Aleksandr Zukin

Aleksandr Zukin observed a positive shift in market spend intensity and asked whether this was driven by the broader demand environment, improved sales execution, or faster product innovation. He also requested more detail on the confidence behind the strong fiscal 2026 guidance, particularly regarding Apache Iceberg's impact and Net Revenue Retention (NRR) stabilization.

Answer

CEO Sridhar Ramaswamy attributed the positive momentum to a feedback cycle of improved product velocity, disciplined use-case lifecycle management by the sales team, and better collaboration with partners. CFO Mike Scarpelli stated that NRR is expected to remain stable in the mid-120s. He now views Iceberg as more of a tailwind than a headwind, as it opens up new workloads without causing significant data egress. EVP of Product Christian Kleinerman added that Iceberg has shifted from a theoretical concept to generating actual revenue.

Aleksandr Zukin of Wolfe Research sought more detail on the data volume uplift from customers using Snowflake with Iceberg and asked about recent sales organization changes and how to think about modeling for the next fiscal year.

Answer

EVP of Product Christian Kleinerman explained that customers are increasingly using Snowflake against data already in cloud storage via Iceberg, driving consumption ahead of any storage headwinds. CFO Mike Scarpelli noted that sales performance management is now a continuous process. For modeling, he advised analysts to remember that Q1 of the next fiscal year will have one less day due to the absence of a leap year, which will impact year-over-year growth comparisons.

Aleksandr Zukin asked for more color on the drivers of strength in the financial services and technology verticals and for commentary on any major investor misconceptions about the competitive landscape.

Answer

CFO Mike Scarpelli cited large banks in early migration stages as a key driver in financial services. CEO Sridhar Ramaswamy added that the quality of vertical-specific sales teams is also a factor. Regarding competition, Ramaswamy reinforced Snowflake's leadership in core analytics and stated its AI products are now 'world-class,' combining reliability and ease of use.

Aleksandr Zukin of Wolfe Research asked where the company is most enthusiastic about its new AI launches driving growth and how it views M&A for accelerating its AI roadmap.

Answer

President, Product and Technology, Gerrit, explained the unique approach of innovating at the core of business processes, citing recruiter capacity gains and contract analysis speed as examples. CEO Carl Eschenbach added that growth is expected across all market segments. Regarding M&A, Eschenbach confirmed they remain 'highly inquisitive' and active in looking for tuck-in acquisitions to accelerate technology and bring in talent, while maintaining a high bar.

Aleksandr Zukin of Wolfe Research, LLC asked where Workday is most enthusiastic about its new AI launches driving growth and inquired about the company's thinking on strategic M&A to accelerate its AI roadmap.

Answer

President, Product and Technology, Gerrit, expressed excitement about innovating at the core of business processes, citing recruiter capacity gains and contract analysis speed as examples applicable across all customer sizes. CEO Carl Eschenbach added that growth is expected across all segments. Regarding M&A, he stated the company remains highly inquisitive and active in looking for tuck-in acquisitions to accelerate technology and talent.

Aleksandr Zukin from Wolfe Research asked how Workday is framing the TAM expansion from its agent strategy and whether the recent restructuring was driven by a new calculus to accelerate investment.

Answer

CEO Carl Eschenbach explained that the agent system of record will monetize both Workday and third-party agents via a secure onboarding gateway, creating new revenue streams. CFO Zane Rowe clarified there was no change in calculus; the restructuring was a strategic rebalancing to fund the significant AI opportunity while continuing to scale the business and drive toward margin goals.

Aleksandr Zukin of Wolfe Research asked if the U.S. election created any deal friction and requested more detail on the mechanics of the 'deliverables issue' that impacted revenue timing.

Answer

CEO Carl Eschenbach stated that Q3 execution was in line with expectations and the election did not materially impact deal timing or scrutiny. He clarified that the 'deliverables issue' is not a surprise but a standard accounting function of large, strategic deals where revenue is recognized upon product delivery, which is simply a timing element that does not affect the deal's overall value.

Aleksandr Zukin asked about vertical strength for the second half, the linearity of midterm margin expansion, and whether the M&A strategy was changing within the new financial framework.

Answer

Co-President Doug Robinson confirmed continued pipeline strength in healthcare, higher education, and government. CFO Zane Rowe indicated the margin expansion would be evenly balanced, perhaps slightly skewed to FY27. Management also confirmed the M&A strategy remains consistent, with no large deals factored into the outlook.

Aleksandr Zukin asked about the upcoming launch of new AI agent offerings, the potential pricing models, and the impact of AI-driven efficiencies on operating expenses and headcount.

Answer

CEO Sasan Goodarzi described the launch of interconnected AI agents (customer, payment, project management, accounting) as a major step toward a 'done-for-you' experience. He stated the new product lineup will be priced for value, allowing customers to consolidate apps and save money, with some mid-market offerings having consumption-based modules. CFO Sandeep Aujla added that AI-driven efficiencies are key to their ability to expand margins while investing in growth, allowing headcount to scale at a slower rate.

Aleksandr Zukin asked a two-part question about AI's impact: first, on the upcoming launch of 'agentic offerings,' their market opportunity, and pricing model; second, on OpEx and headcount trends resulting from AI-driven efficiencies.

Answer

CEO Sasan Goodarzi detailed the launch of interconnected AI agents (customer, payments, accounting) that will perform tasks for customers, creating a 'one-stop shop.' He stated pricing will be value-based, helping customers eliminate other apps, and will include consumption-based modules for mid-market. CFO Sandeep Aujla added that AI efficiencies are driving margin expansion, allowing for continued investment while growing operating income faster than revenue and reducing future headcount scaling.

Aleksandr Zukin asked for an assessment of the current SMB demand environment and inquired about the expected timing for monetization impacts from GenAI. He also asked if the Q2 earnings guide was lighter primarily due to the timing of incremental spending.

Answer

CEO Sasan Goodarzi described the SMB environment as 'stable,' attributing Intuit's growth to platform innovation rather than a macro recovery. He stated that specific monetization from new GenAI features is not baked into this year's guidance and is seen as a future growth driver. CFO Sandeep Aujla confirmed that the Q2 earnings outlook is 'exactly right' to be viewed as a result of timing, as the company chose to pull forward investments into Q1 to capitalize on opportunities.

Aleksandr Zukin inquired about the rationale for the Consumer group's fiscal 2025 guidance, the potential for upside, and the underlying macroeconomic assumptions.

Answer

CEO Sasan Goodarzi stated the guidance assumes the current macroeconomic environment with no expected tailwinds. He emphasized the large $30 billion assisted tax market opportunity and strong momentum in TurboTax Live, which grew 17%. Goodarzi explained the long-term guidance was prudently adjusted until the high-growth Live business, currently 30% of the franchise, becomes a larger majority. Potential upside could come from exceeding the 15-20% growth forecast for assisted tax and capturing more complex, higher-income DIY customers.

Aleksandr Zukin inquired about the quarterly performance of the CRM, service, and dev products, and asked for clarity on the outlook for Net Dollar Retention (NDR) through 2025, noting its stability and upmarket strength.

Answer

Co-CEO Eran Zinman reported strong momentum across the product suite, with high net customer adds in Q1 driven by performance marketing seasonality. He highlighted that 70% of monday service ARR comes from mid-market and enterprise. CFO Eliran Glazer added that while NDR was stable at 112%, it is expected to be slightly below that by year-end due to macroeconomic uncertainty.

Aleksandr Zukin asked about the demand environment in Q4, specifically contrasting trends in Europe and the U.S. during December and the impact on the enterprise pipeline. He also questioned the level of conservatism baked into the 2025 guidance given the company's multi-product strategy and go-to-market changes.

Answer

co-CEO Eran Zinman stated that U.S. demand was healthy and stable, while Europe showed signs of stabilization after some choppiness in November. CFO Eliran Glazer added that business is becoming more back-end loaded each quarter. Regarding guidance, Glazer described it as 'responsible,' factoring in geopolitical unpredictability, the multi-product portfolio, and the full impact of recent hiring.

Aleksandr Zukin requested details on the large customer expansion, including the products adopted and the pipeline for similar deals. He also asked what new COO Adi Dar brings to the team and how important enterprise sales experience is for the incoming CRO.

Answer

Co-CEO Eran Zinman explained the large customer expanded its use of monday Work Management across departments like consulting, infrastructure, and finance, becoming a significant internal tool with more room to grow. He highlighted that new COO Adi Dar brings experience in scaling large, complex organizations and deep technology expertise. Regarding the new CRO, Zinman emphasized the importance of finding a leader who can help continue the company's upmarket transition.

Aleksandr Zukin asked if there were different patterns in AI adoption (copilot or agents) between upmarket and down-market customers, and if there were any changes in sales cycles or pipeline health through April.

Answer

CEO Yamini Rangan reported that the sales pipeline remains healthy across all segments with no significant changes in velocity or quality. She noted two dominant trends: strong demand for multi-hub deals driven by platform consolidation and broad interest in AI. Rangan stated that AI adoption is not differentiated by customer segment but rather by whether a customer has an internal champion for AI. Customers across the board appreciate that HubSpot's AI is embedded and easy to use.

Aleksandr Zukin asked about the demand environment exiting Q4 and for perspective on the competitive dynamic between packaged software like HubSpot and potential 'DIY AI' solutions from foundation model companies.

Answer

CEO Yamini Rangan noted an improved demand environment but said buying patterns remain value-driven. Executive Dharmesh Shah addressed the competitive question by asserting that SMBs will continue to prefer a unified, easy-to-use platform over assembling disparate DIY tools. He positioned HubSpot as the core platform where an ecosystem of tailored agents will be built, which is what SMBs will ultimately want.

Aleksandr Zukin asked about the impact of HubSpot's new AI propositions on sales cycles and how to think about Q4 seasonality, given last year's strong quarter, in the current macro environment.

Answer

CEO Yamini Rangan stated that AI has shifted from a buzzword to a source of real value for customers, creating momentum post-INBOUND. She explained that AI is tangibly increasing the attach rates of Content Hub and Service Hub. For Q4, she noted it is a big quarter with a strong pipeline, and the company is now laser-focused on execution.

Aleksandr Zukin from Wolfe Research, LLC inquired about the tangible results from recent operational changes and the current competitive environment, particularly regarding data vendors and the Databricks partnership. He also asked for the source of confidence in the full-year cloud ARR guide, given the implied second-half acceleration.

Answer

CEO Amit Walia confirmed that operational changes around renewals are yielding positive results, with the cloud renewal rate improving sequentially. He stated the competitive landscape is unchanged and the Databricks partnership is expanding successfully. CFO Mike McLaughlin and CEO Amit Walia both expressed confidence in the full-year guide, citing strong migration and new workload pipelines, improving first-half linearity, and growing customer adoption of GenAI capabilities which are expected to contribute more significantly in the second half.

Aleksandr Zukin of Wolfe Research inquired about the decline in cloud retention rates, seeking details on the root causes, the company's remediation plan, and the level of conservatism embedded in the full-year guidance. He also asked for a stack-ranking of demand, execution, and competition as contributing factors.

Answer

CEO Amit Walia attributed the lower cloud renewal rates to a mix of operational execution issues (e.g., not catching executive sponsor changes at clients) and organizational incentive misalignments, which are now being addressed. He emphasized that the core demand environment remains steady. CFO Mike McLaughlin confirmed that the 2025 guidance incorporates the lower renewal rates seen in Q4 2024 without assuming any improvement from the corrective actions, thereby adding a layer of conservatism. Walia also stated no disruptive management changes are planned.

Aleksandr Zukin asked about the drivers behind the Q1 gross margin headwinds and the significant delta between gross profit growth and revenue growth, seeking guidance on how this trend might shape up for the rest of the year.

Answer

CFO Aidan Viggiano attributed the lower gross margins to two primary factors: the non-repeat of hosting credits from Q1 2024 and a higher mix of international messaging revenue, which is a strategic growth priority. She stated that while messaging mix will be the primary driver in the near term, Twilio does not guide to gross margins due to its inherent variability.

Aleksandr Zukin asked about the level of conservatism baked into the Q1 and full-year guidance. He also requested more detail on the bad debt expense related to the customer Oi.

Answer

CFO Aidan Viggiano stated that while the company is internally focused on double-digit growth, the 7-8% annual guidance is a prudent approach given the usage-based model's volatility. She explained the $17 million bad debt charge was a full reserve against receivables for the Brazilian telecom customer, Oi, due to a slowdown in their payment activity, and no further charges from this customer are expected. CEO Khozema Shipchandler added that the company feels great about its competitive position.

Aleksandr Zukin of Wolfe Research asked about the extent to which non-AI Azure growth is being pulled in by AI workloads and how test-time compute advancements might change the growth curve for AI Azure.

Answer

CFO Amy Hood responded that it is becoming increasingly difficult to separate AI from non-AI workloads, as they are intertwined and use the same underlying infrastructure. She noted that as customers build more AI-heavy workloads, the relationship with the core cloud platform strengthens. She emphasized focusing on the overall strong performance of Azure, which reflects the company's ability to add customer value.

Aleksandr Zukin of Wolfe Research inquired why Freshworks appears unaffected by macroeconomic pressures, how it expects this to evolve, and asked for more detail on the Q1 billings pull-ins.

Answer

CEO and President Dennis Woodside attributed the company's resilience to operating in 'must-have' software categories and offering a lower total cost of ownership compared to legacy competitors. COO and CFO Tyler Sloat clarified that a 2-percentage-point benefit to Q1 billings growth came from overperformance and pull-ins from Q2, but the full-year billings growth forecast remains unchanged at approximately 13%.

Aleksandr Zukin from Wolfe Research asked if new SaaS deal growth will be muted for the year with flips becoming the primary driver, and requested a breakdown of the factors influencing the full-year SaaS revenue guidance range.

Answer

CFO Brian Miller clarified that the timing and volume of on-premise-to-cloud flips are the biggest variables for the full-year SaaS revenue guidance, as new sales have a delayed impact. While flips are expected to be a larger contributor to bookings growth, he stated that the company does not expect new SaaS bookings to be down for the full year.

Aleksandr Zukin asked about the drivers behind the strong demand environment and faster-than-expected SaaS conversions, the role of AI in this trend, and the future trajectory of R&D expense as costs shift from COGS.

Answer

CEO H. Moore attributed the strong demand to healthy government budgets and excellent sales execution, creating a 'mini flywheel' of momentum. CFO Brian Miller noted AI is not yet a major driver of conversions but will be a future advantage. Regarding R&D, Miller explained that about $35 million in development costs will shift from COGS to the R&D line in 2025, with more to follow. Moore added that this includes new investments, not just a reallocation.

Aleksandr Zukin asked a long-term question about whether AI monetization could represent an upside to the 2030 financial targets and sought clarification on the drivers and frequency of large cash prepayments.

Answer

CEO Lynn Moore confirmed that significant new revenue or margin benefits from future AI initiatives were not factored into the company's long-term 2030 targets. On cash flow, CFO Brian Miller characterized the large Kentucky prepayment as a 'one-off' event tied to ARPA funds, not a recurring trend. He emphasized that the consistent, primary driver of improved free cash flow is the attractive cash-generative nature of the growing transaction business.

Aleksandr Zukin of Wolfe Research, LLC asked about the shifting mix between Technology Workflows and the fast-growing CRM & Industry Workflows, and whether any pull-forward activity in manufacturing and federal amplified the strong cRPO results.

Answer

President and CFO Gina Mastantuono stated that quarterly net new ACV mix fluctuates and not to read too much into the shift, though CRM workflows continue to show strong performance. She explicitly denied any material pull-forward activity, attributing the beat to strong execution. Chairman and CEO Bill McDermott highlighted growth in other areas like HR and finance, reinforcing the platform's cross-enterprise appeal.

Aleksandr Zukin asked about the current demand environment, particularly in the strong TMT and retail verticals, and whether the market is stabilizing. He also inquired about the incremental opportunity and expected timeline for the new data platform products, which are set to double ServiceNow's Total Addressable Market (TAM).

Answer

CEO Bill McDermott stated that while the macro environment remains value-based, ServiceNow is succeeding due to its superior innovation, platform strength, and real-world GenAI use cases. He highlighted strong pipelines and event attendance. Regarding the new data platform, he explained that Raptor DB offers a direct upsell opportunity to the entire installed base for significant speed improvements, while the Workflow Data Fabric will unify data from any source to automate processes, effectively doubling the company's TAM.

Aleksandr Zukin inquired about the current demand environment, particularly the strong growth in TMT and retail, and whether AI is a contributing factor. He also asked about the incremental opportunity and expected timeline for the new data platform products to impact the P&L, given they are expected to double the company's TAM.

Answer

CEO Bill McDermott stated that while the macro environment remains value-based, ServiceNow is winning with its innovative platform and real-world GenAI use cases, leading to strong pipelines and event attendance. He explained that the new Raptor DB offers an immediate upsell opportunity across the installed base by significantly increasing processing speeds. McDermott positioned the new workflow data fabric as a major evolution, enabling access to data from any source to automate processes, which independent analysts believe doubles ServiceNow's TAM.

Aleksandr Zukin of Wolfe Research asked what gives management confidence in the forecast for IAM's book of business to grow from low-single-digits to low-double-digits, and inquired about potential positive tailwinds from government digitization initiatives.

Answer

CFO Blake Grayson cited incoming deal volume data and the go-to-market team's embrace of the platform as drivers of confidence. CEO Allan Thygesen added that positive results from the initial IAM launch cohort in North America are showing similar patterns in newer geographies and segments. Regarding government digitization, Thygesen reiterated that they are bullish on the federal opportunity and investing in it, but it is not yet in the forecast.

Aleksandr Zukin of Wolfe Research asked for a breakdown of the $125 million AI book of business and about Adobe's strategy for organic versus inorganic innovation in the consolidating AI market.

Answer

David Wadhwani, President of Digital Media, noted the AI revenue mix is based on product tenure, with strong momentum across the board. Chair and CEO Shantanu Narayen clarified that the majority of the $125M is currently from the creative side. On strategy, Narayen stated Adobe will build its own core, commercially safe models (Firefly) while also supporting third-party models within its applications, positioning Adobe as the key platform for delivering value from AI.

Aleksandr Zukin inquired about the specific growth drivers from Firefly and GenStudio, how they will impact Digital Media net new ARR, and if there are any changes to ARR seasonality to consider under the new guidance methodology.

Answer

David Wadhwani, President of Digital Media, explained that growth will come from new users via Express, increased value and pricing tiers from Firefly models (especially video), and enterprise value from Firefly Services and GenStudio. He noted new users and products will be a larger part of the FY25 growth mix. Dan Durn, EVP and CFO, stated that the company is now focused on guiding to annual ending ARR growth, deemphasizing quarterly linearity.

Aleksandr Zukin questioned the dichotomy between the unseasonably strong Q3 Digital Media net new ARR and the Q4 guide for the same metric, which appeared sequentially weak and historically low for a fourth quarter.

Answer

CEO Shantanu Narayen and President of Digital Media David Wadhwani addressed the question. They attributed the Q3 strength to strong performance in Document Cloud and Creative Cloud, noting some enterprise deals closed earlier than expected, shifting the typical Q3-Q4 linearity. They framed the Q4 target as the 'strongest ever' for a fourth quarter and stated the overall second-half performance is playing out as expected.

Aleksandr Zukin from Wolfe Research asked for perspective on the AI training versus inferencing opportunity, noting investor concerns about training returns, and questioned how Oracle's AI data platform differentiates its inferencing capabilities. He also asked about RPO trends.

Answer

Executive Chairman and CTO Lawrence Ellison asserted that while AI training is growing rapidly, the AI inferencing market represents a much larger long-term opportunity for Oracle. He highlighted the unique capability of Oracle Database 23ai to automatically vectorize customers' private data for AI model use as a key differentiator. CEO Safra Catz added that while RPO may be lumpy, she expects continued large increases due to high demand.

For Alex Zukin, Aleksandr Zukin asked about the level of conservatism in guidance due to geopolitical tensions and whether large new logo wins are from competitors or greenfield opportunities.

Answer

Chief Financial Officer Dominic Phillips stated that the guidance philosophy for fiscal 2026 has not changed and factors in broader macro implications. Chief Executive Officer Sanjit Biswas noted that most customers are focused on domestic operations. Dominic Phillips also explained that the competitive dynamic depends on the product; video safety is often a greenfield opportunity, while telematics more frequently involves displacing competitors.

Aleksandr Zukin asked about the general demand environment, sales cycle consistency, and any potential impact from the U.S. election. He also sought initial thoughts on the outlook for the next fiscal year.

Answer

CFO Dominic Phillips described Q3 as consistent, with typical back-end weighting for large deals. He mentioned a few anecdotal election-related delays that were not material and have since closed. Regarding next year, he stated that while it's too early for formal guidance, the company feels good about current consensus estimates.

Aleksandr Zukin inquired about the total addressable market (TAM) and potential ramp trajectory for the new Asset Tag product, and asked about any potential tailwinds from the Federal Motor Carrier Safety Administration's plan to revisit the ELD mandate.

Answer

CEO and Co-Founder Sanjit Biswas noted it's difficult to compare the Asset Tag's ramp to older products because Samsara is a much larger company now, but stated there is strong customer pull. CFO Dominic Phillips addressed the ELD mandate, explaining that Samsara's growth is driven by being on offense and providing clear ROI, not by relying on potential regulatory changes.

Aleksandr Zukin from Wolfe Research inquired about current workforce level trends and any potential impacts from weather or holidays. He also asked about the competitive pressure from well-capitalized private companies, particularly in the down-market segment.

Answer

CFO Ryan Glenn stated there were no material impacts from weather or holidays and that guidance remains prudent on workforce levels. President and CEO Toby Williams noted that while the space is always competitive, they have not seen a material shift in the competitive mix and will continue to win by providing the most modern platform.

Aleksandr Zukin asked how the Canadian government contract is factored into the 2025 guide and sought clarity on what changed to improve sales cycle visibility after previous caution about upmarket deal length.

Answer

CFO Jeremy Johnson confirmed they are on track for the April 2025 milestone for the Canadian government deal's recurring revenue. CEO David Ossip attributed the improved sales visibility and shorter cycles to multiple factors: the impact of the Discover conference, successful branding efforts, strong sales execution, high customer retention, and increased macro optimism among business leaders.

Aleksandr Zukin followed up on sales cycle elongation, asking if it was an idiosyncratic issue from moving upmarket versus a broader demand signal, and requested clarification on the 2025 float revenue headwind.

Answer

CEO David Ossip confirmed the elongation is a combination of moving upmarket, more global and suite deals, and increased customer diligence, not a change in the general demand environment. He clarified the $25-$30 million float headwind for 2025 is due to an expected drop in yield from ~4.1% to ~3.7%, not a decline in absolute float revenue dollars.

Aleksandr Zukin from Wolfe Research asked about the specific timing and methods for AI monetization and questioned why strong KPIs shouldn't imply an accelerating growth outlook.

Answer

Founder and CEO Eric Yuan stated that AI is already being monetized via Contact Center and Revenue Accelerator, with future revenue from vertical solutions and Custom AI Companion. CFO Michelle Chang acknowledged the strong underlying KPIs but suggested the Q4 revenue growth rate is a "reasonable proxy" for FY'26. She also noted the Online business is expected to be flat to slightly down in Q4, though the long-term ambition is growth.

Aleksandr Zukin asked for an update on the demand environment across segments given the choppy macro backdrop, and inquired about the drivers of the Amazon deal win and the potential for distribution partnerships.

Answer

CFO Michelle Chang characterized the macro environment as 'mixed but stable to the positive.' CEO Eric Yuan attributed the Amazon win to Zoom's superior platform for employee experience and confirmed they are actively working to leverage the AWS marketplace as a significant distribution channel.

Aleksandr Zukin of Wolfe Research asked about the general demand environment and whether customers are pursuing more transformational projects. He also requested an update on net retention trends and linearity during the quarter.

Answer

CEO Tom Shea described the demand environment as consistent, with a growing appetite for transformational projects, particularly from forward-thinking CFOs interested in machine learning. CFO Bill Koefoed added that bookings were approximately 60% new and 40% upsell, a stable trend, and that the net retention rate remains in the 'same ZIP code' as guided during the IPO roadshow.

Aleksandr Zukin asked for a breakdown of the drivers behind the significant cloud revenue beat and inquired about the opportunities the new CRO, Brian Duffy, brings to the sales organization.

Answer

CFO Joe Binz attributed the cloud revenue outperformance primarily to better-than-expected paid seat expansion and migrations, noting other growth drivers were in line or slightly better than expected. CEO Mike Cannon-Brookes expressed excitement for new CRO Brian Duffy, highlighting his experience in driving sales transformations and managing complex go-to-market motions that combine a high-scale SMB flywheel with a high-touch enterprise business.

Inquired about bookings linearity in the quarter, NRR trends for the second half of the year, and the competitive landscape, particularly regarding wins against other work management vendors.

Answer

Implied bookings were very similar to the previous quarter. NRR is expected to trend down, consistent with overall ARR guidance. The competitive environment has not seen meaningful change, and they continue to perform well in the enterprise, with expectations that the new product experience and pricing will improve conversion at the entry point.

Asked to reconcile the seemingly contradictory trends of improving retention rates and increasing charge-off rates, and questioned how write-offs impact reported bookings and the forward-looking revenue trajectory.

Answer

Executives explained that retention stabilization was seen throughout the quarter, particularly in mid-market and enterprise, while write-offs accelerated specifically in June. They clarified that write-offs negatively impact bookings by impairing the remaining performance obligations (RPO) of those contracts. The forward guidance does not assume any benefit from the positive retention trends.

Questioned the drivers of Q4 bookings outperformance given weaker $100k customer adds, and sought clarity on the visibility and drivers for the guided long-term revenue growth acceleration.

Answer

The Q4 outperformance was not driven by unusually large deals; it was a generally good quarter. Many new customers landed just below the $100k threshold and are expected to graduate up. The long-term growth outlook is based on positive Q4 trends, abating macro headwinds, and the impact of internal initiatives, leading to a U-shaped recovery with growth accelerating in the back half of FY25 and reaching a 20% quarterly run-rate during FY26.

Pushed for clarity on how to reconcile the Q4 guidance, current CRPO, and consensus estimates for next year, and asked how new sales strategies might affect the timeline for returning to larger deals.

Answer

The company deferred providing a 2025 outlook until the next earnings call, stating they are waiting for a change in customer buying behavior before adjusting their forecast. The impact of go-to-market changes is expected to materialize over the coming quarters, not immediately.