Nikesh Arora: Great questions. Yes, the pricing has stabilized, you know, we saw tremendous pricing pressure in the last fiscal year with the emergence of few competitors who are willing to do whatever it takes to try and dislodge our platforms or solutions. So I think it’s fair to say that pricing is beginning to stabilize. I think what’s interesting is, we’re seeing customers come the second time around and start looking the platform. I think the first wave so far and there’s still part of the customers are still in that wave. First wave is still very module driven. I want to see SPM solution, I want to see an app solution and I want to look at SCA. So you’ll find that there are different people in the customer’s organization who are responsible for different pieces of the cloud security pie and end up trying to look for best of breeze, kind of like replicating what happened in enterprise security.
But as soon as they start putting big deployments of scale of any kind, they have to start having a platform. I just told you, we had an $18 million deal for a platform for a large SaaS company. Now, we don’t have every large SaaS company which is deploying a platform – sorry, every large SaaS company needs a platform because they have eight different tools that they’re not able to stitch together. So I think it’s going to be sort of a — sort of a recursive journey where we’ll show that we’ll land with some customers – and some customers, other people will land with their modules, but eventually, each of those customers has to go through a platform conversation. So we’re sort of focused on our platform story. We’re focused on making sure we make our platform more and more robust.
I was at a CIO event before this morning. There are 30 of them there. And the first question was, it was interesting, you guys bought Dig or did a security posture management, how is that integrated into the following five things we have running and like, well, the following five things will talk to each other for you.
Joel Fishbein: Thanks.
Walter Pritchard: All right. Thanks for the question, Joe. Next question from Gray Powell at BTIG, followed by Ben Bollin at Cleveland Research. Gray, go ahead.
Gray Powell: Okay, great. Thank you very much. Yes. So maybe a broader question. It’s pretty clear that the firewall space or that there’s headwinds across, you know, the firewall appliance space this year, it’s impacting everyone. But you’re still guiding Q2 billings to about 17% growth. Your closest competitor is guiding to minus 5%. Historically, you’ve been fairly correlated with them. So I know you can’t speak to their business, but can you talk about what’s different on your side? Why you’re more insulated? Is it more the NGS portfolio? Is it data center exposure? Is it share gains? Is there just anything you can kind of help us to think through those dynamics?
Nikesh Arora: Yes. All of the above. Sorry, I’m trying to – I mean I can’t process which competitor he’s talking about, but okay. Look, we are in multiple businesses. In our firewall business, as we said, on the hardware business, we see that 0% to 5% as being where the market is and some of that we achieved through refresh, some of that we achieved through our own customers expanding so that we achieved through the replacement of other people’s firewalls. We’ve – in the last, I’d say, 18 months, we’ve been very diligent about making sure we normalize for the effects of backlog or supply chain in that guidance and that thinking and you see that in our numbers. So I don’t think that’s going to change much for us. I can’t comment on other people’s billing variability.
We just saw the impact of billing variability to our numbers this quarter. So I’m sure they have the reasons of building variability. In terms of SASE, as I said, you know, we’re – we can compete with a different set of people not with the hardware people. We saw 60% growth this quarter and we have visibility on the pipeline for the rest of the year, which gives us comfort that there is business to be had there. We told you about XSIAM, which is again a category which is more in the soft management space, which is a different set of competitors. If you’re talking about XDR, it’s a different set of competitors. And then cloud security, where our competitors want to startup. So I think the portfolio allows us to look at different growth rates in different pipelines, across the spectrum.
As I said, the demand function is not going down for cybersecurity across the board. The only thing that’s changing is people saying, I’ll do a two-year, one-year deal or a three-year or a five-year deal, I’ll pay you later, you finance it around year-over-year. That’s the only confusion you’re seeing. And I think if you do all that in the market, you can figure out the underlying growth rates are strong for some people in certain categories.
Gray Powell: Okay. Thank you.
Walter Pritchard: A follow-up – our next question comes from Ben Bollin at Cleveland Research, followed by Ittai Kidron from Oppenheimer. Go ahead, Ben.
Ben Bollin: Good afternoon, everyone. Thanks for taking the question. I wanted to piggyback Gray – Gray’s question a little bit. When you look at the underlying product revenue, how much of that is physical appliance versus the software form factor? And then a follow-on would be interested in your thoughts on how the trajectory of branch firewall looks over time as customers adopt, you know, more VMs and SASE to get that scale. That’s it. Thank you.
