Greetings. Welcome to Varonis Systems Incorporated second quarter 2022 earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to James Arestia, Vice President of Investor Relations. Thank you. You may begin. Thank you, operator. Good afternoon. Thank you for joining us today to review Varonis' second quarter 2022 financial results. With me on the call today are Yaki Faitelson, Chief Executive Officer, and Guy Melamed, Chief Financial Officer and Chief Operating Officer of Varonis. After preliminary remarks, we will open the call to a question and answer session. During this call, we may make statements related to our business that would be considered forward-looking statements under federal securities laws, including projections of future operating results for our third quarter and full year ending December 31, 2022. Due to a number of factors, actual results may differ materially from those set forth in such statements. These factors are set forth in the earnings press release that we issued today under the section captioned Forward-Looking Statements, and these and other important risk factors are described more fully in our reports filed with the Securities and Exchange Commission. We encourage all investors to read our SEC filings. These statements reflect our views only as of today and should not be relied upon as representing our views as of any subsequent date. Varonis expressly disclaims any application or undertaking to release publicly any updates or revisions to any forward-looking statements made herein. Additionally, non-GAAP financial measures will be discussed on this conference call. A reconciliation for the most directly comparable GAAP financial measures is also available in our second quarter 2022 earnings press release, which can be found at www.varonis.com in the Investor Relations section. Lastly, please note that an updated investor presentation as well as a webcast of today's call are available on our website in the Investor Relations section. With that, I'd like to turn the call over to our Chief Executive Officer, Yaki Faitelson. Yaki. Thanks, Jamie, and good afternoon, everyone. Thanks for joining us today. Our Q2 results once again demonstrated the strength of our platform and the durability of our business model, highlighted by 30% year-over-year growth in ARR. We are especially pleased with the performance in North America, which contributed significantly to this quarter growth. Given the uncertainty of the times, companies around the world continue to recognize the growing urgency to secure their sensitive data. The needs of our customers have always driven our innovation and fuel our growth. As the world move to more hybrid working environment, the Varonis Data Security Platform has become even more critical in protecting sensitive data wherever it is stored. Today, I would like to discuss the trends we are seeing and how we are positioned to capitalize on them. Let's jump in. Looking back, we founded Varonis because we understood that the capacity to create and share data far exceeded the capacity to protect it. Since then, the relentless growth and complexity of data has dramatically increased the attack surface for all companies, making it even harder to protect. Today, it covers all geographies, sectors, and sizes, requiring the coverage and automated protection that our offering provides. The pace of our innovation has matched this rapid growth, and today we provide our customers a comprehensive solution for protecting sensitive data. While on-prem data continue to grow, nearly every company is creating more and more important data in the cloud. Most organizations that we speak with are deeply concerned that their data isn't fully protected and secured within the new complex cloud environments they utilize and depend on. Their concerns are quickly validated and rightly escalated during our initial risk assessment. It goes like this. Our sales reps start with two simple questions. Do you know where your sensitive data is stored? Do you know whether only the right people have access to it? Would you know if your sensitive data was being stolen or encrypted? What we find is that most organizations cannot answer yes to any of these questions at any time for any of their data, much less all of it. This problem has only become worse as companies add more data to the cloud. Why is that? First, cloud applications were built to create and share sensitive data more easily, which inevitably pushed security down as a concern. This is true to Microsoft 365 and Azure, where we have seen tremendous customer engagement over the past few years, as well as additional cloud applications like Google Drive, AWS, and Salesforce, to name a few. Second, the many CISOs we speak with describe cloud applications as the black boxes. They typically report that because each application offers different security capabilities and permission models, some of which are extremely complex, each new application increases their risk surface in ways that are hard to see. Think about the data inside a CRM system like Salesforce. Not only does it contain sensitive information that must be protected in accordance with regulations like GDPR, CCPA, and others, but it also holds the keys to the sales pipeline and customer records. This data is clearly mission-critical to every organization. Losing it or having it stolen can damage your reputation, cost millions in fines, and pose existential risk to your business. This would be catastrophic. These CISOs tell us that without Varonis, mapping access, finding sensitive data, and tracking suspicious activity would be impossible. With DatAdvantage Cloud, organizations can visualize their biggest cloud risks, proactively reduce their blast radius, and conduct faster cross-cloud investigations. DatAdvantage Cloud significantly expands our market opportunity and provides long-term potential. DatAdvantage Cloud is in early innings, and we have always said that our new licenses take time to gain critical mass. Nevertheless, we are pleased with customer conversations and the pace of selling, which improved sequentially in Q2 as we continue building pipeline for the second half of the year and beyond. We are still on pace for the $5 million ARR expectations we guided for at the beginning of the year. Before I turn the call to Guy, I would like to highlight a few customer wins from Q2. A technology company with more than 7,000 employees became a new Varonis customer in Q2. They needed to fix critical open access and data retention issues, but estimated that doing so manually will take them years. After a risk assessment demonstrated how Varonis would automatically shrink their blast radius in a fraction of the time and at much lower cost, they purchased our Silver Bundle, which contains seven licenses, and they intend to expand deployment of our platform in line with their growing data in Microsoft 365 and Salesforce. Turning to our existing customers, you have heard me say that at Varonis, more is more. When customers consume more licenses, they get higher level of automated value, which in turn leads to additional purchases, all moving towards the double-digit license target we have for every Varonis customer. A great example of this is one of the largest telecommunications providers in North America, who first became Varonis customer in 2013 when they were looking to protect their data on-prem. Over the years, they purchased additional subscriptions, including data classification, to identify sensitive data and the Automation Engine to proactively reduce their blast radius. During the second quarter, this organization of over 100,000 employees purchased an on-prem enterprise license agreement, which gives them access to 26 Varonis licenses to better address ransomware threats and to protect data in Microsoft 365. We are already discussing with them the next purchase, our DatAdvantage Cloud SaaS offering that can help protect their data in AWS. To recap, fueled by the expansion of the attack surface, we believe that the global customer's need for strategic data protection has never been more urgent. Our unmatched capability to address this need, coupled with our ongoing innovation, continue to drive value for all Varonis stakeholders. We remain focused on two things, executing against the enormous market opportunity before us and closing in on our $1 billion ARR target. With that, let me turn the call over to Guy. Guy? Thanks, Yaki. Good afternoon, everyone. Thank you for joining us today. Highlighted by 30% year-over-year growth in total ARR and 31% revenue growth in North America, our second quarter results demonstrate strong top-line performance and continued operating leverage. Total revenue growth for Q2 was 26%, and after adjusting for FX and Russia, which I will discuss in a moment, total revenue growth was 30%. On the expense side, accounting for the shekel-dollar headwind that we've discussed at length in the past, we are extremely pleased that operating margins improved by 330 basis points in line with our strategy of balancing top-line growth and margin expansion. Before we drill down into the full Q2 results, let me describe what we're seeing in EMEA, where reported growth was 11% for the quarter. Given that there are a number of external factors beyond anyone's control, these results do not reflect our true performance and the opportunity ahead of us. As we all know, during the first half of 2022, the US dollar strengthened significantly against the EUR and the GBP, a trend which accelerated in the second quarter with the EUR dropping to a 20-year low. Second, as we reported in the last call, exiting the Russia business negatively impacted ARR and revenue by $4 million-$5 million for the full 2022 year. After adjusting for these headwinds, Q2 revenue growth in EMEA was 25%. These dynamics continue to generate near-term uncertainty in the region. Regardless, we will continue to focus on the factors we can control, which include our sales investments and strategic growth plan for EMEA, which we believe position us well to capture the vast multi-year opportunity we see. Turning now to our second quarter results in more detail. Total revenues grew 26% to $111.4 million. This includes subscription revenues of $84.4 million, which grew 44% year-over-year. Maintenance and services revenues were $27.1 million with renewal rates again over 90%. Looking at the business geographically, North America had another strong quarter as revenues grew 31% to $80.8 million or 73% of total revenues. As I mentioned, EMEA revenues grew 11% to $27.2 million or 24% of total revenue. Lastly, rest of world revenues grew 47% to $3.5 million or 3% of total revenue. As of June 30, 2022, 75% of our customers with 500 or more employees purchased four or more licenses, up from 68% a year ago and 58% two years ago. At the same time, 45% of those customers purchased six or more licenses, up from 35% a year ago and 24% two years ago. Our newer bundled offerings are being well-received by both new and existing customers as we progress toward our goal of getting Varonis customers to double-digit licenses. These trends are also reflected in another strong quarter of ARR growth at 30% year-over-year. After adjusting for the FX and Russia headwinds that I described earlier, ARR growth was 32%. Turning back to the income statement, I'll be discussing non-GAAP results going forward. Gross profit for the second quarter was $97.1 million, representing a gross margin of 87.2% compared to 86.9% in the second quarter of 2021. Operating expenses in the second quarter totaled $95.5 million. As a result, second quarter operating income was $1.7 million or an operating margin of 1.5% above the high end of our guidance. This compares to operating income of $1.1 million or an operating margin of 1.2% in the same period last year. After accounting for the 300 basis points of headwinds related to the shekel- dollar that I mentioned earlier, the expansion was 330 basis points. Margin expansion through measured responsible cost management has always been at the forefront of how we manage the business, as evidenced once again in Q2. During the quarter, we had financial expense of approximately $68,000, primarily due to interest expense on our convertible notes, which was mostly offset by interest income. Net loss for the second quarter of 2022 was $0.1 million or a loss of $0.00 per basic and diluted share compared to net loss of $0.8 million or a loss of $0.01 per basic and diluted share for the second quarter of 2021. This is based on $109.7 million and $106.4 million basic and diluted shares outstanding for Q2 2022 and Q2 2021 respectively. As of June 30, 2022, we had approximately $789 million in cash equivalents, short-term deposits, and marketable securities. For the six months ended June 30, 2022, we generated $10.1 million of cash from operations compared to $11.1 million generated in the same period last year. In the first half of 2022, our cash flow was negatively impacted by FX headwinds of approximately $7 million. We ended the second quarter with 2,181 employees, an increase of 54 net new employees from the first quarter. We plan to continue investing responsibly to support the overall growth of the business. Moving to our guidance, we are once again reaffirming our full year guidance for both ARR and revenues while meaningfully raising our expectation for full year operating income despite the following headwinds. First, the significant strengthening of the US dollar against the EUR and the GBP during the first half of 2022, which accelerated in the second quarter, as I already discussed. This is relevant given that we price both our new business and renewals in local currency, and as such, this trend impacts ARR and revenue. Second, the exit of our Russia business, which, as previously discussed, will impact our full year revenue and ARR guidance by approximately $4 million-$5 million. Third is our exposure to the new ILS, which we have partially mitigated through our hedging program for 2022 and is already factored into our guidance. For both the third quarter of 2022 and full year 2022, this headwind is expected to be 200 basis points. With that impact, the midpoint of our operating income guidance now shows year-over-year expansion of approximately 140 basis points for Q3 and year-over-year expansion of approximately 260 basis points for the full year. For the third quarter of 2022, we expect total revenues of $123 million-$125.5 million, representing growth of 23%-25%. Non-GAAP operating income of $8.5 million-$10 million and non-GAAP net income per diluted share in the range of $0.05-$0.06. This assumes 127.1 million diluted shares outstanding. For the full year 2022, we expect ARR of $484 million-$489 million, representing year-over-year growth of 25%-26%. Total revenues of $485 million-$490 million, representing growth of 24%-26%. non-GAAP operating income of $32.5 million-$36.5 million and non-GAAP net income per diluted share in the range of $0.19 to $0.22. This assumes 126.9 million diluted shares outstanding. In summary, with another quarter of strong top-line growth and margin expansion, we are confident in our ability to continue driving durable value creation for all Varonis stakeholders. Looking ahead, we are well-positioned to deliver against the enormous market opportunity before us. Thanks for joining us today. With that, we would be happy to take questions. Operator? Thank you. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your headset before pressing the star keys. In the interest of time, we ask that you please limit to one question. Our first question is from Matt Hedberg with RBC Capital Markets. Please proceed. Great. Thanks, guys for taking my question. One question. Guy, you maintained your full year revenue and ARR guide despite incremental FX headwinds, which was really great to see. I guess, can you help us with how you thought about or incorporated second half macro uncertainty in your guidance? In other words, does it assume conditions kind of stay the same? Do they maybe worse? Just sort of a little bit more thought on kind of the philosophy there. Absolutely. We take a very responsible approach when we look at guidance and factor in what we see in terms of the pipeline, what we saw in terms of the results in Q2. Q2 was a good quarter for us. It was very strong in what we can control. When we look at kind of our ability to execute well, we feel very good in our ability to do that in the second part of the year. Obviously, we talked a bit about the uncertainties in Europe, and we assume that will continue in the second part of the year. Overall, baking everything together, we feel very good with our guidance. Thanks a lot, guys. Our next question is from Joseph Gallo with Jefferies. Please proceed. Hey, guys. Thanks for the question. Guy, I think you gave about 400 numbers, and I greatly appreciate that, but I humbly ask for clarification or maybe just a few more. Regarding revenue and ARR headwinds, was that total year-over-year headwinds related to FX? If so, what was the incremental headwind to ARR and revenue since the last time you gave guidance in 2Q? Any sense of what the incremental revenue headwind was for the year for revenue? Joe, as you mentioned, there's a lot of numbers out there. I wanna be kind of very concise and make sure that everyone understands and we don't start confusing everyone. There's a lot of numbers out there. When you look at the FX headwind, and when you compare that to when we actually gave guidance, I'll take that compared to February of 2022, the actual headwind is over $10 million on the FX side. On top of that, you have the Russia impact that we talked about having between $4 million-$5 million. When you bake those two together, you have roughly $15 million of headwinds compared to when we gave our initial guidance. Obviously, in Q2, the currency accelerated the decline, the US dollar strengthened, and there was obviously an impact there. To try and keep kind of the numbers very set and straight, not start confusing everyone with all the numbers out there, it's important to know that about $15 million of headwind on the top line are against when we gave our initial guidance and we're still reaffirming guidance because we feel very good about our ability to execute. Thank you. Our next question is from Fatima Boolani with Citigroup. Please proceed. Thank you for taking my question. Hey, Guy, just to some of your commentary around the observations in the EMEA business climate, you know, I think you were very clear about things you can control versus things you can't. Maybe can you be a little bit more explicit on, A, what you can control, and B, give us some examples of things you can't control, whether that be signs of sales cycle elongation, signs of slower pipeline build, anything more tangible on the EMEA front, and what you're observing, that is baked into your guidance now. That would be really helpful. Thank you. Absolutely. I'll start by kind of giving some of the numbers. When you look at the reported number for EMEA, we grew 11%, but that truly doesn't reflect the underlying business performance. When we talk about what we can't control, obviously there's the FX headwind. Just to remind everyone, we price in local currency in Europe, both our new business and the renewals. That's why the FX was impacted. On top of that, you have the Russia impact that we talked in length in the last quarter. When you look at the adjusted number with what we can control, the growth in EMEA was actually 25%. The other thing primarily, Hi It's Yaki, it's execution. You know, we are just intensely focused about our customer success. Despite of economic challenges, you know, almost every organization is data-driven. Data is super critical. W e believe that we are the most practical way to protect your organization information. After COVID, one of the staying trend is that the data is concentrated in the center, in the data center, like in SaaS applications, and now with Varonis cloud, with coverage. If you're going to dissect any insider threat or APT ransomware attack, it's all about information. You know, organization time with the IT security efforts to protect digital assets, and this is what we are doing. We want to make sure that our customers are very successful with us. So far, this is something that we are able to do effectively. Our next question is from Joel Fishbein with Truist Securities. Please proceed. Thanks for taking my question. Guy, wanted to just ask about any changes to your hiring plans going forward, you know, versus your initial plan. Obviously, you know, you've cut back on some expenses. I'd love to dig down a little bit deeper onto where you're hiring or continuing to hire and what the plans are throughout the rest of the year. Thanks. We're definitely continuing our hiring and making sure that we can truly capitalize on the longer term opportunity. I think when you look at our philosophy, and it's not just in the last, you know, couple of quarters, but if you look back, for many, many years, we've been very much focused on top-line growth, but at the same time, bringing some of it to the bottom line and showing operating margin leverage. I'm very happy that we continue to do this even in this environment. At the same time, we want to continue to hire and do that in a prudent and responsible way, and that's the way we're thinking about it. We are not losing sight of the overall opportunity. There are so many data repositories that are coming in the cloud that present tremendous opportunity for us. We can really do the three use cases, which is threat detection and response, data protection, privacy, and compliance, very effective to all of them. There is a tremendous market that we need to cover. Like, you know, look at our history, we're always doing it in a responsible way. You know, we are here for the long term, and we understand how the business is acting at scale, and we're just doing the right investments to make sure that we balance it very well, growth plans or innovations and profitability. Our next question is from Rob Owens with Piper Sandler. Please proceed. Good afternoon, and thanks for taking my questions. Wondering if you could, building on Fatima's question, maybe address deal sizes and on larger transactions, are you guys seeing incremental sign-offs like other vendors in the market, or is it kind of business as usual, especially as you look at that North American market? Thanks. In North America, it was business as usual. In Europe, we see more C-level scrutiny, but thankfully, at the end of the process, they are signing on orders. The other thing that historically at least worked very well for us is when customers are doing thoughtful process around purchasing of a security product, we usually benefit from it. When you want to protect your digital information, we believe, as I said before, we are the most practical way to do it. Now with DA Cloud, we have much more coverage. We provide much more automation. When we are doing the sales campaign in the right way with the POC, we cater to our customers that, as you can see, they buy more and more, we are able to do very well. Our next question is from Shaul Eyal with Cowen and Company. Please proceed. Thank you. Thanks for the color, guys. I think definitely you guys deserve congrats on quarterly performance and guidance in light of everything going on. I think you might have put many concerns to rest with a set of results and guidance. Yaki and Guy, I just want to make sure that I get it correctly. If we adjust for constant currency, add back the Russian writen-off contribution. Your revenue guidance for the second half would have actually gone higher. Maybe just a word about linearity trends during the second quarter, maybe just a final word on July trends thus far. Thank you. Absolutely. Based on today's rates, the Q3 adjusted revenue growth is 29% at the midpoint, and the full-year adjusted revenue and ARR growth is 30% at the midpoint. Like you mentioned, that includes the impact from Russia. Got it. Maybe on linearity trends during second quarter, anything unusual? What about July thus far? July started strong and we feel very confident with the second part of the year. Thank you. Our next question is from Saket Kalia with Barclays. Please proceed. Hey, Yaki. Hey, Guy. Thanks for taking my question here. Guy, maybe just to mix it up a little bit, I was wondering if you could just talk a little bit about the bundled pricing a little bit, right? That really started in earnest last quarter. Maybe the question is what's been the reception from the sales team and just any early reads. Just understanding it's still early just in bundling, but any early reads that you've seen from customers that adopt those bundles? Absolutely. We were very pleased with kind of the bundles adoption in the second quarter. The sales force adopted it really well. We see good reception from our customers. Just to remind you though, all the bundles that we sold this quarter were already deals in motion because our sales cycles are between three to nine months and up to 12 months on the larger deals. Overall, we're very pleased with the adoption of the bundle this quarter. Very helpful. Thanks. Our next question is from Andrew Nowinski with Wells Fargo. Please proceed. All right. Thank you. I just wanna go back to ARR. I think you just said that the adjusted ARR growth for FY 22 is now 30% factoring in FX in Russia, which is about 5- point lower than it was last year. You know, given all the new licenses you have now, which I think you're over 40 now, and the new bundles you launched last quarter and the traction with DA Cloud, I guess I wouldn't have expected a 5-point deceleration from last year. Are there any other headwinds that we should keep in mind as we try to assess maybe how conservative that ARR guidance actually might be? First of all, it's on a much larger number. I think when you look at the ARR growth, factoring in the headwinds and looking at the Russia numbers, a 30% at the midpoint is a number that we feel very comfortable with and feel very good with. I think overall, the trends of the business and the adoption and licenses and our customers consuming more of the platform is something that we're very happy with. When you look at the number of licenses that are four or more licenses and six or more licenses, they indicate how we're selling the platform. Overall, we're pleased with the results and with our ability to continue to grow in the years ahead. Okay, got it. Thanks. Our next question is from Chad Bennett with Craig-Hallum Capital Group. Please proceed. Great. Thanks for taking my call. So just on Microsoft's call last week, when talking about their Microsoft Office commercial products and their server-based products, you know, in the quarter, there was a little bit of weakness, especially, you know, SMB related, and I guess it's all about how you define it. But I guess more importantly going forward, you know, they were a little more conservative on kind of the expectations around Office, especially on-prem and their server-based on-prem products. Just kinda how do you guys think about that? I know it's a little bit apples and oranges, and you're not as nearly as penetrated into that vast base as anybody would think. But just any insight there on just, I know you're levered to the Microsoft applications pretty decently on the outlook there. We know we are under-penetrating the overall market and even within our customer base, and the penetration is not a concern. Many customers with Office 365 that need our protection capabilities, and you know, we are going to execute and try to help them. Just overall, like market penetration and things of this nature is not a concern. Got it. Maybe follow up just on Guy, on the operating leverage, you know, on a kinda constant currency or back out nature. I mean, looked good and it seems like the messaging is, you know, there's more to come or expect to see significant operating leverage going forward. I mean, just looking at, I appreciate the FX headwinds in Russia and whatnot, but, you know, there's been a pretty significant deceleration on the subscription side of the business from a growth rate standpoint. Sales and marketing as a percentage of revenue has barely flinched, right? How should we think about, and you don't wanna think short term, you wanna think long term, but how should we think about just generally operating leverage, you know, on an annual basis or just going forward? Well, I think when you look at the operating margin, you know, just being at midpoint at just over 7%, with, when you think about the U.S. dollar, new Israeli shekel headwind, that is kind of another 200 basis points of a headwind for us. We're showing operating margin leverage. I think there's a lot of ability for us to expand, but doing it at the right pace. You don't wanna show operating margin that leaves opportunity hanging and not investing in the right way. If you look back at our balancing between top line growth and operating margin improvements, I think we've done a pretty good job and wanna continue to do it in a responsible way, with the right and necessary investments. When you look at kind of the Q2 results, there is a lot of noise and headwind, but we're pleased with the underlying performance, and it's clearly better than Q1. Very good momentum for us this quarter, and we wanna continue that in the second part of the year. Our next question is from Hamza Fodderwala with Morgan Stanley. Please proceed. Hey, guys. Thank you for taking my question. Two quick clarifying questions from me. Yaki, to follow up on Rob's question earlier, did you say that you were seeing more new deal scrutiny in Europe or no? Yes. New deals. When did that start? Just started in Q2. just during Q2 we saw more scrutiny. thankfully, also, you know, you see the scrutiny that customers are buying, but definitely there is more. For Guy, you said that the FX headwind in your full year guidance was over $10 million for 2022. When you go back to the full year guide that you gave back in May, what were you assuming for FX headwind back then? If you recall. The over $10 million is versus the February guidance that we provided, and with the Russia impact, you get to approximately $15 million of headwind. Right. I'm just asking, when you reported Q1 in May, what were you assuming for FX headwind for the full year outlook? The additional FX compared to last quarter's reported number is approximately $2.5 million of additional headwind. Okay. Thank you. Our next question is from Shebly Seyrafi with FBN Securities. Please proceed. Yes, thank you very much. We're currently in the seasonally stronger federal quarter, and I think in the past, it was like mid-single digits or insignificant. Can you give us an update on how large it is now and what are your prospects for federal in the current quarter? We have a very good pipeline entering this quarter. With some teams, with very good customers, and, you know, we believe that they should perform very well. Okay. I just looking at the geo segmentation, your adjusted for FX and Russia, your Europe growth decelerated from 29% Q1 to 25% Q2. Your North America growth stayed strong at 31%. You just made a comment that you're seeing additional deal scrutiny in Europe. I just want to be clear because some other companies have reported about, you know, basically stating that they're seeing some incremental softening in the enterprise. Just want to be clear here, you're not seeing any kind of softening in U.S. enterprise spending? Thus far, no. I'm sorry? No. Okay. Thank you. Our next question is from Joshua Tilton with Wolfe Research. Please proceed. Hey, guys. Thanks for taking my question. Just, a clarification from me as well. I think you mentioned, an enterprise license agreement purchase in the quarter. How does the duration of that ELA compare to your traditional licenses? We've actually seen sale cycles stay the same. It's not just with the ELA. What's very good and very positive for us is that since we sold licenses under the perpetual model, and you kinda look at the additional licenses that we sell under the subscription model, significantly higher number of licenses. Sales cycles have actually stayed the same, which is very positive for us. We're seeing customers consuming way more licenses, both new and existing, and sales cycles have actually stayed the same. Just to follow up on that, putting sales cycles aside, what about the duration of the actual contract? Is the ELA a longer duration contract versus your traditional contract? We see the same duration it's on those contracts. Thank you. We have reached the end of our question and answer session. I would like to turn the conference back over to James for closing comments. Thank you everyone for joining tonight, and we look forward to speaking with you throughout the quarter. Have a good evening. Thank you. This does conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.