Financial Data and Key Metrics Changes - Revenue grew by 7% to $678 million, exceeding guidance by $6 million [12] - Non-GAAP EPS reached $3.94 per diluted share, including a one-time tax benefit of $1.47 [12][13] - Deferred revenues increased by 8% to $1.887 billion [13] - Calculated billings totaled $672 million, reflecting a robust 20% growth year over year [13] - Operating cash flow was strong at $241 million, with a 23% growth excluding a one-time tax payment [20] Business Line Data and Key Metrics Changes - Services calculated billing grew by 21% compared to 7% last year, driven by strong demand across the portfolio [14] - Emerging technology products, including Harmony SASE and Harmony Email, grew organically by over 40% in ARR year over year [15] - The remaining performance obligation grew by 9% to $2.4 billion [14] Market Data and Key Metrics Changes - The Americas saw a 10% revenue growth, representing 42% of total revenues [16] - EMEA grew by 3%, accounting for 45% of revenues, while APAC grew by 8%, representing 13% of total revenues [16] Company Strategy and Development Direction - The company’s strategy is anchored in four core principles, focusing on securing connectivity, a prevention-first approach, an open platform philosophy, and securing AI [1][2][3] - Recent acquisitions, including Verity and Lakira, are aimed at enhancing the company’s AI security capabilities [4][5][6] - The company is committed to leading the journey for organizations to adopt AI securely and is investing in R&D and strategic acquisitions [7] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the trajectory for Q4 and raised the midpoint for 2025 revenue guidance [1] - The operating environment is characterized by strong demand across the portfolio, with expectations for continued growth in subscription and recurring revenue [30] - Management acknowledged the challenges posed by a weaker U.S. dollar and its impact on margins [18][19] Other Important Information - The company achieved FedRAMP authorization for its Infinity platform, positioning it as a trusted partner for federal environments [7] - A new checkpoint campus is being built in Israel, with a significant investment of approximately $160 million for land [21] - Share buybacks totaled approximately $325 million at an average price of $198 [21] Q&A Session Summary Question: Guidance for subscription and recurring revenue in Q4 - Management expects double-digit growth in subscription revenue, with slight improvement from Q3 [30] Question: Sustainability of 20% billings growth - Management believes this is a new trajectory and anticipates continued growth into 2026, albeit prudently [34][36] Question: Impact of go-to-market leadership changes on strategy - New leadership will take effect in 2026, with a focus on upselling existing customers and acquiring new enterprise customers [41][42] Question: Timing for billing growth to translate to revenue growth - Billing growth in services will translate into revenue over the next four quarters, while product billing is recognized immediately [46] Question: Contribution from SASE and future investments - SASE is seeing over 40% ARR growth, and the company is making substantial investments in this area [55] Question: M&A strategy and future acquisitions - The company is actively looking for acquisition targets to enhance its AI security capabilities [66] Question: Competitive dynamics for Harmony Email - Management does not foresee a deceleration in growth for Harmony Email and expects acceleration due to advanced AI capabilities [72] Question: Impact of hardware refresh on business - The refresh cycle is significant, with opportunities for cross-selling and competitive replacements [128]

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]