Palo Alto Networks, Inc. (NASDAQ:PANW) Q1 2023 Earnings Call Transcript

Clay Bilby: Next, we’ve got Rob Owens of Piper Sandler with Matt Hedberg to follow up. Go ahead, Rob.

Robbie Owens: Could you drill down a little bit in terms of Fed and what you saw in period, obviously calling out a couple of large deals. But if I rewind, the thought process was that Fed was going to get more linear and less budget flushed typical to the September quarter. So are you seeing those trends play out? Or was this more a budget flush type of quarter? And was it in line with your expectations?

Nikesh Arora: No. It wasn’t a budget flush quarter. We’ve been working the deal, which we announced for a very long time, as you can imagine. Those size deals don’t happen overnight. It just happened to converge at the right time for us from a timing perspective. But we’re beginning to see the Fed activity get stronger because we’re at that point in time with this administration where they’ve gotten their stuff together across the various agencies, and they’ve actually started executing against the strategy. 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. It’s always dicey in the first year or first 1.5 years because it’s a whole new set of characters, especially if you change institutions where they’re still trying to figure out what they want to endorse and what they don’t want to.

So I think things are more stable and things are going to continue to stay strong in that space.

Clay Bilby: Next is Matt Hedberg from RBC, with Paula.

Matthew Hedberg: Congrats from me as well on the quarter. Dipak, a question for you. Obviously, your pricing U.S. dollars — but I’m wondering, in international markets, obviously, there’s been a huge currency movement. I know historically, partners would absorb a lot of that price movement. I’m just sort of curious how that’s happening in some of these customer conversation where the dollar is appreciated pretty materially.

Dipak Golechha: Yes. So I think, look, there’s always going to be the isolated instances where it comes up in discussion. But for the most part, our sales reps will try to manage that through different tools that they have available to them and then that’s pretty much it.