Palo Alto Networks, Inc. (NASDAQ:PANW) Q4 2023 Earnings Call Transcript

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Those capabilities are needed across a broader attack surface with the advent of hybrid cloud and hybrid work. The only way to solve this is with a platform. we’re going to share that in a second. In addition, the next set of trends is going to further propel the need for platformization as passwordless becomes common, as Quantum becomes common, as BYOD becomes enabled across enterprises. In all of these, there’s going to be a decision. Do you want to try to enable them across 25 and 30 different standalone point products? Or do you want to enable them in a single platform? The answer is obvious and clear. And that is why we are well positioned to take advantage of the opportunity in front of us across all of network security with our Zero Trust platform.

And to go into more detail is Anand Oswal, Leader of our network security Zero Trust platform team. Anand?

Anand Oswal: Thank you, Lee. Before I talk about network security, let me first talk about the evolution of network security. Today, network security has become increasingly complex. In the past, when users were predominantly in the office and applications in the data center, network security was delivered by a centralized firewall. Data center virtualization and migration to the cloud required inspection of traffic moving to the cloud and many organizations had software firewalls. And with the hybrid workforce and protecting remote branches, many enterprises deployed a cloud-delivered stack, SASE. As you can see, many organizations today have three distinct and disparate stacks. This leads to complexity of architecture, poor operational experience, inconsistent security and poor user experience.

What if you could take a radically different and new approach, ensuring that any user across any location, accessing any application and data is secured by unified security stack, which means we have one platform with a set of security services that ensure that users across all locations have consistent user experience. And administrators can now author policies in a centralized manner. This is enterprise-wide Zero Trust. Over the last five years, we’ve developed a Zero Trust platform with best-in-class products, and it has three key components: first, network secure enforcing points, hardware firewalls, software firewalls and cloud-delivered SASE. Second, cloud-delivered security services that run consistently across all form factors of network security and management that provides configuration, writing of policies, monitoring and analytics.

And each of these three components ensure that we can provide our customers near real-time security, better operational outcomes and a simplified and consistent user experience. Let’s now talk about the components of the platform. First, the network security enforcement points. The foundations, hardware firewalls, software firewalls and SASE. We’re the leader in next-generation firewall now for over a decade, a Gartner Magic Quadrant leader 11 times. And we’re the only vendor that’s a leader in both SSE and SD-WAN that make up the SASE market. We’re also a leader in Zero Trust. Next, let’s talk about cloud-delivered security services. Over the years, as Lee mentioned, the attackers have become more and more sophisticated. The old approach of signature and databases is not working.

We’ve been working on using AI and the power of machine learning to ensure that we can provide our customers with protection against attacks that they have never seen before and ensuring that we can provide near real-time security. We also expanded from three services five years ago to seven, ensuring our customers can consolidate point products onto the platform. In addition, we’ve developed new services like ADEM and AIOps. ADEM, our autonomous digital experience management provides customers segment by segment visibility from user to application, helping them understand exactly what’s going on at every segment along the way. And with AI operations, we can automate many of the complex tasks or customers, ensure that they’re using security with best practices, configuration with best practices and ensuring that we are able to predict things that may not – they have seen before.

Now as you can see, we’ve had some great success with different capabilities of our platform. However, if you think about the market, hardware firewalls to secure data centers and campuses, software firewalls to secure cloud networks and SASE to secure hybrid works and remote branches. These, for the most part, have acted as three distinct markets. And customers for the most part have made independent decisions. I believe we’re now at an inflection point. With unified management across the entire network security estate, we will change the way how customers buy and how customers deploy and how customers operate network security. Let me now show you a glimpse of our unified management, which I’m very excited about. As you can see, we have unprecedented visibility here.

Users can be anywhere in campuses, in branches, remote workers on the go and applications that are sitting everywhere, data centers, public cloud SaaS. And traffic flowing through all the enforcement points, hardware firewalls, software firewalls and SASE. And we have a complete comprehensive view of all the threats in the entire network security estate, the data risks, the posture and the experience. Now the threat landscape is constantly changing. And we always have new vulnerabilities that show up and are published offer. And many times, network administrators want to know exactly if what happens for a particular vulnerability, is the enterprise affected by it or not? Now with this unified management, we can easily search for a given vulnerability.

And once we understand, like in this case, that we have compromised by this vulnerability with a single click, we can get remediations of best actives and make sure that we can apply these best practices across the entire network security estate, which means our hardware firewalls, our softer firewalls and Prisma SASE. That’s the power of having complete end-to-end visibility of the entire estate. Now let me talk to you about our network security copilot. With the power of generative AI, we’re ensuring that customers can use our platform to the best of its capabilities, optimizing security, optimizing configuration and optimizing their operations. This is what you’ll see when you come to the co-pilot. As you can see, they tell you all the activity that happened in the last 24 hours.

And now as you can see, we have 140,000 users that have a good experience, but 10,000 users have a degraded experience. Now rather than point and click to understand what’s going on, we can engage with the copilot with natural language and ask the co-pilot exactly what’s happening for those 10,000 users. And behind the scenes, the power of AI and ML and getting data for all sources, endpoint, cloud identity engine, applications, network enforcement points, we can tell the customer that the users are having degraded experience accessing a geo application. Not only that, we can also give root cause, which is because they’re authorization failures, open an ITSM ticket on their behalf with all the relevant information. Let’s take an example next about a network administrator wanting to know exactly what are the risky applications being accessed in the organization.

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