Palo Alto Networks Inc (PANW)

“Given the recent close of our CyberArk acquisition, we expect the $2.3 billion cash outlay in Q3.”

“And for the year, we expect product revenue growth in the low 20s.”

“For Q3, we expect product revenue growth of 25%.”

“adjusted free cash flow margin of 37%.”

“diluted non-GAAP EPS is to be in the range of $3.65 to $3.70 per share.”

“Operating margins are to be in the range of 28.5% to 29%, diluted non-GAAP EPS is to be in the range of $3.65 to $3.70 per share.”

“Revenue is to be in the range of $11.28 billion to $11.31 billion, an increase of 22% to 23%.”

“Remaining performance obligation of $20.2 billion to $20.3 billion, an increase of 28%, which includes a $1.6 billion contribution from M&A.”

“For the fiscal year 2026, we expect NGS ARR to be in the range of $8.52 billion to $8.62 billion, an increase of 53% to 54%.”

“Diluted non-GAAP EPS is to be in the range of $0.78 to $0.80.”

“Revenue is to be in the range of $2.941 billion to $2.945 billion, an increase of 28% to 29%.”

“remaining performance obligation of $17.85 billion to $17.95 billion, an increase of 32% to 33%.”

“For the fiscal third quarter 2026, we expect NGS ARR to be in the range of $7.94 billion to $7.96 billion, an increase of 56%.”

“our longer-term goal of $20 billion in NGS ARR by fiscal 2030.”

“enabling us to achieve our target of 40% free cash flow margin by fiscal 2028”

“We think in both cases, Chronosphere will scale down into that large enterprise segment very nicely.”

“We expect the full transformation over the next 6 to 12 months or a full transition from the other vendor.”

“We expect that to continue to grow.”

“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.”

“One, as we noted last quarter, we expect to continue to expect our net new NGS ARR and revenue to be second half in Q4 weighted as we continue to platformize with our customers.”

“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 CyberArk and Chronosphere, depending upon the timing of close.”

“and adjusted free cash flow margin in the range of 38% to 39%.”

“For the fiscal year 2026, we expect NGS ARR in the range of $7 billion 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 $10.5 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%.”

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

“This year, we'll be significantly expanding our opportunity in new markets as we close the acquisitions of CyberArk and Chronosphere in both categories of identity and observability, which we believe are in the midst of an inflection due to AI.”

“As Nikesh mentioned earlier, we are also reiterating our 40% cost adjusted free cash flow margin target for fiscal year 2028, inclusive of both CyberArk and Chronosphere.”

“These results reinforce our target of $20 billion in NGS ARR by fiscal year thirty, inclusive of the pending CyberArk and Chronosphere acquisitions.”

“As such, we are raising our expectations from $15 billion to $20 billion in ARR for FY '30.”

“The scale of our platforms and operational leverage in our business reinforces our confidence in achieving over 40 percent free cash flow margins by FY '28, inclusive of both the pending and Chronosphere acquisitions.”

“Between 37 to 40% over the next two years, and, you know, 40 plus percent by 2028.”

“Looking ahead, we think software firewalls is our hidden gem and possibly the next billion-dollar opportunity.”

“We saw modest improvements in hardware demand in Q4, but expect this will continue to be a mid-single-digit grower in FY '26.”

“Furthermore, we expect our top line seasonality to continue to be second half and Q4 weighted as we continue to platformize with our customers.”

“Revenue to be in the range of $10.47 billion to $10.525 billion, an increase of 14%; operating margins to be in the range of 29.2% to 29.7%; diluted non-GAAP EPS to be in the range of $3.75 to $3.85, an increase of 12% to 15%; and adjusted free cash flow margin in the range of 38% to 39%.”

“We are continuing through this transition to deferred payments in fiscal '25, and we expect about half of our fiscal '26 free cash flow to come from deferred payment deals signed in fiscal '25 or earlier.”

“Since fiscal '22, we've expanded our operating margins by almost 1,000 basis points, and we expect to continue to deliver expanded operating efficiencies in fiscal year '26 and beyond.”

“As you will see shortly, we expect to once again be above the Rule of 50 in fiscal year '26.”

“That being said, we expect product gross margins of fiscal year '26 to increase relative to '25 and be in the high 70s or low 80s.”

“As our customers end up in a hybrid compute environment across multiple clouds, we expect to continue to see strength in our software firewall business.”

“This leads us to believe that we will see some improvement in our free cash flow margins over the next 24 months. When we consider all these factors together, we are confident that we can achieve a margin exceeding 40%.”

“Based on our continued operating margin expansion and visibility of free cash flow and our continued smooth transition to deferred payments, we're targeting adjusted free cash flow of over 40% for the combined company in fiscal '28, the first full year post integration.”

“This underpins our confidence in achieving $15 billion of NGS ARR on a stand-alone basis by FY '30.”

“These offerings, each with very large TAMs, continue to gain momentum and reinforce our conviction in achieving $15 billion in next-generation security ARR by FY '30 on a stand-alone basis.”

“Overall, we believe this accelerates our mission to double the value of our joint businesses over the next 5 years.”

“As we aim to more than double the number of platformization in the next 5 years, we believe our foundation for sustainable growth becomes stronger.”

“As we look forward, we expect to see the new market business to be the stronger driver of net new ARR dollars.”

“For the fiscal year 2025, we expect NGS ARR to be in the range of $5.52 billion to $5.57 billion, an increase of 31% to 32%; remaining performance obligation of $15.2 billion to $15.3 billion, an increase of 19% to 20%; revenue to be in the range of $9.17 billion to $9.19 billion, an increase of 14%; operating margins to be in the range of 28.2% to 28.5%; our diluted non-GAAP EPS to be in the range of $3.26 to $3.28 per share, an increase of 15%; adjusted free cash flow margin in the range of 37.5% to 38%.”

“As we noted last quarter, we do expect a higher Q4 contribution to our annual free cash flow.”

“We continue to see stable demand for firewall appliances with market growth in the 0% to 5% range as we have discussed previously.”

“In summary, we see strong momentum heading into our fiscal year-end, driven by continued transformation, and we look for our first north of $4 billion quarter.”

“but we are absorbing this transition while maintaining the high end of our fiscal year '25 annual adjusted free cash flow margin guidance, as well as reiterating confidence in our adjusted free cash flow margin targets of 37%-plus in fiscal year '26 and '27.”

“As such, we remain confident in achieving our adjusted free cash flow margin targets over the next few years.”

“And that assumes somewhere between 60% to 70% of our NGS ARR is made up of these platform customers.”

“And we believe when we get there, at the current trajectory of ARR per platform deals, we're going to get close to our $15 billion target.”

“So, let's recap, Andy. I think we had said we want to get to between 2,500 to 3,500 platformizations.”

“These offerings with large TAMs should help underpin your confidence in the sustainability of our NGS ARR growth as we march towards our $15 billion ARR target for FY '30.”

“Our confidence holds for fiscal year 2025 where we continue to expect 37 to 38% adjusted free cash flow margin as well as our cash generation beyond this year.”

“So we expect to start seeing agentic activity in XIM.”

“I think we're back to steady state. So I think easily, you can expect us to be going low to mid-single digits on the appliance side.”

“diluted non-GAAP EPS to be in the range of $0.76 to $0.77, an increase of 15 to 17%”

“Revenue to be in the range of $2.26 to $2.29 billion, an increase of 14 to 15%, and diluted non-GAAP EPS to be in the range of $0.76 to $0.77, an increase of 15 to 17%.”

“Remaining performance obligation of $13.5 to $13.6 billion, an increase of 19 to 20%.”

“For the third fiscal quarter of 2025, we expect NGS ARR to be in the range of $5.03 to $5.08 billion, an increase of 33 to 34%.”

“And adjusted free cash flow margin in the range of 37 to 38%.”

“Remaining performance obligation of $15.2 to $15.3 billion, an increase of 19 to 20%.”

“For fiscal year 2025, we expect NGS ARR to be in the range of $5.52 to $5.57 billion, an increase of 31 to 32%.”

“But this year, we expect relative to the market that more of our free cash flow will come in Q4.”

“Looking forward, we expect to enter fiscal 2026 with $2 billion in deferred payments scheduled for the year, further increasing our visibility into free cash flow in fiscal year 2026.”

“Also, we had some costs in Q2 related to inventory and product transitions that were higher than typical, and we don't expect that will recur in the second half of the year.”

“We also saw stable demand for firewall appliances in Q2, which we expect to continue through fiscal 2025.”

“We expect healthy software contribution to product revenue in the second half of this year, which we expect will increase our product revenue into the double-digit growth range.”

“Despite the settling in process of the new administration, we see signs that we are going to be able to see reasonable growth through the rest of the year.”

“From our vantage point, the outlook for cybersecurity seems to have been robust in Q2, and is likely to stay so over the rest of this year.”

“These results allow us to raise our operating margin and EPS guidance for the year.”

“We are comfortable that we can generate adjusted free cash flow margins for fiscal year 2026 and fiscal year 2027 of greater than 37%.”

“We're also very happy with our free cash flow performance and continue to be confident in managing our free cash flow guidance over the next few years as outlined.”

“Our Q2 performance keeps us on track to achieve our stated target of 2,500 to 3,500 platformizations by fiscal year 2030.”

“Boiling this down to the impact on our fiscal year 2025 outlook, we are raising our full-year '25 NGS ARR, revenue, and EPS on the back of the strong performance.”

“So there's no more net new inorganic NGS ARR expected this year.”

“If you look every year, our market share in hardware firewalls goes up 200 basis points to 300 basis points. So we think there are donors in the market of market share who will constantly keep donating market share as they hit their refresh cycles.”

“We forecast diluted non-GAAP EPS to be between $1.54 and $1.56 per share, which indicates an increase of 5% to 6%.”

“we expect adjusted free cash flow margins to be between 37% and 38%.”

“Operating margins are predicted to be between 27.5% and 28%.”

“We anticipate remaining performance obligation to be between $15.2 billion and $15.3 billion, reflecting a growth of 19% to 20%.”

“For fiscal year 2025, we expect NGS ARR to be in the range of $5.52 billion to $5.57 billion, which is a 31% to 32% increase.”

“Based on our Q1 results, we remain optimistic about our cash flow outlook for the year.”

“We expect this QRadar NGS ARR to decline to about half by Q4 as we concentrate on upgrading these customers to XSIAM and enhancing our XSIAM ARR.”

“As Nikesh stated, demand for firewall appliances remained stable in Q1, and we anticipate growth of 0% to 5% as previously discussed.”

“I think this will propel us into the top three SIEM players in the market in the next two years from nowhere.”

“I think there's tremendous potential there to give us future margin expansion. So I think across the board, margin expansion on COGS, margin expansion from lower cost of sales, and margin expansion from customer support automation.”

“Now, we are privileged to have some amazing deals with two large cloud service providers, which allow us to maintain margins that are consistent almost with on-prem solutions that other people do because of our scale, and we expect that to continue to improve over time.”

“I actually have a steady expectation from product hardware, which I think is going to underpin our growth across the board over the next few years.”

“Platformization is fueling the growth of our NGS ARR and puts us on track to hit our long-range targets as we drive sustainable profitable growth.”

“We believe that this deal will help us to become one of the top three players in the SIEM space over the upcoming years.”

“Our Q1 performance keeps us on track to achieve 2,500 to 3,500 platformization deals by fiscal year 2030.”

“We feel very confident that we'll be able to continue to do that in the future.”

“I'm happy that we've been able to do this, and we have confidence we can continue this gradual transition within the business and sustain our free cash flow margins at 37% plus through fiscal year 2026.”

“We closed the year with strong top-line growth, expanded our operating margins, and drove best-in-class cash conversion, and we are confident that we can continue this in fiscal year 2025 and beyond.”

“Look. I think we'll see a mix more towards annualized billings in a way from financing.”

“If we were to keep the mix between our financing and billing programs in fiscal year 2025 in line with what we had in fiscal year 2024, we would expect this to drive 12% growth in our billings in fiscal year 2025.”

“NGS ARR to be in the range of $4.33 billion to $4.38 billion an increase of 34% to 36%; remaining performance obligation of $12.4 billion to $12.5 billion an increase of 19% to 20%”

“non-GAAP EPS to be in the range of $1.47 to $1.49, an increase of 7% to 8%.”

“For the first fiscal quarter of 2025, we expect NGS ARR to be in the range of $4.33 billion to $4.38 billion an increase of 34% to 36%; remaining performance obligation of $12.4 billion to $12.5 billion an increase of 19% to 20%; revenue to be in the range of $2.10 billion to $2.13 billion, an increase of 12% to 13%; and non-GAAP EPS to be in the range of $1.47 to $1.49, an increase of 7% to 8%.”

“remaining performance obligation of $15.2 billion to $15.3 billion represents an increase of 19% to 20%”

“For the fiscal year 2025, we expect NGS ARR to be in the range of $5.42 billion to $5.47 billion, an increase of 28% to 30%; remaining performance obligation of $15.2 billion to $15.3 billion represents an increase of 19% to 20%; revenue to be in the range of $9.10 billion to $9.15 billion, an increase of 13% to 14%; operating margins to be in the range of 27.5% to 28%; non-GAAP EPS to be in the range of $6.18 to $6.31, an increase of 9% to 11%; and adjusted free cash flow margin to be 37% to 38%.”

“We continue to expect the deal to close by the end of September depending on the timing of regulatory approvals and other customary closing conditions.”

“We continue to see ample opportunity to expand our operating margins, supporting our free cash flow.”

“We expect these offerings will disproportionately drive our growth as we transform our revenue.”

“We aspire to continue to grow RPO ahead of our target forward revenue growth rate as that helps us build confidence in these growth rates.”

“The firewall appliance market demand was stable in Q4, and we continue to expect growth of 0% to 5%, as we have previously discussed.”

“Lastly, we expect to close the IBM acquisition of our SaaS assets by the end of September.”

“We feel comfortable that we're on track towards our target of making Palo Alto Networks the first $15 billion ARR security business.”

“We expect platformization to be a key driver towards achieving our goal of $15 billion in NGS ARR in fiscal year 2030, and our Q4 performance bolsters our confidence in our ability to reach this goal.”

“We're going with a muted set of expectations into the election to make sure that we don't see any bad surprises.”

“Customers can simply wait for Palo Alto, which we expect to be available in six weeks.”

“I think in that context, we said last quarter that this should persist till the end of Q2 next year. We currently started Q2 this year.”

“And we expect adjusted free cash flow margin to be 38.5% to 39%.”

“We expect our non-GAAP EPS to be in the range of $5.56 to $5.58 per share, an increase of 25% to 26%.”

“For fiscal '24, we expect operating margins to be in the range of 26.8% to 27.0%, an increase of 270 to 290 basis points year-over-year.”

“We expect revenue to be in the range of $7.99 billion to $8.01 billion, an increase of 16%.”

“We expect NGS ARR to be in the range of $4.05 billion to $4.10 billion, an increase of 37% to 39%.”

“For the fiscal year '24, we expect billings to be in the range of $10.13 billion to $10.18 billion, an increase of 10% to 11%.”

“We expect non-GAAP EPS to be in the range of $1.40 to $1.42 a share, a decrease of 1% to 3%.”

“We expect revenue to be in the range of $2.15 billion to $2.17 billion, an increase of 10% to 11%.”

“For the fourth quarter of 2024, we expect billings to be in the range of $3.43 billion to $3.48 billion, an increase of 9% to 10%.”

“Beyond this period, we expect to grow faster than we discussed in August and sustain this growth for longer.”

“Consistent with what we noted in February, we expect that this will persist through fiscal year '25 as we anniversary the rollout of these programs resulting in lower billings and, to a lesser degree, revenue.”

“We continue to expect platformization-related drivers, both larger deals with associated costs of money impacts and acceleration in platformization programs, will impact our billings over a total of a 12- to 18-month period.”

“We expect we can make these investments within the profitability framework we spoke of previously. Specifically, we continue to expect 28% to 29% non-GAAP operating margin in fiscal year 2026 and 37% or greater free cash flow margin through fiscal year 2026.”

“However, as we work through the details of the customer contracts we are acquiring and the deferred revenue associated with this business, we expect our recognized revenue could be much lower than this in our fiscal year 2025.”

“We anticipate closing the transaction by the end of September 2024, subject to regulatory approvals and other customary closing conditions.”

“We have had strong early customer engagement with these offerings, which we expect to be made generally available at the beginning of July.”

“In early May, we announced our comprehensive suite of AI security offerings and believe we will be first to market with capabilities to protect the range of our customers' AI security needs.”

“This drove an increase in bookings, with deferred payments and impact on our billings, something we expect will continue.”

“In short, demand is robust, and my expectation is that we will continue to see it be that way for the next many quarters.”

“We will continue to make further investments here while balancing delivering profitable growth and have chartered a path with conviction towards being a $15 billion NGS ARR company.”

“But yes, in the long term, I have no argument against your thesis that this should allow us to continue to aspire to higher profitability, not counting the impact of AI, which should get us to be a much more productive organization over the medium term.”

“In a scenario where interest rates decrease, I would anticipate a potential reduction in those numbers.”

“We have maintained our absolute free cash flow guidance for the year and absolute EPS guidance for the year.”

“And we expect operating margins to be in the range of 26.5% to 27%, an increase of 240 basis points to 290 basis points year-over-year.”

“We expect NGS ARR to be in the range of $3.95 billion to $4 billion, an increase of 34% to 35%.”

“For the fiscal year, we expect billings to be in the range of $10.10 billion to $10.20 billion, an increase of 10% to 11%.”

“We expect non-GAAP EPS to be in the range of $1.24 to $1.26, an increase of 13% to 15%.”

“We expect revenue to be in the range of $1.95 billion to $1.98 billion, an increase of 13% to 15%.”

“For the third quarter of 2024, we expect billings to be in the range of $2.30 billion to $2.35 billion, an increase of 2% to 4%.”

“Specifically, we believe that we can expand our operating margins by 100 basis points beyond this year, in line with the operating margin guidance we gave in August of 28% to 29%.”

“From a revenue perspective, we expect to see less pressure on revenue as compared to billings.”

“From an NGS ARR perspective, we expect less impact on our year-end metrics, and we expect we can continue to meet or exceed our target, which called for a 30% growth rate through fiscal year '26.”

“Beyond this period, we expect we can sustain higher growth than we provided in these targets in August.”

“We expect this will persist through fiscal year 2025 as we anniversary the rollout of these programs and result in billings below the target we provided in August of 2023.”

“We plan to offer three new product offerings, one to address each of the scenarios I discussed.”

“Looking forward, we have aggressive plans to roll out additional AI-based offerings by the end of this fiscal year.”

“As customers move into the period where contracts have a full billing and revenue contribution, we expect to see an acceleration in our top-line metrics.”

“As these programs ramp over the next year, we expect a change to our billings and revenue growth for the next 12 to 18 months.”

“We expect this trend will continue into our Q3 and Q4.”

“We are confident we can drive our top-line growth trajectory higher for longer ahead of the growth trajectory we discussed back in August, despite absorbing some short-term impacts.”

“We expect this to drive a significant increase in our overall revenue mix that is recurring.”

“Overall, this combined $13 billion to $17 billion opportunity drives our conviction that investing in AI and maintaining our leadership can help us accelerate our growth towards $15 billion by 2030.”

“We also expect to achieve our transformation to a business with greater than 90% recurring revenue, with industry-leading non-GAAP operating margins in the low to mid-30s.”

“Yes, our aspiration is that towards the second half of '25, we should revert back to our original expectations of mid to high double-digit growth.”

“As we see low customer churn, we're confident that independent and specific billing terms and contract lengths will allow us to continue to grow RPO at levels that support our forward revenue growth ambitions.”

“I'm not concerned about the demand for cybersecurity, for this quarter and upcoming quarters, though my concern about our ability to execute.”

“Our long-term forecast thesis remains intact while we expect short-term variability in billings; we do not expect this to have a meaningful impact on our ability to deliver our three-year targets.”

“But we're going to keep our cautious approach towards meeting what we can digest. So you shouldn't expect anything that is off the regular pattern we've sort of shown the last time.”

“Look, we have not changed our point-of-view. We have always maintained that we're going to sustain M&A at a level close to a billion here.”

“We've been very consistent on hardware and hardware expectations for the last 12 months. We are regaining our consistent expectations on hardware. We don't expect any lumpy movements up or down. We expect this to be steady in the 0% to 5% range as we've always been talking about.”

“And we expect fiscal year 2024 capital expenditures of $175 million to $185 million and $40 million to $45 million in Q2.”

“We expect fiscal year 2024 diluted shares outstanding of 338 million shares to 343 million shares.”

“We expect second quarter diluted shares outstanding of 339 million shares to 342 million shares.”

“For the second quarter, we expect net interest and other income of $55 million to $60 million.”

“We also expect cash taxes in the range of $230 million to $280 million.”

“We expect our non-GAAP tax rate to remain at 22% for the second quarter and fiscal year 2024, subject to the outcome of future tax legislation.”

“We expect our fiscal year '24 operating margins to be in the range of 26% to 26.5%, up 190 basis points to 240 basis points versus fiscal year '23.”

“We expect non-GAAP EPS to be in the range of $1.29 to $1.31 per share, an increase of 23% to 25%.”

“We expect revenue to be in the range of $1.955 billion to $1.985 billion, an increase of 18% to 20%.”

“For the second quarter of 2024, we expect billings to be in the range of $2.335 billion to $2.385 billion, an increase of 15% to 18%.”

“This can impact our billings trends quarter-to-quarter and we are reducing our billings guidance to account for this through fiscal year 2024.”

“We expect both transactions will close in our second quarter of fiscal year '24.”

“At the same time, we're also delivering on the latest acquisition of cyber security, where we expect that to become a new module in the next couple of months available to all of our Prisma Cloud customers.”

“We believe that we will be deploying generative AI over the course of the next few months, and we'll talk more about it at a later event.”

“We now see our fiscal year 2023 non-GAAP operating margins as a baseline to build on in the future.”

“We expect fiscal year diluted shares outstanding of $322 million to $324 million, and we expect Q4 capital expenditures of $35 million to $40 million.”

“We expect Q4 diluted shares outstanding of $326 million to $332 million.”

“For Q4 '23, we expect net interest and other income of $50 million to $55 million.”

“We expect our non-GAAP tax rate to remain at 22% for Q4 '23 and fiscal year '23, subject to the outcome of future tax legislation.”

“We expect our adjusted free cash flow margins to be 37.5% to 38.5%, and we expect to be GAAP profitable for fiscal year 2023, including in Q4.”

“We expect non-GAAP EPS to be in the range of $4.24 to $4.29, an increase of 69% to 70%.”

“In fiscal year '23, we expect operating margins to be in the range of 23% to 23.25%.”

“We expect product revenue growth in the range of 15% to 16% in fiscal year '23 as we see supply chain challenges normalize as we exit fiscal year '22.”

“We expect revenue to be in the range of $6.88 billion to $6.91 billion, an increase of 25% to 26%.”

“We expect NGS ARR to be in the range of $2.80 billion to $2.85 billion, an increase of 48% to 51%.”

“For fiscal year 2023, we expect billings to be in the range of $9.18 billion to $9.23 billion, an increase of 23% to 24%.”

“We expect revenue to be in the range of $1.937 billion to $1.967 billion, an increase of 25% to 27%.”

“We think there will be an opportunity in the future to get more efficiency from generative AI as we go ahead and implement some of the capabilities through our organization.”

“We think there is continued opportunity from here and we haven't even factored in the potential impact of generative AI.”

“We feel confident in our future ability to drive NGS ARR.”

“Somewhat counter to the market, we're raising guidance both on top-line metrics and profitability.”

“I think we should see steady continued growth for Prisma Cloud.”

“we believe the relatively early stage of cloud security adoption has and will continue to shelter us from this headwind.”

“We think it's a very good place compared to where we were expecting to be right now. We also have given you hope that we don't believe this is the end. We believe we can keep improving from here.”

“We expect Q3 capital expenditures of $35 million to $40 million, with full-year capital expenditures of $165 million to $170 million.”

“We expect our non-GAAP tax rate to remain at 22% for Q3 and fiscal year 2023, subject to the outcome of future tax legislation.”

“We expect our adjusted free cash flow margin to be between 36.5% to 37.5%, and we expect to be GAAP profitable each quarter and for the fiscal year 2023.”

“We continue to expect product revenue growth in the range of 10% for the full fiscal year.”

“We expect revenue to be in the range of $6.85 billion to $6.91 billion, an increase of 25% to 26%.”

“We expect revenue to be in the range of $1.937 billion to $1.967 billion, an increase of 25% to 27%.”

“We expect non-GAAP EPS to be in the range of $0.90 to $0.94, an increase of 50% to 57%.”

“We expect revenue to be in the range of $1.695 billion to $1.725 billion, an increase of 22% to 24%.”

“For the third quarter of 2023, we expect billings to be in the range of $2.20 billion to $2.25 billion, an increase of 22% to 25%.”

“We expect that this will translate into us growing our EPS faster than our revenue growth rates.”

“As we look towards the second half of the year and into fiscal year 2024, we believe we can continue to execute against our plans and drive higher operating margins.”

“We expect to see ongoing improvements in our operational efficiency.”

“we believe the combination of sustaining higher top-line growth and focus on efficiency sets us up well to build on this base of higher profitability and grow EPS ahead of revenue.”

“We believe we can continue to build on this into fiscal year 2024 and beyond, putting us three years ahead of our profitability targets we offered at our last Analyst Day in September 2021.”

“Additionally, we're also increasing our cash flow guidance.”

“As these extraneous factors mitigate over the next few months, we will see the long-term growth gravitate back to those levels.”

“Our headcount growth this year is likely to be lower than any of the last three years.”

“We now expect our five-year revenue from a SASE customer to be more than 2.5 times that of an appliance customer.”

“And while not expecting shocks, I do think we will see more cautious activity over the next few quarters.”

“So we feel pretty comfortable that not only will we get sales productivity, but we also believe we'll get overall productivity in the organization so we can accelerate our operating margin aspirations ahead of our 3-year plan, we shared about near a quarter ago.”

“So we think, yes, the Fed spend will continue to stay strong and we continue to get linear as time passes, as we get through the rest of this administration's term.”

“So we think those will ease over the next, it really depends on suppliers. I think the supply chain easing is happening as we speak, and we should be out of it in the 6 to 9-month time frame, at the far end 12.”

“Also, we expect operating income in Q3 to be roughly flat with our Q2 levels.”

“As an additional modeling support based on our prior seasonality, we expect the quarter-over-quarter revenue and billings growth for Q3 '23 to be in line with last year.”

“We expect Q2 capital expenditures of $40 million to $45 million, and we expect fiscal year capital expenditures of $190 million to $200 million.”

“We expect Q2 '23 diluted shares outstanding of 320 million to 326 million shares.”

“For Q2 '23, we expect net interest and other income of $18 million to $20 million.”

“We expect our non-GAAP tax rate to remain at 22% for Q2 and fiscal '23, subject to the outcome of future tax legislation.”

“We expect adjusted free cash flow margin to be 34.5% to 35.5%, and we continue to expect to be GAAP profitable for fiscal year 2023.”

“We expect non-GAAP EPS to be in the range of $0.76 to $0.78, an increase of 31% to 35%.”

“We expect revenue to be in the range of $1.63 billion to $1.66 billion, an increase of 24% to 26%.”

“For the second fiscal quarter of 2023, we expect billings to be in the range of $1.94 billion to $1.99 billion, an increase of 21% to 24%.”

“We expect the financial impact of the transaction to be immaterial to our fiscal '23 guidance.”

“We expect this deal to close in the fiscal second quarter.”

“However, coupled with an easing supply chain, I expect that near term, we'll continue to report a low double-digit growth rate for product revenue.”

“We expect this behavior to become the norm over the next year.”

“I think XSIAM holds similar potential and could become our fourth business in that category within the same timeframe.”

“Regarding our fiscal year '24 financial targets, which we outlined at our September 21 Analyst Day, we have strong confidence in achieving those objectives, and we hope you take away from our call today some of the reasons behind this confidence.”

“If you balance that out, we think the number is still in the low to high single-digits.”

“And I anticipate that we'll continue to see that traction in FY '23 given the product innovation that we've driven and will continue to drive across those three products and the value they provide.”

“If we can win half of those deals, we expect to see substantial growth similar to what we experienced this year.”

“Two years ago, we were only capturing one or two deals out of ten, but now we are involved in five to six out of ten, with a goal to reach ten out of ten next year.”

“We expect our Q1 capital expenditures of $35 million to $40 million.”

“We expect Q1 '23 diluted shares outstanding of 108 million to 110 million shares.”

“We expect approximately 42% of our operating income to come in the first half of the fiscal year and approximately 58% in the second half.”

“We expect non-GAAP EPS to be in the range of $9.40 to $9.50.”

“We expect non-GAAP EPS to be in the range of $2.03 to 2.06%.”

“SBC will remain a focus area in fiscal '23 as we balance the use of SBC to attract and retain top cybersecurity talent with scale leverage we expect in this area.”

“We achieved GAAP profitability in Q4 fiscal year '22 and we project this will continue for fiscal year '23.”

“After achieving operating margins at the high end of our guidance in fiscal year '22, we intend to deliver operating margin expansion of 50 basis points to the high end of our guidance, with adjusted free cash flow margins of over 100 basis points at the high end of our guidance while absorbing increased supply chain costs and inflationary impacts.”

“This number is over 70% for the revenue we expect in Q1.”

“We have seen growing commitments from our customers represent a greater portion of next year's revenue. As we enter fiscal year '23, that number is 59% at the midpoint of our guidance.”

“We do not anticipate these pressures going away in the next fiscal year and we have planned for it to persist through fiscal year '23.”

“Looking forward, we're guiding to full year GAAP profitability in fiscal 2023.”

“We anticipate this market will grow substantially in the next five to ten years. We consider ourselves one of only two vendors in the market who will be involved in every opportunity, and we aim to secure a significant portion of that market.”

“The fiscal year closes for Fed comes in the next 1.5 months. So we should hopefully see some activity in Q1 around that. And I think next year should be a better year for Fed spending, especially around Zero Trust and SASE and cloud.”

“Second, we saw some isolated instances of customers extending the life of hardware potentially driven by macro forces. We expect that on the margin. This could continue into FY '23.”

“Based on our Q4 guidance, we're pleased to project that the combination will exceed 60% for fiscal year '22, which is ahead of our prior stated plan.”

“We will continue to make progress on our commitment of 50 to 100 basis points operating margin expansion and 100 to 150 basis points of adjusted cash flow margin expansion beyond fiscal year '22 through '24 whilst balancing top line growth opportunity.”

“We expect capital expenditures in Q4 of $36 million to $41 million, and we expect capital expenditures for the full fiscal year of $190 million to $195 million, which includes $39 million outlaid in Q2 '22 related to our Santa Clara headquarters.”

“For Q4 '22, we expect net interest and other expenses of $1 million to $2 million.”

“We expect non-GAAP tax rate to remain at 22% for Q4 and fiscal year '22, subject to the outcome of future tax legislation.”

“We continue to expect an adjusted free cash flow margin for the year of 32% to 33%.”

“We expect non-GAAP EPS to be in the range of $7.43 to $7.46 based on a weighted average diluted count of approximately 106 million to 107 million shares.”

“We expect non-GAAP operating margin to be 18.5% to 19%.”

“We expect strength in product revenue to continue in Q4 with full year growth of 20%.”

“We expect next-generation security ARR to be $1.775 billion to $1.825 billion, an increase of 50% to 55% versus a very strong performance in the fourth quarter of fiscal year '21.”

“We expect revenue to be in the range of $5.48 billion to $5.50 billion, an increase of approximately 29%.”

“For fiscal year 2022, we expect billings to be in the range of $7.106 billion to $7.136 billion, an increase of 30% to 31%.”

“We expect non-GAAP EPS to be in the range of $2.26 to $2.29 based on a weighted average diluted count of approximately 106 million to 108 million shares.”

“We expect revenue to be in the range of $1.53 billion to $1.55 billion, an increase of 25% to 27%.”

“We expect billings to be in the range of $2.32 billion to $2.35 billion, an increase of 24% to 26%.”

“However, we do expect share repurchase to be a major use of cash flow as previously stated.”

“We expect Cloud Next-Generation Firewall will drive further growth of our Firewall as a Platform and specifically, our software form factors.”

“Although customers are very early in their evaluation and adoption of Gen 4, we expect this Gen 4 adoption will help drive our appliance growth rates ahead of the market growth rate.”

“After our recent limited releases of XSIAM, we are making progress in our goal to initiate co-design work with 10 partners and expect to be on track at the end of this quarter with our plans.”

“So we have factored into our planning some degree of inflation on our wages, but I personally don't think it's going to be off the charts.”

“Within this top line, given our confidence in both our pipeline and our sales execution NGS, we're also raising NGS ARR for the year.”

“Strong security demand, innovations we are bringing to customers such as our Nebula release as well as customer appetite for our Gen 4 gives us strong conviction and sustained product demand into fiscal year 2023.”

“Non-GAAP EPS is expected to be in the range of a $1.65 to $1.68 based on a weighted average diluted count of approximately 106 million to 108 million shares.”

“We expect revenue to be in the range of $1.345 billion to $1.365 billion, an increase of 25% to 27%.”

“Turning to our guidance for the third quarter of fiscal 2022, we expect billings to be in the range of $1.59 to $1.61 billion, an increase of 24% to 25%.”

“For Q3, we expect capital expenditures of $40 million to $45 million.”

“We expect net interest and other expenses of $5 million to $6 million per quarter.”

“We expect our non-GAAP tax rate to remain at 22% for Q3 2022 and fiscal year 2022, subject to the outcome of future tax legislation.”

“Adjusted free cash flow margin is expected to be in the range of 32% to 33%.”

“We continue to expect operating margins to be in the range of 18.5% to 19%.”

“We're lifting our non-GAAP EPS guidance here, reflecting much of the upside resulting in Q2.”

“On the back of this trend and based on what we're seeing in our pipeline heading into the second half of fiscal year 2022, we are raising our total revenue, product revenue and total billings guidance for the year.”

“XSIAM is currently available to a limited number of customers that will be broadly available later this year.”

“We have ample confidence that we will handily meet our expectations for the full-year NGS ARR.”

“We expect net interest and other expenses of $6 to $6.5 million per quarter, and for Q2 '22 we expect capital expenditures of $80 to $85 million.”

“we expect our Non-GAAP tax rate to remain at 22% for Q2 '22 and fiscal year '22, subject to the outcome of future tax legislation.”

“To help you further calibrate your modeling of our seasonality, we expect approximately 33% to 34% of our annual operating income to come in Q4,”

“Based on the seasonality of spending we discussed last quarter, as well as progress during the year so far, we're forecasting we will deliver slightly more operating income in the first half of the year than we noted on our Q4 call.”

“Adjusted free cash flow margin is expected to be in the range of 32% to 33%.”

“We expect our operating margins to be in the range of 18.5% to 19%.”

“We expect our next-gen security ARR to be $1.65 to $1.7 billion, an increase of 40% to 44%.”

“We do expect, though, that given the vagaries of supply chain, we will not be able to beat them as aggressively as we have been in the past.”

“We expect to be able to manage our expenses within our guidance outlined to you for the full year.”

“I expect these challenges to dissipate over the next six to nine months and we will do our best to continue to navigate.”

“These forces combined drove 25% growth in product revenue in Q1, a significant re-acceleration as strong demand continues into Q2 as well.”

“During this period the industry will probably end up having lead times, which are two to four weeks more than normal.”

“I believe the SASE momentum is just beginning. There's extensive growth potential not only for FY '22 but also beyond.”

“Our goal is to expand this category leadership this year and aim for double digits by year-end, demonstrating that our pace of innovation is robust and ongoing.”

“We expect the incremental M&A in fiscal year 22 as compared to the recent past.”

“Some of our expectations for acquisitions will be incremental rather than substantive in the upcoming year.”

“Beyond FY '22, we expect to see our operating income grow faster than revenue, and we will provide further updates to investors on this during our Analyst Day on September 13.”

“This is revenue we expect to sustain into Q1 due to the impending hardware refresh and the fact that we didn't ship everything from our product business in Q4.”

“for Q1, we expect capital expenditures of $35 million to $40 million.”

“we expect net interest and other expenses of $4 million to $5 million per quarter.”

“We expect our non-GAAP tax rates to remain at 22% for Q1 and fiscal year '22, subject to the outcome of future tax legislation;”

“we expect operating income will be shifted to the second half of the year, in fiscal year 22, as compared to fiscal year 21. And we expect an approximate 43% to 57% first half, second half splits during the fiscal year '22.”

“We expect operating margins to be in the range of 18.5% to 19%.”

“non-GAAP EPS is expected to be in the range of $1.55 to a $1.58 based on a weighted average diluted share count of approximately 101 to 203 million shares.”

“Q1 product revenue growth percentage to be in the low double-digits, we are providing this transparency, this quarter,”

“Revenue is expected to be in the range of $1.19 to $1.21 billion, an increase of 26% to 28%.”

“we expect billings to be in the range of $1.29 billion to $1.31 billion, an increase of 19% to 21%.”

“Do we believe leveraged growth is achievable in future years? Yes.”

“We believe we will see continued growth ahead, supporting considerations for reinvestment while we seek that leverage.”

“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.”

“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.”

“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.”

“We expect non-GAAP EPS to be in the range of $597 to $599, using 99 to 101 million shares.”

“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.”