Operator: Next question comes on the line of Fatima Boolani with Citi.
Fatima Boolani: Good afternoon. And thank you for taking my question. Guy, the question is for you on the ARR. I just wanted to dissect that a little bit. So we’ll start with you considering we’re not totally out of the woods in macro but I wanted to better understand why some of this momentum, you’re not expecting to improve through the year, given this was a seasonally slow quarter, and you have so much more demand and growth driver optionality as we look into the back half, so we just love some of the puts and takes that you embedded into the outlook in terms of not rolling forward the upside in this quarter. Thank you.
Guy Melamed : I think that’s a great question, and I want to be very clear. We’re kind of, we are raising our full year ARR guidance because we feel really good about the rest of the year. When you look at the way we raised ARR, it’s purely a mathematical kind of framework. If anything, I would say we feel more confident about Q1 than what we did 90 days ago. So, if I walk you through the math of kind of the guidance itself, as you know, we only guide for annual ARR, and our 2024 net new ARR guidance was similar to previous year’s numbers. So when you look at the net new ARR in Q1 2024, it was approximately $4 million higher than last year, which is exactly what we’re rolling over for the full year midpoint of ARR guidance. When you look at kind of, and I’ve talked a lot about this in previous quarter, when you look at all the things that are working in our favor, we have a lot of things, whether it’s the environment, MDDR, Copilot, but you have to remember Q1 is still the smallest quarter of the year, and our philosophy has always been not to bake in positivity before we actually see it translate into the numbers.
So we want to see how things progress. We want to see how things move forward for the rest of the year. With Copilot and the SEC regulation, we have yet to see that positive impact to our reported numbers. With MDDR, we have started to see good momentum but it’s still only one quarter in, which is why we’re taking a responsible approach. And as we have done in the past, and as we see the data that supports it, we will be happy to update our guidance.
Operator: Next question comes from the line of Brian Essex with JPMorgan.
Brian Essex: Good afternoon. And thank you for taking the question. Yaki, I was wondering if you could give us a little bit of an update. I think you talked a little about this last quarter, but you’ve got a lot of irons in the fire or incremental opportunities as we kind of approach the back end of the year. How do you think about incentivizing the salesforce with regard to number one, new logo growth, number two, more proactive conversion of your installed basis, you kick off phase two, and then number three, expansion into new adjacent markets with MDDR and Copilot. So how do you, maybe if you can categorize the magnitude of each of those levers and how you expect that to play out through the rest of the year?
Yaki Faitelson: So MDDR and the Copilot are relevant to every one existing customer and prospect and really help us to gain market share and expand the platform in the base. So this is something that is working very well for us, but we also have just so many ways to add value to customers with everything that we are doing with be a Cloud, on the SaaS side, on the IaaS side, we really see our customers getting extremely fast to these automated outcomes.
Guy Melamed : And I’ll give the color from a commission perspective. What we have seen from a conversion perspective is that it’s happening in a natural way. When you look at the uplift, obviously it’s beneficial for the customers because they’re getting a much better product, but it’s also beneficial for our salesforce because anything on top of that renewal goes towards their quota. So at the beginning of this year, we didn’t change the incentive for the conversion because it is happening kind of in that natural element, which is great for us and is working great for our customers. What we did do because new logos is such an important component on fueling our growth for the years ahead is we actually doubled down on the commission plan from a sense of ensuring that reps are focused on acquiring new customers.
And in order for them to make real significant money, they will have to focus on new customers. They’ll be able to make money without it, but in order to make real big money, they have to focus on new customers as well. And when you look at the offering itself, the SaaS offering has actually eliminated two of the biggest objections that we’ve used to see. And that’s that customers don’t have the people to support the platform or companies don’t necessarily want to buy the hardware. So in a way, that change of comp plan actually works really well with the offering that we have, and when you think about that combination, it’s something that we’ve seen work very well for us in Q1.
Operator: Next question comes from the line of Roger Boyd with UBS.
Roger Boyd: Great. Thanks for taking my questions. A lot of talk around the momentum that’s in the pipeline around Microsoft 365 Copilot, but Yaki, I’m wondering if you’re starting to see interest from the install base around securing other Copilots and other G&A applications like those in salesforce or GitHub, it’s come up with a few customers, just wondering if that’s showing up in the pipeline or customer conversations with any sort of momentum. Thanks.
Yaki Faitelson: So without a doubt, and even much more because people understand that they want this Copilot for almost every platform that they have. So we see it on the SaaS, stuff like salesforce, GitHub, Jira, and others, and obviously they would like connectors for things like Box and Google Gemini, so you see all these Copilots, and even sometimes people have their own private instance of OpenAI and just storing the data on SharePoint or even an S3 bucket on Azure blog, creating a lot of value, and the other thing that we are doing in Copilot, we extended it to look at the queries themselves, risky users, and all the other logs, so it’s really working from every angle. And the other thing that was also a surprise for us is once you are using these technologies, the speed that you are exposing critical data, it’s unbelievable.
Not exposing and creating critical data. So it’s definitely very interesting for us and just immediately exposing the problem and also enhancing it.
Operator: Next question comes from the line of Shaul Eyal with TD Cowen.
