SentinelOne, Inc. (S) Earnings Call Transcript & Summary

All right. Good afternoon. I'm Ward Waltemath with the Investment Banking Division, and I'm pleased to be having a conversation with Tomer Weingarten, Co-Founder and CEO of SentinelOne.

Thank you, Ward.

It's -- we're going to have some time for Q&A at the end. So be thinking of the question you'd like to stump Tomer with or me, but I'd rather you try to stump Tomer. So we'll leave some time at the end for that. But until then, we thought we'd have a little conversation.

So look, Tomer, you reported Q2 earnings, I guess, it was about a week ago. And so I'm just curious, like in your own words and having reflected on that, like -- how do you think it went? What's the state of the business today?

Yes. It went pretty well, I thought. We beat across pretty much every metric. We've been a public company for not too long. I think that sometimes it gets lost on people. I mean we've been here practically for 1.25 years. And I've just witnessed this company mature significantly in a year. I think when we IPO-ed, we are really on the younger side of companies, I mean, practically the $100 million-ish revenue scale. And looking at it today, I mean, next quarter, we gave guidance, we're going to be near $1 billion in ARR -- near $0.5 billion in ARR that's just an amazing growth curve for us and then look at the gross margin. I mean all of that has just been -- I couldn't be prouder of the team. I think that's my conclusion.

It's actually, I think, 14.5 months at the end of this week. And yes, you were about $100 million in ARR, but you were in hyper-growth mode. But I was looking at the website and kind of reflected on the transcripts and stuff that -- and I did have the fortune of working in one of the lead banks on SentinelOne. So this is a really fun story to be a part of, but I just couldn't believe how much really, in my view, had changed in the business in just that little over a year between the acquisitions and a lot of the new tech and stuff. So I was just curious, what do you think are the most significant accomplishments in this a little over a year? And what are the next milestones?

Yes. Look, I mean, even about -- I think it was 3 or 4 months prior to the IPO, we just acquired a company. So we were IPOing at the same time that we're actually integrating a very important technology and a technology that we feel has really created a new category in XDR, and that was the Scalyr acquisition. Later on, we rebranded that into DataSet. But I think the best way to put it is really the evolution that happened to our entire platform. I mean we started 2020 with a single product, with an endpoint protection product. And today -- and again, this is 14 months of being a public company, we got a fully fledged platform. We got close to 20 different capabilities. We have 3 distinct product lines in security. Obviously, endpoint still remains our core, but the expansion that we've been experiencing in cloud workload protection and in the cloud security market as a whole has been really phenomenal. The integration of Attivo that -- we're 90 days into it, looks really, really promising, folding in a complete identity security portfolio, making it one holistic part of our platform. Suddenly, it's no longer a company that deals with a product, it's a company that deals with a platform. It's a company that delivers one of the best security experiences for customers out there. Not only we're growing super-fast, and we're adding cutting-edge capabilities, we're still keeping some of the most important and critical companies out there safe, close to 8,000 customers today. That's also a huge leap from where we were a year ago. I can tell you from the front seat scaling that way is not trivial at all, being able to innovate, develop new products, but at the same time, scale the business at hyper growth. It's just no easy fit. But if you look at the platform today, that's where also the opportunity lays. It really is very obvious that our success with customers on the back of endpoint really paves the way for us to now growing and really address a whole other set of needs for these customers as the infrastructure that they build upon is changing, as their infrastructure is evolving, and as they look for more capabilities to secure all these different -- the separate parts, cloud is, I guess, the forefront there, where a lot of folks have started that journey to the cloud, especially with the start of the COVID pandemic. Everybody needed to start making their services more accessible. The way to do that was to start to shift from on-prem environments and into the cloud. None of these journeys ever take a year or 2. This is a multiyear journey for everybody. And we're just very fortunate that we're -- that partner that they're looking to, to now address all these newly found challenges. I mean, securing the cloud is not the same as securing your on-prem environment. And obviously, the attack landscape on the flip side is also constantly evolving. It's also costly moving, and they're looking for new capabilities to address some of these concerns. That's why identity is becoming much more of, I think, an imperative capability for most enterprises out there. Attackers have shifted away from mostly machine-based compromise and into user-based identity-based compromise. And then obviously, I mean, you want more detection capabilities. You want more monitoring capabilities that will allow you to deal with that emerging threat vector, and that's why we also decided to acquire Attivo, which we folded into the platform, a singularity identity. And again, we're just seeing a lot of traction pretty much across the breadth of our portfolio.

So that was like a great flyby that illustrates the change that's really constant in security, but also kind of the energy and speed of which you've driven the company, which has always been impressive and very unique in my experience. And so I really want to kind of unpack really that whole discussion because I think that was a great -- you touched on a lot of things I wanted to go into. One, you talked a little bit about the attack landscape, right? That is clearly changing all the time. What was going on at the time of the IPO is different today right? So if you could just double-click on what your customers need today. I then want to go into how your technology marries with that, uniquely to solve it. But let's first start with the customer needs, and what's going on with kind of the bad guys.

Yes. Look, in the market that we're at, you have to play a constant -- we call it the 2-beat approach. It's a short pulse and a long pulse that we always got to operate in. One is tailoring for the challenges of today. And the challenges of today are securing the cloud and securing users, securing identities. We've got 2 uniquely positioned offerings to do exactly that, and that's where we put most of our effort today. Now knowing that the puck constantly moves in security, and to me, it was always not a game of trying to chase the next trap that we need to put in order to catch the attackers, but how do we solve it fundamentally, how do we solve it conceptually. So actually about 5 years ago, we philosophically decided that, what we need to do is get to the point that we allow people out there to re-envision their network, to really solve for visibility, not solve for a specific detection capability, but really how do we create the ability to see all parts of your network because attackers at the end of the day always go for the weakest links. They always go for the vulnerable points. They always go for the blind side. They always go for what you didn't know was there and then they exploit that, the least secure element in your environment. And we thought that the only way to do that was by providing a super robust security data lake that will be able to aggregate data from each parts -- each of the parts of your enterprise starting, obviously, with the endpoint footprint, which we knew very, very well, expanding it to the cloud footprint, which we knew was going to be just the next step in the journey for a lot of these folks, and it's going to reshape how their network looks like. And then users in the other ecosystem products that they have in their environment. And that's why even prior to the IPO, we made that acquisition of a data analytics company. Scalyr was not a security company. Arguably, it had nothing to do with security. They had no security product. They had no security-based customers. They got about 400 customers. We actually sell our log analytics solutions to DevOps consumers, the ones that monitor production environment, and we're seeing great success in that, but that's definitely not the majority of what we do. But we took that technology, and we basically infused our entire security platform with that super robust data analytics back end that will gradually allow us to put and allow our customers to put more and more data into the platform. And then when they ask the platform a question, when they run a query, when they want to search for something, now they get results from their entire network, not just the endpoint footprint, not just the cloud footprint, not just the separate silo, but really every piece of data that we can collect. And what we launched just a quarter ago was also the ability for everybody that already owns the platform, and that's our entire 8,000 customers today. We finished migrating everybody. It was completely seamless to them. So the platform that they use today, 3 of the Fortune 10 and all other customers that we have from the smallest SMB to the largest enterprise, it's a platform that already has the capability to ingest more data with one click, to connect other data sources into it and to fuse that data in a way that gives them cross-correlated capabilities, not just the separate flat log lines to parse through. And that's a major piece of innovation that I think in the long term will prove to be what will inherit what people know today is the same as the security event management platform with a much more active and automatic platform. And by the way, I think the best part of this entire story is that the cost profile for the platform is heaven and earth to what you find with some of the incumbent solution in the security analytics space. We literally do everything they do with, call it, fifth to tenth of the cost that it currently caused the customer to aggregate data on an incumbent platform, a SIM platform. And that in itself, I think, is just a major cost saver for folks today, especially in this macro environment, when you show up at the door and you say, I just want to sell you another product that's one type of story, and it's a great efficacy, and it has amazing capabilities. But you know what, it can also save you on your data ingestion cost, it's going to save you on your data retention cost. And I think that becomes a really, really compelling story for a lot of the folks that we talk to today.

So you talked a little bit about, obviously, Scalyr, which DataSet. You alluded to Attivo. So why did you buy Attivo? And was it for the business? Was it for the customers? Was it for tech? Obviously, Scalyr was for tech.

Yes. Attivo was actually a really, really nice combination of both tech and a financial profile. So we definitely looked for capabilities in identity security, we knew there's going to be a lot of need for that, just on the back of what we were seeing with our customer base. And I kind of said, if we can get the market leader in identity, then that's the type of acquisition -- the best acquisition that you can make is for a market leader. Then the more we looked at them, their financial profile was actually accretive to ours and that became even more appealing because now it's not just about buying a good technology and a good capability for our platform, it's also something that contributes to gross margins, contributes to our EBITDA profile, dilutes a bit our overall growth rate, but our organic growth rate is so great that I don't mind compromising a few points there. So we kind of said, look, I mean, this is -- this really fits the bill in many different regards. We feel it's going to be also something that's relatively easy to integrate. Scalyr was not a straightforward integration. We almost kept it as a separate entity. We still wanted to keep that motion with DevOps buyer. It's a different -- again, not a security play even. We do think now it's a bit more straightforward. I mean we're 90 days in. So I can't tell you it's going to be an absolute blazing success, but from where we see it today, it's on track and it's looking good, and it's relatively simple. Again, it's taking the capability, putting it into the platform. And really, it's more about enabling our go-to-market to now sell another module more than anything else. And right now, if I kind of look at the pipeline that we're building, and the ability to cross-sell into Attivo's customer set. Attivo's customer set was also really nice. I mean, they did a lot of Fortune 500s, almost equal amount as we had. I mean, that was their entire business. So to us, it was another great kind of foot in the door into these accounts and now we're selling into those accounts as well. So all in all, it fits in a lot of different elements that we just found it kind of became a no-brainer at some point.

Well, you mentioned the platform. So it would be great to talk about how you monetize this tech. This is a really compelling part of the story. And I'd love to also learn a little bit how it's evolved in the 14 months since we last double-clicked on that together.

Yes. The main thing is the attachment and the traction that we're seeing for the adjacent modules that we have. I mean, obviously, endpoint protection is a big market in its own right, right? I mean it's a $15 billion TAM. Half of it is still in the hands of kind of the long tail of incumbents. I know that when we talk about endpoint, most of the time, we kind of talk about McAfee and Symantec and maybe Trend Micro, but there's actually a good part of that TAM that sits in the hands of Webroot and Sophos and ESET and Bitdefender, and it's literally half of the TAM. Now it's typically in the mid-market that you see most of these players. And luckily, we built a very robust partnership ecosystem that allows us to reach to all these different parts of the TAM. So the opportunity in endpoint remains very, very strong. It's our #1 imperative. But then seeing the traction that we've had with some of our own in-house developed capabilities, that to me is the most encouraging part of our business to see a product line like Ranger, which is our asset management, vulnerability management capability, completely built in-house, started with a small team of about 5 people and today generates a sizable chunk of new ACV every quarter. That's amazing to see. It's amazing to see customers now lending with more than just endpoints. So Ranger was one capability that we incubated, and now we're seeing double-digit ACV contribution growing at triple-digit growth rate. Our MDR offering, Vigilance same exact thing, completely in-house built, completely in-house developed and today, 30% attach rate into pretty much every high-end deal that we do, and there's a lot more underpenetrated parts of our estate where we can actually go back and market back to our customer set, which we haven't done that much, honestly, to date. Then you kind of go into cloud world, which we discussed as well. We graduated from having the best Linux solution in the market about 3.5 years ago into a fully fledged native capability to protect Kubernetes containers directly from the control plane. We had a lot of discussions today about agent versus agentless and all that endless debate. I think what's important to understand is that when you're talking in cloud environment, it's less about the traditional agent structure. It's more about how you integrate best to protect these environments. And in many cases, we just integrate into the control plane and really remove the need to deploy a heavy agent into these containers, we can just employ a sidecar. We can employ a DaemonSet that is running alongside these containers. So we also changed our DNA as a company from, I think, a company that was very much known for its agent-based technology and endpoint protection into something that today is regarded as best of breed in cloud workload protection. What we, I think, said in the last earnings call was also important. We landed 2 major cloud-native companies for cloud workload protection, even though they weren't our endpoint customers. They were using our closest competitor, yet they chose to go with us in their journey in the cloud. And that comes again only if you can provide truly differentiated best-of-breed tech. Otherwise, one would assume it's going to be the obvious choice and the organic choice to just continue with the vendor that you have. So to me, all these parts in what we do are incredibly exciting, and I can go on and on. I mean, obviously, identity now with Attivo becomes a pretty formidable module for us. The XDR data opportunity that we just discussed, it's something that we're just starting to unlock $20 billion in TAM opportunity there in security analytics. So a lot of work ahead of us. That's for sure.

I would like to go into it a little bit because you touched on a few things that are pretty unique in what I would just call security industry, right? Over time, you kind of picked your swim lane. You're an endpoint company, you're a network company, you're an identity company. You had that ecosystem, then there are Splunk and there are some data and analytics and things like that kind of came on and became a TAM too. You crossed TAMs, right? So that's pretty different.

Yes.

So I'd say the other thing is it was usually a rip and replace, right? Maybe there was some growth in some footprint and that was like net new. But in an endpoint, everybody's had endpoint for a long time. So to be able to land around that, there's an established endpoint and a vendor that's sort of endpoint and provide new things. Both of the things are really different. So how do you do it? Maybe this is a go-to-market question? Or how does the sales force across the boundaries, across the different buying groups? Is that the strength of the platform? Or is it the sales force? Like [ talk ] a little bit.

I think a lot of it is the platform. I think a lot of it is the approach that we took. And to be honest, I mean, it's a lot of assumptions that we've made when we started on how the enterprise environment will eventually look like. And I'll explain why we thought that the right place for a platform of this sort should go through the evolution that we went through. If you kind of think about endpoint is the most dominant footprint in the enterprise. I mean, obviously, the devices that we use are us. This is kind of what we do. This is how we access the network. And if they also generate the most amount of telemetry in the enterprise, it's not the firewall, it's not the network devices. It's the actual endpoint that we all monitor. So as we were kind of becoming more and more proficient in endpoint protection, we started noticing a couple of things. One is our weight now and what we can see is far beyond any other vendor in the enterprise. There's nobody that gets the same type of visibility and coverage that we have, not on endpoint environment and not on on-prem server environment. Now if you look at all that visibility, and all these logs and all these events that we're collecting from the endpoint, where do they go? People are starting to try and put them in the same solutions that they have. And when you look at like an average SAM, if people actually transfer all that endpoint telemetry into the SAM, that amounts to about 60%, 70% of everything you'll find in the SAM. So at some point, we started asking customers you know what, if we could find a solution for you to actually put the other 30% into our platform and just fuse all that data together, would that be something that you'll consider because we don't charge you for storing all that data. So you kind of have 70% of the data stored for free to begin with. And most people said, I mean, for sure. I mean, why not? I mean, it does make sense. It's the majority of the data and even shipping the data in itself before you store it costs quite a bit, just transferring data. We said, okay, maybe there's something there. We looked even deeper in that opportunity. We saw that some of the SAM players also had a big problem scaling. Because guess what, I mean we were looking to implement a SAM at SentinelOne. And we have a lot of event data that we want to collect ideally. So we started POCing all the different vendors. And we found that it's completely cost prohibitive to put the amount of data that we wanted to put in, which was already the terabyte level, and we kind of said, look, I mean, no one is going to put all that data in, but the White House just mandated a year-long log retention for all large enterprises. So where are they going to put all that data. And when you look at these solutions, they're great solutions. They've been the best that you can find. They are designed in the gigabyte era and maybe the terabyte era to kind of scale their node-based systems. They were never designed these cloud-native solutions that enjoy auto-scale and cloud scale as a means to actually offset cost. So when we looked at that issue, we kind of said, hey, you've got to solve for something that's going to be petabyte scale because it's going to be petabyte scale. That's not me, but it's just what's happening. And it's going to have to be completely cloud native. And these other folks they're not going to be able to do it. I mean it's not about taking the architecture that they built and just plug it into the cloud and call it a cloud solution, just have the same node-based architecture now just in the cloud, no, you need a complete shared tenancy, you need an autoscaling solution. You need to enjoy the economies of scale in the cloud. And then we started looking for companies that can potentially do that. We saw two out of the entire gamut of, I think, 15 data analytics company that we saw out there, including potentially OEM. I mean, we didn't -- we weren't entirely set to buy something. But then we saw just 2 great companies that have done something very unique in cloud scale, cloud-native environments. And we said, okay. I mean, that seems like a great solve for our own needs for a back end. But obviously, if we can transfer that into our customer set, then we'll be actually addressing a much bigger need in the market and one that's not going away anytime soon. So that was kind of the inception point and why we felt like the right of passage we have with endpoint will then lead to really be the central repository for the entire network, in essence, and obviously, if you now add cloud into this, we have the ability to monitor a cloud environment and bring that data back into that same platform, then you start to build a pretty distinct center of gravity around your platform. And again, when you do it at the right cost structure, then people kind of gravitate towards that.

Let me ask your question. Given the -- how you've combined all these capabilities that across additional markets. How do you think of your TAM? I mean, in some senses, you clearly have encroached on across the swim lanes, you may have disrupted the economics and the data analytics TAMs. But how do you think of it?

I think, first and foremost, we still look at endpoint as, again, our #1 imperative. So you kind of look at that, and that's an obvious $15 billion TAM. You look at cloud workloads, it's a smallish TAM today, but it's one that's growing incredibly fast. So call it $5 billion today, going to what I would imagine would be a $20 billion in, call it, 3 to 5 years. So I think that's a major opportunity. Identity protection is another $5 billion TAM, according to Gartner, at least, and I kind of feel it's a good sizing of the TAM. The overall data analytics TAM is defined by Gartner as a $40 billion TAM, half of it is specifically security analytics, so call it $20 billion. Then you got vulnerability management. I think that's another sizable TAM, about $5 billion. So all in all, I mean, I think you're looking in conservative terms at about $40 billion of applicable market opportunity. Now I do think that something like the endpoint TAM, as an example, is something that's severely understated in its size, given that it's defined by what I would define as incumbent dollars. And for us, every dollar in antivirus land is actually maybe $3, $4, $5 in EDR land. So I really think it's understated, but all in all, it's ample opportunity for a company our size. And it's also the reason why we continue and invest in growth, and we continue to believe that the right approach would be to really balance growth and profitability at our current scale. I think a lot of what we do is very elective in the nature of spend that we do. But when you have such an opportunity, I think the wrong thing to do would be to optimize only on profitability or only on our EBITDA profile. So we're trying to pair the two. We're showing 30 points of EBIT improvement every single year and along triple-digit growth. So I think that's pretty unique. And I think it's pretty serving to our shareholders. And again, I really believe that give it 12 months and the profile here will inflict and it's going to be a very special company. It's already, but it will be even more.

It was pretty impressive to see that the operating leverage really sneak into the business. And so I was going to ask you about that, but thanks for doing that and especially in this environment. But I mean that size TAM, I mean, are you sure you're not -- you're starving the business for investment? I mean I realize that we've got to be more conscious about it these days, but -- like what are at least some top areas that you feel like you've got to keep your foot on the gas?

Yes. Look, we're just trying to balance it. I mean you can always invest more. I think that's -- you can always find it more excited to invest, but we are trying to balance that. We're trying to prioritize. I think that's the best way to put it. We have so many different avenues of growth, and we kind of said we can't execute on all. We can't humanly execute on all, even if we had the capital to do it. I think we're just growing incredibly fast. And at some point, you just can't recruit the people fast enough. So we kind of said, okay, let's prioritize. Let's take this in a kind of staggered approach. We got the now, we got the year initiative. We got the 2-year initiative, and we're tapering investments accordingly. So I really feel good about how we invest. I really think we're making the right calls in prioritizing where we see yields right here right now, and how do we get more of those and how do we make sure that we measure the efficiency of our investment. I think one of the most impressive elements of what we've done in the past, call it, a year or so is take our sales efficiency from something that was right under 1, magic number that's 1. I think it was 0.9, and now it's at 1.3. Our competitors are kind of at the 1.4. So to me, that's a great attestation to how well we use that capitalize that we deploy and -- that capital that we deploy. So again, as long as these metrics persist, then I feel good about spending. As long as win rates are high, I feel good about spending. As long as pipeline conversion is where it's at, I feel good about spending, but we're keeping post. I mean, there's a lot of uncertainty in the market. We have kind of pulled the levers just a bit and kind of pulled the brakes this past quarter, and we've delivered EBIT, I think, 20 points better than what we initially forecasted just because we wanted to be more prudent and just because we wanted to be more conservative. And we can do it again. I mean, I hope we don't need to do it again.

Right. Well done on that.

But that's kind of the nature of our business.

So I do want to give the audience a chance to ask some questions before we run out all the remaining time. So if I could ask someone to bring up a mic. And I see a hand here. So why don't we spend a few minutes on questions. And if not, I've got a few more on my own. So if you could just identify yourself and then -- for Tomer and then ask your question.

This is Jerry from Junto Capital. I just want to ask one on Attivo. I understand historically, it's more so deception technology kind of recently pivoted towards the identity side. I guess if you were to kind of just lay out how the product development has been for that part of the business. And if you kind of look forward to that 50% growth, you guys kind of guide for that business. More of that's going to come from the identity side? Are you guys thinking more it will come from the historic deception side of the technology?

Yes. It's a good question. And in the past year, prior to the acquisition of Attivo, Attivo really shifted their business to do more of identity security and active directory security. And I think it was a wise choice because, obviously, they saw customers gravitating towards that. So the vast majority of new ARR in that business is actually coming from that part. And they have a long tail of, let's call it, legacy deception customers. The one interesting part about deception is that it's incredibly sticky. So a lot of these customers immediately post acquisition kind of came to us and said, "Hey, hey, keep the deception business. Don't kill it. We want it. We love it. We think it's a great safety net for our environment." And we kind of said, "You know what, we will definitely keep it." We're definitely investing more in identity security. But when you think about deception, we, at some point, kind of thought about both identity capabilities and deception is one of the same. It's kind of a continuum of the same spectrum given that, when you look at identity security, you really want to protect from a privileged user in the environment that may be there because of stolen credentials and now they're starting to pivot around in your environment, and how do you prevent that. And deception is actually a pretty good tool to do that. So we decided to keep on investing and kind of nurture the deception business, bake it into our own singularity identity suite. But to the second part of your question, most of all business will come through that synergy through folding all of that capability set, all of the technology into our go-to-market, into our platform, it's going to be baked in part of our platform sales starting next year. It already is on the go-to-market side today, but starting next year, it's also going to be in terms of the product capability and how we deliver it. It's all going to come on the back of the same platform. And to me, it's just another great attach module and it will, I think, generally accelerate what we do in the identity space, but we will no longer be looking at Attivo as a stand-alone or anything remotely close to that.

Any other questions? Okay. Well, I've got one more. So one of the things that kind of comes up in the industry is you get really good marks for your partnership. What is your philosophy strategy around creating partnerships? And what trends have you really seen across? I know there's multiple different types of partnerships that you've had. But what's really accelerated since the IPO?

Yes. Make them successful, I think that's the deepest philosophy I have here. I think we -- when we started partnering, we looked at what everybody else is doing in the space, and we started seeing some of our competitors really conflicting with the channel. I mean they were competing with the channel. The channel didn't like it one bit. And the channel didn't have any weapons to wage that war, to really compete with them. So we took kind of a pretty significant strategic decision, and it was close to 6 years ago to say we're going to be a weapon supplier, so to speak, to these folks, and we're going to give them the best tools that we can to fight their fight. And if they win their fight, then we win as well, and we care about software licenses, we don't really care about the services business, which means that we don't even have to compete with them. And even in the areas that we have a competing offering, we need to be very mindful of that and go in and allow them to also be successful. So even in areas where we have some overlapping capabilities, like MDR as an example. We have our own MDR platform, our own MDR service. It's a highly rated one. It's ranked #1 by Gartner peer reviews out of all MDR vendors. But when we go into a customer environment, I mean, we basically leave it to the customer to pick any MDR vendor they want to manage their SentinelOne estate. You want to buy it from us, go ahead. I mean, we'll happily oblige. You want to take it from Mandiant? You want to buy it from KPMG? Great. I mean that's fine, too. We'll absolutely make that happen, and we'll work in tandem with that partner to make that happen. And I think that not only the partners appreciate that, obviously, because the customer appreciate that freedom to really choose with any vendor of their liking, maybe someone that they had a relationship with in the past. And we just -- we're just focused on building the best technology that we can, so our partners and our customers could enjoy it. And that really drove, I think, major success in parts of the market like MSSP, like all the other incident response providers in the world that needed to compete with some of these other vendors out there. Integrators, VARs, resellers, everybody really gravitated towards having the ability to build their own practice on top of our platform. We're not trying to eat the entire pie. We're trying to facilitate more business for them and make them more successful. And I think it really, really resonated with them.

Awesome. Final thing. Security has been kind of considered a good neighborhood as it relates to IT [ spending in kind of ] less certain time. How are your conversations with customers going? What are you seeing?

Yes. It remains strong. We've seen, I think, kind of a degree of very high uncertainty kind of in the June, July time frame. And that translated into just more scrutiny around budget. It wasn't run principally, do we need security or not? That was never the conversation, but it was about capacity. I mean do we need to buy 3 years forward worth of security and expansion and all of that. And I think that folks who are kind of dialing back to their needs of today and maybe 6 months or 12 months after knowing that they can always come back and true up. I mean there's no problem with that. But that was the -- I think the vast majority of the impact that we've seen and why we still believe security is relatively a safe harbor in this environment. But even that largely subsided, and I think it's a lot of kind of business as usual at this point in time. But look, we're taking it day by day and every day springs up something new, and we're just -- we remain very, very vigilant as to how customers are thinking about budgets, and we're also being relatively conservative. We took the year up, we guided up, but we did it conservatively. I think that in any other environment, you would have seen us do things differently. But better safe than sorry. And hopefully, we can surprise everybody for the rest.

Well said. Congrats on your success and thank you for spending some of your time with us today.

No absolutely. Thank you for your time.

Appreciate it.

Thank you.