“Overall, we are confirming our ClaiSec projections, while raising NetSec billings by 300 basis points and revenue by 100 basis points, given the strong performance of SASE, VM-Series and subscription business overall within that NetSec.”

In context

“Dipak Golechha (CFO): Thanks, Nikesh. I'm excited and humbled to be part of this world-class leadership team. I look forward to driving total shareholder return. As Nikesh indicated, we had a strong third quarter as we continue to deliver winning innovation, while simultaneously adding new customers at pace. The strength gives us confidence to raise guidance for the year. We delivered billings of $1.3 billion, up 27% year-over-year, with strong growth across the Board, ahead of our guidance of 20% to 22% growth. We’ve continued to see some customers ask for billing plans, many involving larger transactions as we become a more strategic partner to our customers. We’ve also utilized our Palo Alto Networks financial services financing capability here. The dollar-weighted contract duration for new subscriptions and support billings in the quarter were consistent year-over-year and remained at approximately three years. We added approximately 2,400 new customers in the quarter. Total deferred revenue at the end of Q3 was $4.4 billion, an increase of 30% year-over-year. Remaining performance obligations or RPO was $4.9 billion, an increase of 38% year-over-year. We continue to see these metrics becoming more meaningful, as we drive growth from our ratable business. Our revenue of $1.07 billion grew 24% year-over-year ahead of our guidance of 21% to 22% growth driven by billings and broad business strengths amidst an increase in our audible subscription revenue. We remain focused on driving this high-quality revenue, with all new product offerings being pure or substantially all subscription in nature. Looking at growth by geography, the Americas grew 24%, EMEA grew 23%, and APAC grew 25%, showing broad executional excellence across the world. Q3 product revenue of $289 million increased 3% compared to the prior year. Q3 subscription revenue of $474 million increased 34%. Support revenue of $311 million increased 33%. In total, subscription and support revenue of $785 million increased 33% and accounted for 73% of total revenue. Our Q3 non-GAAP gross margin was 74.6%, which is down 60 basis points compared to last year, driven by product mix, which are less mature. Q3 non-GAAP operating margin was 17%, an increase of 60 basis points year-over-year. There are several factors driving our operating margins. We have revenue upside, lower travel and event expenses due to COVID, and some shift in spending out of Q3. At the same time, we continue to aggressively invest in growth, largely in the areas of sales capacity and R&D investments. With health conditions improving and geographies of many of our facilities, including our Santa Clara headquarters, we're seeing more employees look to return to the office. We expect this trend will continue to gain steam in Q4, reversing some of the savings we've seen in the last few quarters in our OpEx. Non-GAAP net income for the third quarter increased 22% to $140 million, or $1.38 per diluted share. Our non-GAAP effective tax rate for Q3 was 22%, the EPS expansion was driven by revenue growth and operating expense leverage with an undertone of strong investments for growth. On a GAAP basis for this quarter, net loss increased to $140 million, or $1.50 per basic and diluted share. We ended the third quarter with 9,715 employees, including 39 from the Bridgecrew acquisition close. Turning to the balance sheet and cash flow statement, we finished April with cash, cash equivalents, and investments of $3.8 billion. Q3 cash flow from operations was $278 million, an increase of 64% year-over-year. Free cash flow was $251 million, up to 100% at a margin of 23.4%. Our DSO was 60 days, a decrease of three days from the prior year period and flat from the second quarter. Our Firewall as a Platform, or FWaaP, had another strong quarter, as we continue to grow faster than the market. FWaaP billings grew 26% in Q3, and we continue our transition from hardware and software to SaaS form factors as Nikesh highlighted. Our next-generation security or NGS continues to expand and now represents 27% of our total billings of $346 million, growing at 70% year-over-year. In the third quarter, we added $133 million in new NGS ARR, reaching $973 million. The acquisition of Bridgecrew added an immaterial amount to this number, and we remain confident in our plan to achieve $1.15 billion in NGS ARR by the end of fiscal year 2021. Turning now to guidance and modeling points. For the fourth quarter of 2021, we expect billings to be in the range of $1.695 billion to $1.715 billion, an increase of 22% to 23% year-over-year. We expect revenues to be in the range of $1.165 billion to $1.175 billion, an increase of 23% to 24% year-over-year. We expect non-GAAP EPS to be in the range of $142 to $144, using 101 to 103 million shares. Additionally, I'd like to provide some modeling points. We expect our Q4 non-GAAP effective tax rate to remain at 22% and our CapEx in Q4 to be approximately $30 million to $35 million. As Nikesh indicated, we're seeing broad drivers across our business in Q3, driven by the foundation of innovation and strong sales execution along with trends we see in our pipeline and the long tail demand tailwinds that remain strong, and we're raising our fiscal year 2021 guidance. We expect billings to be in the range of $5.28 billion to $5.3 billion, an increase of 23% year-over-year. We continue to expect next-generation security, ARR, to be approximately $1.15 billion, an increase of 77% year-over-year. We expect revenue to be in the range of $4.2 billion to $4.21 billion, an increase of 23% to 24% year-over-year. We expect product revenue growth of 1% to 2% year-over-year. We expect operating margins to improve by 50 basis points year-over-year. We expect non-GAAP EPS to be in the range of $597 to $599, using 99 to 101 million shares. Regarding free cash flow for the full year, we expect an adjusted free cash flow margin of approximately 30%. Now let's review our fiscal year projections for NetSec and ClaiSec. Overall, we are confirming our ClaiSec projections, while raising NetSec billings by 300 basis points and revenue by 100 basis points, given the strong performance of SASE, VM-Series and subscription business overall within that NetSec. Moving on to adjusted free cash flow, we expect Network Security to deliver a free cash flow margin of 42% in fiscal year ’21, up from 38% in fiscal year ’20. We continue to expect Cloud and AI free cash flow margin of minus 43% in fiscal year ’21, an improvement from negative 59% in fiscal year 20. While we are focused on growth investments in Cloud and AI, over time we expect Cloud and AI to achieve growth operating and free capital margins in line with industry benchmarks as we gain scale, our customer base matures and we become more efficient. In Q3 we repurchased $350 million in our own stock at an average price of $322. As of April 30, 2021, we have $652 million remaining available for repurchases. This is part of a broader capital allocation strategy focused on balancing priorities and maximizing total shareholder return. We start with fueling organic investments and managing priorities across innovation and go-to-market to set the foundation for sustainable growth at Palo Alto Networks. Second, we deploy capital for targeted acquisitions which accelerate this growth opportunity. We rigorously evaluate targets, focusing on acquiring leading technology, retaining key members of the team and following through with integrating these acquisitions into our businesses. Finally, we work to optimize our capital structure using the options available to us in this dynamic market, including deploying debt, using stock for M&A consideration and also buying back our own stock when we see it representing good value. With that, let's move on to the Q&A portion of the call. Walter over to you.”