François Locoh-Donou: Thank you, Jim. So Yes. On the Lilac, let me start with — we acquired Volterra a couple of years ago. and really launched the platform with our security offering about a year ago. And we’ve seen a very, very good traction with Distributed Cloud Services over the last 10 months. And so we want to build on that traction. We recently started with a CDN offering in the Distributed Cloud Services platform. That was based on an OEM agreement with Lilac. And this was essentially a talked acquisition to in-source that technology and the team, in order to be able to secure the offering for the longer term. And also work with this team to continue to improve on the offering and deliver increasingly innovative edge services on the Volterra platform.
So we’re pretty excited about the team joining us and being able to accelerate our innovation on that front. And it completes our offering in terms of web application firewalls, API security, DDoS protection, anti-bot and now CDN into the bouquet of services that we offer on Distributed Cloud.
Operator: Our next question is from Simon Leopold with Raymond James.
Victor Chiu : This is Victor Chiu in for Simon Leopold. You noted that the fundamental demand around F5 software is still largely intact. But are there specific factors that you can point to that gives you confidence that the slowing isn’t a reflection of more secular headwinds like cloud migration versus the cyclical slowing that you’re noting?
François Locoh-Donou: Yes, Victor, I think it’s interesting because I would say that migrations to the public cloud, if you want to call them like lift and shift tech migrations, we have seen that to be more of a tailwind to F5 than a headwind. But even more than that, what we have seen over the last couple of years is that customers are not migrating applications to a single cloud. Increasingly, customers are leveraging multiple different environments for their applications, multiple public clouds, private cloud and on-premise. And that actually is an architectural model that is ideally suited for the portfolio that we have built, which is essentially an infrastructure agnostic portfolio of application security and delivery services.
And so we feel very strongly that as that trend accelerates in large enterprises and that multi-cloud and hybrid cloud becomes more and more the mainstream deployment way of that enterprises deploy their application portfolio. It is going to drive growth for F5 and specifically, for F5 software and SaaS services. So that’s where our confidence comes and I mentioned those drivers earlier, multi-cloud environments, security, modern applications. All three will contribute to the long-term growth of our software, which is why we feel our views on that are absolutely intact. What we are seeing right now, again, it’s not an architectural or a competitive issue. It is it is largely a macro-driven very cautious spending environment that is kind of indiscriminate across product lines.
Victor Chiu : Well, I mean so prior to the kind of macro headwinds that we started seeing, do you see — did you observe any of those trends that you mentioned regarding multi-hybrid cloud trends and did you see — you observed those trends and that kind of gives you the confidence that, that will resume when things normalize?
François Locoh-Donou: Yes, Victor. I mean, we saw them, which is why if you look at our software growth in 2021, I think it was around 37%. And if you look at our software growth in 2022, the first three quarters of ’22 prior to the change in the environment, our software growth was also close to 40%. So we — and it came from these three drivers, more deployment of modern applications that we serve with NGINX now with Distributed Cloud Services, more need for security in front of applications that we serve with all security solutions, Shape Distributed Cloud, BIG-IP and more deployments in multi-cloud environments with our large customers.
Operator: Our next question is from Tom Blakey with KeyBanc Capital Markets.
