Q2 2019 Earnings Call
<unk> second quarter 2019 earnings conference call.
All lines have been placed on mute to prevent any background noise. After the speakers remarks, there will be a question and answer session. If you'd like to ask a question. During this time simply press Star then the number one on your telephone keypad, if youd like to withdraw your question press. The pound key. Thank you Mr. Ryan Burkert director of Investor Relations you May begin your conference.
Thanks, operator, good morning, everyone and thank you for joining to fund second quarter 2019 earnings Conference call.
With me on the call today are really tough, our chief Executive Officer, and Jack Keeler, Our Chief Financial Officer.
Before we begin I would like to remind everyone that any statements made in today's conference call that express a belief expectation projection forecast anticipation or intent regarding future events and the company's future performance may be considered forward looking statements as defined by the private Securities Litigation Reform Act.
These forward looking statements are based on information available to to fence management as of today and involves risks and uncertainties, including those noted in this mornings press release.
And two buttons filings with the SEC.
Such forward looking statements are not guarantees of future performance actual results may differ materially from those projected in the forward looking statements to fund specifically disclaims any intent or obligation to update. These forward looking statements, except as required by law a telephone replay of the call will be available shortly after completion of this call.
You'll find the dial in information in today's press release, the archived webcast will be available for one year on the company's website at <unk> Dot com.
Now.
I'd like to turn the call over to Tufan CEO Ruby keyed up.
Thanks, Ryan and good morning, everyone. Thank you for joining today, we had a strong second quarter and I'm very pleased with our results.
We continue to see strong demand across all verticals and geographies. We landed notable new logos, while at the same time, expanding the business within our existing customer base.
Total revenue was $25.1 million, representing 36% growth year over year.
This is driven by the increasing needs of large organizations to get a handle their network security posture and to automate their network change processes.
As a reminder, for those who are new to Twoq.
We are the security policy company, helping large enterprises manage their network policies.
The policy governing who can talk to who or what can talk to what on the network.
Public cloud with native security controls and containers running in kubernetes, or docker, often and multi cloud environment.
This resulted complex fragmented networks that have a huge attack surface that as vulnerable to hoppers.
Despite spending millions and firewalls and other security measures most organizations still lack a unified comprehensive security policy governing who can talk to whom and what can talk to walk across the entire network.
These organizations are also lacking visibility into their security posture.
They don't know how they might be exposed from the outside and whether their current configuration is compliant with their own policy.
In fact, most companies don't even have a well defined security policy and I'm, making doesn't it changes every week without understanding the security risks inherent in those changes.
Without such a policy enterprises are trying to manage their complex and will be networks with piece meal solutions and manual processes. The only address part of lighting environment and can no longer serve the needs of the modern digital enterprise.
It's becoming more and more clear that large organizations need to adopt a different approach with the security policy layer above all the network and cloud infrastructure.
Simplifying the increasing complexity and fragmentation of hybrid network environments.
The network change process that most companies either security driven bottleneck.
With two friends policy, driven automation, we use our network wide topology awareness, coupled with our change design and provisioning engines to automate the entire network change process.
And enable customers to implement network changes in minutes instead of days with dramatically better security inaccuracy.
We have a very significant largely unpenetrated market opportunity ahead of us and we're investing for growth in order to capture this great opportunity.
In the second quarter, we continued our investments in sales and marketing both in terms of hiring in various go to market programs.
This investment extended to all of our growth engines the channel program.
Our growing inside sales team the U.S federal market.
And new territories like Japan.
Some of these investments are now starting to bear fruit with strong growth from Asia Pac and new logos in the quarter.
Our momentum in the large enterprise space continued this quarter as once again, we closed several deals greater than $1 million.
The largest deal in the quarter was a seven figure deal with a fortune 500 insurance company, which was a new logo for Twoq.
They use the homegrown network monitoring tool and workflows to manager change policies and when they decided to migrate from Cisco to Palo Alto networks. They knew that their internal solution would not support Palo Alto devices.
On top of that their network cheese prices was completely manual managed with excel spreadsheets.
It took them several days to make changes with frequent downtime.
They chose to fund due to our work for customization capabilities, our unified security policy and accuracy of our chances on suggestions, which stemmed from our superior topology mapping capabilities.
When you automate an IC process, it's not enough to be 60% accurate. So an automation solution needs to be much more accurate than the human engineer in order to add value and be trusted.
We were the only vendor to be able to deliver that level of automation accuracy, which truly added value.
Another significant deal for US was a seven figure expansion of an existing to fund account a large multinational audit and consulting organization as they considered expanding there to fund footprint turkeys were to increase visibility into their security configuration.
To automate their firewall cleanup processes, which were required to maintain continues compliance.
And to provide support for Cisco to tell as the web.
We demonstrated our ability to continue scaling to the size of their environment, which spans thousands of firewalls and routers and to deliver on their needs, especially as their network evolved and their needs change overtime.
Having customers come back to two fun, not just to renew their maintenance, but to expand their installed base significantly is a strong testament to our land and expand model.
We also had a good quarter in international markets with our strongest quarter ever and APAC driven by our growing efforts investment in that region.
Another growing region for us with Latin America, where we landed one of the largest deals of the quarter, a large retail chain, where the Cecil was tasked with fixing the overwhelming issues. They had with a lack of network visibility.
A lack of basic compliance with regulations and a slow broken that were change process.
This customer wanted to transform their processes and leapfrog into the 21st century with zero touch automation the ability to implement network changes in an agile fashion, while increasing security and avoiding mistakes and outages.
To fund was the only vendor that was able to deliver that as well as a fully distributed architecture that was required to scale to the size of their environment.
It's very interesting use case of two for solutions came from a large bank in North America, which was another seven figure new logo deal.
They wanted to find a unified security policy ensure that every change was vetted against the policy before implemented in production and also do that in an automated fashion.
They wanted to model several dozen other complex applications and security.
To enable the network team to understand the application architecture as well as improving communication between Apple Uppers and security engineers.
They bought all three of our on premise products secure truck secure change and secure App and asked us to integrate our platform with four different systems. They have.
Servicenow Cisco titration Qual was interfyl blocks to enable a cheese process that was automated end to end and able to dynamically adjust the network changes ensuring a minimal network attack surface.
It's very interesting to see how far our customers want to take our automation capabilities to fund is truly becoming the security policy platform with integrations that provide value to customers from a wide set of existing products and all these integrations actually make us more and more sticky and these customer environments.
Moving onto product, we recently announced the general availability of the two front orchestration suite, our 19 too.
In this release, we extended our capabilities with enhanced visibility and policy control for Cisco ACI.
Took them cloud guard and importantly, what filters as well as deeper Palo Alto next generation firewall support with dynamic Edrs lists and fully qualified domain names.
These enhancements will enable us to support a wider range of network device and the capabilities as customers become more and more complex and fragmented and require policy abstraction layer to regain control and compliance.
Before I turn it over to Jack I'd like to wrap up by saying that I'm very pleased with our second quarter and what we've accomplished to date.
We expanded across all markets landed significant new logos and gained more strategic footprint within our existing customer accounts.
We believe that fundamentally your security is only as good as the policy that you've been fun in force.
And that the need for policies centric network automation is greater than ever.
We are in the early stages of realizing our potential and I'm optimistic about our market opportunity and our outlook.
Now I would like to turn it over to Jack will Kelly, our CFO to discuss our financials in more detail Jeff.
Thanks movie, let's turn to our strong second quarter results and guidance for the remainder of the year.
Total revenue was $25.1 million in Q2 of 2019 up 36% compared to Q2 2018.
Product revenue increased 31% year over year to $10.9 million and there were maintenance and professional services revenue grew 39% to $14.2 million.
Looking at the geographic mix of Q2 revenue, we have a well diversified geographical distribution with Americas, representing 51% of revenue EMEA, presenting 40% and the remaining 9% coming from Asia Pacific.
As I said in the past given the size of our business and the fact, so revenue may be comprised of seven figure deals in any quarter, we may experience variability by geography on a quarter by quarter basis.
Moving to margins and expenses I will discuss our results based on GAAP financial measures and what applicable non-GAAP financial measures.
non-GAAP numbers exclude stock based compensation expense and the total amount of $2.6 million for the second quarter of this year and zero point $8 million for the second quarter of last year. Please note that the GAAP to non-GAAP reconciliation can be found in the tables for earnings press release located in the Investor Relations section of our website.
GAAP gross profit for the second quarter was $20.2 million or 80% of revenue compared to $15.7 million or 85% of revenue for the second quarter of last year.
non-GAAP gross profit for the second quarter was $20.5 million or 82% of revenue compared to $15.8 million or 86% of revenue for the second quarter of 2018.
Gross margins compressed primarily due to the expansion of the professional service teams to support faster time to value and deploying go solutions with our global 2000 customers.
As we talked about last quarter talking is addressing a large market opportunity that is primarily greenfield with multiple factors driving an inflection.
As a market leader, we plan to invest in this opportunity.
To that end total GAAP operating expenses for the second quarter were $27.9 million up from $18.1 million for the second quarter of 2018.
On a non-GAAP basis operating expenses for this quarter was $25.6 million up from $17.5 million for the second quarter of last year.
Breaking out non-GAAP expenses into line items R&D expense for the second quarter of this year was $7 million or 28% of revenue compared to $4.8 million and 26% of revenue for the second quarter of last year.
As we mentioned, we just launched the two feet orchestration suite 19 does too and we're continuing to invest in engineering talent to deliver innovation to our new and existing customers.
Sales and marketing expenses for both the second quarter of this year and last year represented 62% of revenue.
We continue to invest in growing our sales and marketing organization, a strengthening our coverage of the global 2000 accounts.
Our increased investment in APAC is starting to show return as we saw a 60% increase year over year revenue from that region for this quarter.
Jenny expense for the second quarter was $2.9 million or 12% of revenue compared to $1.2 million and 6% of revenue for the second quarter of last year.
Genie has risen primary due to the increased expenses related to being a public company, mostly attributable to the expansion of the Genie staff and the related expenses.
GAAP operating loss for the second quarter was $7.7 million compared to an operating loss of $2.4 million for the second quarter of last year.
On a non-GAAP basis operating loss for the second quarter was $5.1 million compared to an operating loss of $1.6 million for Q2 of last year.
GAAP net loss was $8.2 million compared to a net loss of $3.1 million for the second quarter of 2018.
Net loss per share basic and diluted was 26 cents for the second quarter compared to a net loss per share of 30 cents for the second quarter of last year, and that's based on 31.2 million and 8 million weighted average ordinary shares outstanding respectively.
On a non-GAAP basis net loss for this quarter was 5.6 million compared to a net loss of 2.2 million for the second quarter of last year and net loss per share basic and diluted was 18 cents for the second quarter compared to 28 cents for the second quarter of 2018.
Turning to our balance sheet.
As of June 32019, we had cash and cash equivalents of $127.5 million, which includes the funds raised in our IPO. This compares with $26.2 million in cash and cash equivalents as of the end of March of 2009.
Deferred revenue on our balance sheet as of June 32019 was $40 million that compares to $29.5 billion as of June 32018. These figures represent the deferred revenue balance after netting of the portion of the deferred revenue that has not been collected as of the end of June of both years.
The gross deferred revenue as of the end of June of 2950 $2 million and this compares with gross deferred revenue $39 billion as of the end of June of 2018.
The second quarter of 2019, we used 10.4 million of cash from operating activities compared with 10.1 million in the same period of 2018.
Turning to guidance as we've talked about in the past we look at the next couple of years as investment years, we plan to spend on strengthening our technological leadership in the market and continuing to grow our sales and marketing organization. As we said earlier, we continue to see strong demand for our products across all verticals and geographies.
For the third quarter of 2019, we expect total revenue $24 million to $26 million, we expect non-GAAP operating loss to range between $4.8 million to $6.3 million.
For the full year 2019, we expect total revenue in the range of $106 million to $111 million up from our previous range of $105 million to $110 million.
For the full year, we expect non-GAAP operating loss to range between $10.7 million to $12.7 million.
With that I will turn it back to the operator open it up for questions operator.
If youd like to ask a question at this time. Please press Star then the number one on your telephone keypad full pause for just a moment to file the Q and a roster.
Your first question comes from Sterling Auty with Jpmorgan. Please go ahead.
Yes, Thanks, Hi, guys.
In terms of your comments around the strength and new logo additions you gave I think a little bit of an examples but any additional color you can give in terms of either type of industry or type of problem.
The new the new customers are trying to solve as well as what are you seeing in terms. Your average deal size with the new customers you know today versus a couple of quarters ago.
[noise], Thanks, Sterling and good morning, everyone.
So.
When I look at.
Revenues by different verticals in different geographies.
We had strength.
Across the board, you know, usually 50% or so its financials and telcos and that continues to be the case.
But if you look at the bigger deals a quarter what would the retail chain. Another one was a consulting firm so there's diversification.
It was really kind of a cross section of the global 2000.
Theres, some finest and telco, but any customer that really has a larger complex network is going to need to and I think the general needs have not really changed much.
You are looking at organizations that have fragmented networks they want it.
Do you want to perform digital transformation they want to move to the cloud we want to make sense of their network. So they're neither first compliance and second to automate the network change process.
We're seeing that in all of these large deals. So almost every one of the large deals was an automation project for us.
And a lot of those are actually multistage projects. So they will first start with compliance automation and then expand to other parts of the network.
So that I think the answer is maybe the first part was there another part of the question.
Yes, again, just kind of.
Bridge size of those initial deals.
So the average size.
In general has not changed much so we report on that.
In.
In our.
Registration statement.
So in general we have.
We have big deals we report that last quarter, we had several seven figure deals.
We have the same thing and this quarter again.
So we had it was 120 K overall and 200 K. and the global 2000 and that has not really changed much.
Past two quarters.
All right great. Thank you so much.
Next question. Your next question comes from Keith Khalia with Barclays Capital. Please go ahead.
Hey, guys. Good morning, Thanks for taking my questions here.
Hey, Hey, Bobby maybe just for you kind of higher level.
You know I think we all saw the capital one reach announced during the quarter.
Our recently I should say you know obviously the biggest driver there was a malicious insider, but there was some mention of policy. So maybe just since we're in a public form can you just talk about whether this was something that involve to fund tools at all.
This is perhaps driving more awareness about policy automation tools.
In the short time since it's happened.
Thanks second so from what we can tell from the reports on the capital one breach that occurred due to the vulnerability in a web application firewall that was coupled with them is configuration and identity and access management roles in either the U.S. So the vulnerability side, that's really outside of our domain. If you look at the mist integration insight FWS, that's actually something that could be prevented with soufun iris.
But I think when you look at the broader picture capital one is probably one of the most security conscious banks that are out there. So I think this cases actually can serve as a warning to other organizations.
That might be complacent, right anybody can get half or even the most security conscious organizations out there and you have to maintain constant vigilance right. So we believe the capital one case will definitely raise awareness around security posture and going to reinforce the importance of investing in security.
And what we do is actually fundamental if you don't have a well defined security policy and you have no visibility I don't know if you're exposed so we see to fund it.
First building block of having a good security architecture.
Got it makes all the sense, maybe maybe for my follow up for you Jack.
No I think you mentioned on the call the gross margin year over year.
You know had gone down because of kind of the build out.
Of of professional services I, just wanted to zoom in a little bit on license gross margin, because I think that tick down as well and I didn't think that would be driven by professional services as much. So can you just maybe talk about the mix of license revenue in the quarter, whether there was perhaps a higher mix of appliances versus software or whether there was anything else to note in that cost of cost of license line. If you will.
Yes, Hi second.
Thanks for the question. So I think you know Nokia, though that correctly.
Well look margins it depends on the mix of software hardware and we did have a little more hardware. This quarter as you may have mentioned.
So again because the revenues are comprised of large deal was some may have hardware elements and let me know.
Gross margins fluctuate some quarters.
Now, having said that we reported overall gross margins of 82% and that's good for us.
If you remember this can fluctuate between quarters compared to 82%.
Looking to Q1, that's 83% so that's not a big change.
Got it very helpful. Thanks, guys.
Your next question comes from John Difucci with Jefferies. Please go ahead.
Thank you.
First question, it's really through the hiring of Larry Austin has a GM of cloud. It thinks interest here or are you starting to see a greater uptick in that pipeline.
Or is this just is this an anticipatory mode.
So you know in general when we're looking at native cloud customers are very excited about our new cloud solutions work in Iraq.
But its early days right. Both are an early availability right now we have several customers that are testing them in providing very valuable feedback.
And we now Larry often as general manager of the cloud unit very happy to have them on board and customers are looking to really accelerate their cloud native adoption right. So they're looking to integrate orphan iris with their devops practices and the CSB pipeline.
They want to allow their security policy to seamlessly be addressed during application development and deployment process is what's called ships left so it really helps security teams and stay out of the way of dynamic and agile process season Dev environments.
Usually security teams.
People look at them as the last mile Road block and the way we see it would work in Iraq, we enable security managers to set a policy what's allowed or not allowed in the cloud essentially the guardrails of network connectivity in that environment, and then as developers checking code and can pick father, maybe open up their opening the configuration or the rewrite and cloud connectivity. We said triggers on these changes and we weren't developers and security managers that they might have checked in somebody that's breaking their policy and they can go back and fix it immediately so.
The whole concept here is to have security managers, not slowing down app developers and customers are very excited about that.
We have a nice pipeline in the earlier early visibility program, we're working with customers getting that feedback.
Moving those projects forward, so we're optimistic about it.
I guess in it that's all helpful. But I'm just trying to understand is this hiring of a new GM. This this sort of business unit area is it is it something that is is it the the products themselves are maturing to the point where.
It will become a more relevant business for you or is it the because.
Just because you had just have more demand that you've you've seen more demand there and I'm just trying to figure out like what spurred this hiring.
Well, it's two different things I mean.
One one we're looking at the revenues are expecting we're not modeling.
Any significant revenue from orphan hours in 2019, and we also expect little revenues on both fronts in 2020. So in the long term, we see them as significant growth engines, but this is a brand new market customers are still figuring it out and China.
Building out their applications in automated world. So it is something that's fairly new a lot of the customers are early adopters, there and they themselves sometimes don't know what they need.
But the way we look at it it's a slightly different sales process is we don't just sell the security managers, we need to sell to Dev ops teams need to sell to development managers. So requires a different approach.
So they were part of specialists and requires a smaller team that is focused just on that within kind of the bigger to firm framework.
So.
It's important to keep that in mind. So I think just taken a product like that like working hours and rolling it out which is a product that is sold a little bit differently to the overall sales organization.
So with that.
They have for cloud unit that focuses on it and is able to engage with customers.
Speak the language is Dev organization.
And help the greater sales team actually sell that successfully to our large customers.
Okay fair enough, thanks, and if I could just said.
Quick follow up I think for Jack Ruby, maybe maybe for you and it the questions on automation I think at your IPO, you said that about 50% of your customers were currently had currently purchased automation and and I. You really you just said that all large deals. This quarter included automation I guess, what percentage of your new customers purchase automation, because that's sort of at least the way we look at it. It's it's really a distinguishing factor for four to five.
Yeah, Hi, John I'll take that.
So so you write them just want to be more accurate, we said that 50% of our global 2000 customers have automation, while the other 50%.
Looking at the long list of the customers. There's a long tail that has not been purchasing a commission so far right. So this is the positive.
Potential upside potential that we discuss also during our IPO roadshow.
And in terms of how much we sell now so 80% of what was it the way we measure it we're looking at automation business, either new landing with automation or upsell or any other product vision products to existing population of customers. So if you look at those combined were talking about mid eightys or business, 85% like.
Being automation class.
Perfect. Okay. Thanks, a lot nice job guys.
Next question comes from Sean evolve with Oppenheimer.
Thank you good morning, guys. Congrats on another set of solid results and guide.
Ruby we are seeing some changes within the competitive landscape. There would have started a few months back specifically as it relates to one of your competitors out of Israel. What we have seen more recently some senior management departures are you seeing that also is a type of near term opportunity to go in display some customers.
Some of the seven digit wins, a new logos that you have mentioned on your prepared remarks does that have anything to do with that as well.
So I think I mentioned that last time as well, we don't really like to comment about competitors.
I think the competitive landscape.
Remained largely the same we're seeing strong demand from our customers in all geographies most of the large deals that we closed were net new so not displacement.
Competitors.
So I mentioned that also in my prepared remarks, we went due to the breadth and depth of our automation capabilities as well as our scalability and change accuracy.
So were continuing.
Our tradition of innovation right being first to market that positions us as the market leader.
However, we believe it's the most customers today, most larger patients don't have a change automation solution. So there is a huge greenfield opportunity ahead of us.
Fair enough fair enough.
And also as as we think about dealer.
Tire European operations, and you know, but up here do you guys have done a good quarter.
But in the UK, we have heard from some some anecdotal data points about some softness specifically maybe in the UK stemming from.
Some growing political uncertainty.
Are you seeing anything coming out of your.
UK operations, specifically and maybe what's happening in Europe from that angle.
So we think Europe is doing well for us we haven't really seen any change in the environment during tough macro concerns I know it doesn't mean, there won't be but we haven't seen anything so far.
And we specifically look at.
Possibility of Brexit from our perspective. This business has moved out of the UK, they're going to move their infrastructure to other locations that will have the same problem. So overall on the business it shouldn't affect it.
So we're not seeing any softness there.
We're actually extended the team there.
So from our perspective, it's nothing that.
So far as that intact.
Got it.
Thank you so much and good luck.
Next question comes from Andrew Andrew Nowinski with Piper Jaffray.
Great. Thank you and congrats on a nice quarter.
Just first question you know billings came in a little bit lighter than we expected. It looks like the average duration may have come down a little this quarter was that why billings were a little lower or is there more to do with the the higher mix of hardware.
Yes so.
And are you looking for looking at the.
Deferred revenue and then from there trying to look at the bookings so a few points here.
You know, what we forecast revenues and this is.
I think coming going for revenues is based on multiple earnings stream from previous quarters and this is how were model actually works and and again going back to the cycle before dipping your booking well you probably came up with this question from.
There are a few points first we did a small I would call it the technical.
Adjustments to the way so we're bidding practices and professional service contracts, we did this to better align with the billing.
Specific milestones so we see customer.
Oh asks for.
For this approach there do not happy to be Invoiced upfront on projects that will be delivered over the timing of a few months.
So we apply this change only recently and this well this has done actually created a backlog for us so some of that be it.
It is now Unbilled, so think of it in terms of.
Oh.
Then there was an additional piece to the RFP. All now that is not in deferred revenues were in the past our IPO was equivalent over to certain things. So this is one part.
Good exchange.
And then the other part is.
Around timing of renewal.
Business and maintenance business.
So as you know some of our business comes in on multiple years.
Okay and this can cause fluctuations between quarters. So if you have.
Comparable quarter, what do you have.
Side multiple year contracts that are significant as you are comparing the quarter that you may not have had this phenomena.
Had more one year contract and this also can create greater fluctuation when you're looking at bookings and revenues.
Okay, great. Thank you for that.
And then you mentioned one of your largest deals in the quarter was that a customer that migrated from Cisco to Palo Alto.
Does that typically how you acquire new customers when they change firewall vendors and then.
When you.
Kind of look at your pipeline, what kind of visibility do you have with regard to those types of deals. Thanks.
Okay. So it's.
Yeah. It happens that sometimes people move from one file vendor to another and then.
They decided to buy to fund as well, but it is not the main catalyst of why people buy too so.
Sometimes it's easier for them to buy that way because.
Mcdavitt 20, or 30 or 40 million dollar project. So they have a funding for something that they might have wanted to do for a while but the main.
The main reason people by 2000 or they look to buy too thin.
Is that they simply have a broken process. There are not compliant they don't have visibility ever changes. They don't have a well defined policy a lessons won't meet customers they know that they're in trouble.
And.
That they know that the unique sounds like too many customers actually need someone to fund and don't have the money to buy it for a while so it's more of an opportunity.
For them to get funding more than anything else and the way we're looking at our pipeline.
I don't think its a.
I think it really affects it significantly so it's not.
In short sometimes the catalyst.
For somebody to finally be able to buy it but it's not a reason for them to meet to them.
Great. Thank you.
Next question comes from Jonathan Ho with William Blair. Please go ahead.
Hi, Good morning, I, just wanted to see if you could give us a little bit of additional detail on our 19, two and maybe what a initial customer reception has been and perhaps maybe what this means in terms of further differentiation for your solution.
Thanks, Jonathan So I think the biggest effort of our 19th two was enhanced visibility and accurate apology modeling for Cisco ACI.
So were investing heavily in Cisco ACI support and we're going to continue actually doing that in our 93 as well so in 92.
We're hoping customer speed up their migration process, a lot of customers are thinking about it or purchasing anti meats and move into a sign actually have a policy. So with 19 to they're able to view and manage changes also searched for various components and see them. For example on the topology map like CPG contracts for domains and other items. So Cisco, we anticipate that customers essentially can expedite troubleshooting and hybrid network environments in the network topology maps can now shown accurate topology with AC in it. So we have that kind of activity both for ingress and egress traffic. So you know to kind of the bullet down a lot of value in this release for a set of customers and more to come next quarter. So that's a significant piece of effort and other things that we've done included enhanced support for other strategic vendors on Palo Alto, we added support for.
Panorama high visibility, which a lot of customers are asking for also external dynamic lists and fully qualified the minings. So it's quite technical but in essence, we're going beyond what we call basic support for managing final rules, we're supporting advanced use cases, typically the ones that larger customers want.
We also had more enhancements around automation support for chip chip on cloud garden, as Youre and full automation for for now what others. So we're constantly focused and it's a big focus item for us in 19 to continue and further the lead that we haven't automation both in terms of the depth and breadth.
So customers are very excited about it a lot of the requirements for 19 to actually came from our customers.
And it's about.
You know, having better visibility in automation across all the major platforms.
Got it and then just in terms of if you can provide any high level color on how much business. This quarter came from existing versus new logos I would just appreciate that thank you.
Yeah, Hi, this is Jack Hi, Jonathan So yeah, I think it's consistent with what we've been reporting and in the past and specifically in the road show.
We are around half half, we can fluctuate 60, 40 to 50 50 and within this range.
[laughter].
Once again, if youd like to ask a question. Please press star one on your telephone keypad, we have a question from Gors with desktop as with Stifel. Please go ahead.
Okay. Thanks for taking my questions really I was hoping you'd give it give us a bit more color here on international growth, which was impressive, especially in Latin America and APAC. When did you start making the investments in the region and then when you kind of look forward, how do you feel about the future growth opportunities.
Thanks score so.
Yes, so we're really seeing strength across all geographies and.
APAC was strong for us, we're continuing to make investments there.
Some of our growth engines are actually international expansion by Socit, we're seeing some nice growth in APAC.
But keep in mind, it's still early days the growth is off of a small base.
Also seeing nice traction in Latin America in the quarter I mentioned, one of the large deals was actually in Chile, I'm continuing to see a lot of more opportunities in Latin America, but overall when we're looking at North America and Europe , there were solid as well so we have a well diversified strength.
Geographically and we're continuing to make more investments. So there's other areas and I mentioned that before Japan, and a few more territories that we've hired people.
So expect more.
More.
To take place there in the next few quarters.
Okay. That's helpful and then when looking on the product side at Iris and Orca still clearly an evangelical stage, there and you know kind of a future growth opportunity, but have you seen any change in the marketplace. Here recently in terms of in terms of awareness and the nature of the conversation, you're having with the customer, especially in the wake of things like the like with a twist block acquisition.
Yes, so so I mentioned that.
I think in one of the other questions.
So so.
Customers are adopting more and more cloud infrastructure technologies, so looking for different ways to incorporate it into their security infrastructure, but it also means that we are seeing a lot more customers running firewalls and the cloud also looking for security solutions around coordinated security controls right. So they want to have tighter control over traffic going into and out of their cloud applications.
Some customers are still approaching the climb with the lift and shift mindset.
They are trying to take their existing tools and processes into the cloud our time that results, they're buying cloud firewalls from their traditional firewall vendors and then they try to integrate that weather.
Picketing processes with service now and others a lot of those customers are typically interested in soufun and buying secure track secure changes secure app and actually managed connectivity and security policy changes in the traditional sense for their cloud environment.
So thats one set of customers, but the ones that you're asking about I think are the ones that are really embracing the depth and talenti right moving there moving into cloud native applications with the CNCB tool chain, they're letting developers and Devops teams managed cloud and coordinated infrastructure right. So in those environments, we're seeing more interest than ours in orca, depending on whether its a container based application or not so.
It's interesting.
To see both approaches and it's even funny to see organizations, where you have a customer we are certain teams our cloud native and other teens, our traditional and I think in some ways. It depends on the sensitivity and the risk appetite of that specific team. So you might have a large financial where.
Now you have a very.
Risk averse team they have something that they will never put up on the cloud so they're going to use.
Or if they put it in the cloud they want to have a tightly managed process and they're going to use or traditional twoten orchestration suite. While another team is working something maybe that is less risky.
And there.
Willing to actually go cloud native and be more experimental and they know that there might be.
A period of time, maybe a couple of minutes when somebody will make and configuration change there might even be a mistake and they're willing to live with that mistake and let ireson orca identify those mistakes report them to security managers and developers and have the developer to fix things immediately. So it's interesting we have customers that are literally buying two front orchestration suite further for some cloud apps and interested in our sunoco for other apps within the same company.
That's a that's interesting very helpful. Thanks Robby.
Thank you and once again, if youd like to ask a question. Please press star one on your telephone keypad.
We do not have any telephone questions. At this time I will turn the call over to the presenters.
All right. Thank you very much everyone.
I'm happy to have you on the call today and.
Looking forward to another great quarter. Thanks, everyone.
So this concludes today's conference call you may now disconnect.