Palo Alto Networks, Inc.

Good day, everyone. Welcome to the Palo Alto Network's Fiscal Second Quarter 2020 Earnings Conference. Today's call is being recorded. At this time, I'd like to turn things over to Mr. David Nederman, Vice President of Investor Relations. Please go ahead, sir.

Good afternoon, and thank you for joining us on today's conference call to discuss Palo Alto Network's Fiscal Second Quarter 2020 financial results. This call is being broadcast live over the web and can be accessed on the Investors section of our website at investors.paloalternetworks.com. With me on today's call are Nikesh Arora, our Chairman and Chief Executive Officer, Kathy Bonanno, our Chief Financial Officer, and Lee Claridge, our Chief Product Officer. This afternoon, we issued a press release announcing our results for the fiscal second quarter ended January 31, 2020. If you would like a copy of the release, you can access it online on our website at We would like to remind you that during the course of this conference call, management will make forward-looking statements, including statements regarding our financial guidance and modeling points for the fiscal third quarter, full fiscal year 2020 and our next three years, our competitive position, our proposed accelerated share repurchase, and the demand and market opportunity for our products and subscriptions, benefits and timing of new products and subscription offerings and trends, and certain financial results and operating metrics. These forward-looking statements involve a number of risks and uncertainties, some of which are beyond our control, which could cause actual results to differ materially from those anticipated by these statements. These forward-looking statements apply as of today. You should not rely on them as representing your views in the future, and we undertake no obligation to update these statements after this call. For a more detailed description of factors that could cause actual results to differ, please refer to our quarterly report on Form 10-Q filed with the SEC on November 26, 2019, and our earnings release posted a few minutes ago on our website and filed with the SEC on Form 8K. Also, please note that certain GAAP financial measures we use on this call are expressed on a non-GAAP basis and have been adjusted to exclude certain charges. For historical periods, we have provided reconciliations of these non-GAAP financial measures to GAAP financial measures and the supplemental financial information that can be found in the Investors section of our website, located at investors.palatinetworks.com. And finally, once we have completed our formal remarks, we will be posting them to our Ambassador Relations website under the Quarterly Results section. We'd also like to inform you that we will be attending the Morgan Stanley TMT Conference in San Francisco on March 5th. And with that, I'll turn the call over to Nikesh.

Thank you, David. Good afternoon, and thank you, everyone, for joining our call. I was talking to our President, Amit Singh, earlier today. He had just finished a two-day review of our sales teams around the world. He was excited. More than I've ever seen him excited since he started Palo Alto Networks. He was excited that we are in more strategic conversations than ever around the world. And our strategy around cloud security, securing the SOC, and adding capability to our firewalls is resonating with customers. They are launching more integrated capabilities than ever before, and our customers are responding well to our efforts. And in the presence of all that enthusiasm, our billings are up 17% year-over-year. including strong performance from our next generation security offerings, which grew 101% in Q2. I was thinking about this earnings call. It's definitely a contrast. We are executing well on our transformation. We're becoming more relevant to our customers and building a second and third leg to our security business, which is the hardest thing to do. But I do know that you all want to talk about products, so let's cut to the chase. Am I disappointed with what happened with our product revenues?