit acquisitions.

We delivered an operating margin of 32% achieved an expansion of 140 basis points year over year, and our second consecutive quarter above 30%.

This strong expansion reflects not only improvements in gross margin, but critically our ability to drive sustained scale and efficiency across all of the Opex line items.

We continue to apply an AI first lens to all of our processes and functions.

Notably we have been able to deploy AI in a global customer support organization to drive three consecutive quarters of case volume reduction and reduced time to resolve for 11 consecutive quarters.

Nikesh Arora: As a direct outcome of this disciplined leverage, our diluted non-GAAP EPS reached $0.93, which exceeded the high end of our guidance. This execution provides the basis for strong adjusted free cash flow, which came in at $1.7 billion, up 17%. Our cash and cash equivalents at the end of the first quarter is now over $10 billion. Finally, regarding capital allocation, our approach remains prudent. We do not repurchase any shares in Q1. Our buyback strategy remains opportunistic. We have a billion dollars in share repurchase authorization remaining through December 2026. Ultimately, we remain focused on leveraging this efficiency to maximize long-term shareholder value. With that, I will move on to Q2 and fiscal 2026 guidance. For the second fiscal quarter 2026, we expect NGS ARR to be in the range of $6.11 to $6.14 billion, an increase of 28%.

As a direct outcome of this disciplined leverage, our diluted non-GAAP EPS reached $0.93, which exceeded the high end of our guidance. This execution provides the basis for strong adjusted free cash flow, which came in at $1.7 billion, up 17%. Our cash and cash equivalents at the end of the first quarter is now over $10 billion. Finally, regarding capital allocation, our approach remains prudent. We do not repurchase any shares in Q1. Our buyback strategy remains opportunistic. We have a billion dollars in share repurchase authorization remaining through December 2026. Ultimately, we remain focused on leveraging this efficiency to maximize long-term shareholder value. With that, I will move on to Q2 and fiscal 2026 guidance. For the second fiscal quarter 2026, we expect NGS ARR to be in the range of $6.11 to $6.14 billion, an increase of 28%.

As a direct outcome of this disciplined leverage.

Diluted non-GAAP EPS reached <unk>, $93, which exceeded the high end of our guidance.

This execution provides the basis for strong adjusted free cash flow, which came in at $1 $7 billion up 17%.

Cash and cash equivalents at the end of the first quarter is now over $10 billion.

Finally regarding capital allocation our approach remains prudent we did not repurchase any shares in Q1, our buyback strategy remains opportunistic.

We have $1 billion in share repurchase authorization remaining through December 2026.

Ultimately, we remain focused on leveraging this efficiency to maximize long term shareholder value.

With that I will move on to Q2 in fiscal 'twenty six guidance.

Okay.

For the second fiscal quarter of 2026, we expect MTS air ought to be in the range of $6. One one for $6, one $4 billion an increase of 28%.

Nikesh Arora: Remaining Performance Obligation of $15.75 to 15.85 billion, an increase of 21% to 22%. Revenue to be in the range of $2.57 to 2.59 billion, an increase of 14% to 15%. Diluted non-GAAP EPS to be in the range of $0.93 to 0.95, an increase of 15% to 17%. For the fiscal year 2026, we expect NGS ARR in the range of $7 to 7.1 billion, an increase of 26% to 27%. Remaining Performance Obligation of $18.6 to 18.7 billion, an increase of 17% to 18%. Revenue to be in the range of $10.50 to 10.54 billion, an increase of 14%. Operating margins to be in the range of 29.5% to 30%. Diluted non-GAAP EPS to be in the range of $3.80 to 3.90, an increase of 14% to 17%, and Adjusted Free Cash Flow margin in the range of 38% to 39%.

Remaining Performance Obligation of $15.75 to 15.85 billion, an increase of 21% to 22%. Revenue to be in the range of $2.57 to 2.59 billion, an increase of 14% to 15%. Diluted non-GAAP EPS to be in the range of $0.93 to 0.95, an increase of 15% to 17%. For the fiscal year 2026, we expect NGS ARR in the range of $7 to 7.1 billion, an increase of 26% to 27%. Remaining Performance Obligation of $18.6 to 18.7 billion, an increase of 17% to 18%. Revenue to be in the range of $10.50 to 10.54 billion, an increase of 14%. Operating margins to be in the range of 29.5% to 30%. Diluted non-GAAP EPS to be in the range of $3.80 to 3.90, an increase of 14% to 17%, and Adjusted Free Cash Flow margin in the range of 38% to 39%.

Meaning performance obligation of $15 75 to $15 eight $5 billion, an increase of 21% to 22%.

Revenue to be in the range of $2 57 to $2 five $9 billion, an increase of 14% to 15% and diluted non-GAAP EPS to be in the range of zero point 93 wells there.

Nine five cents an increase of <unk>.

15% to 17%.

For the fiscal year 2026, we expect N G. S era in the range of seven to $7 $1 billion, an increase of 26, 27%.

Remaining performance obligation of $18 six to $18 $7 billion, an increase of 17% 18%.

Revenue to be in the range of $10 five zero to 10, five $4 billion, an increase of 14%.

Operating margins to be in the range of $29, 5% to 30%.

Diluted non-GAAP EPS to be in the range of $3 80 to $3 90, an increase of 14% to 17% and adjusted free cash flow margin in the range of 38% to 39%.

Nikesh Arora: As Nikesh mentioned earlier, we are also reiterating our 40% plus adjusted free cash flow margin target for fiscal year 2028, inclusive of both CyberArk and Chronosphere. Furthermore, while we will provide more detailed guidance after closing the transaction, we expect to maintain an adjusted free cash flow margin of at least 37% for fiscal year 2026, inclusive of both CyberArk and Chronosphere, depending upon timing of close. We have included our typical modeling points in the presentation for your review, but I would like to highlight a few now. One, as we noted last quarter, we continue to expect our net new NGS ARR and revenue to be second half and Q4 weighted as we continue to platformize with our customers. Two, we expect product revenue growth for Q2 to be approximately 17% to 18%.

As Nikesh mentioned earlier, we are also reiterating our 40% plus adjusted free cash flow margin target for fiscal year 2028, inclusive of both CyberArk and Chronosphere. Furthermore, while we will provide more detailed guidance after closing the transaction, we expect to maintain an adjusted free cash flow margin of at least 37% for fiscal year 2026, inclusive of both CyberArk and Chronosphere, depending upon timing of close. We have included our typical modeling points in the presentation for your review, but I would like to highlight a few now. One, as we noted last quarter, we continue to expect our net new NGS ARR and revenue to be second half and Q4 weighted as we continue to platformize with our customers. Two, we expect product revenue growth for Q2 to be approximately 17% to 18%.

As Nick has mentioned earlier, we are also reiterating our 40% of the cost adjusted free cash flow margin target for fiscal year 'twenty eight inclusive of both cyber Ark and Kronos here.

Furthermore, whilst we will provide more detailed guidance after closing the transaction, we expect to maintain an adjusted free cash flow margin of at least 37% for fiscal year 2026 inclusive of both cyber ocwen chromosphere, depending upon the timing of close.

We've included our typical modeling points in the presentation for your review, but I would like to highlight a few now.

One as we noted last quarter, we expected we continue to expect on net new N. G. S era and revenue to the second half and Q4 weighted as we continue to pop of minds of our customers.

Two we expect product revenue growth for Q2 to be approximately 17% to 18%.

Nikesh Arora: And finally, we expect $130 million to $140 million in CapEx in Q2 2026, which is inclusive of a $90 million non-recurring real estate CapEx. This $90 million will be removed from adjusted free cash flow in accordance with our typical treatment for these non-recurring items. With that, I will turn it over to Hamza for Q&A. Okay, great. To allow for broad participation, I would ask that each analyst ask one question. With that, we'll start with Brad Zelnick from Deutsche Bank, followed by Rob Owens from Piper Sandler. Great, thanks, Hamza. And you know, it's great to see vintage Nikesh coming out strong in Q1, even after a blowout Q4. So congrats to you and the team. Full position, Brad. First question. I love it. I love it. Nikesh, 2026 is setting up as a perfect AI storm where every vendor has a story to tell.

And finally, we expect $130 million to $140 million in CapEx in Q2 2026, which is inclusive of a $90 million non-recurring real estate CapEx. This $90 million will be removed from adjusted free cash flow in accordance with our typical treatment for these non-recurring items. With that, I will turn it over to Hamza for Q&A.

And finally, we expect the 130 million to $140 million in Capex in Q2, 26, which is inclusive of the $19 million nonrecurring real estate Capex. This 90 million will be removed from adjusted free cash flow in accordance with our typical treatment for these nonrecurring items.

Hamza Fodderwala: Okay, great. To allow for broad participation, I would ask that each analyst ask one question. With that, we'll start with Brad Zelnick from Deutsche Bank, followed by Rob Owens from Piper Sandler.

With that I will turn it over to Hamzah the Q&A.

Okay great.

To allow for broad participation I would ask that each analyst asked one question.

With that we will start with.

Brad Zelnick: Great, thanks, Hamza. And you know, it's great to see vintage Nikesh coming out strong in Q1, even after a blowout Q4. So congrats to you and the team. Full position, Brad. First question. I love it. I love it. Nikesh, 2026 is setting up as a perfect AI storm where every vendor has a story to tell.

Brad Zelnick from Deutsche Bank, followed by Rob Owens from Piper Sandler.

Great. Thanks Hamzah.

It's great to see vintage net cash coming out strong in Q1, even after a blowout Q4. So congrats to you and the team are well positioned Brad first question.

No.

I love It I love it and the cash two.

2026 is setting up as a perfect AI storm, where every vendor has a story to tell and it seems all roads lead back to identity, where you clearly are in process of acquiring the best asset out there, but stepping back it's rare that the winter in one technology generation remains the winter and then X. So what is it that youre doing outside of smart M&A at this.

Nikesh Arora: It seems all roads lead back to identity, where you clearly are in process of acquiring the best asset out there. But stepping back, it's rare that the winner in one technology generation remains the winner in the next. So what is it that you're doing outside of smart M&A to disrupt yesterday's Palo Alto to ensure success into an AI and quantum future? Thank you. Thank you, Brad. Well, I think there are enough examples in history of technology companies which have sustained multiple technology waves and continued to win. And I think you're seeing some of the multi-trillion dollar companies out there have been around for four, five, six, seven decades. So we hope we're one of those evergreen companies that persists and is able to execute on a similar trajectory.

It seems all roads lead back to identity, where you clearly are in process of acquiring the best asset out there. But stepping back, it's rare that the winner in one technology generation remains the winner in the next. So what is it that you're doing outside of smart M&A to disrupt yesterday's Palo Alto to ensure success into an AI and quantum future? Thank you.

Yesterday's Palo Alto to ensure success into an AI and quantum future. Thank you. Thank you Brad well I think.

Nikesh Arora: Thank you, Brad. Well, I think there are enough examples in history of technology companies which have sustained multiple technology waves and continued to win. And I think you're seeing some of the multi-trillion dollar companies out there have been around for four, five, six, seven decades. So we hope we're one of those evergreen companies that persists and is able to execute on a similar trajectory.

There are enough examples in history of technology companies, which have sustained multiple technology waves and continue to win and I think youre seeing some of the multi trillion dollar companies out there have been around for 4567 decades. So we hope we are one of those evergreen companies, that's persists and he's able to exit.

Nikesh Arora: We are, as you can see, we are very, very aware of the two biggest technology trends ahead of us, both AI and quantum. What's fascinating is the need for network inspection does not go away. From our perspective, AI and quantum are going to drive a lot, lot more volume. So as the more bits that fly around, the more they need to be inspected, which means the need for bit inspection technologies is not going to go away. Just the way the need for server hasn't gone away since the time servers were created. So I think we don't have a threat to our core business of bit inspection, which is how I broadly describe our network security business. And AI is driving more volumes.

We are, as you can see, we are very, very aware of the two biggest technology trends ahead of us, both AI and quantum. What's fascinating is the need for network inspection does not go away. From our perspective, AI and quantum are going to drive a lot, lot more volume. So as the more bits that fly around, the more they need to be inspected, which means the need for bit inspection technologies is not going to go away. Just the way the need for server hasn't gone away since the time servers were created. So I think we don't have a threat to our core business of bit inspection, which is how I broadly describe our network security business. And AI is driving more volumes.

And on a similar trajectory.

We are.

As you can see we are very very aware of the two biggest technology trends ahead of us both AI and quantum.

What's fascinating is the need for network inspection does not go away, but from our perspective, AI and quantum is going to drive a loss last more volume. So it was the more bits that fly around the more they need to be inspected which means the need for bid inspection technologies is not going to go away just the way they need for server hasn't gone away since the time servers are free.

So I think we don't have a threat to our core business a bit inspection, which is how I brought him to describe our network security business.

Nikesh Arora: I was just talking to the CEO of a large cloud service provider earlier today, and the conversation was about how they go deploy gigawatts of capacity in short order, given the large sort of thrust towards building AI compute, and how do we make sure those bits are secured. So I guess we are going to see sustained demand over time from a network security perspective. If you couple that with the trend that AI is driving, is the idea that now data can be sensed real time and actions can be taken quickly, as we discussed the recent cyber attack. That was an attack based purely on online availability of data and the ability of persistent access. From that perspective, we think the solution on the other side has to be a data-driven problem solution.

I was just talking to the CEO of a large cloud service provider earlier today, and the conversation was about how they go deploy gigawatts of capacity in short order, given the large sort of thrust towards building AI compute, and how do we make sure those bits are secured. So I guess we are going to see sustained demand over time from a network security perspective. If you couple that with the trend that AI is driving, is the idea that now data can be sensed real time and actions can be taken quickly, as we discussed the recent cyber attack. That was an attack based purely on online availability of data and the ability of persistent access. From that perspective, we think the solution on the other side has to be a data-driven problem solution.

And AI is driving more volume. So I was just talking to the CEO of a large cloud service provider earlier today and the conversation was about how they go deploy gigawatts of capacity in short order given the large sort of trust towards building, a compute and how do we make sure those bits of secured so I guess, we're going to see sustained demand over time from a network security perspective.

Active if you couple that with the trend that AI is driving is the idea that now data can be sensed real time and actions can be taken quickly as we discuss the recent cyber attacks that was where the doctor is based purely on online availability of data and the ability of persistent access from that perspective.

Dave We think the solution on the other side has to be a data driven problem solution and if you look at what we've been doing from an X I am perspective, we have more than 70 customers two years ago, I remember you and I talking about ex some of the new product categories and the Sox base and your question to me was what makes you think you will succeed in a space you've never played in before.

Nikesh Arora: If you look at what we've been doing from an XIM perspective, we have 470 customers. Two years ago, I remember you and I talking about XIM as new product categories in the SOC space, and your question to me was, what makes you think you will succeed in a space you've never played in before? Well, Brad, we proved that we can get to close to 500 customers with $1 million ARR. I don't think I know any company in recent history in cybersecurity which has an average ARR per customer of $1 million on a product category. So I think we've proven that we are able to execute on the back of, last but not the least, and I'll give rate on the site, don't underestimate quantum.

If you look at what we've been doing from an XIM perspective, we have 470 customers. Two years ago, I remember you and I talking about XIM as new product categories in the SOC space, and your question to me was, what makes you think you will succeed in a space you've never played in before? Well, Brad, we proved that we can get to close to 500 customers with $1 million ARR. I don't think I know any company in recent history in cybersecurity which has an average ARR per customer of $1 million on a product category. So I think we've proven that we are able to execute on the back of, last but not the least, and I'll give rate on the site, don't underestimate quantum.

Brad we prove that we can get to close to fiber customers. The millionaire R. I don't I don't think I know any company in recent history in cyber security, which is an average error or per customer a million dollars on a product category.

So I think we've proven that we are able to execute on the back of the last but not the least about like Oh.

Well give me towards like.

Nikesh Arora: Quantum is going to break every key, which means every piece of infrastructure that hasn't been upgraded has to be upgraded. I just learned something the other day, which Lee taught me, is you know, you don't even have to have a quantum computer to start breaking keys. You can actually start storing data today and break it later. You can imagine nation-states getting forward and saying, let's just ingest the data, hold on to it. Nobody's paying attention, and I've got the data, we'll crack it later. I just think all these technology trends are in the right direction. We have products positioned in each category. I'll tell you what, in three years from now, we'll look back and say, damn, that Chronosphere acquisition was a very smart move because you need observability.

Quantum is going to break every key, which means every piece of infrastructure that hasn't been upgraded has to be upgraded. I just learned something the other day, which Lee taught me, is you know, you don't even have to have a quantum computer to start breaking keys. You can actually start storing data today and break it later. You can imagine nation-states getting forward and saying, let's just ingest the data, hold on to it. Nobody's paying attention, and I've got the data, we'll crack it later. I just think all these technology trends are in the right direction. We have products positioned in each category. I'll tell you what, in three years from now, we'll look back and say, damn, that Chronosphere acquisition was a very smart move because you need observability.

Don't underestimate quantum.

Quantum is going to break every key.

Which means every piece of infrastructure of Hasnt been upgraded has to be upgraded and I used the word or something the other day with Lee talked me as you know you don't even have to have a quantum computer to start breaking keeps you can actually start storing data today and break. It later, so you can imagine nation states getting forward and saying, let's just in yesterday that hold onto it and always taken.

Nobody's paying attention that I've got the data packet later, so I just think all of these technology trends are in the right direction, we have product positioning these category and.

I would tell you out in three years from now we'll look back and say damn that conifer acquisition was a very smart move because you need a vulnerability. If you want your stuff to work 99.9. So time you need to know if something goes down Asap you can know that if you don't have the data.

Nikesh Arora: If you want your stuff to work 99.9% of the time, you need to know if something goes down ASAP. You can't know that if you don't have the data. And if you go back historically, the question has been the two largest categories of data are security and observability. And that's where Splunk started, by the way. All we've done is we are now the new platform for security and observability once we close Chronosphere. But thanks, Brad, for the question. Thank you. All right. Next, we have Rob Owens from Piper Sandler, followed by Saket Kalia from Barclays. Great. Thanks, Hamza. And good afternoon, everybody. Nikesh, just building on those comments, wanted to touch on Chronosphere. And you know, it has been challenging, I think, for a lot of vendors in security to get into observability.

If you want your stuff to work 99.9% of the time, you need to know if something goes down ASAP. You can't know that if you don't have the data. And if you go back historically, the question has been the two largest categories of data are security and observability. And that's where Splunk started, by the way. All we've done is we are now the new platform for security and observability once we close Chronosphere. But thanks, Brad, for the question.

And if you go back historically the question has been the two largest category of data our security and of durability and ease of Splunk started by the way.

All we've done is we are now the new platform for security and Absorbability once we close cornerstone.

Brad Zelnick: Thank you.

Hamza Fodderwala: All right. Next, we have Rob Owens from Piper Sandler, followed by Saket Kalia from Barclays. Great.

But thanks for the questions. Thank you.

Okay.

Next we have Rob Owens from Piper Sandler followed by Saka Collyer from Barclays.

Rob Owens: Thanks, Hamza. And good afternoon, everybody. Nikesh, just building on those comments, wanted to touch on Chronosphere. And you know, it has been challenging, I think, for a lot of vendors in security to get into observability.

Great. Thanks, Hamzah and good afternoon everybody.

Just building on those comments wanted to touch on.

Kona sphere, and it has been challenging I think for a lot of vendors in security to get into observe abilities. So would love to see or hear from you. Your perspective on number one that convergence is happening right now and number two I think <unk> shown success with some of the largest AI needed companies out there are.

Nikesh Arora: So I would love to see or hear from you your perspective on, number one, that convergence happening right now. And number two, I think Chronosphere has shown success with some of the largest AI-native companies out there having two of the top five frontier models. Are there elements behind their product sets that are applicable to some of these other large AI natives that are growing rapidly that you think you can have success with? Thanks. So Rob, you know, I and the team, actually, it's a funny story. We actually found Chronosphere because we were looking around to see, oh my God, everybody's going and abstracting data pipelining, and everybody's going to have to have a data pipelining capability in the future in the SIM.

So I would love to see or hear from you your perspective on, number one, that convergence happening right now. And number two, I think Chronosphere has shown success with some of the largest AI-native companies out there having two of the top five frontier models. Are there elements behind their product sets that are applicable to some of these other large AI natives that are growing rapidly that you think you can have success with? Thanks.

Having two of the top five frontier models are there elements behind their product set.

That are applicable to some of these other large AI natives that are that are growing rapidly that you think you can have success with thanks, So Rob eight O I's me and the team actually is my story, we actually found Kronos there because we were looking around to see Oh, I got everybody's going and abstracting data pipelining and everybody's going.

Nikesh Arora: So Rob, you know, I and the team, actually, it's a funny story. We actually found Chronosphere because we were looking around to see, oh my God, everybody's going and abstracting data pipelining, and everybody's going to have to have a data pipelining capability in the future in the SIM.

Nikesh Arora: And honestly, as a category, we think data pipelining is sort of an interim category, which is there because of, you know, data inefficiency, but we don't think it has a sustainable future. So we kind of like walked away from data pipelining vendors, which I know that some of the industry has tried to ingest as part of their SIM solutions. But when we looked harder, you know, we ran into Chronosphere, we discovered, you know, it's very rarely when your engineering team comes back and says, these guys are good. Generally, engineers have too much pride to tell you somebody else is good. But our team came back and said, these guys are the best engineers we've run into.

And honestly, as a category, we think data pipelining is sort of an interim category, which is there because of, you know, data inefficiency, but we don't think it has a sustainable future. So we kind of like walked away from data pipelining vendors, which I know that some of the industry has tried to ingest as part of their SIM solutions. But when we looked harder, you know, we ran into Chronosphere, we discovered, you know, it's very rarely when your engineering team comes back and says, these guys are good. Generally, engineers have too much pride to tell you somebody else is good. But our team came back and said, these guys are the best engineers we've run into.

I have to have a data pipeline and capability in the future and the Sims and honestly.

As a category, we think that a pipeline against sort of a interim category, which is there because of their inefficiency, but we don't think it has a sustainable future. So we kind of like walked away from data pipelining vendors, which I know that some of the industry has tried to ingest as part of their Sim solutions, but when we looked harder and we ran into chromosphere, we discovered it.

It's very rarely when your engineering team comes back and say these guys are good generally engineers have too much Brian to tell you. It's somebody else's good but our team came back is that these guys. The best engineers the run into now to be able to scale observe ability when youre ingesting.

Nikesh Arora: Now, to be able to scale observability when you're ingesting, you know, petabytes of data at LLM model scale and be able to not create latency, provide observability in that kind of environment at a cost, which is 1/3. Look, but right now, if you go talk to every customer, even we turned down our observability vendor because it's too expensive at Palo Alto. Like, can't afford to have real-time observability on this product platform because it's too expensive. The problem is you can't run financial services apps, you can't run large e-commerce businesses, you can't run large, you know, food delivery businesses without persistent observability. So what Chronosphere has done has changed the observability model by a combination of open source and techniques where they can do scale sort of data observability at the right price.

Now, to be able to scale observability when you're ingesting, you know, petabytes of data at LLM model scale and be able to not create latency, provide observability in that kind of environment at a cost, which is 1/3. Look, but right now, if you go talk to every customer, even we turned down our observability vendor because it's too expensive at Palo Alto. Like, can't afford to have real-time observability on this product platform because it's too expensive. The problem is you can't run financial services apps, you can't run large e-commerce businesses, you can't run large, you know, food delivery businesses without persistent observability. So what Chronosphere has done has changed the observability model by a combination of open source and techniques where they can do scale sort of data observability at the right price.

Petabytes of data.

L M models scale and be able to not create latency provide observer ability and that kind of environment at a cost which is a third look but right. Now if you go talk to every customer even we turned down a reserve of the vendor because it's too expensive at Palo Alto.

I can't afford to have real time of variability on this broad platform because it's too expensive.

The problem is you can't run financial services apps, you can't run large E. Commerce business is you can run large you know.

Food delivery businesses without persistent absorbability. So what golar is done has seen the observable the model by a combination of open source and techniques, where they can do scale.

Nikesh Arora: So I, you know, we think every born-in-the-cloud company, every company that has a platform that requires customers to really access it 10 by 24 is a potential customer. And I think, again, it's going to be another business like XIM, which we have an average ARR of a million dollars at some point in time. All right, thank you. Okay, great. Next, we have Saket Kalia from Barclays, followed by Matthew Hedberg from RBC. Okay, great. Hey guys, thanks for taking my question here. You know, Nikesh, it's interesting to see you sign larger and larger XIM deals. I think you called out an $85 million deal in the quarter, while at the same time, incumbents in the space are really struggling to grow. And in the past, you've talked about how XIM... That's it. It makes sense.

So I, you know, we think every born-in-the-cloud company, every company that has a platform that requires customers to really access it 10 by 24 is a potential customer. And I think, again, it's going to be another business like XIM, which we have an average ARR of a

Set of data of their ability at the right price. So we think every born in the cloud company every company that has a <unk>.

Platform that requires customers to really access it jumped by 24 is a potential customer and I think again, it's going to be another business like Exxon, which we have an average out of a million dollars at some point in time.

million dollars at some point in time.

Rob Owens: All right, thank you.

Hamza Fodderwala: Okay, great. Next, we have Saket Kalia from Barclays, followed by Matthew Hedberg from RBC.

Alright, thank you.

Okay, great. Thanks, we have soccer Collier from Barclays, followed by Matt Hedberg from RBC.

Saket Kalia: Okay, great. Hey guys, thanks for taking my question here. You know, Nikesh, it's interesting to see you sign larger and larger XIM deals. I think you called out an $85 million deal in the quarter, while at the same time, incumbents in the space are really struggling to grow. And in the past, you've talked about how XIM...

Okay, Great Hey, guys. Thanks for thanks for taking my question here.

It's interesting to see you sign larger and larger <unk> deals I think you called out $85 million during the quarter, while at the same time incumbents in the space are really struggling to grow.

Nikesh Arora: That's it. It makes sense.

And in the past you've talked about how ex Siam market it makes sense.

Nikesh Arora: Incumbents don't grow, we take market share, which means we grow and they decline. That's how it works. Totally understood. But maybe from a spending perspective, maybe the question is, do you find that XIM is able to capture at least what those customers were spending on incumbents, or is there an opportunity to capture more because of that faster mean time to respond? Does that make sense? It makes sense, Saket. I think the way to think about it differently is we do capture at least what the incumbent is, the customer is spending on the incumbent, but in the process of delivering XIM, we're able to consolidate multiple products. So not only do we get the incumbent spend of the SIM provider, but you have, you know, UEBA, you have other carriers; maybe Lee, it's a good time for you to say something.

Incumbents don't grow, we take market share, which means we grow and they decline. That's how it works.

In government don't go we take market share, which means we grow and they decline that's how it works.

Saket Kalia: Totally understood. But maybe from a spending perspective, maybe the question is, do you find that XIM is able to capture at least what those customers were spending on incumbents, or is there an opportunity to capture more because of that faster mean time to respond? Does that make sense?

Understood.

But maybe from a spending perspective, maybe the question is do you find that <unk> is able to capture at least what those customers are spending unencumbered or is there an opportunity to capture more because of that faster mean time to respond is that does that make sense. It makes sense that I think the way to think about it differently is we.

Nikesh Arora: It makes sense, Saket. I think the way to think about it differently is we do capture at least what the incumbent is, the customer is spending on the incumbent, but in the process of delivering XIM, we're able to consolidate multiple products. So not only do we get the incumbent spend of the SIM provider, but you have, you know, UEBA, you have other carriers; maybe Lee, it's a good time for you to say something.

Do capture at least what the incumbent is.

The customer is spending on the incoming but in the process of delivering next time, we were able to consolidate multiple products. So not only do we get the income would spend of the Sim provider, but do you have.

E. B a you have other carriers, maybe Lee it's a good time for you to say something.

Nikesh Arora: EDR, ITDR, recent launches around email security, exposure management. So we're able to consolidate these sort of surrounding product categories back onto a single platform. So customers save money, but we expand the overall footprint that we can deliver. Very helpful. Thanks. Okay, next we have Matt Hedberg from RBC Capital Markets, followed by Tal Liani from Bank of America. Thanks, Hamza. Congrats for me as well on the results. Obviously, a lot of really positive developments here. The $20 billion fiscal 30 NGS ARR target is obviously super impressive relative to the prior target that you had outlined. Obviously, there's some tucking sort of M&A assumptions in there, but I guess I'm curious, like from a high level, Nikesh, what are some of the biggest moving pieces that give you the confidence since you talked about the prior target just last quarter to raise it to such a significant margin?

Lee Klarich: EDR, ITDR, recent launches around email security, exposure management. So we're able to consolidate these sort of surrounding product categories back onto a single platform. So customers save money, but we expand the overall footprint that we can deliver.

Sure Hi, T D R.

Recent launches around email security exposure management, so we're able to consolidate these sort of surrounding product categories back onto a single platform, so customer saves money, but we expand the overall footprint that we can deliver.

Saket Kalia: Very helpful. Thanks.

Hamza Fodderwala: Okay, next we have Matt Hedberg from RBC Capital Markets, followed by Tal Liani from Bank of America.

Very helpful. Thanks.

And next we have Matt Hedberg from RC followed followed by Polyone from Bank of America.

Matt Hedberg: Thanks, Hamza. Congrats for me as well on the results. Obviously, a lot of really positive developments here. The $20 billion fiscal 30 NGS ARR target is obviously super impressive relative to the prior target that you had outlined. Obviously, there's some tucking sort of M&A assumptions in there, but I guess I'm curious, like from a high level, Nikesh, what are some of the biggest moving pieces that give you the confidence since you talked about the prior target just last quarter to raise it to such a significant margin?

Thanks, Hamzah Congrats from me as well on the results obviously, a lot of really positive developments here. The 30, the $20 billion fiscal 30 Ngls are our target is obviously super impressive relative to the prior target that you'd outlined obviously theres some tuck in sort of M&A assumptions in there, but I guess I'm curious like from a high level Nick.

What are some of the biggest moving pieces that gives you the confidence.

You talked about the prior target just last quarter to raise it to such a significant margin.

Nikesh Arora: Well, that's a great question, Matt. So first of all, as I said, our core business continues to show strength. And you know, as every time you're doing forecasting, somebody says, oh, the law of large numbers is going to start making these growth rates go down. But you know, as I mentioned, SASE continues to be strong at 1.3 billion in ARR. We're growing faster than, you know, independent public companies which run SASE. So we feel that's a strong part of our business. Software firewalls, I think, is our hidden gem. You know, 50% of our product, or 44% plus percent of our product is coming from software. I don't think software firewalls are going to stop. As you put more and more cloud workloads out there, people are discovering they need a software firewall. We've been waiting for that trend. It's arrived.

Well, that's a great question, Matt So first of all as I said, our core business continues to show strength and you know as every time, you're doing forecasting somebody said all the law of large numbers going to start making these growth rates go down, but you know as I mentioned sassy continues to be strong at $1 3 billion in IRR, we're growing faster than you know independent public companies with Ron Sassy. So we feel that's a strong part of our biz.

And this software firewall is I think is a hidden gem.

A 50 person or a product or 44 plus percent of our product revenue coming from software I don't think software for all is going to stop as you put more and more cloud workloads out there people are discovering that need a software firewall. We've been waiting for that trend has arrived we are probably outside of the CSP is the only large vendor in the software firewall space. So we feel strong that our core business will keep performing.

Nikesh Arora: We are probably, outside of the CSPs, the only large vendor in the software firewall space. So we feel strong that our core business will keep performing, which allows us to sustain our, you know, current $7 billion target of FY26 forward. If you take CyberArk and what we intend to do with it, we hope that business continues to transform from where they are to absorb more and more identity categories that we intend to do with them. And I think Chronosphere, if you add all three of them up, that gets us very close. Will there be tuck-ins between now and FY30? Sure, we will have tuck-ins, but as you've seen in the past, tuck-ins don't move the needle by billions of dollars. Tuck-ins move the needle by sustaining growth rates and giving you a few hundred million dollars.

We are probably, outside of the CSPs, the only large vendor in the software firewall space. So we feel strong that our core business will keep performing, which allows us to sustain our, you know, current $7 billion target of FY26 forward. If you take CyberArk and what we intend to do with it, we hope that business continues to transform from where they are to absorb more and more identity categories that we intend to do with them. And I think Chronosphere, if you add all three of them up, that gets us very close. Will there be tuck-ins between now and FY30? Sure, we will have tuck-ins, but as you've seen in the past, tuck-ins don't move the needle by billions of dollars. Tuck-ins move the needle by sustaining growth rates and giving you a few hundred million dollars.

It allows us to sustain our current $7 billion targeted by 'twenty six forward. If he takes Iraq, where we intend to do with it we hope that business continues to transform from where they are to absorb more and more identity categories that we intend to do with them and I think chronos, where if you add all three of them up they've got some very close will there be tuck in between now and if Rytary sure we will have Dr.

But as you've seen in the past tuck ins don't move the needles by billions of dollars that can move the needle by sustaining growth rates and giving a few hundred million dollars, but I think the lion's share is going to come from the three categories, you've just outlined.

Nikesh Arora: But I think the line share is going to come from the three categories you've just outlined in our core business, in identity, and in observability. Great. Next, we have Tal Liani from Bank of America, followed by Meta Marshall from Morgan Stanley. Hey guys, two great acquisitions, long-term, very promising. The question is the transitory period. What's the impact on dilution, on margins, or free cash flow margins? And then how long does it take to see the synergies? So the sum of parts is greater than two. Yeah, I'm going to let Deepak answer the precise questions and the numbers. As I said, so I've, you know, Chronosphere, we will run independently. Martin and team have done a great job. We will provide, obviously, the services from the HR finance marketing people, which is great because they don't have a large team in doing that.

But I think the line share is going to come from the three categories you've just outlined in our core business, in identity, and in observability.

Hamza Fodderwala: Great. Next, we have Tal Liani from Bank of America, followed by Meta Marshall from Morgan Stanley.

Our core business and identity and an availability.

Okay.

Next we have a totally Ani from bank of America, followed by a meta Marshall from Morgan Stanley.

Tal Liani: Hey guys, two great acquisitions, long-term, very promising. The question is the transitory period. What's the impact on dilution, on margins, or free cash flow margins? And then how long does it take to see the synergies? So the sum of parts is greater than two.

Hey, guys.

Two great acquisitions.

Tim very promising that question is that transitory period.

The impact on dilution on margins or free cash flow margins and then how long does it take to see the synergies so to sum of parts is greater than two.

Nikesh Arora: Yeah, I'm going to let Dipak answer the precise questions and the numbers. As I said, so I've, you know, Chronosphere, we will run independently. Martin and team have done a great job. We will provide, obviously, the services from the HR finance marketing people, which is great because they don't have a large team in doing that.

Yeah, I'm going to let Deepak answer the precise questions on the numbers as I said cyber era, Chronos, where we will run independently Martin and the teams have done a great job Bill will provide obviously the services from the HR finance marketing people, which is great because they don't have a large team in doing that they're basically once it really smart engineers and forward.

Nikesh Arora: They're basically a bunch of really smart engineers and forward deployed engineers, as well as a few salespeople. So we're going to give them some support by introducing them to the right customers in a very targeted fashion. But Martin is very capable. He will run the business with his team. We trust him to do that. We're just going to provide the sort of rocket fuel in him to go out and meet customers and execute on his plan. So that's sort of, it's kind of low, because for us, it's very important because all of our focus from the integration perspective is on cyber. From a cyber perspective, you know, as I said, we've had some great meetings. We understand what it is. There will be some, you know, rational synergies on day one because we don't need certain things in duplicate.

They're basically a bunch of really smart engineers and forward deployed engineers, as well as a few salespeople. So we're going to give them some support by introducing them to the right customers in a very targeted fashion. But Martin is very capable. He will run the business with his team. We trust him to do that. We're just going to provide the sort of rocket fuel in him to go out and meet customers and execute on his plan. So that's sort of, it's kind of low, because for us, it's very important because all of our focus from the integration perspective is on cyber. From a cyber perspective, you know, as I said, we've had some great meetings. We understand what it is. There will be some, you know, rational synergies on day one because we don't need certain things in duplicate.

<unk> engineers as well as a few salespeople so we're going to give them some support by introducing them to the right customer the right targeted fashion, but Martin is very capable he will run the business with this team we trust them to do that we're just going to provide the sort of the rocket fuel in him to go out and meet customers and execute on this plan. That's set up so it's kind of it's a low because it for us is very important because all of our focus on.

The integration perspectives on cyber <unk> perspective, we've as I said, we've had some great meetings, we understand where it is.

There'll be some.

Rational synergies on day, one because we don't need certain things and duplicate.

Nikesh Arora: We think by the time we get to the end of this fiscal year, our fiscal year FY 2026, we have a much better handle. We'll be able to align their sales quotas, their teams, and territories around our plans. So that's where I think a little bit of reshaping will happen. But I'm going to let Deepak talk about specific dilution and free cash flow markets. Yeah, so I think, Tal, like the key part, just what I said in my prepared remarks is like with both acquisitions, we believe that we'll be able to get back to the 40% free cash flow by 2028. Your question's really about what in the interim.

We think by the time we get to the end of this fiscal year, our fiscal year FY 2026, we have a much better handle. We'll be able to align their sales quotas, their teams, and territories around our plans. So that's where I think a little bit of reshaping will happen. But I'm going to let Dipak talk about specific dilution and free cash flow markets.

We think by the time, we get to the end of this fiscal year.

Our fiscal year, FY, 'twenty, six and a much better handle we'll be able to align their sales quotas and their teams and territories around our plans. So that's where I think a little bit of reshaping will happen, but I will let people talk about specific dilution in the free cash flow, but yes. So I think tell like the key part just what I said in my prepared remarks is like.

Dipak Golechha: Yeah, so I think, Tal, like the key part, just what I said in my prepared remarks is like with both acquisitions, we believe that we'll be able to get back to the 40% free cash flow by 2028. Your question's really about what in the interim.

With both acquisitions, we believe that we'll be able to get back to the 40% free cash flow by 28. Your question is really about what in the in the interim and I, specifically mentioned that we should be able to maintain at least 37% plus free cash flow margin even in the interim like you know barring the onetime costs.

Nikesh Arora: I specifically mentioned that we should be able to maintain at least 37%+ free cash flow margin even in the interim, like, you know, barring the one-time costs, which I think just highlights the bottom of the floor. So we're pretty deep into, at our scale, we're pretty deep into understanding how much we can do, how fast, and it doesn't really move the needle as much as you think it might. So between 37% and 40% over the next two years and 40%+ by 2028. Thank you. Thank you, Tom. All right. Next, we have Meta Marshall from Morgan Stanley, followed by Brian Essex from J.P. Morgan. Great, thanks. And apologize for the voice. Great traction with XIM and Prisma this quarter. Just what ending are you seeing customers in in terms of AI adoption?

I specifically mentioned that we should be able to maintain at least 37%+ free cash flow margin even in the interim, like, you know, barring the one-time costs, which I think just highlights the bottom of the floor. So we're pretty deep into, at our scale, we're pretty deep into understanding how much we can do, how fast, and it doesn't really move the needle as much as you think it might.

Which I think just highlights the the bottom of the floor. So we're pretty deep into it off scale, we're pretty deep into understanding how much we can do.

Nikesh Arora: So between 37% and 40% over the next two years and 40%+ by 2028.

How fast and it doesn't really move the needle as much as anything.

So putting in 37% to 40% over the next two years in the 40 plus percent by 2020.

Tal Liani: Thank you.

Nikesh Arora: Thank you, Tom.

Hamza Fodderwala: All right. Next, we have Meta Marshall from Morgan Stanley, followed by Brian Essex from JPMorgan.

Thank you.

Thank you Tom.

Next we have meta Marshall from Morgan Stanley followed by Brian Essex from J P. Morgan.

Meta Marshall: Great, thanks. And apologize for the voice. Great traction with XIM and Prisma this quarter. Just what ending are you seeing customers in in terms of AI adoption?

Great, Thanks, and apologize for the voice.

Great traction with X I am impressed not this quarter.

Are you seeing customers and in terms of AI interaction and is it different.

Nikesh Arora: Is it different on AI for security versus kind of security for AI? Thanks. Look, it's still early innings on AI adoption. I mean, there's, on one hand, what you see is this massive buildout of AI data centers, models, and everything else. That's the leading indicator. But then when you start to look at enterprise adoption, there's, you know, huge scale of production pilots, early deployments, and things like that. And that's really just the tip of the spear of what we think is coming. Having said that, though, the security of that tends to be trailing that. And so the recent attacks that we're seeing, both of AI as well as AI launching attacks, is obviously going to start driving more and more awareness of the importance, really, of trying to do both those things at the same time.

Is it different on AI for security versus kind of security for AI? Thanks.

For security versus kind of security for AI.

Nikesh Arora: Look, it's still early innings on AI adoption. I mean, there's, on one hand, what you see is this massive buildout of AI data centers, models, and everything else. That's the leading indicator. But then when you start to look at enterprise adoption, there's, you know, huge scale of production pilots, early deployments, and things like that. And that's really just the tip of the spear of what we think is coming. Having said that, though, the security of that tends to be trailing that. And so the recent attacks that we're seeing, both of AI as well as AI launching attacks, is obviously going to start driving more and more awareness of the importance, really, of trying to do both those things at the same time.

But it's still early innings on AI adoption I mean, there's on one hand, what you see is this massive build out of AI data centers and models and everything else. That's the leading indicator, but then when you start to look at enterprise adoption there is.

Huge scale of production pilots in.

Early deployments and things like that and that's really just the tip of the spear of of what we think is coming.

Having said that though.

The security of that tends to be trailing debt and and so.

The the recent attacks that we're seeing both of AI as well as AI launching attacks is obviously going to start driving more and more awareness of the importance really we're trying to do both those things at the same time, it's what I see when I talk to two to customers is a growing desire for the.

Nikesh Arora: It's what I see when I talk to customers is a growing desire for the production pilots of AI to be run in parallel to the production pilots of AI security so that they're moving in lockstep. And so that's going to require a bit more urgency, I think, on the security side to be up in lockstep with the IT deployment side. And that's starting to happen, but it's still early. Thanks. All right. Thank you and feel better, Meta. Next, we have Brian Essex from J.P. Morgan, followed by Joseph Gallo from Jefferies. Thanks, Hamza. And congrats on the results, team. I wanted to circle back on quantum. I saw the partnership with IBM on quantum safe readiness. I guess question for Nikesh, are customers focused on this yet?

It's what I see when I talk to customers is a growing desire for the production pilots of AI to be run in parallel to the production pilots of AI security so that they're moving in lockstep. And so that's going to require a bit more urgency, I think, on the security side to be up in lockstep with the IT deployment side. And that's starting to happen, but it's still early.

<unk> <unk>.

Production pilots of AI to be run in parallel to the production pilots with AI security, so that theyre moving in lockstep and so that that's going to require a bit more urgency I think on the security side too to be up in lockstep with the I T deployment side and that's that's starting to happen, but it's better.

Meta Marshall: Thanks.

Hamza Fodderwala: All right. Thank you and feel better, Meta. Next, we have Brian Essex from JPMorgan, followed by Joseph Gallo from Jefferies.

Too early.

Thanks, Alright, thank you and feel better meter next.

Next we have Brian assay from J P. Morgan followed by Joseph Gallo from Jefferies.

Brian Essex: Thanks, Hamza. And congrats on the results, team. I wanted to circle back on quantum. I saw the partnership with IBM on quantum safe readiness. I guess question for Nikesh, are customers focused on this yet?

Hey, Thanks, and congrats on the results team.

I wanted to circle back on quantum.

The partnership with IBM on quantum state readiness.

I guess question for net cash our customers focused on this yet is this going to require some evangelism on your part or will this be kind of like a why teekay event, where they wait till the last minute to address their exposure and then maybe for Lee how do we think about.

Nikesh Arora: Is this going to require, you know, some evangelism on your part, or will this be kind of like a Y2K event where they wait till the end, you know, to the last minute to address their exposure? And then maybe for Lee, how do we think about the technology advantage that you have that gives you maybe a superior right to win for, you know, post-quantum readiness? Is it the depth of visibility that you have and observability into networks? Is it data protection, all the above? You know, how do you frame that out? Can you start? Let's start with your question on timing. So there's a couple of things that are driving a level of urgency. One is, as Nikesh was mentioning, this notion of harvest now, decrypt later is one of the concerns.

Is this going to require, you know, some evangelism on your part, or will this be kind of like a Y2K event where they wait till the end, you know, to the last minute to address their exposure? And then maybe for Lee, how do we think about the technology advantage that you have that gives you maybe a superior right to win for, you know, post-quantum readiness? Is it the depth of visibility that you have and observability into networks? Is it data protection, all the above? You know, how do you frame that out?

The technology advantage that you have that gives you maybe a superior white right to win.

Post quantum readiness is the depth of visibility that you have and observe the ability into networks as a data protection all the above you know how do you how do you frame that out.

Nikesh Arora: Can you start?

Lee Klarich: Let's start with your question on timing. So there's a couple of things that are driving a level of urgency. One is, as Nikesh was mentioning, this notion of harvest now, decrypt later is one of the concerns.

Uh huh.

Let's start with the your question on timing. So the there's a couple of things that are driving a level of urgency. One is there's no cash was mentioning this notion of harvests now decrypt later as one of the concerns so probably more nation state level type of attack but.

Nikesh Arora: So, probably more nation-state level type attack, but collecting encrypted data and then waiting for quantum to become real in order to decrypt it later. And so there are certain types of data that will still be valuable, you know, years into the future. And so that's one reason for urgency now. Second is it's not clear yet when quantum computers will be viable. And it's possible that they'll be, you know, viable before people are currently expecting. And so there's a certain, that variability is also factored in. And I'd say third is this is likely for a lot of organizations, a multi-year effort. And so if they don't start now, they won't be ready two, three, four years from now.

So, probably more nation-state level type attack, but collecting encrypted data and then waiting for quantum to become real in order to decrypt it later. And so there are certain types of data that will still be valuable, you know, years into the future. And so that's one reason for urgency now. Second is it's not clear yet when quantum computers will be viable. And it's possible that they'll be, you know, viable before people are currently expecting. And so there's a certain, that variability is also factored in. And I'd say third is this is likely for a lot of organizations, a multi-year effort. And so if they don't start now, they won't be ready two, three, four years from now.

Collecting encrypted data.

And then waiting for cointreau embryo in order to decrypt. It later and so there's there are certain types of data that we'll.

We will still be valuable.

Years into the future and so that's one reason for urgency now a second is it is not clear yet when quantum computers will be viable and it's possible that there'll be a <unk>.

<unk> before people are currently expecting and so there's a certain that that variability.

Also factored in and I'd say third is this is likely for a lot of organizations a multiyear effort.

Nikesh Arora: And so all of that is adding up to what I've noticed over the last, let's say, six, nine months is a pretty significant inflection in the number of customers who are starting to talk about this and plan for this from an urgency perspective. On the technical side, look, part of this is really just related to we started working on post-quantum several years ago. So we did not wait to start working on this. We've had capabilities rolling out in the last few years, with the biggest launch being a few months ago with Orion. And that has put us in a very good position simply in terms of being ahead of many of the people out there.

And so all of that is adding up to what I've noticed over the last, let's say, six, nine months is a pretty significant inflection in the number of customers who are starting to talk about this and plan for this from an urgency perspective.

And so if they don't start now they won't be ready two three or four years from now and so.

All of that is adding up to what I've noticed or less let's say six to nine months is a pretty significant inflection in the number of customers are starting to talk about this and plan for this for an urgency perspective Andy.

On the technical side, look, part of this is really just related to we started working on post-quantum several years ago. So we did not wait to start working on this. We've had capabilities rolling out in the last few years, with the biggest launch being a few months ago with Orion. And that has put us in a very good position simply in terms of being ahead of many of the people out there.

On the technical side.

The.

Part of this is really just related to we started working on post quantum.

Several years ago, So we did not wait.

To start working on this we've had capabilities rolling out of the last few years with the biggest launch being a few months ago with with Orion.

And that has put us in a very good position simply in terms of being ahead of many of the people out there too.

Nikesh Arora: Too, our ability to sort of see across hardware stacks, software stacks, SASE stacks, browser stacks now gives us, I think, probably one of the largest footprints where we can leverage existing deployments to get that visibility and to provide remediation versus having it all be net new. And, you know, the partnerships we announced is really pretty powerful because it allows us to work with others that can complement the pieces that we already have. And the only thing I will say to that, Brian, is look, I understand you're, you know, I used to be, I used to be on your side of the world when I was Y2K. We were all trying to figure out which stocks to buy, which ones not to buy. But the good news is, you know, in the Y2K, like you had to go and reset everything.

Two, our ability to sort of see across hardware stacks, software stacks, SASE stacks, browser stacks now gives us, I think, probably one of the largest footprints where we can leverage existing deployments to get that visibility and to provide remediation versus having it all be net new. And, you know, the partnerships we announced is really pretty powerful because it allows us to work with others that can complement the pieces that we already have.

The or ability to sort of see across hardware stack software stack sassy stacks browser stacks now gives.

It gives us I think probably the one of the largest footprints, where we can leverage existing deployments to get that visibility and to provide remediation versus having it all be net new and and the partnerships, we announced or is really pretty powerful because it allows us to work with others that can complement the pieces that we already have.

Nikesh Arora: And the only thing I will say to that, Brian, is look, I understand you're, you know, I used to be, I used to be on your side of the world when I was Y2K. We were all trying to figure out which stocks to buy, which ones not to buy. But the good news is, you know, in the Y2K, like you had to go and reset everything.

The only thing I'll say to that Brian.

I understand you know I used to be they used to be on your side of the world. When I was y2k, we're all trying to figure out if it's talks to why we're trying not to buy.

But.

The good news is.

Nikesh Arora: There was no quick fix across the enterprise. In this case, yes, the long-term solution is to strengthen everything and make it more robust. In the short term, we actually have a solution where using techniques, we can actually take existing legacy enterprise infrastructure and secure for quantum. So as a customer's CIO, would you rather take the risk or you just rather spend a few million dollars and say, I am quantum secure until I can upgrade my infrastructure? The answer is, you know, cybersecurity is insurance anyway. So buy a little more insurance. Are you seeing a compliance push yet, or is that still on the horizon? Early stages of that, Brian. Early stages. It's coming. Yeah, very helpful. Thank you. I appreciate it. Thank you, Brian. Next, we have Joe Gallo from Jefferies, followed by Patrick Colville from Scotiabank. Hey guys, thanks for the question.

You invite Takeda like you had to go and reset everything there is no quick fix across the enterprise and in this case, yes. The long term solution is to.

And then everything and make it a more robust in the short term, we actually have a solution for using techniques. We can actually take existing legacy enterprise infrastructure and secure for quantum so there's a customer CIO would you rather take the risk or we just rather spend a few million dollars and say I am quantum secure until I can upgrade my infrastructure. The answer is yes.

Cybersecurity assurance anyway.

Lee Klarich: Are you seeing a compliance push yet, or is that still on the horizon?

So to buy a little more insurance.

Lee Klarich: Early stages of that, Brian. Early stages. It's coming.

Are you seeing a compliance push yet or is that still on the horizon.

Early early stages of that Brian early stages, it's coming.

Brian Essex: Yeah, very helpful. Thank you. I appreciate it.

Hamza Fodderwala: Thank you, Brian. Next, we have Joe Gallo from Jefferies, followed by Patrick Colville from Scotiabank.

Okay very helpful. Thank you I appreciate it.

Thank you Bryan next we have Joe Galla from Jefferies, followed by Patrick Colo from Scotiabank.

Joe Gallo: Hey guys, thanks for the question.

Nikesh Arora: You made some architectural changes to the cloud security products earlier this year. Can you just update us on that? How has that been received by customers? And any sense of how cloud security grew in Q1 versus Q4? Yeah, so we've made some changes, Joe, as you noted, with the launch of Cortex Cloud early in the year. This was made for a number of reasons. In large part, we were seeing an increased need from customers to be able to secure the full lifecycle of their cloud deployments, from code to cloud deployments to runtime, even connected all the way into the SOC. And so that was the impetus behind this. And we've seen a lot of very positive feedback from customers in terms of aligning to their strategies as well. And then since then, we've been able to continue to drive further capabilities on that.

You made some architectural changes to the cloud security products earlier this year. Can you just update us on that? How has that been received by customers? And any sense of how cloud security grew in Q1 versus Q4?

Hey, guys. Thanks for the question. He made some architectural changes to the cloud security products earlier. This year can you just update us on that how has that been received by customers and any sense of how cloud security grew in <unk> versus <unk>.

Nikesh Arora: Yeah, so we've made some changes, Joe, as you noted, with the launch of Cortex Cloud early in the year. This was made for a number of reasons. In large part, we were seeing an increased need from customers to be able to secure the full lifecycle of their cloud deployments, from code to cloud deployments to runtime, even connected all the way into the SOC. And so that was the impetus behind this. And we've seen a lot of very positive feedback from customers in terms of aligning to their strategies as well. And then since then, we've been able to continue to drive further capabilities on that.

Yes.

So we've made some some changes you know Jos you noted with the launch of cortex cloud early in the year.

This was made for a number of reasons and in large part we were saying.

Increased need from customers to be able to secure the full lifecycle of their cloud deployments from from code to cloud deployments to run time, even connected all the all the way into the stock and so the that was that was the impetus behind this and we've seen a lot of very positive feedback from customers in terms of aligning to their strategies as well.

And then since then we've been able to continue to drive further our capabilities on that earlier.

Nikesh Arora: Earlier this year, we announced ASPM. So this is basically allowing us to prevent application security issues from working the way into production. Then most recently, we announced the new cloud security agent, so our CDR agent, we're able to be 50% more efficient in protecting cloud workloads with that. So we continue to drive more and more innovation. Actually, the last one was with the launch of Agentix. That is now natively available as part of Cortex Cloud as well. So we're even bringing agents to the cloud security mix to help automate customer workflows in the cloud. Thank you, Joe. Next, we have Josh Tilton from Wolfe Research, followed by Patrick Colville from Scotiabank. Hey guys, can you hear me? Not sure if it's supposed to be me or Patrick. Hey, Josh. Go ahead, Josh.

This year, we announced a <unk>.

S. P. M. So this is basically allowing us to prevent application security issues from working away into production.

And then most recently, we announced the new cloud security agents, who are ctr agent, we're able to be 50% more efficient in protecting cloud workloads with that and so we we continue to drive more and more innovation actually in the last one was with the launch of a gentex.

That is now natively available as part of cortex cloud as well, so we're even bringing agents to the cloud security mix too to help automate customer workflows in the cloud.

Okay. Thank.

Thank you Joe next.

Next we have.

Josh Tilton from Wolfe Research, followed by Patrick Cole from Scotiabank.

Hey, guys can you hear me I'm not sure if sustained here Patrick.

Nikesh Arora: Hey guys, I just want to follow up on the first question from Brad. I do think that today the current investor view is that identity security is the market that is best positioned to benefit in an agentic future. But Nikesh, I think in response to his question, you did mention that AI is increasing volume and inspection. So what I'm trying to understand is how should investors expect the volume of network traffic to change in an agentic future? And what does that mean for the traditional firewall business and the SASE business? Look, I think the way to maybe think about it, Josh, is the advent of AI has just created an extraordinary increase in the amount of data, both data concentration, but also movement of data, right?

Hey, Josh.

Go ahead, Josh Hey, guys.

I just wanted to follow up on the first question from Brad I do think that today. The current investor view is that identity security is the market that is best positioned to.

To benefit in an agent of the future, but in the cash I think in response to his question. You did mentioned that AI is increasing volume and inspection. So what I'm trying to understand is how should investors expect the volume of network traffic to change in <unk> future and what does that mean for the traditional firewall business and the SaaS business.

Okay.

Look I think the way to maybe think about it.

Josh is the advent today ice is just create an extraordinary increase in the amount of data.

Both data concentration, but also movement of data right, So where we're seeing environments now that are beyond any scale that we've ever seen before just in terms of the amount of data that's moving around them.

Nikesh Arora: So we're seeing environments now that are beyond any scale that we've ever seen before, just in terms of the amount of data that's moving around. For example, you think about how much training data has to be brought to bear to train one of these models, let alone all different models were being built in different versions of models. And so that by itself is creating a noticeable influx in the amount of network traffic, but somewhat concentrated, concentrated toward the AI platforms themselves. The second part that comes with that, though, is as AI becomes more and more deployed across the enterprises, that will also drive a similar pattern, albeit maybe at a slightly smaller scale.

For example, you think about how much training data has to be brought to bear to even train one of these models, let alone all of their models are being built in different versions of models.

And so that that by itself is is creating a noticeable influx in the amount of network traffic.

Somewhat concentrated concentrated towards the air platforms themselves. The second part that comes with that though is as AI becomes more and more deployed across the enterprises that will also drive a similar pattern, albeit maybe at a slightly smaller scale and that's the part of what the cash was talking about both in terms of amount of data, but then that trend.

Nikesh Arora: And that's the part of what Nikesh was talking about, both in terms of amount of data, but then that translates then to the observability needs, the application criticality needs, and of course, security on top of all of that. Yeah, and I think just I think you probably are alluding to the fact that we didn't explain the identity thing well enough. Look, identity is a market that products were designed 15, 20 years ago. And with all respect, in our view, IAM is not identity security. It's hygiene and IT, it's IT capabilities. Like the fact that you have a badge doesn't make me secure. I have a badge to enter Palo Alto. That's not security. That keeps track of the fact that I'm in the building. It doesn't stop me from doing anything bad that I want to.

Please send to the reserve conserve ability days the business the application criticality needs and of course security on top of all of them.

Yes, I think just I think you probably are alluding. The fact that we didn't we didn't explain the identity thing well enough but.

Identity as a market the products were designed 15 20 years ago.

And.

With all respect and our view I am is not identity security, it's hygiene and IP.

I T capabilities like the fact that you have a badge doesn't make me secure I have cave of Astrazeneca Palo Alto, that's not security that keeps track of the fact that I'm in the building. It doesn't stop me from doing anything bad debt I want. This so we believe to security in the world of identity happens when you start enacting privileged access type controls across identities and RV.

Nikesh Arora: So we believe true security in the world of identity happens when you start enacting privileged access type controls across identities. And our view with CyberArk is that the fact that, you know, why are only 500,000 people in the enterprise privileged when pretty much the remaining 15,000 people at Palo Alto could cause equal amount of damage through other ways using systems? So our view is in the future, almost every identity will get some version of privileged access management. And CyberArk is the best platform from our perspective, an asset in the industry to be able to leverage those capabilities. Now, we have to do some joint product work, which is not unlike the fact that when I came to Palo Alto, you know, we had a network security company with four subscriptions. Today, we have 10.

With cyber Ark is the fact that the wire only 500000 people in the enterprise privilege when pretty much.

The remaining 15000 people bother could cause equal amount of damage to other ways using system. So our views in the future almost every identity will get some version of privileged access management and cyber Ark is the best platform from our perspective, an asset in the industry to be able to leverage those capabilities that we have to do some joint product work, which is not unlike the fact that like him.

The volatile and if he hadn't heard of a security company with four subscriptions today reaffirm they possibly will have 15 by the time the.

Nikesh Arora: We possibly will have 15 by the time, you know, the next five years come out. So can I have an identity platform with 15 different capabilities with the underpinnings of what is a CyberArk privileged access management platform? Yes. But that requires some degree of innovation, some degree of consolidation in the enterprise. And the more we look into what CyberArk has, the more excited we get that there is an opportunity here. But yes, there's a bunch of work that needs to be done. As Lee and I were joking, yes, we call it back to the future. Very helpful, guys. Thank you. Thank you, Josh. Next, we have Patrick Colville from Scotiabank, followed by Fatima Boolani from Citi. All right, hey Hamza. My question is for Nikesh on Chronosphere.

The next five years come out so can I have a identity platform with 15 different capabilities of it the underpinnings of what is the cyber are privileged access Nunavut platform, yes, but that requires some degree of innovation. Some degree of consolidation in the enterprise and the more we look into what cyber are cast the more excited we get that there's an opportunity here, but yes, there's a bunch of work that needs to be done.

As Leonardo Jokey yesterday, we called it back to the future.

Yeah.

Alright very helpful.

Josh next we have Patrick <unk> from Scotia Bank, followed by a team of Bologna from Citi.

Alright, Jason I'm sorry, My question is for the cash on Chromosphere I mean, we know many of the V C backers and I totally agree with your comments earlier that you know.

Nikesh Arora: I mean, we know many of the VC backers, and I totally agree with your comments earlier that, you know, you're acquiring a top quality asset with a toe hold in a Tier 1 foundation model vendor. But my question is, the data piece about to get there, Patrick. Okay, nice. There's more than a toe already, but we're working on getting the whole foot in there. Well, we're looking forward to seeing that. So I mean, maybe that, I guess, why has the advent of AI driven you to pull the trigger right now on the Chronosphere deal? And then I also, if I think about Chronosphere, the buyer is typically a dev or maybe a CIO, which is quite different to your current buyer profile. So just talk me through your thinking of how you're going to penetrate those new buyers.

Youre acquiring a top quality asset.

With adult with toehold in Taiwan.

Our nation module vendor.

Question is the dark Blue bar together get there Patrick.

Nice there's more than it already but we're working on getting the whole footing there.

Looking forward to seeing that.

I mean, maybe that I guess why has the advent of AI driven you to pull the trigger right now on the corner Sweet deal and then then and then also if I think about coffee at the buyer is typically a dev or may be a CIO, which is quite different to your current buyer profile. So just.

Talk me through your thinking of how are you going to penetrate those new buyers. So.

Nikesh Arora: So Patrick, what's interesting is that let me ask for that in three different ways. One, the actual buyer for Chronosphere is very often the CIO or even the CEO. You know, I had a conversation as part of our diligence with the CEO of a financial fintech company. I said, Hey, have you heard of Chronosphere? He's like, Yes. I said, Are they good? He's like, Yes. I said, How do you know them? He looked at me, stared at me now and said, You think I don't know my tech stack? So I mean, these guys understand. Remember, if your restaurant app goes down, your ride-hailing app goes down, every second is lost revenue. What observability does is make sure it keeps track of whether any element of that stack is decaying. Is any element showing latency? Is there any performance issues across that stack?

So Patrick what's interesting is that.

Well, let me answer that in three different ways Juan.

The actual buyer for Kronos fare is very often the CIO or leaving the CEO.

Had a conversation as part of our diligence with a CEO of a financial Fintech Company I said heavy order courseware is.

Yes.

I say all of the good they say yes.

So how do you know them well.

Let me extend my analysis, you think I don't know my Tech stack.

So I mean these guys understand remember if you're.

Your restaurant App goes down your ride hailing App goes down every second is lost revenue.

Does anybody does is make sure it keeps track of whether any element of that stack is decaying is any element of trade latency is it any performance issues across that stack. So you need constant persistent the variability the problem is.

Nikesh Arora: So you need constant, persistent observability. The problem is it's expensive. The current vendors charge a lot of money for it. Now, Chronosphere is able to figure out how to do the same thing at 1/3 of the cost. So it's a combination of open source stack. It's a combination of enterprise-grade features, but they're pumping large amounts of data. So the two biggest problems are scalability and cost. They solve both problems. Now, the cherry on the cake or the icing on the cake is we plan to take what you find in observability, marry that with agentic AI, and provide remediation agents, which haven't been done before. So if you can take that entire lifecycle and say, "Found a problem, solve the problem, built an agent, fix the problem." Right?

It's expensive.

The current vendors charged a lot of money for it now Kronos photos are going to figure out is how does the same thing at a third of the cost. So it's a culmination of open source stack is the culmination of enterprise grade features.

They're pumping large amounts of data so the two biggest problems or scalability and cost.

They solve both problems now that the cherry on the cake because the icing on the cake is.

We plan to take what you find an observer ability marry that with the Gentex and provide remediation agents, which haven't been done before so if you can take that entire lifecycle say time to problem solve the problem and built an agency fixed the problem.

Nikesh Arora: Now, these agents will be built in partnership with customers because no customer should allow us to independently reset their infrastructure. But they can now write capability on top of the platform saying, "I found a problem. I'm going to automate it. I'm going to build an SRE agent, fix the problem." So I think this is a huge opportunity. I'd say in the last year, 75% of my customer conversations are CIOs and 10% are CEOs. So I know the buyer. That's why Martin is going to run the company. Listen, there are 173 companies in the world which all need persistent observability. We know all of the names. We know exactly who deployed. This is what Martin does for a living. We'll go one at a time and convince them there's a platform to have.

Right now the thing is we built in partnership with customers with no customers will allow us to independently, we said that infrastructure, but they can now right capability on top of the platform, saying I found a problem going on automated I'm going to build necessary agent picks. The problem I think this is a huge opportunity and <unk>.

I'd say in the last year, 75% of my customer conversations with Cio's.

And 10% of Ceos.

So I know the buyer and Thats, a Martin who can run the company listen there are 173 companies in the world, which all need persistent or observe body. We know all of the names you know exactly who deployed this Walmart industrial living will go one at a time and convinced of the platform behalf.

Nikesh Arora: Each of those guys spends $5 or 10 million a year with us; we're home. Thank you, Patrick. Next, we have Fatima Boolani from Citi, followed by Gregg Moskowitz from Mizuho. Thank you. Excuse me. Thank you for taking my questions. Nikesh, I was going to ask you an out-of-the-box question in accordance with how out-of-the-box your thoughts around Chronosphere are. I don't expect anything else. It's my brand now. So what I wanted to ask you, you really have kept hitting home the point around TCO, scalability, cost efficiency as a conduit for this convergence of security and observability, right? So in terms of the Chronosphere rationale, I wanted to ask you how much of the rationale there was for you to effectively modernize in-source, whatever terminology you want to use, to modernize or in-source the underlying fabric of your Cortex and XSIAM technology, right?

Each of those guys spend five or 10 windows here with US we're home.

Thank you Patrick.

Next we have a team of belonging from city, followed by Gregg Moskowitz from Mizuho.

Thank you Keith and thank you for taking my questions.

I was going to ask you.

And out of the box question in accordance with how out of the box here thoughts around <unk>.

Or expect anything else.

It was my brand now.

I wanted to ask you you really has kept hitting home the point around Tcl scalability and cost efficiency as a conduit for this convergence of security and in circuit that what he right. So in terms of the krona sheer rationale I wanted to ask you how much of the rationale there weren't sure you to effectively.

<unk> modernized in source or whatever terminology, you want to use them too.

Modern is our in source the underlying fabric of your core tax in <unk> technology right. So.

Nikesh Arora: So, you know, in the context of everything you and Lee have talked about, an absolute explosion of data, an explosion of telemetry that's going to be hitting your iron, basically, for all your appliances, how much of the rationale for Chronosphere was that versus, you know, wanting to enter outright into a brand new market where you're going to try to win budgets? I think that the latter, not the former. And if you go back, and I'm sure you've asked the question, and many of you guys have asked me the question, there's always been this sort of fantasy that observability and security will come together at some level. And I think this is what started when Splunk half the data is used for observability, half the data is used for security. So it started there. But it never progressed past that.

In the context of everything <unk> talked about and it absolutely explosion of data.

Explosion of telemetry, that's gonna be hitting your iron basically for file ear if my answers.

Much of the rationale for kind of scared with that.

First as you know wanting Ken.

Sure right into a brand new market, where you're going to try to win budgets.

Well I think the latter not the former and if you go back and I'm sure you've asked the question in.

Many many of you guys have asked me. The question has always been this sort of <unk>.

Fantasy that observer ability and security will come together at some level.

And I think this is what started when splunk half the data is useful absorbability how it is used for.

Security So it started there.

Nikesh Arora: Most of the observability vendors were so caught up in trying to solve the observability problem that they dipped their toes in security. I always say, you know, if it was so easy to build security with 20 more engineers, then God bless you, why do we exist? The same thing applies to observability. Like if you don't, these guys have spent, they have like 200 plus engineers. They've spent the last three years doing this and proven scale in the market. So yes, it's a phenomenal adjacent TAM, which is going to grow in double digits for the next five to ten years. Yes, we want a part of that. If you look at it from our ambition to get a 20 billion ARR, we're not going to get there if customers are not spending a lot of their IT and cybersecurity spend with us.

But it never progressed Boston most deals early vendors were so caught up in trying to solve real durability problem that they dip their toes in security and I always say you know if it was so easy to build security with 20 more engineers and God Bless you why do we exist and the same thing applies to observe ability like if you don't do you guys have spent there like 200 plus engineers there.

The last two years doing this are proven scale of the market. So yes, it's a phenomenal adjacent dam, which are going to grow in double digits for the next five to 10 years and yes, we want a part of that and if you look at it from our ambition to get a 20% IRR, we're not going to get there if customers are not spending a lot of there.

Nikesh Arora: Now, there is a connective tissue between data across enterprises, right? Over time, the best enterprises will have seamless data access across many of their data lakes. What is the observability data lake? Is there a security data lake? Is there an IT data lake? Because eventually, you want agents to go and go figure out what's going on across multiple data lakes to solve your problem. And sometimes the problems cross across multiple data lakes, right? You know, if something's down in an application, maybe the firewall shut it down. So the firewall's in the security lake. So if you want this agentic capability across data lakes, all we're trying to do is we're trying to build the enterprise fabric with our customers so over time we can provide more and more capability. I mean, think of what Lee said on XIM.

As cyber security spend with US now there is a connective tissue between data across enterprises right.

Over time, the best Enterprises will have seamless data access across many of their data lakes, whereas the observer the data lake because the security they like the idea of data lakes. Because eventually you want agents to go and we'll figure out what's going on across multiple data lakes to solve your problem. It sometimes problems cross across multiple did.

<unk>, so I didn't know if somethings down an obligation maybe the firewall shuttered dalzell firewalls and security late so if you want this agenda capability across data lakes. All we're trying to do is we're trying to build the enterprise fabric with our customer. So over time, we can provide more and more capability. We think to what Lee said on X I am we're building more and more modules on top because we can write more software on top of the existing data.

Nikesh Arora: We're building more and more modules on top because we can write more software on top of the existing data. Why does my firewall have 15 subscriptions in 2030? Why does it have 10 today? Same data, same data. How do I get quantum cryptography visibility? I watch network data. I watch network data for malware. I watch for URLs. I watch it for quantum keys. So once you get the data right, you can build a tremendous amount of software capability in one at a time, take out slivers of the industry. This is the third data platform of the enterprise, which is observability. Once we get that data, imagine the amount of SRE activities and agents we can build over time. So I just think this is foundational to our ambition to be a very large tech company.

Why does my firewall have 15 subscriptions in 20th Birdie or does that tend to that same data seemed it how do I get quantum cryptography visibility I watched network data our decorative home malware I wish it were you or else I want you for quantum Keith. So once you get the data right you can build tremendous amount of Suffolk, everybody in wintertime takeout.

Slivers of the industry. This is a third data platform in the enterprise, which is observer ability once we get that data imagine the amount of SRT activities and agents, who can build over time. So I. Just think this is foundational to our ambition to be a very large tech company and two to five years and all of us sitting back and saying Oh My God, we get it now you put a foray into the observatory space, you've got access to <unk>.

Nikesh Arora: You know, three to five years from now, we'll be sitting back and saying, "Oh my God, we get it." Now you put a foray into the observability space, you got access to production data from enterprises that allows you to keep them running at 99.9% time. You can see I'm excited about this. Thank you, Fatima. As promised, our last question will be Gregg Moskowitz from Mizuho. All right. Thanks, Hamza. Nikesh, we continue to hear of more and more adoption for your secure browser. Certainly, the data points you provided today back that up. But how pervasive can this become among your net sec install base? And how strong is the modernization opportunity associated with that?

Actual data from enterprises that allows you to keep them running at 99.9% that.

You can see I'm excited about this.

Thank you Fatima and as promised our last question will be Gregg Moskowitz from Mizuho.

Alright, Thanks, Nick.

The cash should we continue to hear more.

More and more adoption for your secure browser or certainly the data points you provided today back that up but how pervasive can this become amongst your net <unk> installed base and how strong is the monetization opportunity associated with that.

Nikesh Arora: So I think, Greg, just, you know, connecting it back to what I was talking to Fatima about, I think browsers are going to get more and more prevalent in the enterprise. And if you look historically, browsers have been a threat vector and they're not secure, right? Pretty much companies use the browser that come out of the box with the OSs. And there's a bunch of things like, you know, we did a test POC with a customer. 5,000 of their browsers were tested. We found 167 were compromised, right? So there's a wild, wild west of browsers out there. And I think it's going to get worse when AI browsers come out with agentic capability. So you have much more of a flood of all kinds of browsers in the enterprise. But browser has become, I'd say, 80% to 90% of the workspace for most white-collar workers.

So I think Greg this connecting it back to what I started Fatima about.

I think browsers.

Are you going to get more and more prevalent in the enterprise and if you look historically browsers have been a threat vector and theyre not secured by pretty much companies use the browser to come out of the box with the horses.

And there's a bunch of things like we did a desk, you'll see what our customer.

505000 of their browser.

Browsers were tested 567 were compromised.

Right. So there's a there's a wild wild west of browsers out there and I think it's going to get worse in AI Roses come out of it then to give a body. So you have much more of a flood of all kinds of browser enterprise, but browser has become.

I'd say, 80% to 90% of the workspace for most white collar workers.

Nikesh Arora: Even developers, you know, exclude the legacy guys, but 80%, 90% of the work is being done in the browser. So the browser does become a very strong entry point from a security tech perspective. It has both opportunities and challenges. The opportunities are far higher from a security perspective of the browser. So we just think the browser becomes an important part of the foundational fabric for us to deliver services in the future, right? But we need to wait for its pervasiveness or its ubiquitousness in time. And that's why, again, it's one of those foundational things. If I can get 100 million browsers out there, which are secure, I can deliver all kinds of security capabilities, but way higher than that. To that extent, I think the monetization opportunity is sort of in the future at scale. Of course, there is monetization today.

Even developers.

<unk> the legacy guys, but 80% 90, when the work is being done in the browser. So durazo does become a very strong entry point from a security Tech perspective. It has both offers.

Opportunities and challenges the opportunities are far higher from a security perspective. The other so we just think the browser becomes an important part of the foundational fabric for us to deliver services in the future what do we need to wait for is pervasive Nassau is ubiquitous ness in time, and that's where again, there's a lot of those foundational things if I can get $100 million is out there which are secure I can do over all kinds of <unk>.

Security capabilities would way higher than that so to that extent I think the monetization opportunities sort of in the future at scale of course Theres monetization today, we don't get the browser away for free and factory is fungible as an endpoint agent from a sassy perspective, so right now we're very keen on deployment and adoption and ubiquity of the browser. It has obviously financial.

Nikesh Arora: We don't get the browser away for free. And effectively, it's fungible as an endpoint agent from a SASE perspective. So right now, we're very keen on deployment and adoption and ubiquity of the browser. It has obviously financial impact on our SASE numbers. So you'll see it at $1.3 billion. But I think from a strategic perspective, the more we can get out there, the better security outcomes we can give them in the future. Great. Thank you. Thank you, Gregg. With that, we will conclude the Q&A portion of our call. I will now turn it back to Nikesh for his closing remarks. Thank you again, everyone, for joining us today to discuss our results and the opportunities ahead. I also want to thank our partners, our employees, and everybody who contributed to these great outcomes for us in Q1.

With us as the number of sales at the $1 $2 billion, but I think from a strategic perspective, the more we can get out there the better security outcomes that can give them in the future.

Great. Thank you and good.

With that we will conclude the Q&A portion of our call I will now turn it back into cash for his closing remarks.

Thank you again, everyone for joining us today to discuss our results and the opportunities that I also want to thank our partners our employees and everybody.

Who contributed to these great outcomes for us in Q1, we continue to plot along for Q2 and beyond and I just want to reiterate really excited that we are now able to establish a toehold or perhaps a footprint.

Nikesh Arora: We continue to plot along for Q2 and beyond. I just want to reiterate, really excited that we are now able to establish a toehold or perhaps a footprint in the spaces of identity and observability in the future.

In the spaces of identity and observer ability in the future.

Q1 2026 Palo Alto Networks Inc Earnings Call

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