Are you curious about what cloud code is doing behind the scenes. Or do you want observability in the critical workflows that you've set up with claude code. Hey, I'm Tanish from Langchain and we built a claude code to LinkSmith integration so that you can see each step that cla takes whether that be an LLM call or tool calls.Um it's pretty fascinating to see the entire trace. So I want to show you what this looks like. Um uh I have uh a project here.It's a very very very simple uh agent that I build with u ...

Summary of Palo Alto Networks Conference Call Company Overview - **Company**: Palo Alto Networks (NasdaqGS:PANW) - **Industry**: Cybersecurity Key Points and Arguments Historical Context and Growth Strategy - In 2019, Palo Alto Networks was one of seven cybersecurity companies with a market cap between $10 billion and $20 billion, aiming to break out of this range to achieve $10 billion in revenue [4][6] - The company has made significant acquisitions to enhance its product offerings and expand its Total Addressable Market (TAM) [3][4] - The average spending of the largest customer increased from $4 million in 2019 to $60 million currently, indicating successful upselling strategies [5] Recent Acquisitions - Two significant acquisitions were made recently: CyberArk and Chronosphere, aimed at expanding capabilities in identity management and observability, respectively [8][11] - CyberArk is viewed as the best asset in the identity space, with expectations of improving operating margins from 20% to over 30% within 24 months [15][16] - Chronosphere is positioned to capitalize on the growing observability market, which is projected to be worth $50 billion to $100 billion [10][28] Market Dynamics and Future Outlook - The cybersecurity landscape is experiencing a significant inflection point, particularly in the Security Information and Event Management (SIEM) and Security Operations Center (SOC) spaces, which represent a $40 billion TAM [6][10] - The rise of AI is expected to further drive demand for observability and security solutions, with a projected $1 trillion in infrastructure spending annually [10][23] - Palo Alto Networks aims to achieve a long-term fiscal 2030 Annual Recurring Revenue (ARR) target of $20 billion, with a third attributed to Chronosphere and two-thirds to CyberArk [12] SaaS Business Performance - The SaaS segment is growing at 34%, with over 6,000 customers, indicating strong market validation and competitive positioning [36][46] - The company has developed capabilities to convert existing VPN customers to SaaS without significant disruption, enhancing customer retention [48][49] AI and Security - The emergence of AI has increased the attack surface, necessitating greater investment in cybersecurity solutions [71] - Palo Alto Networks is focusing on developing AI-driven security solutions to keep pace with the speed of AI attacks [72] Observability Market - Observability is critical for enterprises, especially those operating in cloud environments, with a significant portion of IT budgets expected to be allocated to this area [27][28] - The company is targeting high-value customers, with one customer expected to spend $20 million on Chronosphere this year [29] Integration and Management of Acquisitions - The integration of Chronosphere is expected to be straightforward due to its existing traction and customer base, while CyberArk will require more restructuring [30][32] - The company plans to leverage its resources to support the growth of acquired companies without stifling their innovation [31] Additional Important Insights - The cybersecurity market is evolving rapidly, with increasing competition and the need for continuous innovation [4][6] - The company is focused on maintaining its core business while integrating new acquisitions to ensure sustained growth [32][36] - The overall sentiment is optimistic regarding the future growth potential of Palo Alto Networks, driven by strategic acquisitions and a robust product pipeline [69][70]

Financial Data and Key Metrics Changes - Subscription revenue grew by 20%, reaching $424 million in Q4 and $1.62 billion for the full year, also reflecting a 20% increase [31][33] - Annual recurring revenue (ARR) ended at $1.73 billion, representing a 17% growth, slightly above guidance [27][33] - Non-GAAP operating margin for Q4 was 26%, exceeding guidance by over 100 basis points, while the full year margin was 29% [33][34] - Non-GAAP net income for Q4 was $99 million, or $0.33 per diluted share, above the high end of guidance [33][34] Business Line Data and Key Metrics Changes - The Dynatrace platform subscription (DPS) model gained traction, with over 40% of the customer base utilizing it, contributing to over 60% of ARR [29][30] - The number of customers leveraging log management solutions increased by 18% compared to the previous quarter, with one-third of customers now using this solution [13][45] - The average ARR per customer is now over $400,000, indicating increased adoption of the platform [28] Market Data and Key Metrics Changes - The observability market is expected to grow significantly, with a projected addressable market opportunity of $65 billion [10] - Hyperscalers are generating nearly $250 billion in annualized revenue, growing in the mid-20s, indicating strong demand for AI-powered observability [9] Company Strategy and Development Direction - The company is focusing on expanding its go-to-market efforts, particularly through partnerships with GSIs and hyperscalers, which now account for over 70% of overall deployment in ACV [50][51] - Investments in AI capabilities and the development of an agentic observability platform are key strategic priorities [17][20] - The company aims to drive consumption growth through dedicated strike teams focused on logs, application security, and digital experience monitoring [55] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the observability market despite economic uncertainties, highlighting the critical need for improved productivity and user experience [8][9] - The company anticipates continued growth in ARR and revenue, projecting ARR growth of 13% to 14% for fiscal 2026 [36][37] - Management noted that while the demand environment remains resilient, there may be longer sales cycles for large strategic accounts [58] Other Important Information - The company repurchased 787,000 shares for $43 million in Q4, with a total of 3.4 million shares repurchased since the program's inception [35] - A new Chief Customer Officer was appointed, indicating a focus on enhancing customer success and engagement [23] Q&A Session Summary Question: Update on logs performance and target for $100 million ARR - Management confirmed that logs are the fastest-growing product category, with over a third of customers using the log solution and high confidence in exceeding the $100 million consumption goal in fiscal 2026 [45][46] Question: Sales productivity and go-to-market changes - Management reported strong traction in sales productivity, particularly with GSIs and hyperscalers, and introduced strike teams to enhance focus on specific areas [52][55] Question: Security opportunity and product depth - Management indicated that expanding product offerings and go-to-market strategies are essential for unlocking security opportunities [63] Question: On-demand revenue and customer behavior - Management discussed the cautious approach to forecasting on-demand consumption, emphasizing the importance of driving adoption and consumption [67][92] Question: Net retention rate and its trajectory - Management noted that the net retention rate slightly decreased but would have increased if ODCs were included, indicating strong underlying demand [81] Question: AI and agentic observability trends - Management highlighted a significant trend towards agentic observability, emphasizing the need for integrated data and automation capabilities [86][87] Question: Hyperscaler growth confidence - Management expressed confidence in hyperscaler growth due to strong demand and strategic partnerships, particularly with AWS [96][97]

Financial Data and Key Metrics Changes - Subscription revenue grew 20% in Q4, reaching $424 million, contributing to a total revenue of $445 million, which is a 19% increase [31][32] - Annual recurring revenue (ARR) ended the year at $1.73 billion, representing a 17% growth [27] - Non-GAAP operating margin for Q4 was 26%, exceeding guidance by over 100 basis points [32] - Full year non-GAAP operating margin was 29%, 25 basis points above guidance [33] Business Line Data and Key Metrics Changes - The Dynatrace platform subscription (DPS) model saw over 40% of the customer base adopting it, contributing to over 60% of ARR [29][30] - The number of customers leveraging log management solutions increased by 18% compared to the previous quarter, with one-third of customers now using this solution [13][14] Market Data and Key Metrics Changes - The observability market is projected to grow significantly, with Dynatrace estimating a $65 billion addressable market opportunity [10] - Hyperscalers are generating nearly $250 billion in annualized revenue, growing in the mid-20s [8] Company Strategy and Development Direction - The company is focusing on expanding its go-to-market efforts, particularly in strategic accounts and partnerships with hyperscalers [10][11] - Dynatrace is investing in AI capabilities to enhance its observability platform, aiming to lead in the agentic AI space [16][18] Management's Comments on Operating Environment and Future Outlook - Management noted a resilient demand environment despite economic uncertainties, with expectations for continued growth in observability spending [7][25] - The company anticipates a cautious spending approach from enterprises in fiscal 2026, reflecting the macroeconomic landscape [36] Other Important Information - The company repurchased 787,000 shares for $43 million in Q4, with a total of 3.4 million shares repurchased since the program's inception [34] - A new Chief Customer Officer, Steve McMahon, was appointed, replacing Matthias Dolanciar [23] Q&A Session Summary Question: Update on logs performance and fiscal 2026 expectations - Management expressed confidence in exceeding the $100 million consumption goal for logs in fiscal 2026, with growth expected to be over 100% [45][46] Question: Sales productivity and go-to-market changes - The company reported strong pipeline growth, particularly in strategic accounts, and highlighted the importance of partnerships with GSIs and hyperscalers [50][51] Question: Net retention rate and ODC impact - The net retention rate was 110% in Q4, with management indicating that including ODCs would show a modest uptick in NRR [81] Question: AI and autonomous observability trends - Management noted a significant trend towards agentic observability, emphasizing the need for integrated data and automation capabilities [86][87] Question: Customer behavior around on-demand consumption - Management indicated that the consumption model is favorable in a tighter macro environment, allowing customers to adopt more without penalties [92]