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