James Fish: Hey, guys. First, just Tom Barth. Look, you’ve been a class actor and appreciate all the help over the years, and just wanted to echo Tom Leighton and Ed’s sentiment there. I really appreciate the help over the years. I want to circle over to security, actually. Look, security was a little bit lower than I think we were all anticipating for Q4. I get that we have some drivers underneath that are helping the business, but did you see any push out of deals and maybe that’s contributing to your confidence around mid-teens growth for 2024? Help us on the confidence for sustained mid-teens growth, and really how is that selling outside the install base and penetration of those new security packages going?
Ed McGowan: Hey, Jim. This is Ed. Yes, I was actually pretty pleased with our performance and didn’t see many deals push out. We didn’t have any large license deals like we did in Q3, so that might be — that always skews some of the results, so we didn’t have any of that. But no deals that really pushed out from a security perspective. Very pleased with what we’re seeing with Guardicore continued great growth there. That’s been phenomenal, and that’s a lot of customers are being driven new verticals and things like that. The channel’s been doing phenomenally well there. We talked a lot about in our prepared remarks, API security. I don’t get surprised often, but I’ve been surprised with the ARPUs there. I’ve been very pleased with that.
That’s been very, very good to see. And the strength in – we talked about the bundles that we had done a lot on the last call. That’s continued to go very well, and we’re seeing very strong growth in our WAF and our fraud products, too, bot management and our fraud protector. So really strength across the board. Nothing so far from macroeconomic challenges. That always can change. You never know what can happen, but nothing that we saw in Q4. As far as the projections for this year, we feel pretty confident. We’ve generally been relatively conservative with our approach to security growth. We don’t factor in any major type of attacks where sometimes we’ll see a spike in demand or anything like that. So we feel pretty good with how security’s going.
Tom Leighton: Maybe just to click down one level into Fatima’s earlier question on the CDN side, and something that Tom said as well in his prepared remarks, is there any way to understand how much on the CDN side of the base you plan to essentially — I don’t want to say give away for free, but give away for free to get that compute revenue or help us understand kind of the dynamic between what we should expect between CDN and compute kind of dollar shifting. Thanks, guys.
Tom Leighton: Yes. I think you can’t factor in any percentage there at this point. We have been in some discussions with some very large media companies where we would offer discounted or free delivery in return for a significant portion of the compute business. On balance, that would be a great trade for us, much more profitable and much more revenue, because at the end of the day, big media companies will spend 10x on compute what they’ll spend on delivery and even security. This is something that we see the hyperscalers do. They will sometimes give away the delivery in return for getting the compute business, because that’s where the vast majority of the revenue is and very profitable. We’ll keep you advised as we go if that starts to make a material difference.
Operator: The next question comes from Keith Weiss of Morgan Stanley. Please go ahead.
Keith Weiss: Excellent. Thank you, guys, for taking the question. This is one for Ed. Throughout 2020, we talked a lot about savings initiatives. We talked a lot about migrating workloads to internal cloud and that yields savings. I got to say, just to put it bluntly, it kind of disappointing about the lack of margin expansion in the sky. Is there something holding that back or is there some incremental investments perhaps behind Gecko that we’re making instead of that? Or meeting a bunch of questions like, why not more margin? Given all the efficiency sort of improvements that you guys have been putting in for the past year?
Tom Leighton: Yes, I’ll take this one, Tom. You broke up a little bit there, Keith, but I think I got the genesis of the question. So yes, we’ve done, I thought, a great job of making some acquisitions over the last few years, investing in a compute business, spending an awful lot to build out our compute facilities, adding a lot of functionality, growing our security business, doing acquisitions there as well. And got back to 30% margin last year and continuing this year. We’ve always said that’s been a pretty healthy spot to run the business. We’re investing because we see opportunity for growth and there’s always a balance. You can’t cut your way to greatness. Perhaps we could cut a few more points, but then what are we leaving on the table?
I think we’ve been pretty disciplined and balanced with our approach in terms of investing for growth and returning to margin. We’ve got some pretty exciting areas. We’re seeing great growth in API security. It’s still early days there. The product will continue to get better. We’ve seen good ARPUs there, so I’m very excited about what we’re doing there. We’ve made investments in go-to-market and Guardicore, and that certainly has paid off. And the investments in Computer Stein has shown some early returns. So again, it’s a balanced approach. We’re in this for the long-term, and I think we don’t want to shoot ourselves in the foot and not go after some of these big opportunities that we have in front of us.
Keith Weiss: Got it. That’s clear.
Tom Leighton: Thank you.
Operator: The next question comes from Mark Murphy of JPMorgan. Please go ahead.
Mark Murphy: Thank you very much. So, Tom, you’ve done a very solid job with the compute business. And in the prepared comments, you mentioned onboarding of submission-critical apps. I’m wondering if you could shed a little light on the pipeline of that kind of critical app that you see coming to you in 2024 and thus far. How well is your infrastructure handling the intensity of those larger workloads in terms of stability, reliability, uptime, etc? And then I have a quick follow-up.
Tom Leighton: Yes. So, signing on compute customers is a big focus for us this year. We have the basic infrastructure in place. Of course, now we’re building out Gecko. But just with the basic infrastructure already in 25 cities, we’ll be looking to add on many more mission-critical apps from major enterprises. And some examples, you look at social media, live transcoding. We now have two giant companies using that on the platform, one for live sports broadcasting, another for live user-generated content. Another customer, we’re hosting e-commerce sites for them in a way that performs better because closer to the end-user and less expensive. AI inferencing for ad targeting, personalizing content. And again, you want to do that really fast.
And you just don’t have time to backhaul that up into a centralized location. You want to be in a lot of locations around the world to get better performance. And again, we can do it at a lower cost. We’ve even got a large, one of the world’s largest banks now using us, our edge compute, to register credit cards, their user credit cards with Apple Pay because Apple Pay requires you do the registration in 60 milliseconds. And the only way they can get that done fast is to do it on Akamai Connected Cloud. So really, a lot of different applications already on the platform, doing proofs of concept now. So the focus this year, and I think it’s a good pipeline, is to be taking on many more mission-critical apps for major enterprises. And of course, we’re the first big one.
We’ve got enormous applications already running on the platform and very successfully. And we do it in a multi-cloud way. And as I talked about earlier, now we have the global load balancing built in, the failover capability, so that it does make for a reliable service that’s high-performing. So really excited about what’s coming this year.
Mark Murphy: Yes. It’s great to hear the tie-in with the inferencing and Apple Pay as well. So I appreciate the color of that. Ed, I wanted to ask you, you’re providing the fiscal year guidance in constant currency and, of course, we all understand it’s going to be very difficult to predict the actual fluctuations in the spot market, but if we looked at it at current FX levels, do you think it would skew that 6% to 8% revenue growth level higher or lower? If we were to try to translate it into reported U.S. dollars in our models right now today?
Ed McGowan: Yes, good question. I think the CPI report today gave you a good view of how things can change so quickly. The market originally had thought there’d be a lot of rate cuts and now all of a sudden that doesn’t look like it’s going to happen and obviously currencies and interest rates are very closely aligned. So if you look, I gave you the 1231 number, so obviously the dollar has gotten a bit stronger. I gave you the numbers in terms of the total non-U.S. dollars, so you can kind of do some math. It would still be in that range. Obviously, it’d be a little bit of a headwind just given that the dollar’s gotten stronger since 1231, but I think you can take our Q1 guidance and sort of fold that in and think about the normal seasonality that you have and come up with an answer. But it would still be in that range, though.
Mark Murphy: And just to clarify, so it’s still in that 68% range if we put it into USD or are you saying it’s still kind of mid-single-digit, but maybe some like a point lower?
Ed McGowan: Well, no, I mean, if you’re using spot rates as of today, the simple math would suggest that it is, yes. If you looked at, just take the midpoint of the guide, right? Just say if I just use that and what the impact of the dollar has been, it’s still in that range. Now, you would ask, could it be higher? Obviously, the dollar was at 101 back at 1231. It was at 106 in November, and so it’s bouncing all over the place. Obviously, if it were to move, you can do the math, five or six points lower, you could potentially get on the other side of that. So, again, it’s just I’d be end up giving you guys a massive range that wouldn’t be helpful. So what I’d rather do is just give you guys the tools that you can do it yourself and look at, really get an understanding of the core business underneath that. How is that? I think it’s much more important to understand.
Mark Murphy: Understood. Thank you very much. And I want to also thank Tom Barth for a lot of great interactions over the years.
