Hello and welcome to Fortinet's Fourth Quarter 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, we will conduct a question-and-answer session. Please be advised that this call is being recorded. I would now like to hand the call over to Anthony Luscri, Vice President of Investor Relations. Please go ahead. Thank you. Good afternoon, and thank you for joining us on today's conference call to discuss Fortinet's fourth quarter and full year 2025 financial results. Joining me on today's call are Ken Xie, Fortinet's Founder, Chairman, and CEO; Christiane Ohlgart, our CFO; and John Whittle, our COO. Ken will begin our call today by providing a high-level perspective on our business. Christiane will then review our financial results for the fourth quarter and the full year of 2025 before providing guidance for the first quarter and full year of 2026. We will then open the call for questions. During the Q&A session, we will ask you to please limit yourself to one question and one follow-up question to allow others to participate. Before we begin, I'd like to remind everyone that on today's call we will be making forward-looking statements, and these forward-looking statements are subject to risks and uncertainties which could cause actual results to differ materially from those projected. Please refer to our SEC filings, in particular the risk factors in our most recent Form 10-K and Form 10-Q for more information. 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. Also, all references to financial metrics that we make on today's call are non-GAAP unless stated otherwise. Our GAAP results and GAAP to non-GAAP reconciliations are located in our earnings press release and in the presentation that accompany today's remarks, both of which are posted on our Investor Relations website. As a reminder, this is a live call that will be available via replay via our webcast on the Investor Relations website. The prepared remarks will also be posted on the quarterly earnings section of our Investor Relations website following today's call. Lastly, all references to growth are on a year-over-year basis unless noted otherwise. I'll now turn over the call to Ken. Thank you, Anthony, and thank you to everyone for joining our call. We are very pleased with our excellent first quarter growth. Driven by broad-based demand across our platform, our billings increased 18% and revenue growth 15%, driven by product revenue growth of 20%. Our operating margin was strong at 37%, reflecting our continued focus on balancing growth and profitability. Secure Networking billings growth 13%, outperforming the overall secure networking market as we continue to gain market share. Fortinet remains the number one firewall leader with 55% unit market share and the highest product revenue among our cybersecurity peers. Fortinet has led the convergence of networking and security for over 25 years, and secure networking is expected to surpass the traditional networking by the end of this year. Our firewall leadership is driven by FortiOS, which unifies the networking and security, and our FortiASIC technology delivers 5-10x better performance than competitors while lowering the total cost of ownership and energy consumption, which provides a large advantage in securing AI data centers. We will introduce the FortiOS 8.0, and Fortinet's annual customer and partner conference is celebrated in March, featuring significant new capability in security and networking, especially in AI security such as agentic AI security in enterprise, plus a new bundled SD-WAN and SASE service. We also recently partnered with NVIDIA to leverage their BlueField-3 DPU to secure AI infrastructure. Unified SASE billing growth 40%, representing 27% of the total billing, supporting our belief that Fortinet is the fastest growing SASE leader on the scale. Our momentum is powered by three key advantages. First, Fortinet uniquely integrates leading firewall, SD-WAN, and SASE on a single OS, FortiOS, running on-premise or in the cloud, allowing customers to expand SASE in minutes and driving upsell across a large customer base. Second, we're supporting both sovereign SASE and public SASE. Sovereign SASE enables enterprise and service providers to deploy SASE in their own data centers to meet data privacy, sovereignty, and compliance requirements. We are seeing strong demand in sovereign SASE, and none of our major SASE competitors offer sovereign SASE solutions, making Fortinet's total unified SASE addressable market significantly greater than our peers. Third, our owned and long-term invested global cloud infrastructure, FortiCloud, delivers high performance and security at roughly one-third of the total cost of ownership of our peers. This differentiates positioning Fortinet as a leader in the 2025 Gartner Magic Quadrant for SASE platform as we continue to be the leader in SD-WAN, and I believe we will be the number one unified SASE within the next few years. AI-driven SecOps billings growth 6% in the fourth quarter and 22% for the full year, while ARR was up 21%. Our strong performance was driven by more than 20 AI-powered solutions as customers consolidated multiple security vendors onto Fortinet's platform. In addition, Fortinet's leadership in security also extends to operational technology and cyber-physical systems, offering enhanced visibility, robust threat protection, and secure connectivity. Demand for OT solutions is driving significant growth, with billings up more than 25%. Finally, we reaffirm the midterm target we share and our annual guidance, reinforcing our commitment to continue to grow faster than the overall market, including delivering billings and revenue CAGR above the market growth of 12% and achieving the Rule of 45. I would like to thank our employees, customers, partners, and suppliers worldwide for their continued support and hard work. I will now turn the call over to Christiane. Thank you, Ken, and good afternoon, everyone. As Ken mentioned, we are very pleased with our strong fourth quarter performance, exceeding the high end of guidance across billings, total revenue, and operating margins. This outperformance reflects solid global execution and broad-based demand for our solutions, with product revenue growth accelerating in the second half of the year. We are well-positioned to deliver durable, long-term growth as a leader in large and rapidly expanding cybersecurity markets, including Secure Networking, Unified SASE, and security operations. This opportunity is supported by strong secular tailwinds such as vendor consolidation, the convergence of security and networking, ongoing technology upgrades, and the expansion of enterprise attack surfaces across cloud, OT, and AI. Our strong network security foundation drives adoption of SD-WAN, SASE, and SecOps while creating significant opportunities to upsell integrated solutions across enterprise customers. Building on these market dynamics, our leadership in secure networking, combined with our unified FortiOS operating system and broad platform, enables customers to deploy security anywhere across private, public, and hybrid multi-cloud environments and in any form factor, including hardware, software, and SaaS. As a result, our platform approach drives strong customer expansion, increases wallet share, and supports growth across both existing and new markets. In addition, we benefit from durable competitive advantages through our proprietary ASIC technology and single integrated operating system, which delivers superior performance, lower total cost of ownership, and meaningful differentiation versus peers. At the same time, continued investment in R&D across custom silicon, OS convergence, AI-driven security, quantum readiness, and Fortinet-owned cloud infrastructure supports rapid innovation and organic growth. Finally, our highly diversified business across geographies, customer segments, and industry verticals reduces volatility and enhances resilience across economic cycles. Complementing this diversification, we operate a strong and balanced model with a Rule of 45-plus profile, robust recurring revenues, strong free cash flow generation, a solid balance sheet, and a disciplined shareholder-focused capital allocation strategy. This balanced model supports our confidence in our 2026 guidance and continued long-term shareholder value creation. Now, moving to an overview of our strong fourth quarter results. Total billings grew by 18% to $2.37 billion, driven by strong growth in Unified SASE, OT security, and success in large enterprises in the US and Europe. Unified SASE billings grew 40%, driven by growth in cloud security solutions. Furthermore, SASE adoption momentum has remained strong, as 16% of our large enterprise customers have purchased FortiSASE, an increase of over 50% highlighting our continued expansion of FortiSASE in our customer base. Operational technology use cases continue to contribute strong growth to our success, with billings growth of over 25%, with broad-based demand for both our hardware and software solutions. Our continued momentum in large enterprise drove growth in the fourth quarter, as the number of deals greater than $1 million increased by over 30%, while the total deal value grew by over 40%. The U.S. and Europe were the largest contributors to growth in $1 million-plus deals, each delivering more than 30% growth. In addition, we continue to expand our customer base. 7,200 new organizations selected our unified FortiOS platform, reinforcing our strong position across all market segments. With regards to ARR, unified SASE increased by 11% to $1.28 billion, which included an increase of over 90% for FortiSASE ARR, while SecOps ARR increased by 21% to $491 million. Total revenue grew 15% to $1.91 billion. Product revenue increased by over 20% to $691 million, reflecting broad-based growth driven by strong performance across our product portfolio as we continue to gain market share. Both hardware and software grew 20%, supported by technology upgrades, upselling, and expansion into new use cases. Service revenue grew 12% to $1.21 billion, reflecting lower product revenue in 2024, while service billings growth was strong at 18% in Q4. As a reminder, we view product revenue growth as a leading indicator of future service revenue growth, as shown on slide 20 of the earnings presentation. Now, I'd like to highlight some key deals that demonstrated our market leadership and customer expansion. In the competitive seven-figure upsell deal, a large consumer services company, an existing Forti SD-WAN customer, selected FortiSASE to secure more than 10,000 users as part of its next-generation access and security transformation. The win was driven by our single OS approach that tightly integrates SD-WAN and SASE, enabling rapid expansion to SASE and delivering strong performance at a meaningfully lower total cost of ownership. The customer chose Fortinet for our unified FortiOS operating system, which reduces complexity by enabling a single, consistent security policy across FortiSASE and FortiGate devices, while leveraging our globally distributed POPs. By integrating our POPs into their existing SD-WAN fabric, the customer has simplified centralized policy management and enabled secure private access at scale, which highlights our platform model. Next, a leading global data center provider supporting AI and cloud workloads signed an eight-figure deal with Fortinet to support its rapid global expansion. The customer selected Fortinet for a predictable, scalable investment model that aligns security growth with its accelerated data center build-out. As the company standardizes on our FortiGates, FortiSwitches, and FortiAPs, our solutions will streamline operations across IT and OT environments, including critical power, cooling, and physical security systems. This strategic partnership enables the customer to scale securely and consistently, supporting its long-term global growth strategy. In another key win, a major utility company expanded its partnership with us through a high seven-figure $ agreement to secure its operational technology environment. The deal includes a comprehensive set of solutions covering network segmentation, identity and access management, and zero-day threat detection across the utility's advanced distribution management system, along with the adoption of FortiAI. This competitive win was driven by our ability to automate critical security operations, our proven expertise in protecting critical national infrastructure, and a compelling price-for-performance advantage. Lastly, in a competitive displacement win, a Fortune 100 company signed an eight-figure multi-year agreement for Unified SASE, selecting our virtual firewall solution to secure approximately 1,800 store locations. The customer chose FortiGate VM through our FortiFlex points-based consumption program, which supports flexible hybrid firewall deployments and a broad set of security solutions. Fortinet was selected after a highly competitive evaluation due to the flexibility of the program and our ability to meet demanding technical requirements at scale, enabling the customer to consolidate security on a single architecture while gaining deployment flexibility, centralized management, and long-term cost efficiency to support future growth. Turning to margins and cash flow. Total gross margin of 80.3% was better than expected, which is especially impressive given the strong product revenue growth and related mix shift. Operating margin of 37.3% exceeded the high end of the guidance, mainly due to stronger-than-expected revenue growth and cost management. Free cash flow was very strong at $577 million, and adjusted free cash flow was $589 million, up $130 million, and represented a margin of 31%. We repurchased approximately 730,000 shares of common stock for $57 million during the fourth quarter and an additional 4.6 million shares for $356 million quarter to date. In January, our board of directors approved a $1 billion increase in the authorized stock repurchase amount, and the remaining share repurchase authorization as of today is approximately $1.4 billion. Turning to our full year 2025 results, where we once again exceeded the Rule of 45 for the sixth consecutive year. Billings grew 16% to $7.55 billion. Our faster-growing pillars of Unified SASE and SecOps grew a combined 24%, representing a two-point mix shift year-over-year and six points over the past two years. The two pillars now make up 36% of total billings, reflecting the value of our integrated platform approach and the convergence of security and networking and success in cross-selling our other solutions. Total revenue grew 14% to $6.8 billion, driven by strong product revenue growth of 16%. Service revenue grew 13% to $4.58 billion, representing 67% of total revenue. Gross margin of 81.3% was flat despite a shift to product revenue and investments in the build-out of our data center infrastructure. Operating margin increased 50 basis points to a record of 35.5%, resulting in operating income of $2.41 billion, which is up 16%. Our GAAP operating margin of 30.7% continues to be one of the highest in the industry. Earnings per share increased 16% to $2.76. Free cash flow was a record of $2.21 billion, representing a margin of 33%, while adjusted free cash flow was $2.5 billion, representing a margin of 37%. Our adjusted free cash flow CAGR of greater than 20% of the past five years demonstrates the strength of our business model. Now, moving on to guidance. As a reminder, our first quarter and full year outlooks, which are summarized on slides 24 and 25, are subject to the disclaimers regarding forward-looking information that Anthony provided at the beginning of the call. For the first quarter, we expect billings in the range of $1.77 billion-$1.87 billion, which at the midpoint represents growth of 14%. Revenue in the range of $1.7 billion-$1.76 billion, which at the midpoint represents growth of 12%. Non-GAAP gross margin of 80%-81%. Non-GAAP operating margin of 30%-32%. Non-GAAP earnings per share of $0.59-$0.63, which assumes a share count between 746 million-750 million. Infrastructure investments of $80 million-$120 million. A Non-GAAP tax rate of 18%. Cash taxes of $45 million-$50 million. For the full year, we expect to achieve the Rule of 45 for the seventh consecutive year and expect billings in the range of $8.4 billion-$8.6 billion, which at the midpoint represents growth of 13%. Revenue in the range of $7.5 billion-$7.7 billion, which at the midpoint represents growth of 12%. Service revenue in the range of $5.05 billion-$5.15 billion, which at the midpoint represents growth of 11%. We expect service revenue growth to pick up in the second half of 2026, driven by accelerating product revenue growth in 2025 as a key leading indicator. Non-GAAP gross margin of 79%-81%. Non-GAAP operating margin of 33%-36%. Non-GAAP earnings per share of $2.94-$3, which assumes a share count of between 747 and 753 million. Infrastructure investments of $350-$450 million. Non-GAAP tax rate of 18%. Cash taxes of $350-$400 million. Before we open it up for Q&A, I just wanted to share a few modeling considerations. As a reminder, the majority of our service revenue is recognized ratably on a daily basis, and the first quarter this year has two fewer days than Q4. From a margin perspective, our first quarter operating margin guidance reflects the timing of several marketing events. Additionally, the recent weakness of the U.S. dollar may create a modest headwind in the first quarter. Finally, we plan to repay the first tranche in the amount of $500 million of our senior debt at maturity at the end of the first quarter. This, alongside lower market interest rates, will reduce net interest income for the year. As we look to 2026 and beyond, we are confident in our growth strategy, driven by significant secular tailwinds such as rising cybersecurity spend, the convergence of security and networking, vendor consolidation, and the increasing need to secure AI and OT environments. We believe we can sustain product revenue growth of 10%-15% over the midterm on average and reaffirm the midterm target shared at our analyst day, including delivering billings and revenue CAGR above 12% and achieving the Rule of 45, reinforcing our commitment to continue growth beyond that of the overall market. Our leadership in innovation and price-for-performance enables the lower total cost of ownership across Secure Networking, Unified SASE, and SecOps, positioning us to outperform the overall market. We are well positioned to deliver durable, long-term growth, considering our highly diversified, cash-generative, and profitable business. I will now hand the call back over to Anthony to begin the Q&A session. Thank you, Christiane. As a reminder, during the Q&A session, we ask that you please limit yourself to one question and one follow-up question to allow others to participate. Operator, please open the line for questions. Thank you. If you would like to ask a question, please click on the Raise Hand button at the bottom of your screen. When it is your turn, you will hear your name called and receive a message on your screen notifying you that you may unmute yourself. We will allow a moment for the queue to form. Our first question comes from Shaul Eyal at TD Cowen. Shaul, your line is open. You may unmute and ask your question. Thank you so much. Good afternoon, everybody. Congrats. I'm interested in what drove the strength or the change that you've seen during the quarter, specifically the Unified SASE billings and the strong guide. What gives you confidence into 2026? Yeah, that's a great question, Shaul. Thank you. Actually, you can see the Unified SASE grow 40%. That's where we see probably the fastest growing Unified SASE vendor and scale because the three unique advantages I mentioned. First, actually, the Sovereign SASE we see very strong growth. I believe the Sovereign SASE market, probably even bigger than the current public SASE, that's all the other vendors doing right now. But we don't see any of them try to get in the Sovereign SASE or have the function to support in Sovereign SASE, which we kind of designed the SASE in the beginning and try to support in our service provider and all these things, which is all kind of Sovereign SASE approach. That's have a huge growth. Sovereign SASE usually buy the product first, then deploy in the customer or service provider data center, and then we'll keep supporting with additional service. So that's a huge market opportunity. We believe we're the only leader in the space for the sovereign SASE. Second, we have three functions into single OS: network security, SD-WAN, and SASE. That actually gives us a huge advantage level or huge customer base. None of our competitors have this advantage. That's making us grow very quickly. Both our sales and the partners see the huge advantage and suddenly ramp up very quickly. Then also long-term because of our investment in the infrastructure. So we do see we have a cost advantage. So our cost is about one-third compared to some of our competitors, right? So that's also we can pass all this kind of cost saving to customer and play the long-term game. That's we see drive our strong growth of our Unified SASE. Maybe Christiane and John have some other points. Yeah. So I think we saw really good traction on our execution in Q4, and it was very broad-based. So as you heard from me, I mean, we were great in enterprise. We executed well on the OT side. We had successes in SASE. AI was a big driver. So that gives us significant confidence for 2026 that these growth drivers are going to continue because the demand is definitely there. Yeah. And I would just say, obviously, the cybersecurity market is growing really nicely. As Ken highlighted, we have a lot of competitive advantages where we feel like we can grow faster than the market and faster than each of the three pillars that we focus on as we did throughout 2025. And we see a lot of different growth drivers amongst the three pillars, the OT momentum. We see opportunities with AI and with quantum. And when you look at our business, it's really diversified in a number of ways, geographically based on customer segments and also industry verticals. And then if you look at our solution sets as well, it's diversified amongst the three pillars that we focus on. And when we focus, we have a track record of doing really, really well. If you look at what we did in SD-WAN, we focused and did really, really well starting around 2018 or so and really grew that business. We're really focused on Unified SASE in these other areas as well and expect to do well just like we've done in the past. Got it. Thanks for this color. Maybe just a brief follow-up. Ken or team, what are your views on AI-eating software, specifically as it relates to cybersecurity? We have seen we're sitting here in front of the screens. Probably everyone else from my peers here seen software demise. Cyber has been holding a little better, but I think today, the past few days, it hasn't been fun at all. Just curious as to your views whether security actually augments AI or maybe it's the other way around. Yeah, definitely changing, especially the enterprise landscape. Some software probably also need to be changing to see whether they take advantage of the AI or they kind of falling behind, which let AI to eat some of the software. But on the other side, we do see AI as an opportunity in the cybersecurity space because also how to control some of the AI. We do see in the enterprise environment as a kind of see some strong demand in whether internal segmentation to kind of control some of agentic AI or some other data leakage prevention. So on the other side, the AI data center, also we see some huge opportunity there. I think we'll present more detail in the next month's Accelerate if you see some of the presentation I did in the last few Accelerate like six years ago. I do see the edge will eat the cloud and the mobile. So that's where I think that sometime some of these edge AI solution or edge and the immersive technology with AI, I think it will be kind of changing some of the traditional web software infrastructure, which we keep invested, we keeping kind of prepared this in the last 5-10 years. So we see this as an opportunity to both leverage AI and also helping enterprise to secure AI. Thank you so much. Thank you. Our next question comes from Saket Kalia at Barclays. Saket, your line is open. You may unmute yourself and ask your question. Okay, great. Hey, guys. Thanks for taking my questions here. Ken, maybe first for you, can you just talk a little bit about how you're navigating the current environment in memory? And maybe as part of that, Christiane, can you just talk about how you're thinking about the impact of higher memory prices as part of your guide in 2026? That's another great question. Actually, we prepare for this kind of supply chain things. You can see 5 years ago when there's a supply chain issue during COVID, we're doing quite well because we do have inventory on average about 6 months, which try to buffer during this kind of time. And also we keeping mentioning during the analyst day, we're maintaining a healthy margin. So we're adjusting some of the price based on our margin. And because even we adjust some price, we still have a huge advantage leverage our technology, whether the ASIC gave a 5-10x better performance for the same function, same cost. And at the same time, the OS offer much more function than other competitors. So even with a little bit recent price to maintain our margin, we still feel we are very competitive compared to any other competitors. So we view this just like 5 years ago as an opportunity to gain a market share. So that's where we're well prepared with good inventory and also managed operation manufacture directly with our own operation center worldwide. And also with the technology, we feel we even a little bit price raise, we still very competitive, will not reduce our growth, our market share. Christiane, other things you want to add? Yeah. As Ken mentioned, we are planning to maintain our kind of profitability and gross margins on our products in two ways, right? One is by negotiating and making sure we get the components early, but also we've already raised some prices where we have some component cost pressures, and we will potentially continue to do so throughout the year depending on what the components prices do. Yeah. The other part can help in the margin is we're starting to see the service revenue will be turned around probably during 2026 this year. And also when we shift in more sales into whether Unified SASE or the AI-driven secure app, which has the most service, we feel the margin also will be kind of improving from that angle, which has the most service. So that's also helping. But there's other things we also kind of measure whether the currency issue of some other. But we kind of feel we are prepared. And without all the diversification we have, whether by vertical, by geo, we feel we kind of maintain the margin and keeping the Rule of 45. Got it. Got it. Christiane, maybe for my follow-up for you, it was a great billings result in the quarter and good to see the guide. Can you just, and apologies if I missed it, but can you just remind us what billings duration was this quarter? And to Ken's point, just as we think about that driving services revenue for next year, is there a way that you just have us think about the shape of services revenue for next year through the year? So from a billings duration perspective, because of all the enterprise deals, it was slightly up. It's around 2.5 years. And so yeah, not too much different than it is normally in a Q4. Got it. Very helpful. Thanks. Our next question comes from Rob Owens at Piper Sandler. Rob, excuse me, your line is open. You may unmute and ask your question. Great. Thank you for taking my question. I know you highlighted the Sovereign versus public SASE as one of the strengths. Curious if you can give us a sense of what your actual revenue mix looks like, Sovereign versus public, number one. And then number two, to kind of follow up on Saket's, I think it was his third question, but I'm not going to call him out. When you look at the shape of services revenue and the recovery there, and I know you talked about the second half being stronger, but it doesn't seem to track with where you've been historically in terms of a recovery given what you saw with product revenue this year. So is there something unique in 2026 or something unique going on that's causing that to lag just a little bit more than maybe you've seen historically? Thanks. For the service or product revenue, as you can refer to the page 20 on the presentation, we gave out the last 16 years since IPO, the growth between the service revenue and the product revenue. You can see the since changing the product revenue lead indicator of a service revenue. So we do believe this year with the last few quarter with the product revenue in the last few quarter grow stronger. That's what helping drive the service revenue turn around, starting grow faster. On the first question, sorry. Sorry, what's the first question? Sovereign versus public SASE mix, correct? Yeah. I believe the Sovereign SASE market is probably even bigger than the current public SASE market, but kind of approach is different. The Sovereign SASE market, the service provide enterprise handle by the product first, which also we see the product growth very strong in Q4 and also believe will helping drive this year product revenue growth with Sovereign SASE. We have not compared the sovereign and also the public yet, but I believe probably pretty close to each other right now. But Sovereign SASE, we see more strong growth because we don't see any of our competitor offer this Sovereign SASE approach. And also with the product with the ASIC acceleration, it's a huge advantage for us. So that's why I do believe we have probably doubled the total addressable market in the SASE market with the sovereign SASE supporting the service provider enterprise with their own kind of SASE approach. All right. Thank you. Our next question comes from Gabriela Borges at Goldman Sachs. Gabriela, your line is open. You may unmute and ask your question. Hey, good afternoon. Thank you. I know last year we shifted the conversation away from refresh tied to end of support and more towards refresh tied to technology upgrade cycles. Tell us a little bit, Ken and Christiane, what you're seeing in the pipeline from the 2020 and 2021 refresh cohorts, their willingness to engage across the platform, and do those cohorts look more meaningful or notable than the cohort that you had refreshed last year? Thank you. Yeah. I think there are two things. One is really we mentioned on the Analyst Day is end of support, which we say there's 11%, 11%-12% that will be end of this year, end of support. But actually, doing some communication with the customers, some of them still want support beyond end of support. So I think we kind of found some solution probably win-win. We may extend the end of support instead of try to force customer to buy the new product. We may give them actual extended service, but we do charge more service fee, both hardware RMA fee and also the maintenance software fee. So that's a win-win situation. Then also, like I said, that's not a major drive of this growth because the growth more come from the new function, come from all these kind of new demand in the market. The second refresh is that's where in the past, probably the average hardware product, whether network security, networking, even server, probably after 5-6 years, they may have to get a new one. So we do see 5 years ago during the supply chain COVID time, there's a strong growth of product revenue. You can see on the page 20, 21, 22, there's a pretty strong product revenue growth like over 40%. Some of that one probably will helping in the next couple of years. But like I said, the better driver will be new function like how to supporting the SASE in the ZTNA Zero Trust Network environment, how to go internal segmentation, supporting enterprise to convert from the traditional networking to the network security and helping protect the data level, whether the data leakage or some kind of AI agent. That's I feel is the one to drive the strong growth. Just like the strong growth come from the unified SASE, it's a 40% in Q4. I feel customer definitely more interested in if you have a better function and also kind of they can see the future of a long-term advantage. That's what more drive customer to buy. Otherwise, they may replace the product with some other different vendor. So that's I see is more important. We more focus on how the strong function, how the future kind of advantage we have, and also how to leverage a long-term investment we have, whether in the AI, in the quantum, in the infrastructure. That's give the customer confidence also keeping our partner with the 49. Yeah. I would confirm. Thank you for the detail. Ken, please, Christiane. Yeah. I would confirm what Ken said. Based on the customer conversations we are having, the driver is that they need additional security. And so as they look at FortiSASE or similar, they upgrade their underlying technology at the edge as well. Yeah. That makes sense. Thank you. Ken, my follow-up is on how to think about the second derivative of AI compute demand. So more on the inference side, how does that impact what you see from a network security standpoint and a network traffic standpoint in particular? That's everybody still kind of because the space changing so quick with AI, we're definitely trying to working closely with our customer, with our engineer, try to develop all this technology, try to do better protection. But in general, I think we kind of are more leaned to whether the edge computing and also how the broad infrastructure protection instead of too much weight on the uncertain cloud or certain software. That's where we kind of a lot of long-term investment we have, whether in the ASIC chip, in all these kind of system level, in the infrastructure level, and also in the supporting. I feel it's kind of more broad approach what we helping better instead of just too much focusing one single area. Thank you for the detail. Thank you. Our next question comes from Fatima Boolani at Citi. Fatima, your line is open. You may unmute and ask your question. Oh, good afternoon. Thank you so much for taking my question. My first question is for you, Ken. The strength in unified SASE at 40%, your product growth this quarter in excess of 20%, that paints a really interesting picture that maybe is in contrast to some fears around SASE or FortiSASE rather being maybe a force of cannibalization of the product refresh opportunity. And I know you alluded to sovereign SASE specifically, but I'd be curious to get your perspective on how you are independently driving strong growth in SASE and independently driving strong growth from a product refresh perspective that doesn't seem to be affirming fears of cannibalization, especially for branch and branch location environments. And then I have a follow-up for Christiane, please. I have to say that that's the same SASE cannibalize that some of the networking security come from some competitor. I never think in SASE will be cannibalized all this network security, even a branch. I feel will be complement and also will be add on additional business opportunity. That's what we're doing both in the networking and then traditional network security and also SD-WAN and SASE for many, many years. So from all angles, we do see SASE do offer additional business opportunity, additional product service both in the customer level, in the service provider level, and also in some other branch approach. And eventually, may even try to supporting working remotely, working from home, all this kind of approach. And also will be leveraged both the infrastructure in the public cloud, in the colo, and also in your own kind of infrastructure. So that's where we see there's a lot of different approach to SASE and the different customer, different region may have a kind of different need. So that's where we kind of in the very beginning when we developed SASE technology, probably like 6, 7 years ago, we more believe the Sovereign SASE service provider kind of SASE will be the future. That's where we kind of keeping investing in this area. But also when we launch our own kind of SASE, a little bit over 2 years ago, we also feel kind of working side by side with service provider offer our own SASE and even some of our infrastructure also very important. So that's where we see the SASE actually will be complement also will be additional business opportunity add beyond the traditional networking and network security. In the branch office, you still need a physical device. That's an advantage we have. We have like we call three-in-one. You do get a networking device, network security device, and a SASE device into one solution, one 40 or 140 FortiGates in the branch office. That's probably not our competitor offer this kind of a solution. And that's we see is a huge opportunity. So we don't see SASE will be replaced branch office and network security solution. And you can see the unit shipment even in the branch office solution in the low end, in the retail grow very strong. Some are because of SASE, but some also they try to buy, deploy, I believe the future they can enable whether the SASE or the SD-WAN, some other additional security service they needed. But they do need to have a device in the branch office. They do need some kind of an edge solution to handle all the both security and networking. I really appreciate that detail. Thank you, Ken. Christiane, I wanted to go back to some of your comments with respect to pricing actions in response to an earlier question and something you mentioned, the prepared remarks. Was hoping you could quantify what degree of gross pricing increases you've been able to roll out in the base and to the extent there's a net pricing yield associated with that and how that's influencing your guidance? And maybe to just take that a step further, is that one of the reasons why we're maybe seeing a slower ramp in the services trajectory of the business because you are seeing a price action yield on the product, which may not necessarily be translating to services? I'd love for you to just explain that for all of us. Thank you very much. The pricing actions are on specific products and, of course, dependent on the components that go into it. Overall, I think it's between 5% and 20%. That also positively impacts services because our service pricing is a% of list price. Of course, it's going to take longer until that materializes in service revenue, right? For a product, you will see it in the next couple of quarters. For service revenue, it's going to take a bit. Thank you. Our next question comes from Junaid Siddiqui at Truist. Junaid, your line is open. You may unmute and ask your question. Great. Thank you for taking my question. Just had a question on your software firewall business. As AI transformation across enterprises accelerate growth and cloud workloads, do you feel that your software firewall business, which has been growing at a nice rate, could inflect even further? And how do you think about that hardware, software, firewall mix going forward? I think Q4, we see the software firewall and the hardware firewall grow almost the same pace about 20%. So the partnership with NVIDIA, the BlueField-3 DPU, that's probably more leverage a software approach. And also we do working with some kind of some other service provider, cloud provider to offer some software. But I do believe we have also more advantage leverage our own kind of secure ASIC, which kind of gave a 5-10 time better performance compared to some software approach and with lower cost. And that's probably but I see so far it's almost the same growth pace. For most of our enterprise customers, I would say they have hybrid models. So they buy our hardware, but they also buy virtual firewalls. Great. Thank you. Just got a follow-up as well. Great to see the billings number. But just wanted to ask about specifically billings for SecOps. It seems like it decelerated from Q3. Could you maybe just unpack that in terms of what were some of the drivers there? Yeah. I don't want to call it a driver. I would say if you look at the annual growth, billings growth for SecOps, it's very compelling. ARR growth is compelling. Revenue is compelling. So billings is always a little bit of a more volatile number. And in Q4, we had a lot of success in secure networking and unified SASE, but our SecOps portfolio is solid and we continue to see interest and demand. And so I wouldn't take this one quarter as a trend. Yeah. Also, the Secure Networking and Unified SASE can be a leading indicator for some future SecOps because they tend to buy the product first and then eventually will also handle the additional operation service. I have to say because a lot of our sales and the partners see the Unified SASE demand so strong, they probably shifting more focus in that. And they can see that's more easy win. But security is a very SecOps is very long tail. We have so many different products with AI. I feel probably looking at annual number will be more kind of adjustable instead of some quarterly number. Great. Thank you. Our next question comes from Patrick Colville at Scotiabank. Patrick, your line is open. You may unmute and ask your question. Thank you so much for taking my question and nice end to 2025. Could I just get a clarification on the pricing comments because I thought that was interesting? Fortinet is a company that over the years has clearly demonstrated pricing power. We saw that most evidently in 2021, 2022. Good to see that lever being pulled again. Christiane, did you say that expect pricing for appliances in 2026 to go up between 5% and 20% on average? It depends on the appliance, but that's what we are targeting. Yes. Yeah. We can actually adjust by the price monthly. We usually give a distributor like a 30-day notification. So some of them already see we probably will raise the price next month. But on the other side, we do have a buffer. That's where we feel we can kind of react this kind of situation better than other competitors. And we also have a good global operation with our own operation center. We manage manufacturer directly. Okay. Okay. And I guess I just want to ask maybe just kind of a question zooming out. I mean, we've seen your peers really accelerate the pace of M&A. You saw that at your kind of endpoint peer. You saw that at your firewall peer, both for tuck-ins and for larger deals. Fortinet hasn't done that over the last few quarters. What's your thinking in terms of M&A philosophy and how we should think about that into 2026, whether they're tuck-in deals and need it in certain areas? Thank you. I think the technology we develop, whether the FortiOS, FortiASIC, and integrate all this function together, sometime probably more using internal innovation will be better. But we do open for merger acquisition. And also we do look in different opportunities, especially in the secure operation area. But on the other side, we have a discipline, whether the Rule of 45 or some healthy margin. And also we try to plan the integration before the acquisition. I think with the market a little bit more reasonable now, I think definitely there's more opportunity when we look at the merger acquisition. But we do have the discipline, which we maintained the last 25 years, kind of tend to acquire the technology or some talent instead of trying to buy some market or customer base. Christopher, thank you so much, Ken. Thank you. Our next question comes from Adam Borg at Stifel. Adam, your line is open. You may unmute and ask your question. Excellent. Thanks so much for taking the question. Maybe just thinking about your ASIC chips. I don't want to front-run anything from Accelerate, but we've been talking about the opportunity for ASIC chips this year. Just remind us what kind of opportunity there is when those chips come out. How long after an announcement do you typically see those being adopted by customers? Obviously, it goes into test first and ultimately production. Any color there in terms of that and the ability to drive innovation and additional attached going forward? Thanks. We see the new ASIC chip will come out this year, but we tend to announce together with the product. But also usually the new ASIC chip also takes some time to build into the product. That's where the next months acceleration is more focused on the FortiOS first. And the ASIC, we try not to get excited too early, put it this way. But definitely it's a good technology. We're improving the performance. We'll add more function there. But we usually announce the product after we deliver instead of some competitor trying to announce ahead of time. So that's why we want to keep in the same way, same culture. Once we have the related product or we are very sure we can deliver to the customer partner, then we announce it. That's incredibly helpful. Maybe just as a quick follow-up as a clarifying question, when we talk about the refresh opportunity, be it COVID or otherwise, when those boxes typically come up, and I'm sure the answer is it depends, but do you typically see a one-for-one box refresh where they come back and buy more boxes? I guess the follow-up to that would be, what is the kind of the sales motion about cross-selling and upselling SASE and SecOps as part of those refreshes? Thanks so much. We do see there's more kind of what do we call attack surface or there's more area you can deploy the network security and also the convergence also starting kind of take more effect. So now that we see a lot of network security deploy inside the company do the segmentation, replacing some traditional network gear. Even our own kind of demand for FortiSwitch, FortiAP, which has a FortiLink technology can link to FortiGate as more like a hardware agent as a SASE also see pretty good growth. On the other side, there's OT security. There's some other wider supporting work from home. Eventually, the network security can expand into the consumer space. That also could be the new opportunity. But I say if you look at this, it probably depends on the vertical, also maybe depend on certain region how mature the networking network security is. I have to say, by vertical, like five years ago, the first strong growth in consumer, some retail, right? So, in retail or some other online service. So that part, we do see they heavily use in the box. And then this kind of with a 3-to-1 like networking network security and also the SASE kind of into the same box. That's where probably the only one can solve that issue. So we do see that will continue to be the market for us, basically. On the other side, there's a lot of where we're in the data center with some other kind of bigger infrastructure. That's probably the new FortiASIC chip or some other solution we will have like a Forti Gate or some other thing maybe will help. But it depends on. I do see the market get definitely more broader, bigger because there's more attack surface to cover and also more function needed both inside enterprise and also in the consumer and also in different region. To your other point, we do see any refresh opportunity as an opportunity to expand. When you look back 5 or 6 years, we didn't have a lot of the solutions that we have right now that are at the maturity level that they're at right now. Anytime we can have those conversations, whether through our partners or through our sales force, it's an opportunity for us to expand to not only sell the firewall, but to sell beyond the firewall. I would say any of the discussions with regards to firewall upgrades at the edge is combined with the FortiSASE discussion because it's so compelling for our customers to expand. Our last question comes from Brian Essex at J.P. Morgan. Brian, your line is open. You may unmute and ask your question. Great. Thank you very much for taking the question and congrats on some solid product growth this quarter. I guess I wanted to just maybe one question with regard to memory questions that were asked previously. Ken, just really appreciate the fact that you have six months of inventory supply. Could you help us understand the dynamics there? Maybe what percentage of your bill of materials is exposed to memory? And then how your contractor agreements, how long do you have those committed out? Just to understand it as we see the acceleration in prices here. Maybe a little bit more clarity in terms of how do you manage your supply chain? I think we are similar to any other system server. Tend to be 10%-20% cost come from the memory because we also manage a lot of manufacturer component directly with the supplier instead of go through some third party. That's where we tend to have some direct contract. That's also depending on the lead time. I think this time probably a little bit different than five years ago. Five years ago, I see that there's a communication chip. There's some CPU. There's a lot of issues. This time probably more related to memory. Actually, you can track in the memory. There's a daily memory price tracker, actually. And you can see somehow the last couple of days since starting coming down. So it's kind of interesting. But for us, like I said, we do maintain six months inventory. Also based on the growth, based on the projection, sometimes we also kind of up and down and also depend on the product. We feel this is the opportunity just like how we did five years ago. It's the opportunity for us to gain market share. We're well prepared for that. Right. Super, super helpful. Maybe quick follow-up for Christiane. On the secure networking side, how much of that was networking, like switches and access points versus more firewall mix? Just kind of curious to get the mix there and how that might influence what you're thinking in terms of software services acceleration in the back half here. So it was a broad-based mix. So pretty much similar growth rates across all components. So we had good firewall growth as well as APs and switches. Yeah. Also, the reason they buy the FortiSwitch and FortiAP is because we have this what we call FortiLink technology. They link all the FortiSwitch and FortiAP to the FortiGate. And then, using FortiGate to process certain traffic, like if Wi-Fi, they identify there's a visitor, that traffic probably goes to the FortiGate. It's more like a kind of a local SASE approach with a hardware agent, which is FortiAP with the hardware agent. The same thing for the FortiSwitch. That's actually a lot for the internal segmentation. So to kind of broaden security inside the local area networking, that's where the convergence we see happening. But I think on the percentage, definitely the FortiGate is the key part. It's all led by the FortiGate. The other part is pretty small, I have to say. All right. Really helpful color, Ken. Thank you so much. Yeah. Thank you. We have no further questions at this time. I will now hand it back to Anthony Luscri for closing remarks. Thank you. I'd like to thank everyone for joining today's call. We will be attending investor conferences hosted by Bernstein and Morgan Stanley during the first quarter. The Fireside Chat website links will be posted on the events and presentation section of our investor relations website. If you have any follow-up questions, please feel free to contact me and have a great rest of your day.