Ready to go? Okay, great. Good afternoon, everyone. My name is Brian Essex. I'm J.P. Morgan's security software analyst, and with me today, I have Ken Xie, Founder, Chairman, CEO of Fortinet, and Keith Jensen, CFO. I've been cautioned before I start, I must turn things over to Keith so that he can say a few words.
Yes, it would be my pleasure to say. I'd like to remind everyone that we may make forward-looking statements during today's fireside chat. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected in these statements. Please refer to our SEC filings, in particular, the risk factors in our most recent Form 10-K and Form 10-Q and to other reports that we may file from time to time with the SEC for additional information on factors that may cause actual results to differ materially from our current expectations. All forward-looking statements reflect our opinions only as of the date of this presentation, and we undertake no obligation and specifically disclaim any obligation to update forward-looking statements. Thank you, Brian.
You've been practicing. Well, thank you for joining us. I really appreciate it, both of you. I guess maybe if we could start with a bit of a recap for Q1. You know, what were some of the key takeaways you'd like the audience to know, and, you know, we can, we can progress from there.
Yeah, I think the headliner was SASE and SecOps. We are really, really... Well, I know I'm sure we'll talk more about SASE, so I'll save some of the headline numbers. But, I think Ken announced that product or that solution in November, and to be able to talk about it the way that we did, you know, coming out of Q1, I think we were very pleased with that. A lot of operational milestones, a lot of financial milestones as well.
I think also, you know, at how backlog rolled out, in terms of the headwind that we experienced, we knew that Q1 was by far and away the largest headwind that we would have, from backlog comparisons year-over-year and the impact on Q1 results, and that that will continue to ease throughout the year, and Q4 will have no backlog headwinds. So we're looking forward to that and, and perhaps a more normalized world for us. You know, I think the execution was largely in line with what we expected. Maybe just a little bit of disappointment in the last week coming out of the international part of the business, but, all in all, I think it was a fairly solid quarter for us.
Great. And then I guess for the setup for the rest of the year, you know, particularly, you know, a lot of people look at the billing setup, you know, guidance implies that I guess 2Q seems like the billings trough, with billings expected to grow, you know, thereafter, you know, accelerating in the back half of the year. And I guess the midpoint of guidance implies, you know, like 1.6% year-over-year growth. What are you seeing in the business that gives you confidence to execute to that level and see that acceleration in the back half of the year?
Yeah, I think the one, the backlog, you know, compare gets easier. And I do agree that, you know, indications that we have the trough probably, you know, whether this recovery is, like we talked about with COVID, a V shape or a U shape. You know, I do think, you know, we saw the weakness Q4 a little bit outside the big deals, but certainly Q1 and Q2 kind of feels a little trough-ish, if you will. I think the quarter's going pretty much as we expected to this point. I would caution everybody, it's early. As we look out towards, you know, the rest of the year, in addition to backlog, one another topic we're working our way through was this concept of inventory digestion.
We talked about, you know, that we're seeing a more accelerated pace of customers registering security contracts. The inference in that is that customers are now deploying some of those units that had to go through the digestion cycle. I think we view that as a healthy sign. I think the last point I would make is just the general conversation with our sales leaders, our salespeople, as well as customers. You know, just a tad bit more optimism as we look to the second half of the year.
Yeah, the pipeline, we see pretty healthy growth, and also the new SASE solution, we see a lot of interest from the customer, from the partner, which come 24% last quarter. We do see since our SASE there, actually for us, because the SASE we offer is in the same operating system as a network security as SD-WAN. So most current customer, which we're the leader in network security and also in SD-WAN, will be quite easily, quickly adopt the SASE solution. So it's different than our competitor. We are still more focused on network security.
So we are the leader in the No. 1 in the firewall network security, and also we'll be the leader in the SD-WAN. So we also want to be the leader in the SASE in the next few years. We believe we have the best chance to achieve that one, both on the technology product, also in the market position point of view.
Got it. Super helpful. And maybe to touch on, you know, some of what both of you kind of alluded to, what are you seeing at the macro level? We're kind of halfway through the quarter now. Maybe give us a sense of what customer demand looks like and, and how they're spending our, our budgets easier this year than last year. Particularly as, you know, this time last year, I think a lot of people were concerned about, you know, the potential for a recession in the back half of the year as opposed to a soft landing.
I feel it's, we call stabilized. It's, people starting more look at how this a long-term, investment now, even the, the cost of money is still pretty high. But we do see certain area, like, in the telco space, since starting come back, also retail, compared to one year ago, it's kind of, or probably two years ago, the strong growth and then kind of stop a year ago. Now, since also starting come back a little bit now. And, I know companies still more looking for OpEx model, like a SASE, so they are still not quite go back to the CapEx level, they have like, two or three years ago.
But if they want to look in the long term, in a five-year timeframe, the CapEx definitely can save them more money, probably half the cost compared to the OpEx consumption model. So that's where we see. And also a lot of new use case in the IoT/OT, most of the time, probably network security is the only solution to address all this new market. We do see a company kind of growing, expanding in that area. So we see the new use case in the network security keeping expanding is a lot different than some of our competitor, more focused on their current enterprise customer. We see a lot of new opportunity, and also the other area we see strong growth is through the SMB which is very different than some other competitors. Yeah.
What is it about SMB that's driving...? That's one thing that seems that's a little bit different than what I'm hearing from other companies. What areas of SMB, and where is that demand coming from?
The ransomware attack on SMB is starting increasing right now, and SMB is very different than some enterprise, especially U.S. enterprise. They're more dependent on the channel service provider, which we have a much better ecosystem. We partner much better than our competitor. You can look in both SMB or international, they're more dependent on the channel, dependent on the partner, compared to a lot of U.S. enterprise, the company has to go direct marketing sales. So, for us, we have a better product, we have better ecosystem, which we're doing quite well on SMB, on international leverage, or partner.
Great. And then I think, you know, a lot of investors, I mean, obviously this is a digestion year. You know, we're going through a digestion cycle, as I think Keith alluded to, and a lot of investors are looking forward to more normalized growth at some point, some looking to maybe next year. And you know, I was talking to Peter last night about, you know, maybe the discrepancy of what some of those growth expectations. I think Bloomberg has 15%, FactSet has 12% growth next year. But whatever the number is, you know, in order for you to hit, let's just say, mid-teen growth next year, to reach, like, a 12% growth by the end of the year, what has to happen in order for you to hit those kind of growth rates in the business?
You know, what verticals have to come back? What do you have to see from an execution standpoint, and what are you tracking from a demand perspective that will kind of, like, point in that direction?
Yeah, a great question.
I know you don't want to guide to 2025. I'm just saying-
Well, I was going to, but you... No. No, I... Look, I think the pipeline needs to move back to what it's been in historical levels, you know, well into double-digit growth in the pipeline. I think we've done a very good job of cleaning up the pipeline, and we need to maintain that hygiene, if you will. If you look at the verticals and you look at the geos, as Ken mentioned it, you know, retail is typically one of our three or four largest verticals, and we need to see that spending recover and become more normalized. It doesn't need to be what it was in, say, 2022, but it needs to contribute its part. The service providers are doing well.
Financial services are doing fantastic, manufacturing and state and local governments, et cetera, so I would expect that to continue. I think the U.S. will continue on its journey of being a challenger in the U.S. enterprise space, and by that I mean, in many geographies, we are the, we have the number one market share. That is not the case in the U.S. We're probably number three, and we will continue to invest there, and we should show continued progress, both in going deeper into our install base of enterprise customers, but also, more displacement opportunities. I think one thing that we experienced in 2023 was an absence of displacement opportunities. There was really a kind of "let's sit tight" mentality from a lot of companies about their firewall refresh cycle.
For us to be successful in growing in the U.S. enterprise, we need those displacement opportunities from the incumbents.
Got it. And then, I guess on a per business segment standpoint, from that standpoint, I mean, you've split the businesses, or you've kind of like reorganized into three silos. You have Secure Networking, SecOps, and SASE. What kind of a mix would you anticipate? You know, what is the mix now, and what would you anticipate when you hit kind of a more normalized rate of spending, that would support that kind of growth?
Well, first of all, I think I applaud our marketing team for moving away from FortiGate and non-FortiGate. I think the talk about three pillars now in terms of network security, SASE, and SecOps really aligns with Gartner Magic Quadrants and how people talk about the industry. I think that SASE and SecOps are going to continue to do very well. They're not dependent necessarily on the firewall refresh cycle or digestion, so I would expect that they're going to show growth in absolute numbers and absolute dollars. On a smaller base, we'll probably have larger growth. Maybe Ken will talk a little bit more about, you know, the firewall network security in terms of, you know, while we expect growth there, it's on a very large number.
Yeah, actually, if you look at the Secure Networking and the firewall, I don't like the term firewall. It's really... I prefer the gateway, because firewall you mean block the traffic. Gateway, you still need the people coming, connected online. So the gateway business and the same time, the SASE, using the same FortiOS, same operating system. Just the model, one is more CapEx on the Secure Networking, and the other one, the SASE, is more OpEx, consume, per user, whatever spending model there.
I think so once the big environment change, the interest rate low or whatever, where people move to the CapEx, because the long term, it's definitely more cost lower on the CapEx model. Especially a lot of service provider will start and invest, a lot of telecom service provider, because they do have the infrastructure to do some of that. So it's difficult to say the mix, but I do believe, like we said, we are, we are the leader in the network security already, and we'll continue to lead and gain share. The market itself there is probably grow around 10%.
We believe we'll be grow faster than that. And then on the SASE, we also see very fast growth, leverage our position in network security, leverage our position in the SD-WAN as leader. We feel, because right now, 94% of SASE customer come from existing customer, which already using firewall SD-WAN. We see pretty fast growing there. So these two together, because it's in the same operating system, on the FortiOS, and the network security is kind of also leverage ASIC to accelerate better performance at lower cost.
On the other side, the SASE little bit all OpEx model, kind of a short-term, probably short-term contract period, something like that. Short-term spending there. This two, we feel both will... We want to be the number one leader and continue to grow our focus in this area. The SecOps is the most kind of similar upsell, cross-sell opportunity. We also build, like, 50 other product, mostly internally developed, and try to automate, integrate together. Also, we're different than some other company, multiple acquisition.
So that's where we're probably keeping similar strategy going forward. Internally innovate and then gaining market share, and, once we lead in some area, then expanding from there, instead of try to go all front, which we feel may not be the best strategy.
Yeah, it's interesting. Maybe on that SASE, on the SASE market, I know one of the points that investors bring up is just the number of competitors flooding into that space, whether it's, you know, Cato, Netskope, Palo Alto, too Microsoft, Cisco. I mean, there's just a broad array of different vendors trying to approach that market. You know, who do you run into competitively, and how do you see that market shaping up for Fortinet in terms of their ability to gain more than their fair share of, like, that SASE market?
It's interesting. We develop all this SASE product, including SD-WAN, like 5-7 years ago. The go-to-market strategy changed 6 months ago. Instead of every service provider, we say we're going to go direct. So we're starting to see more SASE competitor, but we do have some advantage other competitor don't have. First, we have a huge installation base on the network security. We have, like, 700,000 customer and more than 12 million FortiGate firewall deployed. Number one, both on the unit shipment, which we have a 52% market share globally, and then also on the revenue, about 30% bigger than any other competitor.
So we're leverage all this installation base, upsell, cross-sell. Second, we also believe we have a technology ahead of other competitor. We integrate all the SASE function in the same operating system, FortiOS, which is not the case for other competitor. They have to go separate box for, like, SD-WAN, some other SASE function, have to use in multiple server in a PoP, in a cloud to process all SASE function, which we can process within the same OS, whether using the local appliance or using the PoP in the cloud. So that's where we're different than most other competitors, whether they're missing the network security part, missing SD-WAN part, or they kind of lack of all this installation base.
On the other side, we do have both hardware component, hardware agent for SASE, like using Wi-Fi switch, or we can using a software agent, whether using FortiClient or other, do the SASE approach, give the customer flexibility. Because I do believe long-term SASE, a lot of customer or certain vertical area, finance, service, healthcare, they more need like a local private SASE instead of for all the traffic go to hub to process, which we feel we have a huge advantage using single OS with a hardware acceleration- and a local process, at the same time, do a, like, cloud-based to supporting remote workers.
So this kind of hybrid approach will be the future for SASE. At the same time, we continue to partner with a carrier service provider. We see they starting coming back now, compared to they're a little bit slow in the last few years. So once they all come back, this kind of hybrid approach, whether on-premise SASE or cloud SASE, or leverage service provider, or go direct ourselves, I think it will be, the future of SASE. We have this advantage than the competitor. That's give us a kind of confidence we'll be the number one in the SASE few years.
And that kind of like, you know, return to the service provider, is that, you know, in spite of interest rates, in spite of, you know, limited or hesitation to spend on CapEx because SASE is a more kind of like OpEx model? So in spite of some of the headwinds that we may see from carriers, you know, during their earnings calls, they're still moving in the direction of SASE?
Yeah, I think for the service providers, especially carrier, they have infrastructure. They own the infrastructure. So they do have a cost advantage because SASE, the major part of cost is really the infrastructure cost. You have to run the PoP, you have to process all the traffic, which carrier service provider have a huge advantage long-term wise. The same thing, like how we approach SASE early days, we want to build our own PoP, which costs probably half compared to some cloud provider cost, which we're still using, our own PoP to handle majority of the traffic. But if there are certain location, we don't have the PoP or don't have enough traffic to invest in their own PoP, we probably will leverage the cloud provider.
A lot of carriers, not only they own infrastructure, but also they have good relation with the local customer and also certain regulation requirement, they need to have data to be processed locally. So thus we see the service providers do have their advantage to play the SASE game. They are just a little bit behind on the technology, on the headcount , on the training to make their service to the enterprise to their customer, which they do need additional secure expertise to do that. But also the other area we see strong interest is really the SMB, right? Which is really, most of our competitor don't even address that market, but they do need this kind of SASE service, to protect some of the data against some ransomware attack.
Got it. Super helpful. And then, you know, with regard to, the infrastructure that, you know, your SASE platform sits on top of, I mean, you were building out, or I guess you still are building out your own kind of data center footprint, but you made the decision last year to partner with GCP, for the access portion of the network. What was behind that decision, and what has happened to, I guess, the acceptance or the, your ability to penetrate the market after you've partnered with GCP?
That's where we're changing the go-to-market strategy. Before we try to do, like six months ago, we tried to more go for a service provider, carrier service provider. So six months ago, so we announced we go direct for the SASE. That's also partner with the GCP, which they bring us additional like 150 PoP. Because SASE is actually, from my point of view, should be more measured by the latency, should be more measured by the uptime, all this reliability issue, instead of by number of PoP. But somehow, a competitor using number of PoP to measure it, we say, "Okay, we can, we can play the same game," even though number of PoP owned by ourselves is less, but it's a much more efficient, cost much lower. Now we partner with the cloud provider, the number of PoP we also is the same or even better.
Yeah. Got it. And then, you know, you talked a little bit about SD-WAN. I know historically, you know, you've pointed to the opportunity that's within your installed base for SD-WAN. How are you going to market in terms of converting those SD-WAN customers to SASE, as opposed to maybe selling Secure Service Edge up front and using that as the tip of the spear to sell SASE? I mean, are you still leading with SD-WAN or converting with SD-WAN, or are you able to sell, you know, SASE on a standalone basis?
Yeah, first, we do believe we are probably already number one in SD-WAN because we offer SD-WAN as a part of the FortiOS, which develop internally, which we're different than other top five, top 10 player. They all come from acquisition with separate mask . We have the same operating system and in the same FortiGate, FortiOS, which we have more than 12 million deploy in the field. We feel quite a bigger percentage, maybe close to half, are already using some SD-WAN because we don't quite track in that.
So we feel they will be supporting the work remotely, the ZTNA, some other data security. They probably will be o nce we announce we're going to do SASE directly, there is a lot of interest in how we can convert from the current FortiGate, FortiOS with SD-WAN and even FortiGate firewall to the SASE offering. SASE, we do have some extra service, do have some other like a software, and also even using the hardware FortiAP, FortiSwitch to sell the hardware agent. So we only started tracking six months ago. We see last quarter, 24% growth, but also far more fast growth. I think it's a, there is a huge SD-WAN installation base, probably millions of FortiGate-enabled SD-WAN. We feel they can more easily to convert upsell, cross-sell for the additional SASE service, which will drive the additional service business for us.
Got it. And then I guess to spend some time on Secure Networking. Everyone's kind of wondering when we're going to see, you know, a firewall recovery. Keith, I think you pointed to, you know, you know, a little bit of, you know, stabilization and, you know, particularly with regard to diminishing the backlog. What is your expectation in terms of the timing of a, you know, kind of a turnaround and recovery to more normalized growth, and what might we base those expectations on? I think you've, you know, cited some Gartner forecast- but to what extent is it Gartner versus talking to your own customers and maybe basing an understanding on what the real spending may look like?
Yeah, great, great question, and certainly a very common question these days.
Yeah.
You know, what, what's the date that it's actually gonna happen? I think it'll be easier to look back in hindsight and say that was the date, than it'll be able to look forward and say, we expected on that, that date. You know, I think the things that we look at beyond, you know, Gartner, and obviously he's talking to companies about what their expectations are, one is our own pipeline.
And as I indicated, you know, we're starting to feel- we're starting to feel better about our pipeline as we look further out now in terms of it being a better growth rate, and cleaner than it had been in the past. I think in conversations with customers, you know, and we spend a lot of time on the road, one-on-one with customers and getting a sense of what their spending plans are for 2024 and how they feel about 2025.
You know, I think if I were to compare and contrast it to, say, a year ago, I think that certainly we and, and some of our customers are a little bit surprised at how fast spending got shut down in the security space in Q2 of last year. I think it's quite the opposite now. It's, it's not that the spigot is completely reopened, but they can now sit down and have meaningful conversations with their own leadership team in terms of what their plans are. In terms of supporting things like go-to-market or AI or SASE or other initiatives, you know, I think it's a more open conversation now, but again, I don't think it's fully back. There's a little way to go there.
Got it. And then, who are you seeing most on the competitive front? I mean, is it more reliant on what your customer base is spending, or is there more reliant on what maybe your competitor's customer base is spending or the rate of refresh that they're seeing? I mean, how do you... What, what kind of dynamics do you see within you know,
In terms of the, yeah, we track our firewall, or pardon me, our pipeline, and, you know, we break it down by segments, firewall being one, for example. I guess I'm calling it FortiGateway now. Is that the, the new name at this point? Yeah, and those competitors, you know, both in terms of who they are, you, you know the names, the top three, and, and the mix really hasn't shifted, you know, over—for an extended period of time.
You know, we have more overlap with Cisco, both in terms of our product suite and our customer footprint, than we do with, say, Check Point or Palo Alto. But again, that mix hasn't really shifted. We certainly have seen as, as you look to the other two pillars, SASE and SecOps, some of these other names that you talk about are now much more prominent in terms of being competitors, you know, whether that's Zscaler or Netskope or some of the others that you mentioned. We see those, and we obviously track those as well. So I think there's, there's been a new class of citizens, so to speak that have entered our pipeline that were probably not there 12 months ago, and certainly not 24 months ago.
Got it.
Yeah, I think it's, that's where you look at all the by region, by vertical. By region, outside U.S., we're number one pretty much in every country. And then, the U.S., like he said, we are probably a little bit behind Palo Alto and Cisco. But Cisco is still the same issue for the last 10, 20 years. They don't quite have the product. They have to acquire a company to have a separate product, whether for SD-WAN, for firewall, for some other security solution there. So we have a single OS with ASIC, but keeping our salary down, the performance and lower the cost. And on the other side, in the U.S., we kind of... Because the business model in U.S. a little bit different than international more depend on the partner, depend on the channel.
The U.S., the vendor have to go direct, invest in the marketing, direct sales force, which we started to invest. So that's where in the U.S. enterprise, we started more gaining market share quickly, especially, some vendor there, they kind of try to do the proper automation. They try to whatever. And when the renewal come, you can see the price tag go however high.
On the other side, if they lose competitive advantage in some area, whether in the network security, in some other area, and also they have a much less coverage use case, whether supporting the internal high-speed segmentation, whether supporting the branch office or supporting work from home, all these concerns. Then we are more come in and then gradually replacing some of the competitors. Like I said, we are very focused on network security, both Secure Networking, both on SASE, and then just want to make sure we win there first, and then gradually we see the SecOps, and that's upsell, cross-sell. So that's the strategy, very different than competitor. We continue to believe we are the best on the Secure Networking, on network security, and also the best in the SASE offering.
Right.
So we're leveraging that advantage and approach this way. So that's where in the U.S., we more gaining market share quickly, because the competitor either lack the product or they lack of a kind of the performance or the cost advantage as we are.
Maybe that's a good segue into... I guess I'll ask the, "Is hardware going away?" question. I guess you have a lot of, you know, competitors who talked about, you know, migration to cloud, and everything is moving to the cloud. And, you know, what are the, what are the technical merits of actually having hardware, either in a branch office or in your infrastructure, that support the argument for, you know, firewalls or, or hardware, you know, not going away as we kind of walk through this, you know, increasing migration to the cloud?
Yeah, we're happy if our competitor all give up hardware, so which is not the case. Even during their earning, they just mentioned still hardware is quite important. More than half of their business come from the, the hardware side, I mean, on the product revenue. Because always a hybrid mode, and you do need to have a physical security, on-premises appliance, and also especially a lot of new area. And, that's why we're keeping using a convergence, because a traditional networking gear, routing, switching, they cannot give you the way to manage the data level, the application level, the content level, or the other, the user level, and only the Secure Networking can do that. So that, that's where Secure Networking will be bigger than the networking by 2030. That's the Gartner forecast.
On the other side, we do see there's a lot of a new total addressable market, not a new use case. The traditional enterprise security, enterprise firewall market or enterprise, secure gateway market, kind of, go beyond that one, especially OT, IoT security and internal data center security and remote SMB, work from home area, which a lot of new use case, which is all quite strong growth, which is most depend on the hardware appliance. And also, that's also compared to the, the company technology, because we do believe in the hardware beginning. That's also the reason from 24 years ago, we decided to invest in ASIC. So none of our competitor really have that long-term investment strategy, because ASIC would take probably 10 years to build new future generation and also big investment there.
That's where we're keeping our advantage, because none of our competitors have this advantage in competing with us. So that's where they say the firewall hardware is dead, but which is not the case. You can talk to all the customer, even a lot of our new SASE customer. SASE is really additional to the traditional firewall. So they do need additional network security, firewall gateway, and on top of that, they add some additional SASE service or some other part.
So we don't see the firewall or the hardware business will go away, and that's why I do believe the market will continue to grow, like, around 10% in the next 10, 20 years, and the convergence also will happen. So that's what keeping driving the growth, because we are the only one have some advantage from the single OS, from the ASIC advantage none of competitor have. So we feel we're keeping, keeping growing, and, still, quite a big business, like, 67% business come from that, that, that, that, that portion. Part of SaaS is probably even more, much more, yeah.
Got it. What's the algebra behind that 10% growth rate? I mean, you know, Gartner may have done it, but is there some sort of a, you know, bottoms-up analysis they've done to get to that? Or did they just look at what historical rates have been to kind of arrive at that number?
The historical data probably even higher than that, maybe 15, even close to 20%. For us, in the last 15 years since IPO, the CAGR probably 25% because we keeping gaining share. There's a traditional, they see an enterprise firewall secure gateway market. But a lot of other new use case to go beyond the traditional enterprise like go to SMB security, OT/IoT security, supporting work from home. And I think eventually, with all the home appliance all connect online, the home gateway market also may take off, maybe leverage AI to, to lower supporting costs, to address that one. Right now, the current model, especially supporting, cannot really supporting the, the work from home consumer network security, because supporting costs will be too high.
Got it.
So that's a lot of new technology needed to bring the market to lower the supporting cost.
Got it. I just realized we're running up on... Like, we've got a few minutes left, and I wanted to give people in the audience an opportunity to ask questions, if anyone has them. I can keep going. Just wanted to make sure I checked. So in terms of, you know, I wanted to give you an opportunity to talk about AI. You know, you recently announced, GenAI IoT Security Assistant and new GenAI capabilities for, for, you know, network and SecOps. Can you dig into that a little bit in terms of capabilities for FortiAI- FortiAI, and walk us through, you know, GenAI for IoT vulnerabilities?
Yeah. Right now, the FortiAI already applied in the FortiSIEM, FortiSOAR, FortiAnalyzer, FortiManager. We apply more product with GenAI, basically we're helping the, the security and IT guy to, to, like, lower operation costs, more quickly respond to any attack. We also using AI, probably can handle close to half of our supporting right now. So that eventually can enable us to expand the market into, like, whether it's, consumer, SMB, some other area. But also in R&D, we do build our own kind of a language model. It's more like a, a expert model, to handle certain security on the intelligence side, and also apply some operation side, even sort of on R&D side. So that's where there's multiple things going on with AI.
And also, we're waiting. When AI starting to apply into a certain vertical, certain area, whether in healthcare, in some manufacturing, some area, they also bring some other how to secure all this AI, all this, application, using AI. Which we're also working with quite some experts and vertical to address that issue right now.
Got it.
Yeah, I think AI is gonna be an interesting journey. I would say that, you know, there's almost two classes of use cases, and, and one is the, the mundane, labor-intensive exercise. The example the CFOs like to give is that we will get rid of our investor relations person, and we'll have the ChatGPT he's paying attention, draft a script. I mean, it feels almost, you know, one step removed from offshoring-type resources and that sort of thing.
I think the other part of it is, when you talk to customers, it's really a focus on the top line. It just consistently, when you talk to a customer right now about their own plans for AI, it's always about the top line and how they're enabling sales, whether it's in retail, whether it's financial services, and so many different use cases. And then behind that comes the security part of it.
There was a our Accelerate kickoff, speeches we did, the gentleman did a great job on an example of how we use AI internally in local language modules and, and thirty different languages to do the, quote-unquote, "routine investigation of logs and checking logs and data." I think you'll see that type a lot. I think you'll also see from us a lot of conversation about, you know, the sheer volume of AI, of data that we have to sort through as part of our security operations team and our FortiGuard team. And there's tremendous opportunity there to continue to expand what Ken talked about earlier, our use of AI. So I think that AI is really... You can look at it in different ways, the mundane things, the top-line things, and then also really how you're gonna be forced to go about securing it.
I think it's to come back to your question about Gartner and you know, Gartner's growth rate. I think what Gartner has been trained to understand, and Ken mentioned this, is that every so often there seems to be another use case for firewalls and cybersecurity, whether that's OT or whether that's micro-segmentation or whether it's the edges. More things are coming, I mean, it's the nature of our industry because the bad actors are unfortunately very creative in how they go about things. With that, that generates new use cases for security.
Great. With that, I think we're out of time. So Ken, Keith, thank you for joining us, and thank you for joining us as well.
Thank you.
Appreciate it.