Sentiment Analysis of the earnings transcript to help figure out if there are any bullish or bearish sentiments that could be gathered from it. We're doing ML and AI based analysis on the earnings call to get some more insights.
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| Statement |
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| At the same time, the NAC, Network Access Control, the other things, we see pretty strong growth |
| And especially in the U.S., we see a huge opportunity |
| And that gave us huge advantage for the current customer installation base |
| And I think we've shown the ability over the last few years to do a little bit better than that floor in terms of the margin |
| We are very, very proud of that |
| Because we feel we have a very healthy gross margin, operational margin probably better than our competitors |
| So that gave us a huge advantage |
| The pipeline is to grow like over 150% and just in the quarter, and we also see a pretty strong demand |
| So I think if we can get a sales force the partner quickly and get a SASE selling, we do believe we will be better, bigger than any other SASE player in the space |
| And so we do with all the skills we have and all the customer base we have, we can quickly turn customers into our SASE and eventually will benefit from the huge installation base we have |
| The same thing for e-mail security, also as I mentioned, endpoint security also had pretty strong growth |
| So that will give us more advantage both on the product and the infrastructure side to supporting the customer |
| So we just see the growth pretty strong right now |
| So there's a huge opportunity |
| How do you think it allows you to more effectively pull data from these different vectors? Ken Xie Yes, we see the FortiSIEM, FortiSOAR, especially we have the FortiAI or the generative AI already in the FortiSIEM, FortiSOAR now grow very, very strong |
| But on the OT side, this has been a really strong area of growth for you |
| So that we see additional use case, additional opportunity for us to keep it growing because the technology we have in a single OS with ASIC accelerator can really apply in this high-speed environment, local environment, the traditional sizing play there |
| So that's where we see the huge opportunity keeping growing in that areas |
| Certainly, on a GAAP basis, the margins are quite higher |
| And with me, I'm really excited to have the team from Fortinet here |
| So basically, in like two, three years, we doubled the product revenue, doubled the business there |
| So -- if you look at our total gross margins, you can see that I'm able to make -- we're able to make those investments in SASE and at the same time, maintaining our total gross margin |
| And also, what's differentiated from Fortinet and other competitors where the first, we have a huge installation base |
| I think, Keith, you also mentioned towards the back half of this year that Fortinet will grow above market, right? So like I think initially it was after the really strong Q4 performance you had or before the strong Q4 performances that you had, the -- the view was we'll be back to double-digit growth by end of this year |
| So that's the reason I believe the network security and including hardware keeping growing 10% to 20% in the next five to 10 years |
| And you start looking at pipeline that far out, it's a pretty soft number, but I think the indications are for more strength in the second half of the year at this early stage |
| Security is pretty interesting |
| That's where I do believe in the next five to 10 years, the network security will continue to grow like in the last three years, 10% to 20% |
| And I think that the conversations with CIOs and CISOs around their plans for 2024 and budgets have improved from a year ago |
| So I think there should be some benefit from there that I think a couple of other early data points in terms of recovery mode, looking at our own pipeline for the second part of the year |
| Statement |
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| We've been probably talking for the last year or so in the earnings calls about some headwind around data centers and cloud provider fees and such, not so much that they were hugely meaningful but really to presell the notion that you were going to see us coming to market with more hosted solutions |
| And we do see that during the current environment, economy slowed down |
| So that's where I think the supply chain issue even in the COVID in the last two, three years kind of distort the market a little bit |
| I think the headcount last one or two quarters downticked sequentially |
| But somehow in the last few years, they are moving too slow |
| I think a year ago, everybody was contemplating a hard recession |
| So that's where when the platform understanding integrate some of the points are real function into their own kind of OS than the point solution starting to losing the market share there |
| And I think a lot of the actions and conversations were very soft in terms of what they wanted to accomplish in 2023 |
| So talk to me about where we are in that cycle? Do you think we're nearing a bottom here? And when do you think we'll start to see growth rates converge back to that 10%, 20%? Ken Xie I think the market this year is a little bit distorted by the last two, three years |
| They also have very limited computing power |
| I think the -- if you go back to the earnings call, and I think we're dumping our chasten offering and note of caution at the same time, around the fact that we had closed six 8-figure deals in the fourth quarter of 2023 |
| And then as for mid of last year, we started to say, hey, since study needs to see digestion certain vertical like we see in like a retail space, the last two, three years, when they grow over 100%, now seems relatively flat or even maybe negative there |
| Because endpoint were not very difficult to work in there |
| You very purposely didn't really monetize the SD-WAN base really that much at all |
| But I don't see that being disruptive to our margin philosophy |
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