Operator: Our next question comes from the line of Ray McDonough with Guggenheim. Please go ahead.
Ray McDonough: Tomer, over the past couple of quarters, we’ve talked about some downsizing on renewals, and I understand the commentary around the macro in general has been that trends are relatively stable, but in that area specifically around renewals, are those trends starting to change at all? Are you still seeing similar customer behavior? And maybe just continuing to zoom out, as you look at kind of what transpired in November and as you talk to customers about heading into the next calendar year, how are those budget conversations around security spend shaping up? Do you feel close rates may improve next year as the threat environment seems to get more intense? Just any commentary on broader level spend and your feeling going into next would be helpful.
Tomer Weingarten: Yes. Look, all I can say is that things remain pretty consistent. I don’t think that anybody feels like they can buy forward licenses for something that they don’t use. So rightsizing, truly understanding what you need to use, I think that dynamic is here to stay. I don’t think anything changes with that. Cybersecurity has been top of mind for years now. I don’t think there’s anything new in that. So all-in-all, I think there’s really no change that I can call out at this point in time.
Ray McDonough: And Dave, as the data lake solution continues to scale, can you talk about the patterns of overages on consumption that you’re seeing and assuming that’s where the majority of consumption revenue comes from? And maybe to what extent you’ve been successful in capturing incremental commitments, which would otherwise have been overages? And how should we think about that potentially point being a tailwind to ARR growth next year, as the data lake solution scales?
Dave Bernhardt: Yes. We really didn’t have any changes or unexpected impact from consumption during the quarter at all. One of the things that we’re seeing and we’re encouraged by is that customers that did have overages when they do commit to us are committing at the level that they were spending. So if a customer is moving from consumption to subscription, we’re seeing that at the levels that they were spending. As Tomer said, they’re not putting a lot of elevated spend in that. They’re essentially carrying forward at the rates they’ve been doing. So, we really haven’t seen anything except for stabilization.
Operator: Our next question comes from the line of Gray Powell with BTIG. Please go ahead.
Gray Powell: I really appreciated the color that you gave on the macro environment in the prepared remarks. I guess, I just want to follow up there. So we’ve been in a weak macro for like 18 months now. How do you feel about your visibility on customer behavior patterns and just — like customer behavior patterns today and your ability to predict your business today versus this time a year ago?
Tomer Weingarten: I mean obviously, we know more, but once again, I feel like we’re still in the bad macro, we remain in the bad macro, and we expect the bad macro to continue. I think even within the bad macro, obviously, you still see us grow 40%-plus. So, at the end of the day, I think we’ve adjusted at the beginning of this year to what we believe we can extract. And I think that we’re seeing practically stabilization across customer behavior. I think customer expectations remain roughly the same as what they were a few quarters ago. So all in all, once again, I wouldn’t assume anything is trending better, but it’s also not trending worse. It’s the same macro. And to Dave’s point, I think our team’s execution, our ability to adapt and really, I think convey the value in our platform, has helped us kind of navigate through it.
Gray Powell: And then, one more, if I may. So when you acquired Attivo back in early, I think it was 2022, that business was growing at about a 50% annual pace. Just with the tax, more recently, you’re increasingly targeting identity systems. How should we think about the growth potential on that business? Has there been any incremental tailwinds?
Tomer Weingarten: I think it’s — for us, it’s just another module out of a pretty large list of capabilities that we have. We’re targeting bigger market opportunities, and I think our attention goes towards designing our go-to-market around where we feel the most traction and the biggest opportunity is. Identity is just one of more modules that we have. I also think that in cybersecurity in general, a lot of these capabilities are very much I would call them, temporary in their ability to actually alleviate the threat vector. So, it’s identity today. Tomorrow, it’s going to something else. A year ago, it was exploitation. I think these are constantly moving targets. And identity is obviously growing with our business. It’s a great capability to have. But again, we’re focused on cloud, focused on data, focused on AI as really tiebreakers for defenders in the enterprise.
Operator: Thank you. Our last question comes from the line of Eric Heath with KeyBanc Capital Markets. Please go ahead.
Eric Heath: Dave, just a housekeeping question. I know before you had some targets out there for EBIT profitability for fiscal ‘25 and free cash flow profitability for second half of ‘25, so just curious if that stands. And then just I’ll add the second question, which for Tomer, it sounds like you’re taking a different approach to your pricing around gen AI. So just curious what the pricing mechanism is for Purple AI and just how customers are — what the feedback is from customers on that pricing strategy?
Dave Bernhardt: Sure. I can start. Thank you for the question. We’re committed to optimizing growth and margin improvement, and we remain on track to achieving positive free cash flow in the second half of fiscal year ‘25. We’re delivering margin improvement in an incredibly strong pace, more than 25 points of operating margin improvement for nine consecutive quarters. It’s our entire history as a public company and we’re going to continue with that. Free cash flow margin improved 40% year-over-year. Our net income margin was negative 5%. So, we’ve been very proactive with our cost structure. We’ve shown measurable progress to achieving profitability. And we’ve also raised our full year operating margin guidance from negative 25% to negative 20% this last quarter.
