Keith Jensen : Yeah. I think Ken is giving you not the accounting answer on backlog numbers, but the CEO version that he’s done worrying about it, and he knows the company can manage their way through it. From a numbers viewpoint, we still have some backlog that we — that will pick up. Some low single-digit benefit in Q3. And then to Ken’s point, we think that largely, as you get out of Q3, we’ll have a — we’ll be back to very close to normal backlog numbers.
Tal Liani : Great. Thank you.
Operator: Thank you for your question. [Operator Instructions] Our next question is from Brad Zelnick with Deutsche Bank. Your line is open.
Brad Zelnick : Thanks very much for taking my questions. I want to ask one of Tal’s questions maybe a little bit differently. A lot of what you shared suggests your market position remains strong, and we’ve always thought that the price performance advantage of your architecture should enable you to actually take share in a tougher environment. I guess what many you’re trying to figure out is if it’s tough for Fortinet, does that implicitly mean it’s tougher for others out there? And is there anything maybe you can share on competition, that would be helpful perhaps win rates or pricing dynamics that you’re seeing in the market?
Ken Xie : I think we do have the best solution at special level of the ASIC chip. So the product revenue still grew by 18% compared to, I think, checkpoints of minus 12%, I believe, and some other vendors is low single digit so we still feel we’re keeping gaining market share. On the other side, we also see some consolidation, so it’s leverage our installation base. We see some of the other products that are kind of helping sell. But on the other side, probably two other kind of maybe timing-related issue when you can see the last two years on the product revenue growth, if we go on Page 3 or Page 4? [Indiscernible] finance statement here. Because you see, the product revenue growth is probably like 40%, 50% in some quarter, but over 30% in the last two years.
So I do believe some kind of inventory is being held by certain customers or some other partner or kind of service provider channel. And we’re also kind of changing the policy, service grace period policy early this year, I think, in March or April. Which instead of give some of the channel like one year, they can enable service, we tighten that up to like 90 days, which can help in reduce the — some inventory level in certain partner there. At the same time, we do announce the ISP side early this year, and today is the first product available based on the new ASIC SP5 which probably like four times, five times better performance and more application being accelerated, and at the same time, the same cost. And it’s kind of — I do believe certain partners, certain customer may be also waiting for some of the new products leverages technology, so that maybe also has certain kind of impact.
Keith Jensen : Yeah. Brad, it was a great question and kind of follow on with Ken there. When I look at the win rates for, say, our top 3 competitors, right, they are in the firewall market, I’m not really seeing a change in the win rates, loss rates. They were quite consistent, maybe improved in one of the three cases that — of the names that we know. I think that what — what we don’t know is how much is specific to us was that we had deals teed up for the last couple of weeks of the quarter that we’re on a path to close and they did not close. So how — the question comes is that something about the macro and the enterprises that are pushing out spending a little bit? Or is it some area that we need to reprove on in terms of how we go at our own internal inspection and forecasting and look at the detailed deals, right? We’ll know more about that as time plays out.
Ken Xie : Yeah, the regional slowdown is more because of very strong growth when years ago, almost double, and now it’s going to slow down. The carrier service provider is still not ramp up yet, so we do hope they will ramp up soon.
Brad Zelnick : Thanks for the color, Ken. And just my follow-up, Keith. As we think about pricing, which has been a tailwind across the whole market, I think, given supply constraints over the last couple of years. Can you give us any update of what the trends are now as supply eases? And what’s embedded in your your assumptions for your guide on billings for this year and next?
Keith Jensen : Yeah. I think that what we look at — go back our approach we’ve had for many years when we introduced a new product, and you heard about the 90G today. Our starting point is even though it has superior functionality capacity throughput, et cetera, is we generally price that along the lines of its predecessor. I think one thing that we’re seeing as we move into the second half of this year, some opportunities to take, maybe some targeted pricing actions around use cases. For example, maybe if you get really far down the low end of the market where you’re dealing with some low-cost franchisee models, maybe we would take some opportunities there to perhaps offer some incentives to our channel partners and such to participate in that market.
