Good day everyone, welcome to today's Palo Alto Networks conference call. After comments by management, we will go directly to question and answer. As a reminder, this conference call is being recorded. At this time, I would like to turn the call over to Kelsey Turcotte from Palo Alto Networks. Please go ahead.
Thank you for joining us on today's conference call to discuss Palo Alto Networks' pending acquisition of Cyvera. This call is being broadcast live over the web and can be accessed on the investors section of the Palo Alto Networks website at investors.paloaltonetworks.com. With me on today's call are Mark McLaughlin, Palo Alto Networks Chairman, President, and Chief Executive Officer, and Steffan Tomlinson, Chief Financial Officer. This morning, Palo Alto Networks issued a press release discussing the acquisition. If you would like a copy of the release, you can access it online at the company's website.
We would like to remind you that during the course of this conference call, Palo Alto Networks management will make forward-looking statements, including statements regarding our expectations regarding the acquisition, the consummation of the acquisition, the integration of Cyvera with Palo Alto Networks, and synergies between the two companies, our competitive positioning, expectations regarding future investments and revenue growth, and fiscal third quarter financial performance. These forward-looking statements involve a number of risks and uncertainties, some of which are beyond our control, which 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 our views in the future, and we undertake no obligation to update these statements after this call.
Before I turn the call over to Mark, I want to remind you that registration for our Ignite investor track, running from March 31st to April 1st, is still open, we encourage you to attend. If you would like to register, please email me at kturcotte@paloaltonetworks.com. For those of you who cannot attend in person, there will be a webcast available at investors.paloaltonetworks.com for the portion that will be conducted from 1:00 P.M. Pacific Time to 4:00 P.M. Pacific Time on Monday, March 31st. With that, I'd like to introduce Mark.
Thank you, Kelsey, and thank you everyone for joining us today on such short notice. We're very excited to announce that we have entered into a definitive agreement to acquire privately held Cyvera for approximately $200 million in transaction value, comprised of approximately $112 million in stock and $88 million in cash. The transaction was approved by both boards and is subject to customary closing conditions. We view today's announcement as a strategically compelling combination that again disrupts the security market and opens up significant incremental market opportunity for us. Cyvera provides a highly innovative endpoint threat prevention solution that's unique in the market. It protects enterprises from security breaches by blocking attacks on the endpoint at the critical exploit phase through advanced detection and prevention techniques that do not require prior knowledge of the attack.
Today's announcement also marks a significant step for us in the continued evolution of our next-generation enterprise security platform and our ever-increasing leadership position in the market. With the pending acquisition of Cyvera, we are once again changing the cybersecurity landscape by creating a unique and comprehensive enterprise security platform spanning networks, endpoints, and the cloud. As a result, we are expanding our total addressable market in the large and growing $4 billion endpoint market with a fifth SaaS-based offering. We see significant synergy to cross-sell Cyvera to our existing base of customers. Our next-generation security platform performs three security functions, understanding traffic and controlling it, detecting and preventing known attacks, and collecting information for our next-generation threat cloud to analyze and stop unknown attacks.
The result is that we can uniquely and safely enable applications for all users on any devices across any network, and we've been doing this for several years now with great results. The acquisition of Cyvera will extend our next-generation security platform to the endpoint with a very innovative approach to preventing both known and unknown attacks. By blocking the attack at the exploit phase, Cyvera essentially disables the tools that attackers require without needing prior knowledge of the attack itself. The result is technology that successfully prevents zero-day attacks and can collect data for our next-generation threat cloud to further analyze. With the combination of the network-based data and the endpoint-based data, the next-generation threat cloud is able to detect more attacks, provide more intelligence, and quickly prevent newly discovered attacks.
The combination of our Next-Generation Firewall, our next-generation threat cloud, and Cyvera's next-generation endpoint security technologies in a single highly integrated and automated enterprise security platform will be a first for the industry and will provide significant value to customers in the cybersecurity battle. The level of innovation at Cyvera is amazing and a great cultural fit for us as a technology-driven company. What Cyvera is doing in the enterprise endpoint space is akin to what Nir and the team did in the traditional network security space. In both cases, legacy approaches are fundamentally flawed in the age of IT infrastructure shifts, like the explosion of third-party applications, massive adoption of mobility as the primary compute platform, and the shift to the cloud.
Since 2007, Palo Alto Networks has disrupted the $11 billion network security market with a next-generation approach that has fundamentally changed the way enterprises think about security, while the competition tries to cobble together legacy technologies in an attempt to catch up. The endpoint security market today is similar. The legacy technologies were designed for a different time and have not kept up with the rapid threat landscape. Just like the legacy firewall space, you cannot build on the legacy platform and win this battle. With the acquisition of Cyvera, we'll be taking a fundamentally different approach that we believe will disrupt the enterprise endpoint security market, much in the same way we continue to disrupt the network security market.
The acquisition will bring us a unique endpoint-based solution and an amazingly talented team, which will allow us to immediately target the adjacent enterprise endpoint security market, which is $4 billion today and growing to close to $5 billion in the next few years. We see significant go-to-market opportunities as Cyvera is highly synergistic with the needs of our existing customer base and offers a compelling opportunity to drive new customer adoption of our platform with our end-to-end security solution. We intend to leverage our large and growing global distribution capabilities and partners to sell the Cyvera offerings into our existing and fast-growing 16,000-plus customer base. With this combination, we'll be able to compete in a very large $15 billion-plus addressable market today that is growing to close to $20 billion in a few years and will do so with an unparalleled technical advantage.
Before I turn the call over to Steffan, I'd like to welcome the Cyvera team to Palo Alto Networks. There are incredible synergies between the two companies, and we are very excited about the creation of a unique and comprehensive next-generation enterprise security platform that spans network, endpoint, and the cloud. Now I'll turn the call over to Steffan and look forward to seeing many of you during Ignite Investor Track on March 31st. Steffan?
Thank you, Mark. I'd also like to welcome Cyvera and thank the Palo Alto Networks team. Both have worked very hard to bring our vision to reality. Cyvera, which has raised two rounds of early-stage venture capital, will bring to us 55 employees, of which 37 are highly skilled engineers based in Tel Aviv. Our plan is to continue to invest and expand the operations in Tel Aviv to tap into a vibrant market of professionals in the security industry. Looking at the revenue and gross margin models, Cyvera has a subscription offering, which further enhances our hybrid SaaS revenue model and will add to the services portion of our revenue stream. Over time, gross margin for Cyvera should approach software-type gross margins.
While the Cyvera technology is currently in use in a number of companies and being actively tested in dozens more, it's an early-stage company from a go-to-market perspective. As a result, we expect minimal billings and revenue contribution for the balance of fiscal 2014, with billings and revenue ramping into the back half of fiscal 2015. Given the subscription nature of the business, we expect billings and free cash flow to ramp ahead of revenue, with meaningful revenue contributions in fiscal 2016. Prior to the acquisition, Cyvera's investments were heavily focused on R&D. Because of the technical leap forward they've pioneered versus other endpoint solutions in the market, we're going to continue to make the necessary investments in R&D to extend our lead. Additionally, we'll build out the customer support and sales and marketing organizations to address the incremental $4 billion-plus of market opportunity.
Our plan is to build out a specialized sales organization to focus on the endpoint market and implement a marketing plan that broadly increases awareness. The preliminary estimates of the operating expense for our P&L associated with these investments are approximately $1.5 million for Q3 2014, $3.5 million for Q4 2014, and $25 million for FY 2015. We anticipate being free cash flow positive for Cyvera in the first half of fiscal 2016. After we close the transaction, we'll refine the assumptions and provide updates at that time. We look forward to discussing all this further during the investor track of our Ignite Conference on March 31st in Las Vegas. We'd now like to turn the call over to the operator to take questions. Operator?
Ladies and gentlemen, if you have a question, please press star one on your touch-tone phone. After your question has been answered or you would like to withdraw your question, please press star two. Questions will be taken in the order received. Please press star one to begin. Your first question comes from the line of Michael Turits with Raymond James. Please proceed, sir. Your line is open.
Hey, guys. Technology question first. There have been some other endpoint solutions that have been acquired, Mark, including Mandiant by FireEye, and there's some other independent ones out there. Maybe you guys could take some time to differentiate a little bit how you guys are approaching the endpoint versus some of the competitors.
Sure. Hey, Michael, it is Mark. Good morning. On the endpoint side, there is a number of features and functionalities that have a complete endpoint solution. The one that we believe is the most important because it prevents the attack in the first place is exploit prevention. What Cyvera is doing is based on a deep understanding of the exploit techniques themselves to get the exploit in the first place. It is preventative as opposed to detection. Most surveillance is doing detection capabilities or forensics, like the attack has occurred, then trying to figure out what happened after, you are going to chalk the body instead of stopping the crime in the first place. That is a high-level concept of the difference. Nir is sitting here with me, if he wants to add something.
Yeah, sure. Of course. You are right, there are many endpoint solutions in the market. By the way, we looked at all of them, Cyvera by far stood out. The reason for that is that several things are going on on the endpoint. Some of the companies you mentioned, as Mark said, what they do is they collect information from the endpoint, send it to a central location, then if you find out that you had a problem, i.e., your score ended up in some other country, you hire an army of incident response people that use that information to figure out how you got hacked. Other approaches in the market include the AV approaches, which is look for each and every individual piece of malware using signatures.
There are hundreds of thousands of new ones every week, many millions every year that you have to chase. For sure you are going to miss many of them. Other approaches in the market include host-based intrusion detection and different kinds of them, old ones, new ones. The problem with them is that they are still chasing thousands and thousands of new vulnerabilities that are found every year and miss a lot of them. The Cyvera approach stood out very different. We tested it with a lot of different malware, even the most sophisticated one that we have collected throughout the years, they just detect everything. Essentially what they do is they go after the toolkit that the exploit writers use in order to exploit the vulnerabilities, turns out that that toolkit is limited to about 20 different techniques.
What Cyvera does is it basically blocks the bad guys from being able to use those techniques, it just works. Again, it works for each and every sample, each and every sophisticated piece of malware we have detected over the last few years.
Any particular way that this will be integrated with the existing technology platform?
Yeah, absolutely.
Obviously you're going to feed back up to the cloud, but does it leverage the platform in other ways?
Yeah. Just think of it then, the slide deck there you saw, Michael, sort of a triangle concept that this will be the only really integrated and automated platform to market today. Think of connecting or closing the loop between the network and the endpoint, and that's closed through the threat cloud, which is basically analyzing information from the endpoint and analyzing information from the network itself. That takes care of all known attacks. Even more importantly, is quickly analyzing and stopping unknown attacks. That information will be shared back and forth between the network and the endpoint, so that those two loops will be closed between each other as opposed to being disparate systems.
Ladies and gentlemen, as a reminder, if you would like to ask a question, please press star one on your phone. Your next question comes from the line of Raimo Lenschow with Barclays. Please proceed. Your line is open.
Hey, thanks. Congratulations. Sounds like a very interesting deal.
Thanks, Raimo.
Two quick questions from me. First, if I look at the current offering, will the client still need an endpoint solution like a legacy one and you just do the more advanced stuff, at least for now? I guess later on, you probably want to take that on completely. Just a quick question. How does the pricing licensing model work? You mentioned subscription. Is it per endpoint or how do I have to think about it? Thank you.
Yeah, sure. Raimo, good morning. Yeah. On the big picture of the endpoint, many companies have legacy solutions in the endpoint because those technologies are doing a lot of different endpoint features and functionality. This technology is very focused in the advanced threat space, and that's where the legacy technologies are falling down today, is on the advanced threat space. This is what this technology does, and I think out of the gate, it can be complementary to legacy technologies and run side by side with those things. Over time, we can evolve it if we choose to do that from a roadmap perspective. That's the way to think about it right now. On the model, I'll ask Steffan to address that.
For the pricing and licensing, it'll be some convention around a license per endpoint. We'll get into more specifics of that during our investor day at Ignite. Also, we need to get through the transaction and actually close it out, but it'll be some convention around endpoint pricing.
That pricing then would be recognized as a SaaS-based offering.
Okay, perfect. Okay, thanks.
Your next question comes from the line of Keith Weiss with Morgan Stanley. Please proceed. Your line is open.
Thanks. Thank you guys for taking the question. It looks like a very interesting acquisition. First question, do you guys have any customers that are running both your technologies and the Cyvera technologies today? If so, can you walk us through how they're using the two technologies together today?
Hey, Keith, good morning.
Morning.
Cyvera has a handful of customers today. This is pretty early-stage companies from a go-to-market perspective, not from a technology perspective. We have one or two common customers we got some pretty good feedback on that are running both of our technologies. They're not integrated obviously yet in this customer base, but they like both of them. We've already got a lot of early indication from some customers that we've given some confidential previews to that very much like the Cyvera technology, it's what it does and can definitely understand the power of integrating it to WildFire and to the next-generation platform. The early interest is very high.
Yeah. This is Lior. As Mark said, we have a few customers that are joint customers. The way the products work today is they're relatively separate, although there is a way to forward information from WildFire to Cyvera for Cyvera to use in order to detect legacy attacks on the endpoint. You see, there are really two ways to get on an end user endpoint today. The legacy way, which is send them a piece of malware and hope that they install it. Right. Here is an executable, install it. There are other ways to hack into it or to exploit a vulnerability. Cyvera is focused more on the latter, which is really the way all the APTs work, which is exploit the vulnerability on the endpoint, take it over, and then do whatever you want with it and with the network.
With the information that Cyvera can get from WildFire, they can also handle the former, which is make sure the executables don't get on the endpoint. This is in testing. Some customers got a preview of it, and the feedback was really, really good, which is part of why we think Cyvera is the right solution for us.
Excellent. Then one for Steffan. In terms of how we should be thinking about the OpEx impact for FY 2015, I think you said $25 million in OpEx. From a free cash flow perspective, can you give some kind of sense of what FY 2015 free cash flow impact should be like?
OpEx is going to be ramping out throughout FY 2015. Free cash flow, we don't anticipate the Cyvera acquisition to turn positive for free cash flow until the first half of FY 2016. Mainly that's due to the incremental buildup that we're taking a very early-stage company, making the necessary investments in not only R&D, but more specifically into customer support, sales and marketing to really build out that presence. We're going to be building an overlay sales force or a specialized sales force to sell the endpoint technology. From a free cash flow standpoint, it'll be positive in the first half of FY 2016. That's what we're anticipating right now.
Most of that expense, Keith, will go into the go-to-market capabilities since the technology is built and already commercial. We think that's a worthwhile exercise since there's, like I said, a $4 billion enterprise endpoint market today. This is an immediate TAM expansion for us.
Your next question comes from the line of Phil Winslow with Credit Suisse. Please proceed, your line is open.
Hey, thanks, guys, and good morning. Just have a question, I guess for both Nir and Mark, sort of from a historical perspective to now. In the past, we've seen some endpoint companies trying to go into network security market kind of unsuccessfully. More recently, though, we've seen some network security companies trying to move into endpoint. I guess, what do you think has changed from, I guess, a technology perspective or from the buyer's perspective that makes sort of a joint endpoint network offering more attractive and sort of why you think that the network security vendors are going to be successful now moving into the endpoint? Thanks.
Yeah. Hey, Phil. Good morning. Yeah, a few things there. The first is that the and the most importantly is that the advent of the advanced persistent threats is really what's driving this because you could have, in the past, a network market, security market, and enterprise security endpoint market that were roughly separate. It's the APTs that are forcing companies to think about the network as one thing. Not just network over here and endpoint guys over here. More and more when they use the term network, it includes endpoints because the threats can come in through the endpoint and get to the network, come through the network, get to the endpoint. It's a common understanding now of what the network actually means.
Because of that, folks like us who have very deep technical understanding of the advanced threat market are technically qualified in order to take on both of those challenges. Just that's a technical, intellectual sort of statement from an understanding perspective. The third part is making sure that you can actually get it out there from a customer perspective, right? That's a challenge where you have to get deployed out on the endpoints as well. I think companies and customers over the last 18 months when we really, really started to dig into this market have shown an understanding and the desire to do that because the legacy technologies just are really not keeping up here.
This reminds me a heck of a lot of the firewall market a number of years ago, where you had a new challenge out there that the legacy providers are just not quick enough to get in front of, mostly because they're running large installed businesses and they're kind of not innovating where they need to innovate. That opens up a disruptive capability in a really large market, and that's what we intend to exploit.
Yeah, I think that some technology advancements have made it possible to integrate network security and endpoint security in such a way that it actually provides value to the customer. I think that the use of cloud-based technologies, our next-generation threat cloud, which today processes a lot of information. Today, it runs a lot of files, documents, executables from our customers in sandboxes. It provides URL categorization, which is using machine learning to automatically categorize websites. It's looking at a lot of DNS traffic coming from customers to find a lot of bad domains that were not known before.
I think that the ability to take endpoint information and plug it into that cloud and then in return generate information that's useful for both the network and the endpoint to detect more and more bad things is something that didn't exist before because cloud-based technologies like WildFire didn't exist before that. Also, as Mark said, I think that the big endpoint security vendors have been sleeping for quite a while. When we met Cyvera last year and started talking to them, it became apparent that they're going to do to the endpoint security market what we did to the network security market in pretty much the same way. It only made sense to combine the two and go after the entire enterprise security markets together.
Great. Thanks, guys.
Thanks, Phil.
Your next question comes from the line of Walter Pritchard with Citigroup. Please proceed. Your line is open.
Thank you. Just relative to the go-to-market investments that you talked about on the call here, can you talk about how you take this to market as a separate sales force? I think just referring to what Phil talked about in the past, we've seen a number of network companies go to this market, and it feels like the issue has been it's a separate buyer, and I know at my firm it's a separate buyer. Just trying to understand, what you have to do differently from a go-to-market perspective, and why you think your chances are better given it may be a separate buyer here you're going into. Did you guys catch that question?
Can you hold on for one second? I think the main speaker line dropped. This is Kelsey.
Oh, hey, Kelsey.
Sorry. They're dialing back in.
Okay.
Apologies, guys. Just hold on a second, please. I think they're back. Mark?
Hi, Kelsey. We are back. I apologize everybody for that. I'm not sure what happened there with the conference line, I'll just pick up where we left off. Walter, you had a question about the go-to-market motion. That's where I was. I think I got cut off. I'll just pick up there.
Okay.
Yeah, sorry about that. As I was saying, we're very cognizant of the challenges, in getting another agent out onto the endpoint. We've thought a lot about that. I think you're right that historically there's challenges with different buyers around that. I think what we're seeing that gives us confidence that we're going to get this right is the first thing is the idea of advanced threats being thought of as companies, as I said, for the entire network, which includes endpoints before.
While there is, in fact, traditionally different buyers for network security and endpoint enterprise security, when we spent time in the last year really digging into this, what we have found is that it is either those people are talking to each other or more likely now at a higher level, like the CIO, CTO, or CISO level, they're thinking of the entire network and are making decisions about endpoint security in light of the network side and network side in light of the endpoint side. I think there's a common understanding of what the network means in the future that's being driven to C-level. Our early feedback, when we went out and talked to a number of our customers to show them this confidentially, that's what we got back.
It was the CISO or the CIO saying, "Yes, we're very interested in this, and we understand how this works together." Now, that aside, there is a different motion there on getting something deployed at the endpoint. What we're going to do is create an overlay, as Steffan said, sales team that are specialists on the endpoint side. It'll take us some time to build that out in order to be able to speak the right language to the traditional buyer of the endpoint security so that we can show them what we have. Hopefully, with the air cover of the C-level executives using our major account and global account team to describe and explain the value of the entire platform. I think very importantly for us and for the customers, this endpoint technology is very sophisticated and very unique.
The real power here is when it's integrated to WildFire and our next-gen firewall. It's that combination that really makes it rock. The C-level folks that we've spoken with, I think, get that and understand that. We think that's just going to happen. The last point is we've been pretty successful so far with WildFire. From a go-to-market motion perspective, we created a small overlay team on WildFire because it's very specific from a need perspective into the APT space. What we found is that overlay team working with our hundreds and hundreds of folks in the field has been able to have the right architectural conversations because they know what they're talking about APT.
The account folks are getting the overlay team into the architectural meeting, the overlay team is able to have the architectural strategy conversation with folks, the account team is able to fill those pieces in to date with the next-gen firewall plus WildFire, and now we'll have the ability to add the endpoint to that as well. I think that combination is what's going to be powerful and that in the future, these C-level folks will think about endpoints as part of the network, not as a separate thing.
Great. Thank you.
Thanks, Walter.
Your next question comes from the line of Aaron Schwartz with Jefferies. Please proceed. Your line is open.
Good morning. Thank you. Maybe sort of a continuation or follow-up from the last question. If we talk to enterprise customers, for years, they've been putting a lot of price pressure on the traditional endpoint vendors in instances of where companies even go for free solutions or sort of the lowest common denominator pricing for these legacy type antivirus solutions on the endpoint. I guess, Mark, in your work in sort of talking to the CISO or talking about this common approach, how do you reverse that and how do you sort of create an appetite to, again, move higher on the endpoint pricing, presumably where you'd be selling this type of solution? Thanks.
That's a great question, Aaron, the answer is relatively simple, which is the legacy stuff doesn't work, right? Earlier I said that this is very reminiscent for us of the firewall market circa 2008, where the major legacy firewall providers had commoditized the firewall market and everybody was competing with stateful inspection technology, primarily on price. When Palo Alto Networks came along Nir invented the Next-Generation Firewall, it was very innovative and was actually solving a very important problem for customers. It turns out they're willing to pay for that, willing to pay a premium for that. That's what's driven the success of this company since then. We view this as very similar, which is you've got a large legacy market where the legacy vendors haven't innovated. They've, in essence, commoditized the technology.
Along comes a company like Cyvera with something very innovative and disruptive, solving a hard problem at the right time, the customers are willing to pay for that. Not just pay for it, but a premium for that. I think that's what's going to happen in this market, is you're going to see the highly innovative folks being able to reverse that commoditization trend and turn this into a real value proposition. That's what we intend to do.
Ladies and gentlemen, we have time for one more question, and that comes from the line of Scott Zeller with Needham & Company. Please proceed, sir. Your line is open.
Yes, thank you. Just a high-level summary. Could you go over the previous acquisition of Morta versus Cyvera? Cyvera, we're talking about the endpoint focus, just from maybe a technique perspective, you were talking earlier today about Cyvera understanding the toolkit that hackers are using. Could you just talk perhaps how Morta is either different or similar to this acquisition?
Great question, Scott. In both cases, what we're after is very innovative and sophisticated technology and understanding in advanced threat space. What Morta brings to the party for us from an APT perspective is a number of technologies. The one that we've mentioned a few times is the ability to understand really subtle lateral movements. If you have a threat inside your network, it's attempting to move across your network. The very sophisticated threats are able to do that in a very subtle way to escape detection, and Morta has a technology and team that understands that very well. That's just a general statement or comment technically around you definitely want to be able to see and understand threats as they move through your network in order to detect them and ultimately prevent them.
What Cyvera is doing is specific to the endpoint today, they're looking at the underlying techniques that are used to exploit a problem on the endpoint or an application on the endpoint already. An easy way to think about that, there's been hundreds if not thousands of reported exploits at the endpoint. All of them, over time, what we've found are generated or used maybe a couple dozen techniques. They're very sophisticated techniques. What Cyvera has done is has a deep understanding of those techniques. While the entire market is very focused on, say, think about it as a house, of protecting the house from break-in. You've got cameras, you've got locks, you're watching for the break-in to detect it, or if somebody's in the house, you're trying to figure out where they are.
Cyvera is actually going to the meeting where the criminals are planning how to break in, and they understand in advance that they're coming over the wall at 2:00 A.M. on the left side of the yard sort of thing, and they're there. It can just stop the break-in from occurring in the first place. It's a very different and upstream approach than what else is in that market today.
Okay, thank you for that.
Yeah.
This is Nir. I'd like to add to that there's no single silver bullet that's going to prevent the bad guys from doing what they want. You need to have as many defenses as you can against them. That includes, number 1, limiting what your users can do to absolutely what they need to do, and that's what the Next-Generation Firewall does. Then you also need to look at the malware trying to get in, which is what sandboxing does. You want to try to detect the malware already on your network trying to go out, which is what you can do with IPS, looking for command and control connections. You want to prevent the malware from being able to resolve the IP addresses to which it wants to go, which you do with DNS protection.
You want to protect the endpoint, meaning if the malware already made it to the endpoint, you want to detect it on the endpoint, prevent the exploit on the endpoint, which is what Cyvera is doing. Then if somehow the bad guy was able to get on the endpoint and is now moving around the network, you want to detect that and block that, which is something that a data center Next-Generation Firewall plus the technology that we acquired for Morta can do. If you look at what we're trying to do here, is we're building multiple defenses against the way a traditional APT, remember, APT is a person. APT is not a piece of malware. A traditional APT, or not traditional, but an APT will take in order to get to where they really want to get, which is your data in the data center.
We think that only this approach of preventing all the different steps that they take is actually going to work.
Thank you.
Thanks, Scott.
This concludes our question and answer session. I would now like to turn the call back over to Mr. Mark McLaughlin for closing remarks.
Thanks everybody for joining us today. We really appreciate it, and we're very excited about this acquisition. Like we said, which brings us an immensely talented team, some very unique and disruptive technology, and an opportunity to immediately expand our addressable market by over $4 billion. We look forward to talking with everybody in more detail in about a week's time at Ignite, and hope we'll see you there for the investor track. Thanks, everybody.
Ladies and gentlemen, that concludes today's conference. Thank you for your participation. You may now