Dipak Golechha: Yes. So let me take the first part of the question. I mean, our product revenue when Nikesh talked about zero to five is actually across hardware, virtual firewalls, another software that’s counted in product revenue. We talked about that last time then. I think it’s very customer-specific in terms of what their actual needs are. So again, rather than trying to pass through each of them, I think it’s looking at the aggregate. We feel pretty comfortable in that 0% to 5% range. So software is about 35% or about 30% this quarter, right? And then just —
Nikesh Arora: You can see that in the gross margins. Our gross margins continue to improve for product because software is obviously a higher gross margin product for us.
Dipak Golechha: And then I think your second question was around what is the impact of this on the branch deployments. The – there’s really primarily two models for the branch. One is a SD-WAN-only branch, that tends to be for smaller branches where all of the security or just about all the security moves into SASE is cloud-delivered. And the second model is a next-gen firewall typically with SD-WAN built-in branch, which is still often connected back to SASE for global network connectivity, et cetera. So there – so the shift to software in SASE doesn’t replace the need for the branch to have that local intelligence and to be an extension of the customer’s network and ultimately, the extension of the network security posture, zero-cost posture.
Ben Bollin: Thank you.
Walter Pritchard: Next up, Ittai Kidron from Oppenheimer followed by Patrick Colville from Scotiabank. Go ahead, Ittai.
Ittai Kidron: Thanks, Walter. Dipak, can I just – not sure I got the answer for Ben’s question quite right. On hardware, can you tell us exactly hardware, what percent of revenue that is? And Cisco in conjunction to you right now reported also results, and they’ve talked about – they’ve significantly took down their next quarter guidance in the view that for the last two, three quarters a lot of hardware was sold but not installed and so there’ll be some digestment period in there. My question to you, when you sell firewalls, how much visibility do you have into how much of that is actually goes and sit on the shelf which is actually gets deployed in the field? And so is there a risk or is there a blind spot here, where you might not know exactly how your customers are handling hardware – firewall hardware and could that catch up somehow with our business as well.
Nikesh Arora: Okay. So I don’t – I did not listen to the Cisco call because we’re here. And even if I had the time, I wouldn’t. So I don’t understand, it’s a very large hardware business. Remember, hardware is a small part of our business, A. B, we only report in revenue what we sell and ship to the customer. So there’s nothing – if it’s sitting on the shelf at a customer then it’s still sold from our perspective.
Ittai Kidron: Yes. But I don’t have any color to interact, but you have visibility especially again installing that.
Dipak Golechha: Yes. Every share-based payroll is deployed has to be registered with us. So we have reasonably good visibility into firewalls that are sold to deployed. And any – I would say, it’s fair to say and there are specific issues where a customer may have bought extra firewalls because [indiscernible] but there’s no – I say there’s no uncharacteristic or different activity we see in the last three months that has been away from the normal. So we don’t have suddenly the last quarter, a lot of customers going a lot of firewalls. I think I’m going to try and guess, but there was this whole backlog situation and supply chain problem where people may have bought ahead because we’re expecting supply chain prices to continue.
And now they’ve got a bunch of stuff that is ordered sitting around that they can deploy, they don’t order more, we don’t have that situation. We never went down that path. We didn’t hit a lot of backlog. We shipped – You know, we never went past 12 things of shipping in our product. So we did – I know that in the industry, some people are up to 1 year in terms of shipping backlog, we have 12 weeks or back to four to six weeks. So it really is not an impact for us from that perspective. So I think that should give you some better sense of what the spread is. We have reasonably decent visibility into our pipeline can be up or down the margin? Yes, but nothing as substantive as what you might have seen from other people.
Ittai Kidron: Thanks you.
Walter Pritchard: Thanks, Ittai. We’ll take our last question from Patrick Colville at Scotiabank. Patrick, go ahead.
Patrick Colville: All right. Thank you, Walter, for squeezing me in and got a sore throat, so sound a bit like Jason Statham. So forgive me for maybe quiet, to me, the standout metric was the non-GAAP operating margin, which was 28% typically 1Q is like the low watermark for margin, but based on your guidance is actually can predicted to be the high watermark. So I guess, you know, I presume Talon and Dig are going to be dilutive. But Dipak, are there any other puts and takes that you know we should consider around operating margin?
