Andrew Sherman

Andrew Sherman questioned the 2026 provision guidance of 2.5%-3%, asking if it reflected sufficient improvement given favorable Q4 repayment performance and the pivot to higher-quality subscription products. He also asked for an early read on the tax refund season.

Answer

CEO and Executive Chairman Charlie Youakim clarified that the 2026 provision guidance is a step-up from 2024 (2.2%) and 2025 (2.3%), designed to maintain a 60%-65% gross margin. He explained that improved take rates and lower transaction/capital costs allow for a higher acceptable provision while still hitting margin targets. Charlie Youakim noted that the tax refund season appears to be 'business as usual'.

Andrew Sherman from TD Cowen asked for further insight into Sezzle's 2026 provision guidance of 2.5%-3%, noting it represents a step-up from 2025, and inquired about any early trends observed during the tax refund season.

Answer

CEO Charlie Youakim clarified that the provision guidance is designed to maintain a gross margin target of 60%-65%, explaining that improved financial strength from take rate and lower transaction processing/cost of capital allows for a higher acceptable provision while still hitting the target. He noted no unusual trends for the tax refund season, describing it as 'business as usual.'

Andrew Sherman inquired about the specific drivers behind TASER's 32% growth and its achievement of a billion-dollar run rate, Axon's capacity standpoint, and the timeline for the Apollo cartridge. He also asked about the pipeline for Europe following two large deals in Q4 and what is driving the momentum in that region.

Answer

President Josh Isner attributed TASER's strong performance to execution and the closing of large deals that had shifted from Q3 to Q4, noting robust demand and positive early impacts on the moonshot mission. CEO Rick Smith stated that the Apollo cartridge is testing well and will be in customers' hands for the next cold season, though not a meaningful revenue contributor this year. Josh Isner explained that Europe's momentum comes from a combination of large and medium-sized deals, with a growing number of 'big deal hunters' bringing in opportunities.

Andrew Sherman inquired about the specific drivers behind TASER's 32% growth, Axon's capacity, and the status of the Apollo cartridge. He also asked about the pipeline and momentum drivers for Europe after a strong year, and how Axon plans to sustain that growth.

Answer

President Josh Isner attributed TASER's growth to strong execution and the closing of large deals that sometimes shift between quarters, emphasizing robust demand and the product's impact on de-escalation. CEO Rick Smith reported that the Apollo cartridge is testing extremely well in labs and will undergo field testing soon, with a goal for customer hands by the next cold season, though not a meaningful revenue contributor this year. Josh Isner explained that Europe's momentum comes from a combination of large and medium-sized deals, with a focus on 'big deal hunters' to capitalize on exciting opportunities.

Andrew Sherman inquired about the recent international deals, including a nine-figure cloud deal, seeking more details on their location and products. He also asked about the international pipeline and the sustainability of momentum, particularly in Europe. Additionally, he requested an update on the Body Workforce Mini's retail trials, its potential to deter organized crime, and the overall enterprise opportunity.

Answer

President Josh Isner highlighted the opening up of cloud opportunities in Europe, with strong and consistent bookings from Canada, Australia, and South America, driven by TASER 10. CEO Rick Smith noted the significance of the nine-figure deal as the first major cloud adoption in the EU, signaling future growth. Regarding ABW Mini, Josh Isner expressed strong bullishness on the enterprise market, citing pent-up demand and existing customers deploying Axon Body 4. Rick Smith added that ABW Mini is expected to be a breakthrough product for enterprise, similar to Axon Body 1 for law enforcement, with early proof points showing significant reductions in assaults and retail crime. CPO and CTO Jeff Kunins emphasized the ecosystem approach, combining cameras with Fusus and partners like Auror to address organized crime.

Andrew Sherman inquired about the recent international deals, including a nine-figure cloud deal in Europe, seeking more details on product purchases and geographical impact. He also asked about the pipeline's strength and the sustainability of international momentum. Additionally, he requested an update on the Axon Body Workforce Mini (ABW Mini) retail trials, its potential to deter organized crime, and the broader enterprise opportunity.

Answer

President Josh Isner and CEO Rick Smith highlighted growing cloud adoption in Europe, TASER 10 acceleration, and consistent bookings from Canada, Australia, and South America, expressing confidence in continued international growth. Josh Isner and Rick Smith discussed pent-up demand for ABW Mini, its role in reducing assaults and deterring crime in enterprise settings, and its integration with Fusus and partners like Auror to create a comprehensive solution for retailers.

Andrew Sherman of TD Cowen asked about the demand mix for the AI era plan, particularly for Draft1, and whether momentum for the entire AI product bundle is accelerating.

Answer

President Josh Isner confirmed that demand for the AI era plan is accelerating, with a 'loaded' pipeline for the second half of the year. He attributed the success to tangible time savings for customers and an expanding suite of valuable AI products, crediting Founder, CEO & Director Rick Smith for the strategic early investment in AI.

Andrew Sherman asked about the primary drivers of the strong Q1 cloud and Annual Recurring Revenue (ARR) growth, sought an update on the sales pipeline for Draft One, and inquired about the factors causing the recent inflection in international market performance.

Answer

President Joshua Isner attributed the strong Q1 bookings to improved execution and proactive pipeline development, noting that Draft One adoption is expected to accelerate significantly in the second half of 2025. CFO Brittany Bagley added that the strong Q1 ARR result was a direct reflection of the record bookings in Q4 2024. Regarding international success, Isner credited increased company-wide focus, strong leadership, and a successful 'land-and-expand' strategy with core products.

Andrew Sherman requested details on the assumptions behind the 25% revenue growth guidance for 2025, specifically regarding Net Revenue Retention (NRR) and the AI Era plan's contribution. He also asked for an update on the supply/demand imbalance for the TASER 10.

Answer

CFO Brittany Bagley confirmed no change in guidance philosophy and noted that NRR remains stable with low churn. She stated that TASER 10 demand continues to outpace supply and that CapEx is being invested to increase capacity, with a goal of reaching equilibrium within the next year. President Joshua Isner added that T10 demand remains robust due to its field effectiveness.

Andrew Sherman asked about the assumptions behind the 25% revenue growth guidance for 2025, focusing on Net Revenue Retention (NRR) and the AI Era Plan's contribution. He also inquired about the current supply/demand balance for the TASER 10.

Answer

Brittany Bagley, CFO, confirmed no change in guidance philosophy and expects NRR to remain stable. She noted that TASER 10 demand continues to outpace supply, and the company is investing in capacity to close the gap by next year. Joshua Isner, President, reiterated that T10 demand remains exceptionally strong.

Andrew Sherman asked if demand for JFrog Curation accelerated further after the second npm attack in late November, whether this pulled deals into Q4, and the year-over-year growth of the Curation pipeline.

Answer

JFrog CEO Shlomi Ben Haim acknowledged that while they don't celebrate attacks, JFrog Curation benefited from the npm incident due to its clear value, maturity, and readiness to handle scale and risk. He confirmed that the company performed "amazingly" in Q4 due to the incident and built a strong pipeline moving forward.

Andrew Sherman asked if demand for JFrog Curation continued to accelerate following the second npm attack in late November, if this pulled any deals into Q4, and about the year-over-year growth of the Curation pipeline.

Answer

JFrog CEO Shlomi Ben Haim confirmed that Curation significantly benefited from the npm incident, demonstrating clear value and maturity. This led to strong performance in Q4 and contributed to building the pipeline for future growth.

Andrew Sherman inquired about the pipeline for large enterprise deals, citing the 7-figure telco win for JFrog Curation, and asked about the momentum and renewal dynamics of the security business.

Answer

CEO Shlomi Ben Haim stated the pipeline is strong with deals combining cloud migration, security, and MLOps. He highlighted the telco deal was driven by a need for a software supply chain firewall during tool consolidation. Regarding security, he noted that high retention rates reflect successful renewals and that the business is benefiting from the market trend of consolidating security tools onto a single platform.

Andrew Sherman asked for an update on the pipeline for large enterprise deals and their expected timing. He also inquired about sales cycles for security products, renewal performance, and success in displacing point solutions.

Answer

CEO Shlomi Haim confirmed several large deals are projected for the second half of the year but are derisked from guidance. He stated security sales cycles are stable as it's often sold as part of the platform. He noted that while early security renewals are aligned with projections, more data will be available in the second half, as many large deals closed in late 2024.

Andrew Sherman sought confirmation on whether there were any material true-ups or overages in the Q4 cloud revenue number. He also asked about the pipeline for large deals, similar to the strong ones closed in the second half of 2024, and for commentary on enterprise traction.

Answer

CFO Ed Grabscheid confirmed there were no significant true-ups, as most cloud customers are on a monthly 'use it or lose it' model, unlike in 2023. CEO Shlomi Ben Haim acknowledged the strong H2 2024 and stated that while there are large opportunities in the current pipeline that couple cloud and security, the company is being very conservative in how it derisks that pipeline for guidance purposes.

Andrew Sherman asked about the pipeline of large deals for Q4 and the company's visibility into them, and also inquired about the timeline for when AI-related offerings might begin to contribute to revenue.

Answer

CEO Shlomi Haim confirmed a strong pipeline of large deals for future quarters but reiterated that they are de-risking the forecast due to both macro factors and strategic decisions to wait for larger platform deals. On AI, he stated that while AI models are binaries (a core strength), customers are still in experimental phases, and material revenue contribution will likely take more than a few quarters.

Andrew Sherman asked Lynn Moore to elaborate on Tyler Technologies' barriers to entry against AI disruption in software and why it would be challenging to create their applications and platform solely with AI.

Answer

President and CEO Lynn Moore explained that AI's effectiveness relies on data and access, which Tyler Technologies possesses through its systems and unique domain expertise in public sector workflows. He emphasized trusted client relationships, embedded AI in flagship products for automating workflows, and ongoing R&D and M&A efforts as key differentiators. He cited examples like AP automation and geo-reconciliation as deeply integrated solutions that competitors lack access to.

Andrew Sherman asked Lynn Moore to discuss Tyler Technologies' barriers to entry, specifically why it would be difficult to create their applications and platform using AI, given investor concerns about AI disruption.

Answer

Lynn Moore, President and CEO, explained that AI's effectiveness relies on data and access, which Tyler Technologies possesses through its systems and unique domain expertise in public sector workflows. He emphasized trusted client relationships, embedded AI in flagship products for automating workflows and creating measurable savings, and ongoing R&D and M&A efforts. He cited examples like AP automation and geo-reconciliation as deeply embedded features that competitors lack access to.

Andrew Sherman (TD Cowen) inquired about the gap between the 20%+ consumption growth and ARR/revenue growth, asking what drives the convergence of these metrics and over what time frame.

Answer

Jim Benson, CFO, explained that there is a lag between healthy consumption growth and its manifestation in ARR acceleration, noting that early expansions can occur but there's no simple answer to the exact timing of convergence. He reiterated that the premise of DPS is to drive consumption and value, leading to expansions and continued double-digit net new ARR growth.

Andrew Sherman asked about the disparity between the 20%+ consumption growth and the lower ARR/revenue growth, and what factors would lead to their convergence, along with an estimated timeframe.

Answer

Jim Benson, CFO of Dynatrace, explained that there's a lag between healthy consumption growth and its manifestation in ARR acceleration, with no simple answer for the timeframe. He emphasized that the premise of DPS is to drive consumption and value, leading to expansions, and the company aims for continued double-digit net new ARR growth.

Andrew Sherman asked CFO Jim Benson to compare Dynatrace's visibility and confidence now versus a year ago, given the go-to-market changes, and what other factors should be considered for the second half of the fiscal year.

Answer

CFO Jim Benson stated that visibility and confidence are greater now than a year ago, as the go-to-market process is well-established, geographies are performing strongly, and pipeline focus is better. He reiterated that while there's good conviction for the back half, the timing certainty of large deals still requires prudence in the outlook. CEO Rick McConnell added that the strong first half and increased guide are supported by leading indicators like strategic account pipeline growth.

Andrew Sherman asked Jim Benson to compare and contrast Dynatrace's visibility now versus a year ago, given the go-to-market changes, and to highlight any other considerations for the second half of the fiscal year.

Answer

Jim Benson, Chief Financial Officer, stated that visibility and confidence are greater now than a year ago, attributing this to established processes, high-performing geographies, and improved focus on pipeline growth and closure. He reiterated that while conviction for a strong second half is high, the prudence in the guidance accounts for the timing certainty variability associated with large deals.

Andrew Sherman asked if the Net Retention Rate (NRR) of 111% should be expected to continue increasing throughout the year, given that over 65% of ARR is now on the higher-consumption DPS model.

Answer

CFO Jim Benson stated that while it's uncertain if NRR will expand further during the year, he expects expansions to be a heavier mix of net new ARR than historically. This is due to the health and expansion-focus of the current sales pipeline.

Andrew Sherman inquired if the increase in less-tenured sales reps was due to higher attrition or recent hiring initiatives, and asked for the reason behind the sequential decline in sales and marketing expenses. He also asked about expectations for a year-end budget flush.

Answer

CFO Jim Benson clarified that the higher mix of new reps is a result of strategic hiring to match new skill profiles for the IT 500 segment, not due to increased attrition. He explained that the Q2 decline in sales and marketing spend is seasonal, primarily because the company's major sales kickoff event occurs in Q1. Benson also stated that the company is not assuming any material budget flush in its guidance, consistent with the prior year.

Andrew Sherman asked why ServiceTitan's residential HVAC GTV is insulated from OEM volume declines and if improving OEM cycles could become a tailwind. He also requested a rank order of pro products seeing the highest demand.

Answer

CFO Dave Sherry explained that residential GTV is driven by break/fix in existing homes, including labor, parts, and membership, making it less susceptible to new home construction or supplier inventory cycles. President Vahe Kuzoyan noted that mature products like Marketing Pro are most penetrated, but AI-driven solutions (virtual agents, demand generation, dispatch automation) are currently seeing the hottest demand.

Andrew Sherman asked about the residential HVAC performance, considering the hot summer and tough comp, and if higher interest rates or weaker consumer sentiment impacted replacements. He also asked if the refrigerant change provided any incremental benefit.

Answer

Co-Founder and CEO Ara Mahdessian reiterated that OEM data reflects inventory, not end-consumer demand, which was stable. Co-Founder and President Vahe Kuzoyan added that ServiceTitan's customers continue to gain market share within HVAC, and the summer was geographically dispersed and cooler than the previous year, impacting HVAC GTV.

Andrew Sherman of Cowen asked if the recent 17-year high in home equity loan (HELOC) applications could be a tailwind for larger home improvement projects among ServiceTitan's customers.

Answer

President Vahe Kuzoyan responded that the company hears from customers that turnover in the housing market is a driver of work. He said he would anticipate any meaningful change in that direction, like increased HELOC usage, to be a positive factor, but noted it is hard to predict the magnitude of the impact.

Andrew Sherman from Cowen asked if the recent spike in home equity loan (HELOC) applications could drive larger projects for ServiceTitan's customers.

Answer

President Vahe Kuzoyan acknowledged that increased housing market activity is generally a positive driver for their customers' work. However, he stated that it is difficult to predict the specific magnitude of the impact from the rise in HELOC applications at this time.

Andrew Sherman inquired about the extent to which the Q3 surprise from reorganizations and layoffs, which pressured seat counts, is a one-time event versus a controllable factor, and how PagerDuty plans to prevent similar impacts in Q4 given a large renewal base. He also asked about the health of platform consumption and the speed at which PagerDuty can transition to a consumption model to alleviate seat pressure.

Answer

Jennifer Tejada, Chairperson and CEO of PagerDuty, noted progress with proactive customer engagement, leading to improved logo retention and fewer absolute downgrades. She described a 'pod model' for deeper engagement and better visibility, expecting improvements but not a significant change in the macro environment. Tejada affirmed strong platform usage and new customer growth. She clarified that the shift to a consumption model isn't one-dimensional, as many customers are content with seat-based models, with pressure most pronounced in large enterprises. Howard Wilson, Chief Financial Officer of PagerDuty, added that customers with seat reductions are staying with PagerDuty and gaining access to a broader product footprint with flexible licensing, setting them up for future growth.

Andrew Sherman asked how much of the Q3 surprise from reorgs/layoffs and pressured seats is one-time versus controllable, how to prevent it in Q4, and the health of platform consumption and speed of transition to a consumption model.

Answer

Jennifer Tejada (Chairperson and CEO, PagerDuty) indicated progress with proactive customer engagement, noting improved logo retention and fewer downgrades, and highlighted the use of a pod model for deeper customer understanding. She confirmed increased usage across almost every metric and double-digit new customer growth, clarifying that the shift to consumption isn't one-dimensional, with multi-year agreements and usage-based product credits expected to drive future ARR conversion. Howard Wilson (CFO, PagerDuty) added that flexible licensing allows customers to access more product footprint, setting them up for future growth despite initial seat reductions.

Andrew Sherman of TD Cowen requested more color on the significant six-figure win with an AI research company, asking about the use case and potential for expansion. He also inquired about the performance of non-incident management products during the quarter.

Answer

CEO Jennifer Tejada explained that the AI company win validates PagerDuty's platform for the new frontier of managing complex AI operations, where reliability and security are paramount. Regarding other products, she highlighted that AIOps continues to perform well, with maturing use cases such as helping customers optimize observability spend and prioritize technical debt.

Andrew Sherman of TD Cowen inquired about the current macroeconomic environment's impact on PagerDuty's business and sought an update on the go-to-market strategy, specifically regarding the productivity ramp of new sales representatives and any further planned adjustments.

Answer

CEO Jennifer Tejada stated that customers continue to prioritize platforms with high ROI and efficiency, a trend PagerDuty is accustomed to. She detailed the ongoing sales transformation, which involves a talent rotation towards experienced enterprise platform reps who are ramping faster. Tejada emphasized her focus on increasing sales effectiveness, productivity, and standardizing the go-to-market motion to ensure strong account engagement, which is a key driver of growth.

Andrew Sherman asked for a rank order of the new products contributing to 40% of net new ARR and whether attach rates could drive larger deals. He also asked if the higher Enterprise NRR includes mid-market and when the SMB drag on overall NRR might subside.

Answer

CEO Jennifer Tejada explained that AIOps, Automation, and Customer Service Ops are key drivers, often sold as solutions to funded CIO initiatives like op center modernization, which helps deals get bigger. CFO Howard Wilson clarified that the Enterprise DBNR figure now includes companies with revenues above $500 million, incorporating the upper mid-market. He noted the SMB segment's negative growth has been flattening, reducing its headwind on overall growth.

Andrew Sherman asked for an update on the performance of flexible enterprise pricing and its impact on expansions. He also questioned how Q4 guidance accounts for longer deal cycles and how renewals have tracked.

Answer

CEO Jennifer Tejada reported positive feedback on flexible pricing, noting it enabled significant deals and that the consumption-based AIOps offering grew about 20%. CFO Howard Wilson stated the guidance accounts for deal timing. He also explained that a strategic push for multi-year renewals has reduced the renewal base for Q4, de-risking retention and allowing the sales team to focus more on growth.

Andrew Sherman asked about the productivity ramp of Datadog's team focused on Fortune 500 companies, its contribution to strong new logo bookings, and its potential for increased contribution next year.

Answer

CEO Olivier Pomel confirmed a long-standing focus on the Fortune 500 and that the team is tracking well. He emphasized the importance of incentivizing the salesforce to land new customers, even if initially for smaller amounts, to drive future growth.

Andrew Sherman asked about the productivity ramp of Datadog's team focused on Fortune 500 companies, its contribution to strong new logo bookings, and potential for increased contribution next year.

Answer

Olivier Pomel, Co-Founder and CEO, Datadog, noted that the focus on Fortune 500 is not new and is tracking well. He emphasized the importance of focusing on landing new customers and rewarding sales for these efforts, even for smaller initial amounts, expressing confidence in the new plans.

Andrew Sherman noted that the net new additions of customers with ARR over $100,000 was the strongest since Q4 2022 and asked about the drivers behind this expansion, including new use cases, new products, and share gains.

Answer

CEO Olivier Pomel confirmed it was driven by 'all of the above,' stating that it's a consistent trend of customers expanding on the platform as they consolidate tools and add workloads. He also highlighted the return of 'boomerang' customers who had previously left for other solutions, viewing their return as validation of Datadog's long-term value proposition.

Andrew Sherman noted that sales and marketing growth was below revenue growth and asked about the company's sales capacity position as it heads into the next fiscal year.

Answer

Interim CFO Eric Prengel responded that the strong performance in Q2 and Q3 gives them confidence to continue investing. He stated that they plan to invest in the field, marketing, and product in FY26, with investments being front-end loaded in Q1. He affirmed they actively monitor field capacity and feel comfortable with the current headcount needed to drive FY26 growth.

Andrew Sherman, filling in for Derrick Wood, asked about Appian's key differentiators in agentic AI, the customer adoption of new pricing tiers, the impact of AI consumption pricing, and the reason for the high cloud bookings mix.

Answer

CEO Matt Calkins identified Appian's unique Data Fabric as the primary differentiator, enabling a more private, auditable, and effective approach to agentic AI. He noted strong adoption of the higher-priced 'advanced' tier, particularly among new customers. CFO Mark Matheos commented that while the high cloud bookings mix is positive, it can fluctuate quarterly and should not be seen as a definitive new trend.

Asked about the market traction for Boundary, feedback from the sales team, and its potential for revenue contribution next year.

Answer

The company is very excited about Boundary's traction, seeing strong inbound interest and landing significant deals. The product addresses a clear need for modern privileged access management created by the shift to the cloud, and it is a frequent topic in customer conversations.