Financial Data and Key Metrics Changes - The company reported revenues of $665 million, exceeding the midpoint of projections by $3 million, representing a 6% year-over-year growth [21][22] - Non-GAAP EPS was $2.37, reflecting a 9% growth year-over-year [21] - Calculated billings grew by 4% to $642 million, with RPO increasing by 6% to $2.4 billion [23] - Gross profit increased from $557 million to $585 million, resulting in a gross margin of 88% [24] - Operating cash flow reached $262 million, a 31% growth year-over-year [28] Business Line Data and Key Metrics Changes - Product revenues showed strong growth driven by customer demand for new appliances and higher volumes of product refreshes [22] - Subscription revenues experienced slight deceleration, while support revenues saw a slight decline due to bundling deals [22] - The QuantumForce AI-powered firewalls grew by 12% year-over-year, indicating strong demand for AI-powered inspection [8][22] Market Data and Key Metrics Changes - The Americas and EMEA regions grew by 5%, while APAC experienced a robust 15% growth year-over-year [24] - The company noted a significant back-end loaded quarter, with several large deals pushed into July, positively impacting future billing [23][72] Company Strategy and Development Direction - The company is focused on four guiding principles: securing connectivity, prevention-first ethos, open platform philosophy, and AI-first security [6][18] - The company is investing in SASE and has opened a new R&D center in India, doubling the size of its SASE R&D team [9][10] - The acquisition of Verity enhances the company's capabilities in automated threat intelligence and real-time remediation [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in a healthy pipeline for the remainder of the year and reiterated guidance for 2025 [5][31] - The management acknowledged challenges in accelerating growth but emphasized the importance of a strong go-to-market strategy and investments in AI [44][48] - The company expects to see a headwind from foreign exchange impacts but remains optimistic about future performance [27][30] Other Important Information - The company completed the acquisition of Verity for approximately $90 million and purchased land for a new campus in Tel Aviv for $160 million [29][30] - Management indicated that the current foreign exchange rates could increase operating expenses by $50 million to $60 million in 2026 if rates remain stable [27] Q&A Session Summary Question: Impact of Palo Alto's acquisition of CyberArk - Management stated that the impact on the company is minimal as it does not operate in the identity space, focusing instead on connectivity and AI [34][37] Question: Challenges in accelerating growth - Management acknowledged that growth acceleration takes time and emphasized the need for a strong go-to-market approach and cultural changes [42][44] Question: Confidence in long-term growth despite discounting - Management expressed confidence in long-term growth due to strong demand for appliances and increasing ARR from existing customers [53][56] Question: Update on SASE acquisition and differentiation - Management reported solid growth in SASE and emphasized the unique hybrid approach that enhances user experience and controls costs [62][66] Question: Insights on slipped deals - Management noted that slipped deals were more than usual but have already been closed, leading to optimism for Q3 [71][72] Question: Quantum product cycle and customer architecture - Management indicated that there is significant potential for product refreshes and competitive replacements, with a strong funnel for the second half of the year [86][87]

Financial Data and Key Metrics Changes - The company reported revenue of $229 million for Q1, representing a 23% year-over-year growth [26] - Total Annual Recurring Revenue (ARR) grew 24% to $948 million [27] - The gross margin maintained at 79%, with an operating margin improvement to negative 2% [29] - Free cash flow margin reached a record 20%, with a trailing twelve-month basis expansion of five percentage points [29][35] Business Line Data and Key Metrics Changes - Revenue from international markets grew 27%, accounting for 38% of total quarterly revenue [27] - Customers with ARR of $100,000 or more increased by 22% to 1,459 [28] - The data solutions segment surpassed $100 million in ARR during Q1 [10] Market Data and Key Metrics Changes - The company observed elongated sales cycles due to macroeconomic uncertainty, impacting Q1 net new ARR [19] - Despite the challenges, win rates remained strong, and there were no project cancellations [19][52] Company Strategy and Development Direction - The company is focusing on a platform sales strategy rather than a product-centric approach, aiming to enhance flexibility and customer adoption [23][75] - Recent innovations include the unified cloud security suite and advancements in AI capabilities, which are expected to drive future growth [9][34] - The company achieved FedRAMP high authorization for several products, enhancing its competitive position in the public sector [13][14] Management's Comments on Operating Environment and Future Outlook - Management noted improved trends in May, with expectations for year-over-year net new ARR growth in Q2 to exceed Q1 [41][52] - The company remains cautious about macroeconomic conditions but is optimistic about the strength of its pipeline and demand [19][53] - The outlook for Q2 revenue is approximately $242 million, reflecting a 22% growth [31] Other Important Information - The company announced a $200 million open-ended share repurchase authorization, reflecting confidence in its long-term trajectory [36] - The company is committed to investing in AI-driven innovations while maintaining operational efficiency [33][84] Q&A Session Summary Question: Can you talk about incremental ARR in the quarter? - Management indicated that improved trends were observed in May and expects year-over-year net ARR growth in Q2 to improve relative to Q1, attributing Q1 challenges to macro volatility rather than elevated churn [41][43] Question: Can you clarify guidance assumptions? - Management acknowledged improved trends in May but is being cautious about potential external disruptions, which influenced the slight decrease in revenue guidance [48] Question: What are customers saying about slip deals? - Management noted that longer sales cycles were observed, particularly in April, but there have been no deal cancellations, and demand remains strong [51][52] Question: How is the productivity and bundle sale progressing? - Management highlighted that the breadth of the platform is significant, and efforts are being made to make it more flexible for customers [57] Question: What is the outlook for the SIEM market? - Management noted increasing interest in cloud-native SIEM solutions and the need for real-time threat addressing, which legacy systems struggle to provide [63] Question: What are the hiring plans for fiscal 2026? - Management indicated a focus on R&D hiring, with adjustments made based on business needs [105] Question: What is the impact of the share repurchase program on M&A? - Management stated that the strong liquidity position allows for opportunistic share repurchases while still having ample cash for potential M&A [93]

Financial Data and Key Metrics Changes - First quarter ARR grew 11% year over year in constant currency, with total ARR reaching $492.7 million, reflecting a 10% year-over-year growth on a reported basis [24][26] - First quarter revenue was $118.2 million, exceeding guidance by $2.2 million, representing approximately 4% year-over-year growth on a reported basis [25][26] - Adjusted EBITDA for the first quarter was $31.6 million, reflecting a 27% margin, which was above the high end of guidance [27][30] - Gross margin for the first quarter was 80.6%, down from 84.7% in the same period in 2024 [27] Business Line Data and Key Metrics Changes - Subscription revenue was $116.8 million, representing approximately 5% year-over-year growth on a reported basis [26] - The company ended the quarter with 2,398 customers contributing $50,000 or more of ARR, up approximately 10% year over year [26] - Dollar-based net revenue retention was approximately 101% on both a reported and constant currency basis [26] Market Data and Key Metrics Changes - Approximately 43% of revenue was generated outside of North America during the quarter [28] - The company is targeting to reach $750 million in ARR by 2028, driven by security success, scaling go-to-market efforts, and boosting customer expansion [8][24] Company Strategy and Development Direction - The company is focused on enhancing its cyber resiliency platform to address the growing demand for security solutions among small and mid-market businesses [7][8] - Key growth pillars include expanding the go-to-market strategy to capture a broader range of channel providers, including resellers and system integrators [18][19] - The company is committed to CMMC 2.0 readiness to enhance its appeal in regulated sectors [20] Management's Comments on Operating Environment and Future Outlook - Management noted that while there is some elongation in deal cycles, overall demand for cyber resiliency solutions remains strong [42][68] - The company is raising its full-year revenue and ARR guidance based on strong first-quarter results and updated foreign exchange rates [29][31] - Management expressed confidence in the growth potential driven by new product launches and channel expansion efforts [30][31] Other Important Information - The company announced a $75 million share repurchase authorization program, indicating confidence in its business [24] - The adjusted EBITDA outlook for the full year is raised to $134 million to $139 million, representing a margin of 27% to 28% [31] Q&A Session Summary Question: Contribution of AdLumin acquisition to revenue growth - The AdLumin acquisition contributed approximately $21 million of ARR, which should help in calculating the organic growth rate [36] Question: Considerations for seasonality in ARR - Management expects ARR growth to be consistent throughout the year with slight improvements [37] Question: Market spending environment and customer feedback - Demand for cyber resiliency remains strong, although some deals are taking longer to close [42][68] Question: Dollar-based net retention dynamics - Management expects the current retention rate to be a trough, with improvements driven by cross-sell opportunities [46] Question: Reseller traction and growth potential - The company is in the early stages of expanding its reseller network, with expectations for more significant impacts in 2026 [55][57] Question: Impact of FX on revenue guidance - The increase in revenue guidance is primarily related to FX, with constant currency outlook held steady [66] Question: EBITDA margin expectations - The focus for 2025 is on growth acceleration, with expectations to return to low 30s EBITDA margins in 2026 [71]