The Transcripts, Transcripts
Fortinet, Inc. (FTNT) 51st Annual JPMorgan Global Technology, Media and Communications Conference Call Transcript
Fortinet, Inc. (NASDAQ:FTNT) 51st Annual JPMorgan Global Technology, Media and Communications Conference Call May 23, 2023 10:10 AM ET
Company Participants
Keith Jensen – CFO & CAO
Ken Xie – Founder, Chairman & CEO
Conference Call Participants
Brian Essex – JPMorgan Chase & Co.
Brian Essex
All right. Good morning, everyone. Thank you for joining us today. My name is Brian Essex, I’m JPMorgan cybersecurity analyst. And with me today, I have Ken Xie, he’s Fortinet’s Chairman, CEO and Co-Founder; and to his right is Keith Jensen, the company’s CFO.
Before I get started, I think Ken has a few words he’d like to share. So why don’t you go ahead and…
Keith Jensen
By popular demand, I’ll do the safe harbor language.
Brian Essex
That’s right. Here we go.
Keith Jensen
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 to specifically disclaim any obligation to update forward-looking statements. Thank you, and you’re welcome.
Brian Essex
That’s exhausting. Well, thank you — Ken, Keith, thank you again for joining us. Maybe a good place to start would be, Ken. Maybe if you could introduce the company within the context of how your approach is different. It’s kind of interesting because you’re a bit more focused on the value of the hardware than other vendors in the space, whether it’s others seem to be focused more on everything migrating to the cloud over time and focused on software. So maybe a little background on the company, what your focus is and what you think your core differentiation is.
Ken Xie
Okay. Yes, the company, we started 23 years ago. So we do believe [indiscernible] the convergence of network security will be gradually overtaking the traditional networking. So we feel lucky now. Even Gartner [indiscernible] believe that one. So by 2030, their forecast also see the network security will be bigger than the networking side. So I think in order to do the network security, you definitely need more computing power to process the traffic because network security need to look in more higher layer, more deeper into the package. You need to look at how the content, how the application side, how the user, the device, even some location to make — to control to make the decision there. So that’s where we are.
From day 1, we decided to invest in the ASIC technology, which gave us a much better computing power to process all the security function. So the latest chip we announced actually about a few months ago, that we call SP5, called security process 5, actually can — each generation, we kind of double the speed and has more application. We accelerate in the ASIC level. So the latest one we can have a 14 application using ASIC to accelerate, which gave us like — you can look at the last like 10, 20 product we announced. Every product we announced, we also gave the data compared to the same product, same function, same cost in the space.
So what’s the performance advantage we have for all the top 6, 7 functions in the network security space? We tend to be 5 to 10x better performance for the same cost, same function in the competitor — in the industry average. So that’s making the Fortinet, we can have a much bigger total addressable market beyond the traditional enterprise network security. So that gave us a much faster growing and at the same time, kind of more broadly deployed network security beyond the traditional enterprise network security, including SDN area, including going forward the 5G and also including the Internal Segmentation, which the traditional networking switch and deploy and secure within the data center and also supporting work from home, the branch office approach.
So today, we probably have about half the market share on the total global unit shipment for the network securities device. So globally, there’s about 20 million network security devices being deployed, so we count about 10 million of that. So it give us some good potential going forward to get additional service out of this device. So that’s where the product revenue we’re kind of at #1, and that’s also what helping drive the future service revenue, which a lot of service provider working with us, whether in the SASE or some other security service, which is also much high demand today in the environment.
Question-and-Answer Session
Q – Brian Essex
Great. Great. That’s super helpful. And maybe if we can dig in a little bit to kind of the core kind of firewall platform that you have. I think John Maddison at Accelerate had a slide where he had about 11 different use cases for firewalls, which I think is pretty interesting. And those included segmentation, hyperscale, OT, container applications. How many of those are emerging? And which ones do you see have the greatest untapped potential as we kind of look in the years ahead?
Ken Xie
We see the traditional network security is still keeping — growing, maybe around 10% there. But on the other side, the new use case like SD-WAN, the 5G, the OT area probably will grow faster, maybe like a 20%, 30%, even 40% and also will be a pretty huge market. So that’s we see even within the company. Internal Segmentation is also a good market because a lot of ransomware attack more target company, internal data, other things, also work from home is the other area. So that’s also drive us we believe — so we kind of had the biggest product revenue in the whole space. We also believe the product revenue growth will continue to be double digit compared to some of our competitor field is only a single-digit growth.
So it’s not just kind of — we have more use case. We also feel the consolidation and also take some market share, also working well for us because we have a well-integrated product solution. And at the same time, we also want to keep up the innovation and follow the change in new requirement in the space quickly and come up a new product quicker, better than other competitors. So that’s where we want to continue to drive the innovation internally. At the same time, kind of keeping — expanding — the product can be deployed in the field and have keeping open up the new addressable market.
Brian Essex
Excellent. One of the things that came up, and this was actually at Accelerate, I talked to one of your partners, who used to work with an unnamed network security or network equipment vendor in the OT market, and they specialize in OT, IoT, ICS, who do you see in those segments as competition? And one of the things that they noted to me at your conference was that they moved over to Fortinet because the other vendor couldn’t supply them [indiscernible] actually works more efficiently. So is that a trend that you’re seeing on your platform?
Ken Xie
Yes. We do see the OT will be huge potential because you can see the next phase of connection is more about connect all the device online. And also most of the device also kind of have a different operating system and also were different than the laptop, and the mobile phone being connected is really pretty much the only way to secure most of the device is really by network security because endpoint security, which can be pretty efficient in the laptop, mobile phone, not quite working in a lot of this OT device because they have different operating systems, different computing power. And so that’s where leverage network security is very, very important to secure all these device.
So thus we see a lot of potential, but also OT security, also kind of more divided into different vertical space, like what do you have in health care is different than the utility manufacturer, some other area. I need to understand the special protocol the OT operate and also the environment OT operate. So thus we also see kind of — to keep up all this innovation changing and because all the 5G also are starting to connect OT device very, very quickly.
So thus we’re compared to a lot of our traditional network security company and also some other bigger company, the more acquisition to grow their cybersecurity. We are more focused on internal innovation, which also do better on the integration, on the automation side, which is quite important in the OT area. So thus we see OT definitely is one of the top growth driver for us in the next few years.
Brian Essex
Yes. And you actually — and I don’t know if this is — maybe it’s a joint question for both of you, but you’ve recently noted that SD-WAN and OT together accounted for over 25% of bookings, but that OT is smaller. What needs to happen for OT to eclipse SD-WAN? And any idea when that could actually happen?
Keith Jensen
Yes. When we look at our internal metrics, we do have a bit of a horse race going on with our peers and the management team about whether OT or SD-WAN is going to be the larger of the two. At the moment, SD-WAN is larger, but OT is growing faster. And if you look at the market opportunities, Ken’s talked a lot just about the OT market opportunity. SD-WAN, I think a lot of companies got into the SD-WAN solution because of the MPLS savings, but we’ve seen that now mature to where they’re now using SD-WAN because of the — it creates more capacity and the ability to do a lot more things on networking with traffic because you’re avoiding those MPLS fees.
But I think also very importantly now that SD-WAN is a key component of the SASE solution, right? So it’s one of those 5. So I do think that you’re going to see, a lot of people have asked us early on, was SD-WAN starting to run out of wind and far from it? We’ve seen some information come out recently about the MPLS market and how the read-through from that and the degradation there is still in the very early innings, but I think also the SASE will now provide another like to it. In terms of how we’re wagering internally, I can’t disclose the bets on those two.
Brian Essex
All right. And kind of the — you touched on SASE, so that’s a kind of a good segue into this next one, which is that segment of the market is obviously getting a lot of attention both from public vendors as well as privates that are investing a lot of money in that space. So can your presentation at Accelerate framed out what you described as universal SASE as opposed to single vendor SASE. So Universal with a single OS. How do you define Universal SASE? And the way that — and what is your perspective on the way that Fortinet is kind of uniquely positioned with a single OS?
Ken Xie
Yes. The SASE is pretty — still in the early stage to ramp up. And also, if you look at the Fortinet history, like 15 — 10, 15 years ago, the service provider, telecom count about 30% of Fortinet business. So it’s our biggest sector. Today, it’s probably half of that, about 15%. So we do believe long-term wise, security needs a lot of service provider to working with the vendor and provide all the service because security has a lot of new things keeping come up every year. So if you look at the SASE, they not only offer the traditional firewall, VPN, but also the additional like , the CASBs and WAF, some other function there, which I feel the traditional service provider, even telecom provider, cloud provider, they are a little bit behind.
On the other side, the technology, the product is not quite mature enough. So we do believe in order to offer SASE, you need to offer like the VPN in the same OS, in the same system and need to be deployed more broadly instead of all to the cloud, [indiscernible] the process and send it back. Some deployment situation, like when you work from home, sends certain signals to cloud process makes sense. But when you’re working in the office, you better process the data locally, instead of go out of the cloud and send it back all these things. Thus we do believe the SASE needs to be more universal, new hybrid approach.
So that’s where in the last few years, we already developed technology. They can be in the same OS, can be running the same FortiGate system or in the cloud. So we may have the customer to decide, like service provider to decide what kind of deployment they need and what kind of service they can offer. So that’s where we have a little bit different approach in SASE compared to the SASE vendor today. It’s really more integrated and also more widely deployed, both leverage software and also the hardware and also more leveraged service provider infrastructure, which can be the telecom service provider, the cloud service provider, the traditional security service provider.
And also, there’s a lot of company, also they are interested in like the private SASE. They still want to manage SASE themselves. So that’s why we feel the same OS solution and can be leveraged both hardware and software can solve that issue at the universal. That’s how the universal SASE we feel will be the trend going forward. That’s also both the service provider, the vendor side, the partner and the customer, they kind of have flexibility to deploy the security service based on their need, their environment.
Brian Essex
Great. And then I think we spoke at dinner about the visibility that you have into SASE adoption, still kind of early stages, I think. And I think you noted that some companies might not be quite ready for it when they issue RFPs, but they want to see the road map is there. Maybe can you expand on that a little bit in terms of how customers evolve towards adopting a SASE framework? And what role does SD-WAN play into that?
Ken Xie
Yes, definitely, SD-WAN is a very important part of SASE because SD-WAN can kind of [indiscernible] based on different application. So when we do the secure [indiscernible] also more based on certain content, certain locations, certain user device behind. And so that was a — I mean, SD-WAN is a part of the whole SASE solution. On the other side, you see SD-WAN market is also quite interesting. There’s a — so that’s our internal target. We want to be the #1 in SD-WAN, also like #1 OT and the network security. So the SD-WAN, you can see the top 5, 6 players, most of them come from acquisition and still have a single SD-WAN box. A few kind of some — could have some issue going forward long term. In the network security space, you can see in the last 20, 30 years, most single-function box vendor pretty much all disappears. You can name quite a lot of them. I don’t want to name any of them right now.
So because all this integrated platform eventually when they have the function, they have a huge advantage compared to the single function box, which they have to deploy kind of — if you deploy multiple box, it can be very costly, it can be more difficult to manage. It’s the same thing for — so that’s also, we believe, leverage our integrated OS, and the company platform ASIC has more function to integrate together. So including all the SD-WAN function, SASE function will be working.
But in the enterprise environment, nowadays, a lot of them can see the benefit of SD-WAN because cost saving, because it gives them more reliable based on different applications to different traffic. But on SASE, it’s still kind of a certain struggle, whether there’s a SASE vendor try to get a customer, there’s a service provider trying to hold on the customer, and there’s a customer also want to keep the data or some security measure themselves. So that’s where we feel — so keeping growing in the SD-WAN market will be more easy for the enterprises to see the benefit, especially in the current environment.
And then when they’re ready to move additional security service, and that’s all the SASE function from the current FortiOS, FortiGate, we can offer them both to the customer for the service provider. So we feel — so we give the customer their own kind of a pace, their own selection, how they want to go forward is the way to do that. And for us, actually, we offer SD-WAN as a part of the FortiOS, FortiGate function for free, basically. They can see the benefit, both on the cost side, on the additional functions they can offer together with security. So we feel that’s probably much better than the other single function SD-WAN box, which could be cost higher and also at the same time has very limited function and have a difficult time to offer the additional service going forward.
Brian Essex
Actually, that brings up a good kind of follow-up point is maybe a Keith question. But the concept of offering SD-WAN for free, how substantial is demand? And what kind of levers do you think you have from a pricing power perspective as you kind of look ahead?
Keith Jensen
It’s a great question. And there’s been moments where we’ve kind of revisited the idea that we were putting it in the operating system and not charging for it. And depending upon the day of the week, we may have different conclusions about that strategy. But I think now with the benefit of hindsight and I’ll roll it back and build it on a bit of Ken’s comments, when I’m a consumer of technology solutions and I’m evaluating different technologies, use SD-WAN, if somebody is coming to me and they’re offering me a single vendor solution, where I don’t have to cobble together 4 or 5 disparate technologies and it’s on one operating system. I’m going to give that a very, very hard look.
And then they’re going to explain to me the journey of the firewall, where you buy the firewall because it has the SD-WAN operating system in it, it’s a natural progression to see customers then turn on the SD-WAN functionality, maybe move to secure SD branch after that or something of that nature. But now that SASE’s in the operating system and so to come full circle. I think the fact that we made the decision to include SD-WAN in the operating system and not charge for it, gives us a very significant foothold now to go have conversations with customers about SASE.
Brian Essex
Great. And I think maybe to kind of build on that a little bit. At Accelerate, Patrice had a slide up, where you noted that you had an installed base of over 635,000 customers. How much of an opportunity do you think you have to cross-sell into that installed base with both SD-WAN and SASE?
Keith Jensen
You answered it last night.
Ken Xie
Yes. I think a lot of our customer enterprise, they see the benefit of leverage SD-WAN and also the additional security they can offer is — even we have like over 600,000 customers. Each quarter, we do gain quite a lot of customer, but it’s sometimes — because we also leverage the channel, the service provider, it’s a little bit difficult to — I think from the revenue side, probably a little bit more easy than the measured the number of customers, maybe is better.
Keith Jensen
Yes. I think the SASE market, if you will, our expectations, and we’ll come back to you in a couple of years and tell you how we did with that, certainly at the very high end of the market, the Fortune 100 and maybe the Fortune 50, they certainly have the budget, if you will, to evaluate the point solutions and build the integrations and they may go that way and cobble together with it. But that’s a relatively, for us, a smaller segment of the market given the significant footprint we have with service providers, the mid-enterprise, the geographic footprint, if you will.
I do believe, and we have some conversations with some MSSPs recently, that we’d be selling into the smaller market. And the kind of the question we gave to them was, do you see the SMBs intrigued by the SASE offering. And they said, absolutely. And they view that as an opportunity for them to go there. And it’s probably from a cash flow viewpoint, using an MSP an easy way for those smaller enterprises to get into the market.
And then I think as you move up from that, I think the mid-enterprise is a no-brainer, absolutely, they’re going to move into the SASE space. And I do think a very large component of the enterprise as well. And maybe the final comment on this is we don’t view, and we don’t think others should be, the SASE and on-prem firewalls are mutually exclusive. Rather, customers have a use case, they have a group of appliance or devices and users. And you need as a customer to make a decision on a case-by-case basis how to secure those.
If you have a remote worker that’s going to the cloud for an application, then SASE probably makes sense. If that same remote worker is working in the office some days and he’s going into the data center, so to speak, to access applications, you’re going to need a different architecture. So we do think that they’re going to move hand in hand, if you will. We feel really good about where we’re positioned with the operating system in SASE.
Ken Xie
Great. Also SMB also is quite a greenfield, especially with network security and also even like the consumer side, network security also pretty much so far is a [indiscernible] open to be in that space. And you can see the U.S. alone probably have a 20 million, 30 million SMB is a very, very low percentage and in our security solution there. Thus, we see leverage service provider, leverage the technology we have also could be a huge market opportunity.
Brian Essex
Fantastic. And then, Keith, I think you guided for CapEx of $400 million to $450 million this year in part. Do the — I guess, money being allocated to build out your access network in PoPs and maybe either for you or for Ken, what is that — what was the decision process around building a point of presence network as opposed to your own data centers or leveraging hyperscalers? How should we expect that to look? And how critical is that towards offering users more efficient access at the edge?
Keith Jensen
Yes. I’ll talk about it from a margin perspective, as you might expect. I mean obviously, we looked at some of the other players in the market, and there are different strategies, some building out PoPs and some relying up on a cloud provider, if you will. And I think what Ken talked about earlier was really a strategy where, yes, we will build out some of our own PoPs. And PoPs are not a huge outlay of capital compared to, say, a data center or something like that. We do think there’s opportunities to quickly move in there with our office footprint that we have internationally, where we have power supply and some of the requirements to set up PoPs.
But importantly, we’ll supplement that with the service providers infrastructure. I think the service providers, again, as Ken kind of alluded to, have realized that other practitioners in the SASE market are trying to move traffic off the service provider’s network, and that’s not what they want to have happened. And so I think with that and why they want to partner with us, will be another source of the footprint, if you will. And then the third source, obviously, we’re going to have some large customers that have come to us, and they’re going to speak to a specific location, in a certain city or country or what have you, where they do want to have a PoP. And I think we’ll build something there or perhaps even partner with a cloud provider.
So I think we’ll get to it in 3 different ways. But yes, in terms of CapEx for the year, I think there’s 2 things that you’re seeing in that number. One is to support the infrastructure for SASE and the PoPs. I think we’ve done a pretty good job of messaging that for several quarters and talking about margins and the impact of the data centers on that. But I think there’s also a read-through there that we appreciate and then there’s an opportunity for us to continue to deliver additional security features and functions, not only on-prem, but through the cloud. And I think you’re seeing us position ourselves for that with some of our own data centers as well. And then lastly on that, I would say probably with a bit of an eye to some of the regulatory and compliance changes that are having related to data movement across borders and across countries. And I think we’re trying to get positioned for that.
Brian Essex
Great. Maybe I’ve got a few more, but I’m — I’ll ask one set of questions, and we’ll open it up for other questions from the audience, if you’d like. So Keith, they want to keep you in the spotlight for a minute. I’ll let you swallow your water. I think some are still amazed at the level of growth you’re seeing on the product side in particular. But I think given the guidance that you had in the quarter, I think a little bit more conservatism, which I think we appreciate. I think after the fourth quarter, we’re a little bit surprised that the guidance call it for as much robust growth as you kind of indicated, but a little bit more conservative than 1Q. What are you seeing like from a macro perspective and a demand perspective, I guess, sense earnings and what caused that kind of incremental conservatism? Is it just what you saw in the quarter? And has that changed? Or is it kind of more of the same right now?
Keith Jensen
Yes. I think we’re getting what we expected. That’s the good news. The bad news is what we expected isn’t a lot of great news. I don’t think our view of the macro is terribly different than what you’re going to hear from other country — other companies, particularly as we look at the second half of the year. I think the — as it manifests itself to us in terms of our own pipeline, we continue to be very excited about the growth of our total pipeline, particularly when we compare it to the consensus numbers and things of that nature. But the change that we’ve seen over the last two or three quarters, the two changes. One was linearity, deals moving further out into the quarter to get closed. And two, the close rates themselves, right, which are somewhat related.
And I think what you saw in the guidance setting process coming out of — even though we guided robustly for the year, I think we did well for the quarter, but still cautious because we’re looking at that close rate number. Close rate was not a variable in the guidance setting process that we had to spend a lot of time with for years and years and years, it was very consistent. That has certainly changed now in the current environment, and I think we’ve offered some caution in that area.
Brian Essex
Is that still the case now, like what you’re seeing so far in the quarter — is it a back-end loaded?
Keith Jensen
I would offer the same comments today about close rate pipeline that I did before.
Brian Essex
Yes. Okay. Great. With that, we’ll pause for a minute and see if there’s anyone in the audience that would like to ask a question. We have one upfront. There’s someone is running with the mic.
Unidentified Analyst
So you mentioned that you think the Fortune 50 to Fortune 100, right, that’s the group that can use separate boxes right and everybody else would benefit from using a consolidated box. What portion of the spend do the — security spend do they represent?
Keith Jensen
What percentage of the security spend with the Fortune 100 represents?
Unidentified Analyst
Yes. So the ones who want to have the — ones who can afford to have best-of-breed boxes for everything.
Keith Jensen
I think that, for us, in terms of our business off the top, it would be a very small percentage of the total business. Of the industry, I’ll refer to somebody else that may have a breakdown by the Fortune 100 spending. I don’t.
Ken Xie
Yes, I don’t have that breakdown.
Keith Jensen
Yes. I would — for us — and the reason I don’t — we should offer is that our business model, 1/3 small, 1/3 mid, 1/3 large enterprise. And then amongst the geographic split, if you will, the U.S. for us is less than 30% of total business and 70% is international. So probably we spend a lot more time looking at the total available market, if you will, in the segment you’re referring to.
Brian Essex
Now you have been going upmarket, though.
Keith Jensen
Pardon me?
Brian Essex
You have been going upmarket.
Keith Jensen
Extremely successfully, yes. Absolutely. Yes.
Brian Essex
One second.
Unidentified Analyst
Are you seeing a change in what drives deal closures over the last few months, i.e., people more cost conscious or platform-based for your products?
Ken Xie
We definitely see some more consolidation trend. So that’s where if it’s an existing customer, they also look at the other product we offer, so like the whole approach. Also, some deal definitely take a little bit longer time to get close. But on the other side, we also see a lot of new total addressable market or use case. So that’s where whether the SD-WAN, the OT area, which is still pretty healthy, pretty strong growth. So — and also even Internal Segmentation. And also, I keep mentioned SMB from the last quarter earnings release, we see also SMB’s pretty healthy growth.
Unidentified Analyst
Yes. It seems like you guys — solution is like a combination of hardware and software. Are those solutions are like mainly focused on how to provide more efficient algorithm or software? So do you see any kind of threat from AI sort of — like sort of AI solution in the future or anything like that?
Ken Xie
Yes, we’re keeping working on AI for probably more than 10 years, both in the intelligence side and also in the product data analysis side and also in the supporting side. So that’s where we see kind of — there’s probably more dependent application, how AI can be used in all these different areas. We definitely see some benefit of using AI and lower the cost, be more efficient and also more automate a lot of our response on intelligent area.
But it’s so far from probably finance impact, not see much yet, pretty much still — but it’s really the technology just like other technology, we keep — keeping using that. So we’re open for a lot of new technology. We want to keep inside the company a lot of R&D projects that’s more forward-looking for the next 5 to 10 years, including a lot of different areas, like certain [indiscernible] computing, how this may impact the security and some other new technology, 5G, 6G all those areas.
Keith Jensen
We posted a similar question to 2025 CIOs and CISOs at the Accelerate event. And the question was, where do you think you start to see AI or chat up here first, offense or defense? And unanimously, it was unfortunately offense, right? The reality is the bad actors can bring things to market, so to speak, much faster than companies can. There’s not a lot of QA perhaps that goes on. There’s not a regulatory oversight. And historically, I think consistent with history, you’re going to see a reaction from those CIOs and the CISOs about how are they going to go about defending themselves. And in terms, what are the technologies that the vendors are going to provide.
Brian Essex
Just to follow up on that, in the last 3 years, you’ve been working on the ASIC, the 3 ASICs. Could you talk about how the change in speeds of those ASICs? Where are they now? And how is that going to be important with your strategy in sales? Like how is it so important to you on a go-forward basis the next couple of years?
Ken Xie
Yes. We have 3 ASIC family. So the content processor, network processor and also the — we call security processor, but it’s more like . So the latest announced already this year is really the fifth generation of SOC — sorry, SP5 kind of — which doubled the application we use ASIC accelerate from 7 — SP4 to SP5 is a 14 application we can accelerate now and also using the pretty latest technology, which this ACI will be used in the product in the — probably within the next few months, and then that’s kind of helping drive for us pretty much the same cost, but you can see the speed will be double. The function will be much more function. And so this probably will help in drive additional use case and also even enhance a lot of current solution, both in SD-WAN and OT area, so give us more advantage compared to other competitors.
Unidentified Analyst
Palo Alto struggled with the first few versions for the SASE. It took them a few iterations. What’s your typical adoption curve? How does it look like for SASE compared to Palo Alto, for example, which took several years to roll it out? What’s your strategy?
Ken Xie
I’m not quite clear. But I think the current version of — I’ll call the first-generation SASE is definitely the — you look at how they process some traffic, you have [indiscernible] traffic to the PoP and within the PoP, there’s multiple machine, each running different functions to process that one. We feel that’s probably not quite efficient and also may not working for a certain company area, which they want to keep the data more with their own control. So that’s where — that’s the reason we try to build a SASE within the same OS and leverage both the cloud infrastructure, also the hardware ASIC to accelerate and more broadly deploy, also more leveraged a lot of service providers, telecom provider, cloud provider, their infrastructure instead of just a PoP for some SASE provider, which is very, very limited.
So that’s the way we feel SASE should be more integrated and also more broadly deployed and also more leveraged service provider both on the infrastructure in the resource, which we also want to support in this service provider with the best product we can offer.
Keith Jensen
Just jumping with 2 quick comments. If you talk about the time line of development, I would offer 2 questions or 2 comments. One is, we know because we’re so faithful to a single operating system, a single platform that there’s times that we may not be the first to market. I think we’re first to market with SD-WAN and OT, but I think in SASE, I don’t know that we would say that. In terms of when our journey started, I would point you back to an acquisition that we did probably 3 years ago, a small company called OPAQ. Before SASE, it was really well defined. I think it was still 15 technologies from Gartner. And we test drove that shortly after the acquisition with some customers and got their input. And that really, from that point forward, has been the team, the development team working on the actual product itself and getting into the operating system and bringing it to market. I think you heard Ken talk about that in a very outspoken fashion during the last earnings call. So I think that’s kind of the time line behind it.
Brian Essex
Great. I think with that, we’re out of time. So thank you, everyone, for joining us. And Ken, Keith, thank you very much as well.
Ken Xie
Thank you.
Keith Jensen
Thank you.