Andrew DeGasperi

Andrew DeGasperi asked about Cadence's claim of taking market share across the board, inquiring if this represents a change from previous quarters, if it's focused in particular areas, and if management is surprised by this trend.

Answer

President and CEO Anirudh Devgan confirmed that Cadence's competitive position has improved, leading to market share gains, particularly in hardware (due to unique platforms) and IP. He noted that these gains are reflected in the results, with Cadence's growth outpacing the market. Devgan also highlighted strong performance in EDA, 3D IC, and maintaining strong positions in analog while gaining in digital and verification, attributing this to technology-centric R&D investments paying off.

Andrew DeGasperi asked if Cadence's claim of taking market share across the board represents a change from previous quarters, if it's focused in any particular area, and if management is surprised by this trend.

Answer

President and CEO Anirudh Devgan confirmed that Cadence's competitive position has improved, leading to market share gains, particularly in hardware due to platform uniqueness, and in IP. He noted that Cadence's growth significantly outpaces the market, and they are holding strong positions in analog while gaining in digital and verification. Devgan attributed this success to Cadence's technology-centric and R&D-centric approach, with investments paying off through increased customer adoption of their flows.

Andrew DeGasperi asked about the drivers behind losses to competitors at the lower end of the market, specifically if they were price-driven or AI-related. He also inquired about management's confidence in achieving next year's guidance of 10-11% growth and potential upside sources like e-invoicing or AI products.

Answer

President and CEO Chris Young clarified that attrition was concentrated in smaller customers (under $50,000 ARR) and primarily driven by M&A and bankruptcies, with competitive losses being a modest component. He emphasized that Vertex wins more ARR from competitors than it loses. CFO John Schwab expressed confidence in the guidance, which thoughtfully incorporated 2025 developments, and highlighted e-invoicing mandates and Smart Categorization as key growth vectors for 2026.

Andrew DeGasperi asked about the drivers of losses to competitors at the lower end of the market, specifically if they were price-driven or AI-related, and inquired about management's confidence in achieving 2026 guidance, including potential upside from e-invoicing and AI products.

Answer

Chris Young, President and CEO of Vertex, clarified that higher attrition in 2025 was mainly due to M&A and bankruptcies, concentrated in smaller accounts (under $50,000 ARR), and competitive losses were modest, with Vertex winning more ARR than it lost. He confirmed it was not AI-related. John Schwab, CFO of Vertex, expressed confidence in the thoughtfully set 2026 guidance, aiming for a 'beat-and-raise' cadence, and identified e-invoicing mandates and Smart Categorization as potential growth drivers.

Andrew Degasperi of BNP Paribas sought confirmation that the expected margin leverage in the second half of next year remains on track and asked for an expansion on the "compliance confusion" in Brazil and its impact.

Answer

President and CEO David DeStefano clarified that while not providing 2026 guidance, the company will not pull back on strategic investments like e-invoicing. He explained the Brazil issue stems from a confusing, decade-long transition to a new VAT system, which slowed deals and impacted NRR by about half a point, but represents a long-term opportunity due to the increased complexity.

Andrew DeGasperi asked if changing supply chains are an actual driver for current customer decisions and requested a view on Vertex's end-market exposure, particularly in marketplaces.

Answer

CEO David DeStefano clarified that while supply chain shifts are part of active conversations, they are not yet an immediate driver of performance but rather position Vertex as a 'future-ready' solution. He emphasized that indirect tax is a horizontal solution with no concerning revenue concentration in any single vertical, as it applies across all industries.

Andrew DeGasperi asked for Navan's perspective on the SAP Concur partnership with Amex GBT, questioning if it was a response to Navan's market success. He also sought details on the conversations and factors that led Visa to choose Navan's platform.

Answer

Ariel Cohen (CEO) dismissed the SAP Concur/Amex GBT partnership as an 'antiquated' model of stitching together disparate systems, contrasting it sharply with Navan's modern, AI-driven, integrated platform. He explained that Visa, as a modern fintech, chose Navan for its product, vision, and ability to deliver significant savings and time efficiency for its global employees. Amy Butte (CFO) added that Visa's rapid launch and adoption validated their enthusiasm and Navan's focus on quick implementation.

Andrew DeGasperi asked for Navan's perspective on the SAP Concur partnership with Amex GBT and what convinced Visa to choose Navan's platform.

Answer

CEO Ariel Cohen dismissed the SAP Concur/Amex GBT partnership as an 'antiquated' model, contrasting it with Navan's integrated, AI-driven platform. He explained Visa, as a modern fintech, chose Navan for its product, vision, cost savings, and time-saving benefits for global employees. CFO Amy Butte added Visa's rapid launch and adoption validated their enthusiasm.

Andrew DeGasperi asked if the slight slowdown in net new customers over $100,000 ARR was a function of landing larger customers. He also inquired about the expected growth rate of R&D, its efficiency, and if it will be a driver of operating leverage going forward.

Answer

Dominic Phillips (CFO) clarified that it was a strong large customer quarter, with $100k+ ARR customers growing 35% year-over-year and contributing 59% of total ARR, emphasizing ARR growth rates and mix over just customer counts. He stated R&D will remain a significant investment area for AI and innovation, not expecting a material decrease in leverage or a shift in its percentage of revenue.

Andrew DeGasperi questioned Samsara's exposure to cross-border traffic amid geopolitical tensions and asked if the extra-week adjustment for revenue should also be applied to billings.

Answer

Chief Executive Officer Sanjit Biswas stated that the majority of their customers' operations are domestic, such as food and beverage distribution or construction within their own countries. Chief Financial Officer Dominic Phillips advised focusing on the revenue and constant currency-adjusted ARR metrics, reiterating that the impact of the extra week on bookings is much less clear than on revenue.

Andrew Degasperi sought clarification on the fiscal 2026 guidance for Red Canary's contribution, noting an increase from previous estimates, and asked about the underlying growth assumptions.

Answer

CFO Kevin Rubin clarified that $83 million ARR was recognized at close, and the fiscal 2026 guidance assumes a $95 million contribution from Red Canary, reflecting low double-digit growth. He noted a prudent approach due to MDR providers historically having higher churn rates and this being a new business segment for Zscaler.

Andrew Degasperi of BNP Paribas asked about the federal business, referencing checks that suggested Zscaler could see strong growth in this sector and questioning if the company was seeing similar positive trends.

Answer

CEO Jay Chaudhry reported that the federal business performed in line with expectations and noted that the government's focus on cost-cutting can be an advantage for Zscaler. CFO Remo Canessa clarified that their Q4 guidance does not assume a significant contribution from the federal sector, as these large contracts have long sales cycles, even though Zscaler is well-positioned within federal agencies.

Andrew Degasperi from BNP Paribas asked for commentary on any potential verbal commitments for EDC and inquired about the nature of the recent large hiring class of graduates, wondering if it was a recurring annual event.

Answer

CEO Peter Gassner declined to comment on verbal commitments for EDC, noting the public discussion around CRM commitments is a unique situation. CFO Brian Van Wagener explained that the 'Generation Veeva' hiring program for recent graduates is a core part of their talent strategy and that while the Q2 class was large, it was in line with annual expectations, reflecting a shift in timing rather than a change in overall hiring.

Andrew Degasperi of BNP Paribas inquired about the horizontal CRM product, asking if the core team investments have been made and whether M&A is a possibility for this new venture.

Answer

CEO Peter Gassner confirmed the core team for horizontal CRM is in place and will be expanded incrementally. Regarding M&A, he stated that Veeva keeps a wide aperture, most likely looking for synergistic opportunities in horizontal applications outside of life sciences, similar to the successful Crossix acquisition model.

Andrew DeGasperi asked if the recent inflection in clinical trial starts was a factor in Veeva's confidence for its R&D growth guidance.

Answer

EVP, Strategy Paul Shawah stated that their confidence in clinical performance is not related to trial start volumes. He explained that most of Veeva's clinical business, especially in the enterprise segment, is based on enterprise license agreements that are not directly impacted by fluctuations in clinical trial volumes.

Andrew DeGasperi asked if Vault CRM migrations will improve gross margin over the next two years by reducing Salesforce royalties. He also asked for clarification on which products are focused on direct-to-consumer (DTC) advertising.

Answer

CFO Brian Van Wagener explained that while there will be a gradual gross margin improvement, it will be spread out over a long period until 2030 due to the lengthy migration timelines. CEO Peter Gassner confirmed Crossix is the primary product involved with DTC advertising measurement but noted that overall commercial strength is broad-based across multiple products.

Andrew Degasperi of BNP Paribas asked if sales productivity gains were broad-based geographically and whether increased sales capacity would accelerate product attach rates.

Answer

CFO David Obstler noted that investment intensity and growth rates are higher internationally in less-developed markets. CEO Olivier Pomel explained that sales incentives are balanced to ensure reps also focus on landing new logos, not just upselling, so attach rates may not directly accelerate with headcount.

Andrew Degasperi asked for more context on a large bank win driven by a Federal Reserve mandate and whether this represents a broader near-term driver. He also questioned if the operating margin outperformance was due to changes in sales and marketing investment assumptions for the second half of the year.

Answer

CEO Julie Iskow explained that financial services regulations have long been a driver and Workiva is deepening its focus on this vertical, including banks, investment firms, and insurance, with expanding use cases. CFO Jill Klindt clarified that there were no large-scale changes to sales and marketing investment. Instead, the margin improvement stems from ongoing reallocation of resources, operational efficiencies like the hunter-farmer model, and a disciplined focus on achieving the 2027 margin targets.

Andrew DeGasperi inquired about the market opportunity for the new Fund Reporting solution and asked for clarification on the net retention rate (NRR) headwinds and the rationale for lowering the free cash flow target.

Answer

CEO Julie Iskow described the Fund Reporting market as a large opportunity, citing over 12,000 public funds globally. CFO Jill Klindt explained that FX and the Leap Year impacted NRR by about 1.5 points. She added that the free cash flow margin target was lowered to reflect potential impacts from the cautious buying environment on bookings for the rest of the year.

Andrew DeGasperi of BNP Paribas asked if OneStream would benefit from the recent federal executive order on modernizing financial accounting systems and what the potential timeline for that impact would be.

Answer

CFO Bill Koefoed, while not commenting on the specific order, reiterated that OneStream is well-positioned to benefit from any government initiatives focused on modernization, efficiency, and security. He highlighted their value proposition in replacing legacy applications and their FedRAMP High certification as key advantages.