Key Takeaways PANW's NGS ARR grew 29% year over year to $5.85B in Q1 fiscal 2026, led by platform adoption.Platform customers are scaling fast, with those above $5M and $10M in NGS ARR up about 50%.Large XSIAM and SASE deals show enterprises are replacing legacy tools with PANW's unified platform.Palo Alto Networks (PANW) is seeing steady growth in its next-generation security (NGS) business, where the company’s platformization strategy plays a key role. The platformization strategy involves getting custome ...

Key Takeaways CRWD's Falcon Flex ARR topped $1.35B in Q3 fiscal 2026, growing more than 200% year over year.Falcon Flex is driving larger deals, including multiple eight-figure contracts tied to SIEM and AI modules.Re-Flex activity surged, with several customers signing new deals at more than twice their original spend.CrowdStrike’s (CRWD) Falcon Flex subscription model is becoming a key driver of the company’s growth. In the third quarter of fiscal 2026, management said that more customers are choosing Fle ...

Core Insights - CrowdStrike's Falcon Flex model is rapidly growing and is integral to the company's expansion strategy, with Annual Recurring Revenue (ARR) from Falcon Flex customers reaching $1.35 billion in Q3 fiscal 2026, more than tripling from the previous year [1][9] Group 1: Falcon Flex Growth and Impact - Falcon Flex facilitates quicker adoption of new modules without lengthy contract processes, resulting in increased platform usage and strong re-Flex activity, with over 200 customers expanding their contracts in Q3 [2][9] - The model is driving growth in key product areas such as Next-Generation Security Information and Event Management, cloud security, identity security, and endpoint protection, as it reduces procurement friction and encourages multi-module adoption [3][9] - Falcon Flex is expected to remain a significant growth engine for CrowdStrike, contributing to increased ARR, larger deal sizes, and deeper platform utilization, with revenue estimates indicating a year-over-year increase of around 21% for fiscal 2026 and 2027 [4] Group 2: Competitive Landscape - Competitors like Palo Alto Networks and SentinelOne are also experiencing growth through platform expansion and AI innovations, with Palo Alto Networks reporting a 29% year-over-year increase in its Next-Gen Security ARR in Q1 fiscal 2026 [5] - SentinelOne achieved a 23% year-over-year growth in its ARR for Q3 fiscal 2026, driven by the adoption of its AI-first Singularity platform [6] Group 3: Financial Performance and Valuation - CrowdStrike's shares have increased by 9.6% over the past three months, contrasting with a 3.3% decline in the Zacks Security industry [7] - The company trades at a forward price-to-sales ratio of 21.56, significantly higher than the industry average of 11.83 [11] - The Zacks Consensus Estimate for CrowdStrike's fiscal 2026 earnings suggests a year-over-year decline of 5.6%, while fiscal 2027 earnings are expected to grow by 28.8%, with recent upward revisions in estimates [14]

Key Takeaways CRWD's Next-Gen SIEM saw record net new ARR as customers shift from costly, slow legacy SIEM tools.A major European bank adopted Falcon SIEM, Onum and Charlotte AI in a large eight-figure replacement deal.Expanded AWS access lets millions use Falcon SIEM through Security Hub, widening CRWD's customer pipeline.CrowdStrike ((CRWD) is seeing strong momentum in its Next-Generation (Next-Gen) Security Information and Event Management (SIEM) as part of its mission to protect enterprises against evol ...

Financial Performance - Palo Alto Networks reported a revenue growth of 15% year over year, reaching $9.22 billion for fiscal 2025 [3] - The Annual Recurring Revenue (ARR) for Next Generation Security grew 32% year over year to $5.58 billion, while the total Platform Offering (PO) increased by 24% year over year to $15.8 billion [3] - Network Security ARR reached $3.9 billion, marking a 35% year over year increase, driven by strong adoption of software firewalls and SASE solutions [4] Business Line Performance - The Cortex segment saw a significant expansion in its XSIAM customer base, which more than doubled year over year, indicating strong adoption of Next Generation Security capabilities [5] - The Security Operating Platform also experienced broad-based momentum, with NGS ARR reaching $1.7 billion, an approximately 25% year over year increase [4] Market Trends - The cybersecurity landscape is undergoing a transformation due to the rise of generative and agentic AI, prompting the company to evolve its product offerings to protect customers using AI tools [6] - The company announced its intent to acquire CyberArk, aiming to reshape the identity security category and enhance its multi-platform strategy [7][8] Strategic Direction - The company is committed to innovation across all security platforms, focusing on the integration of AI into its offerings [4][6] - The acquisition of CyberArk is expected to establish a leading platform for end-to-end AI security, positioning the company as a key player in the evolving cybersecurity landscape [8] Management Commentary - Management emphasized the importance of their dedicated workforce of over 16,000 employees in driving innovation and delivering cutting-edge technologies [9] - The management expressed confidence in the company's ability to protect customers from increasing cyber threats through their innovative solutions [9] Other Important Information - The company spent $567 million on share buybacks in 2024, raising concerns about the impact of such financial engineering on executive compensation metrics [19] - Shareholder proposals regarding adjusting financial performance metrics to exclude share repurchase impacts and declassifying the board were discussed, with the board recommending against these proposals [20][28] Q&A Summary Question: Concerns about executive compensation linked to share buybacks - Shareholders urged the board to adopt a policy that adjusts financial performance metrics to exclude the impact of share repurchases when determining executive compensation [20] Question: Issues with classified board structure - A shareholder criticized the board's practice of making director appointments outside the annual meeting cycle, arguing it undermines shareholder oversight and accountability [24]

Financial Performance and Key Metrics - Fiscal 2025 revenue grew 15% year over year to $9.22 billion [2] - Next Generation Security (ARR) increased 32% year over year to $5.58 billion [2] - PO grew 24% year over year to $15.8 billion [2] Business Line Performance - Network Security (NGS ARR) reached $3.9 billion, a 35% year over year increase [3] - Security Operating Platform (NGS ARR) saw a 25% year over year increase, reaching $1.7 billion [3] - Cortex's XSIAM customer base more than doubled year over year, indicating strong adoption [3] Market Data and Key Metrics - The cybersecurity landscape is shifting due to the emergence of generative and agentic AI, influencing product offerings [4] Company Strategy and Industry Competition - The focus for fiscal 2025 was on evolving product offerings to support customer adoption of AI tools [4] - The launch of Prisma AIRS, a comprehensive AI security platform, was a key strategic move [4] - The intent to acquire CyberArk was announced to enhance identity security capabilities [4] Management's Comments on Operating Environment and Future Outlook - Management emphasized the importance of innovation and the role of employees in driving the company's success [5] - The company is committed to protecting customers from increasing cyber threats [5] Other Important Information - Shareholder proposals regarding executive compensation and board declassification were discussed, with mixed outcomes [10][18] Q&A Session Summary Question: Concerns about executive compensation linked to stock buybacks - A shareholder urged the board to adjust financial performance metrics to exclude the impact of share repurchases when determining executive compensation [10][11] Question: Proposal for declassifying the board - A shareholder argued that declassifying the board would improve accountability and align with best practices in corporate governance [13][14] Response from Management - The board recommended voting against the shareholder proposals, citing reasons outlined in the company's proxy statement [15]

Financial Data and Key Metrics Changes - Remaining Performance Obligation (RPO) grew 24% year-over-year to $15.5 billion, indicating strong long-term revenue predictability [28] - Next-Generation Security (NGS) Annual Recurring Revenue (ARR) reached $5.85 billion, up 29%, exceeding guidance [28] - Total revenue for Q1 was $2.47 billion, representing a 16% increase, surpassing the high end of guidance [29] - Diluted non-GAAP EPS was $0.93, exceeding guidance, with adjusted free cash flow of $1.7 billion, up 17% [33] Business Line Data and Key Metrics Changes - SASE ARR grew 34% year-over-year, surpassing $1.3 billion, making the company the fastest-growing SASE provider [10] - Product revenue increased by 23% year-over-year, with nearly half of product revenues driven by software form factors [29] - Software firewalls saw significant growth, contributing to nearly 44% of trailing 12-month product revenue, up from 38% [29] Market Data and Key Metrics Changes - The Americas region grew 14%, EMEA increased by 18%, and JPAC saw a 22% growth, indicating broad-based strength across all major markets [30] - The company has approximately 6,800 SASE customers, including one-third of the Fortune 500 [10] Company Strategy and Development Direction - The company is focusing on platformization to address the fragmented security landscape, emphasizing the need for unified security solutions [8][9] - The acquisition of CyberArk and Kronosphere is expected to enhance capabilities in identity security and observability, respectively [25][26] - The company aims to achieve $20 billion in NGS ARR by fiscal year 2030, raising expectations from a previous target of $15 billion [23] Management's Comments on Operating Environment and Future Outlook - Management highlighted the evolving threat landscape due to AI, emphasizing the need for real-time visibility and security [7][8] - The company is optimistic about the future, expecting continued demand for its products as customers transition to AI workloads [13][19] - Management reiterated a commitment to maintaining a free cash flow margin of at least 37% in the interim, with a target of 40%+ by 2028 [36][73] Other Important Information - The company launched Prisma AIRS 2.0, a comprehensive platform for AI security, addressing the growing risks associated with AI [12] - The integration of Protect AI is complete, enhancing the company's capabilities in securing AI environments [12] - The company is also focusing on quantum readiness, launching solutions to help customers prepare for future quantum threats [15][88] Q&A Session Summary Question: What is Palo Alto Networks doing to ensure success in an AI and quantum future? - Management emphasized the importance of network inspection and the sustained demand for bit inspection technologies, which will not diminish with the rise of AI and quantum [41][44] Question: What is the perspective on the convergence of security and observability? - Management acknowledged the challenges in integrating observability into security but expressed confidence in Kronosphere's capabilities to address these needs effectively [50][54] Question: How does the company plan to manage the impact of acquisitions on margins and free cash flow? - Management indicated that they expect to maintain a free cash flow margin of at least 37% during the transition period, with synergies expected to materialize over time [72][73] Question: What is the current state of customer focus on quantum readiness? - Management noted a significant increase in customer discussions regarding quantum readiness, driven by the urgency of potential future threats [86]

Financial Data and Key Metrics Changes - Remaining Performance Obligation (RPO) grew 24% year-over-year to $15.5 billion, indicating strong long-term revenue predictability [28] - Next-Generation Security (NGS) Annual Recurring Revenue (ARR) reached $5.85 billion, up 29% year-over-year, exceeding guidance [28] - Total revenue for Q1 was $2.47 billion, representing a 16% increase, surpassing the high end of guidance [29][35] - Diluted non-GAAP EPS was $0.93, exceeding guidance, with adjusted free cash flow of $1.7 billion, up 17% [33] Business Line Data and Key Metrics Changes - SASE ARR grew 34% year-over-year, surpassing $1.3 billion, making the company the fastest-growing SASE provider at scale [10] - Product revenue increased by 23% year-over-year, with nearly half of product revenues driven by software form factors [29] - Software firewalls saw significant growth, contributing to 44% of trailing 12-month product revenue, up from 38% [29] Market Data and Key Metrics Changes - The Americas region grew 14%, EMEA increased by 18%, and JPAC saw a 22% growth, indicating broad-based strength across all major markets [30] - The company reported strong traction in the U.S. Federal sector, including a $33 million SASE deal and a $100 million deal with a large telecom provider [9] Company Strategy and Development Direction - The company is focusing on platformization to address the fragmented security landscape, emphasizing the need for unified security solutions [8][10] - The acquisition of CyberArk and Kronosphere is expected to enhance capabilities in identity security and observability, respectively, aligning with the company's strategic goals [25][23] - The company aims to achieve $20 billion in NGS ARR by FY2030, raising expectations from a previous target of $15 billion [23] Management's Comments on Operating Environment and Future Outlook - Management highlighted the evolving threat landscape due to AI, emphasizing the need for real-time visibility and security [7][8] - The company is optimistic about the future, expecting continued growth driven by AI transformation and the need for robust security solutions [12][23] - Management reiterated confidence in achieving 40%+ free cash flow margins by FY2028, despite the impact of acquisitions [36] Other Important Information - The company launched Prisma AIRS 2.0, a comprehensive platform for AI security, addressing the growing risks associated with AI [12] - The integration of Protect AI is complete, enhancing the company's capabilities in securing AI workloads [12] - The company is actively pursuing a quantum-safe strategy, launching solutions to prepare customers for future quantum threats [15][14] Q&A Session Summary Question: What is Palo Alto Networks doing to ensure success in an AI and quantum future? - Management emphasized the importance of network inspection and the sustained demand for security solutions as AI and quantum technologies evolve [41][43] Question: What is the perspective on the convergence of security and observability? - Management acknowledged the challenges in integrating observability into security but expressed confidence in Kronosphere's capabilities to address these needs [50][52] Question: How does XIM capture customer spending compared to incumbents? - Management indicated that XIM not only captures incumbent spending but also consolidates multiple product categories, expanding the overall footprint [58][60] Question: What are the biggest moving pieces behind the raised NGS ARR target? - Management cited the strength of core business areas, including SASE and software firewalls, as key drivers for the increased target [62][64] Question: What is the expected impact of acquisitions on margins and free cash flow? - Management expects to maintain at least a 37% free cash flow margin during the interim period, with a return to 40%+ by 2028 [72][73] Question: Are customers focused on quantum readiness yet? - Management noted a significant increase in customer discussions around quantum readiness, driven by urgency and potential future threats [86][87]

Core Insights - Palo Alto Networks (PANW) achieved strong results in fiscal 2025, driven by an increase in customer adoption of its platforms and a record number of large platform deals in Q4 [1][11] Group 1: Platformization Strategy - The platformization strategy focuses on encouraging customers to adopt multiple products across network, cloud, and security operations, enabling larger customers to utilize the full security platform [2] - This strategy is contributing to faster growth and larger deals for the company [2] Group 2: Customer Growth and Revenue - In Q4 of fiscal 2025, customers with over $20 million in Next Gen Security (NGS) Annual Recurring Revenue (ARR) experienced a nearly 80% year-over-year increase, while those with over $5 million and $10 million in ARR grew by about 50% [3] - PANW added $490 million in NGS ARR during the quarter, with significant contributions from software firewalls, SASE, and XSIAM [4] - Key customer wins included a global consulting firm with a contract exceeding $100 million, a European bank with a $60 million deal, and a U.S. insurer with a $33 million multi-platform agreement [4] Group 3: Future Outlook - For fiscal 2026, the company anticipates a revenue growth of 14%, with NGS ARR expected to grow by 26-27% [6] - The Zacks Consensus Estimate for total revenues in fiscal 2026 is $10.42 billion, reflecting a year-over-year increase of 13% [6] Group 4: Competitive Landscape - Competitors like CrowdStrike and Zscaler are also expanding through platform growth and AI innovation, with CrowdStrike reporting $4.66 billion in ARR (20% growth) and Zscaler at $2.9 billion in ARR (23% growth) [7][8] Group 5: Valuation and Performance - PANW shares have increased by 20.8% year-to-date, outperforming the Zacks Security industry's growth of 14.6% [9] - The company trades at a forward price-to-sales ratio of 13.04X, slightly below the industry average of 13.23X [13] - Earnings estimates for fiscal 2026 and 2027 imply year-over-year growth of 13.5% and 13.2%, respectively, with upward revisions in estimates over the past 30 to 60 days [14]

Group 1: Core Insights - CrowdStrike (CRWD) is leveraging Charlotte AI as a competitive advantage in automated cybersecurity, with usage growing 85% in Q2 of fiscal 2026 compared to the previous quarter [1][10] - Charlotte AI functions as a virtual Security Operations Centre (SOC) analyst, significantly reducing task completion time from four days to one hour [2][10] - The integration of Charlotte AI into the Falcon platform enhances its capabilities through continuous learning from threat intelligence and SOC data [3] Group 2: Customer Adoption and Financial Impact - The adoption of Charlotte AI is linked to new customer contracts, including an eight-figure re-Flex deal with a Fortune 500 software company to modernize its SOC [4][10] - Charlotte AI is contributing to CrowdStrike's ability to secure larger contracts, indicating its potential role in the company's growth narrative [5] - The Zacks Consensus Estimate for CrowdStrike's fiscal 2026 revenues is projected at $4.78 billion, reflecting a year-over-year increase of 20.9% [5] Group 3: Competitive Landscape - Competitors like Palo Alto Networks (PANW) and SentinelOne (S) are also expanding their platforms and innovating with AI, with PANW's Next-Gen Security ARR growing 32% year-over-year [6] - SentinelOne reported a 24% year-over-year growth in its ARR, driven by the adoption of its AI-first Singularity platform [7] Group 4: Valuation and Performance - CrowdStrike's shares have increased by 26.6% year-to-date, outperforming the security industry's growth of 11.7% [8] - The company trades at a forward price-to-sales ratio of 19.76X, significantly higher than the industry's average of 12.35X [12] - The Zacks Consensus Estimate for CrowdStrike's fiscal 2026 earnings indicates a year-over-year decline of 6.6%, while fiscal 2027 earnings are expected to grow by 29% [15]