Alex Henderson

Asked for a bridge to the 25% EPS growth guidance, the financial drag from accounting issues, the ramp cadence and scope of the new 800G hyperscaler contract, and the economics of managed optical fiber network (MOFN) deals.

Answer

The 25% EPS growth is driven by revenue growth, 200 bps of gross margin expansion, and controlled OpEx. The accounting drag was ~$3M in Q4 and will be similar in Q1. The 800G contract is for 'hundreds of millions' over 3 years starting in 2025, with a fast ramp, and is for pluggables, though Infinera can compete separately for the systems. MOFN deals are structured like traditional large service provider system sales.

Asked about the impact of enterprise AI adoption on infrastructure demand and whether the recent 'year of efficiency' is now driving adoption of tools like Terraform to prevent future waste.

Answer

AI is viewed as a tailwind, accelerating multi-cloud adoption and driving interest across the HashiCorp portfolio. The efficiency trend has accelerated the creation of centralized platform teams, which are HashiCorp's primary customers, creating a favorable long-term dynamic for the company.

Asked for a timeline on when backlog and excess inventory are expected to normalize, and whether there is any risk of inventory obsolescence.

Answer

Backlog is expected to fully normalize by the middle of 2024. Inventory normalization will take longer, likely a few years, and will settle at a new, higher-than-historical normal. The costs associated with higher inventory, including excess and obsolescence reserves, are already being incurred and are factored into the financial guidance.