Speaker 1: Bloomberg Audio Studios, podcasts, radio.
Speaker 2: News, Nikesh, I think we get right into the numbers, right.
Speaker 2: The situation is for your EPs guidance come down, revenue
Speaker 2: is beaten, and so I'm trying to understand, like the
Speaker 2: environment that you're in, you know, what is it that
Speaker 2: that's weighing on profitability for the balance of this year.
Speaker 3: Well, first of all, nice to see you, Ed, and
Speaker 3: thank you for having me on. I think the market
Speaker 3: is not paying attention to our numbers carefully. We just
Speaker 3: completed our largest acquisition.
Speaker 4: In cyber Arc. We had a great quarter.
Speaker 3: Our numbers are across every known consensus metric. The market
Speaker 3: is not understanding that our guidance for the next two
Speaker 3: quarters includes cyber Arc. If you take the consensus cyber
Speaker 3: Arc and ours, we are actually getting above the collective consensus.
Speaker 3: But the market hasn't understood the dilution of shares, so
Speaker 3: I think they have it wrongs. Actually, the board I always.
Speaker 4: Above consens across the board.
Speaker 3: These are the post market bots which haven't figured this out.
Speaker 2: I always enjoy you joining us on the network. You're
Speaker 2: always honest, You're always very specific about M and A. Right,
Speaker 2: the math that people are doing is the guide for
Speaker 2: next gen ARR growth is fifty three to fifty four
Speaker 2: percent cyber arc chronosphere, but that would suggest that that
Speaker 2: organically growth is neared a sort of twenty percent. Can
Speaker 2: you see the math that they're doing.
Speaker 3: Yes, I see the map, but I think if they
Speaker 3: listen carefully, cyber Arc computes ARR differently from us, So
Speaker 3: we've had to trip out a few hundred million dollars
Speaker 3: of cyber RKERR. Hence, if you dig that out and
Speaker 3: netted back, we're actually doing better collectively than we're guided.
Speaker 3: This all clarify by tomorrow morning as the market opens,
Speaker 3: but I think the market hasn't understood the comments are
Speaker 3: CFO made around the fact that our computation of ARR
Speaker 3: is different.
Speaker 4: It's more conservative than cyber Arc. Cyber arcs is more
Speaker 4: as aggressive than ours.
Speaker 1: If you turn down their ARR down to the way
Speaker 1: we compute it, actually actively, our RIRR guidance is a
Speaker 1: success of what we previously guide it organically individually.
Speaker 2: On the call, you mentioned a nine figure chronosphed deal.
Speaker 2: You didn't name the customer. Somebody from the cell side
Speaker 2: asked you about the deal, they didn't ask you to
Speaker 2: name the customer.
Speaker 4: Who's the customer in a cat it's a popular LLLM
Speaker 4: out there.
Speaker 3: I think more importantly, what is there to understand is
Speaker 3: that Cronis Fair is a net new startup. They came
Speaker 3: up with a new way of doing observability which is
Speaker 3: much more cost effective, much more efficient, and can scale
Speaker 3: to the volume that elms are putting out there. That's
Speaker 3: the reason we bought the company, the fact that two
Speaker 3: hundred and fifty engineers can build something so amazing that
Speaker 3: provides a leap frog opportunity against current players in observability.
Speaker 3: That's what we bought them for. They've been under tests
Speaker 3: for many months with this LLM. They've fully been accepted
Speaker 3: across the platform. They will be replacing an incumbent vendor,
Speaker 3: and as that continues to grow, we expect to see
Speaker 3: continued growth of RR for that one customer. But additionally,
Speaker 3: obviously knos Fair is talking to a whole bunch of
Speaker 3: net new customers who are looking for either get off there,
Speaker 3: do it yourself observability platforms or the place expensive observable
Speaker 3: platforms that they've subscribed to in the past.
Speaker 2: Nikesh like observability is so core to what is happening
Speaker 2: Inegentic right now, if we move on the assumption that
Speaker 2: the customer is one of the key frontier labs, would
Speaker 2: you just talk a little bit about why they came
Speaker 2: to you for security rather than do security themselves.
Speaker 3: That.
Speaker 2: I know that might sound like silly question, but actually
Speaker 2: you know a lot of the frontier labs have teams
Speaker 2: right they're looking at this issue themselves. They see value
Speaker 2: clearly in what parallelto networks is offering.
Speaker 4: Well, the number observability is beyond the model. Right.
Speaker 3: The model LM people are focused on making sure their
Speaker 3: model is amazing.
Speaker 4: It does all the things that are expected to do.
Speaker 3: But observability is to look at it from an end
Speaker 3: to end perspective to see how do they make sure
Speaker 3: that the customers are theirs who are using these things
Speaker 3: and the usage continues to double almost every quarter. How
Speaker 3: do they make sure that all their systems, our low
Speaker 3: latency are working perfectly and there's nothing in the entire
Speaker 3: end to end delivery chain that is underperforming.
Speaker 4: So that's what observability does.
Speaker 3: The reason they're coming to us is because they're busy
Speaker 3: building the best models, applying their AI research to the models.
Speaker 3: We're busy with Thronosphair making sure that the end to
Speaker 3: end proposition works and there is very low latency.
Speaker 4: By the way, this app.
Speaker 3: This is true for not just LLLM, this is true
Speaker 3: for every consumer app there is out there ability to
Speaker 3: take Uber, door, Dash or YouTube. Every one of these
Speaker 3: has to have an underpinning observability platform to make sure
Speaker 3: that it's fully available ninety nine point nine nine percent
Speaker 3: of the time, so that because every minute it is
Speaker 3: not working at the capability and the latency that is
Speaker 3: required is lost revenue.
Speaker 2: Nickish very quickly your acquired KOI. The idea is greater
Speaker 2: visibility into AI threats. But just succinctly, what problem did
Speaker 2: that solve for you on the team? What are you getting?
Speaker 3: Yeah, look, I think if you look at the adoption
Speaker 3: of AI and at the enterprise end, you were seeing
Speaker 3: a tremendous amount of adoption in vibecoding. People are using
Speaker 3: cloud code, Cursor, Codex, and many many open source coding platforms.
Speaker 3: As they use it, all that action is happening at
Speaker 3: the endpoint, at the developer laptop, and that's where that's
Speaker 3: an uncovered area of security. You have to protect that laptop,
Speaker 3: that endpoint or the developer to ensure that you can
Speaker 3: deliver code safely and security.
Speaker 4: Coy saw the opportunity inn here and a half ago.
Speaker 3: They build a capability, they have hot people are adopting
Speaker 3: them across the board. Anyone who's trying to use vibecoding,
Speaker 3: anybody's trying to use get on this recording bandwagon.
Speaker 4: Find efficiencies, need that security at the end point. This
Speaker 4: is different than other endpoint security. Both US and.
Speaker 3: Another place in the industry sell called ADR. This is
Speaker 3: very specific to endpoint security for agentic capability.
Speaker 4: That's what COY does. So that's the reason we acquired COY.
Speaker 2: A Keshra pala alto Network CEO, jumping straight from the
Speaker 2: earning school to bringing back television