Brad Zelnick

Brad Zelnick asked for insights into ARR and net new ARR seasonality for Q4 and into next year, and how to calibrate future performance expectations as a new public company.

Answer

Drew Del Matto, CFO, Netskope, noted that ARR has grown about a point faster than revenue over the last year and that Q4 last year was very strong. He emphasized a prudent approach to guidance as a newly public company, given the challenges in predicting rep hiring and ramp rates.

Brad Zelnick sought insight into ARR and net new ARR seasonality for Q4 and the next fiscal year, and how to calibrate expectations for future performance given current strong growth.

Answer

CFO Drew Del Matto noted that ARR has grown approximately one point faster than revenue over the past year, with Q4 of the prior year being a strong quarter. He emphasized a prudent approach to guidance as a newly public company, considering the ongoing ramp-up of sales representatives.

Brad Zelnick asked about Oracle's capital requirements and funding strategy for its accelerating AI growth plans, particularly given the capital-intensive nature of the business.

Answer

Clay Magouyrk, CEO, explained that Oracle has diverse funding options, including customers bringing their own chips and vendors renting capacity, which reduce upfront capital expenditures. He also stated Oracle is committed to maintaining its investment-grade debt rating and expects to need substantially less than the $100 billion some analysts have modeled for its buildouts.

Brad Zelnick asked Larry Ellison for his perspective on the future of the enterprise applications industry, particularly for companies lacking Oracle's integrated database and infrastructure advantages, suggesting it could be an 'extinction event'.

Answer

Chairman and CTO Larry Ellison emphasized Oracle's substantial advantages as both an infrastructure and application company. He explained that Oracle's use of AI application generators allows them to build better and more efficient applications, enabling them to offer comprehensive suites (ERP, CRM) where all components are engineered to fit together, simplifying consumption for customers. He also reiterated Oracle's unique position in AI inferencing, allowing customers to securely query their private data with AI models.

Brad Zelnick of Deutsche Bank asked about the enduring importance of Oracle's full-stack technology advantage, from applications down to silicon, as the industry enters a new era of computing.

Answer

CTO Lawrence Ellison responded that the full stack is a key strength, not a weakness. He explained that building applications on their own database improved the database, and that superior database technology (specifically the Autonomous Database) makes their cloud more reliable, scalable, and secure. Having expertise at all layers allows Oracle to innovate and build an integrated solution that is faster, cheaper, and more reliable than competitors can achieve.

Brad Zelnick from Deutsche Bank asked about the 'Stargate' AI project, questioning what unique value Oracle provides that led partners like OpenAI and NVIDIA to choose them, and how this related-party transaction would be reflected in the financials.

Answer

Executive Chairman and CTO Lawrence Ellison stated that Oracle's key advantage is its superior technology, which runs AI clusters faster and more economically, translating to a significant cost advantage for customers. He noted the current $130 billion RPO was achieved even before any Stargate contracts. CEO Safra Catz added that Stargate deals will flow through the financials in a standard, transparent manner, without complicating analysis.

Brad Zelnick asked for perspective on AI 'scaling laws,' questioning if there are diminishing returns on using larger GPU clusters for model training and how Oracle maintains its leadership in AI infrastructure.

Answer

Chairman and CTO Larry Ellison explained that AI training speed depends on both larger GPU clusters and, critically, faster networks to feed them data. He emphasized that Oracle's key differentiator and area of heavy investment is its high-speed networking infrastructure, which prevents data bottlenecks. Ellison believes that by continuing to speed up its networks, Oracle will avoid diminishing returns and maintain its performance advantage in AI training.

Brad Zelnick of Deutsche Bank asked how Oracle's security posture, beyond just automation, is helping it win large OCI deals, particularly with government clients, amid a landscape of high-profile cyber incidents.

Answer

Chairman and CTO Larry Ellison outlined a four-part, next-generation security strategy. He announced Oracle is eliminating passwords in favor of biometric authentication, introducing 'Zero Trust Packet Routing' to secure data from the user to the database, leveraging automation to eliminate human error, and using AI for code generation to prevent security vulnerabilities from being written into programs. He positioned these AI-based systems as essential for winning the 'cyber war' against increasingly sophisticated threats.

Brad Zelnick of Deutsche Bank asked about the structure of Rubrik's partnerships with AI platforms like Amazon Bedrock and Microsoft Copilot Studio, including potential co-investment or co-innovation, and how Rubrik Agent Cloud will be monetized.

Answer

CEO Bipul Sinha explained that Rubrik leverages existing go-to-market partnerships with hyperscalers, initially established for cyber resilience, and is expanding them for Rubrik Agent Cloud. He confirmed that Rubrik Agent Cloud is a completely separate product suite, currently in beta with strong customer feedback, and is anticipated to be sold as distinct SKUs rather than migrating customers up core product tiers.

Brad Zelnick inquired about the rationale for moving from six-month to twelve-month sales compensation plans and what specific behaviors the company is looking to incentivize.

Answer

CFO Kiran Choudary and CEO Bipul Sinha explained that the shift to an annual comp plan aligns the sales team's incentives with how the business is managed and planned, which is based on annual net new ARR. They noted this is a common practice for companies at Rubrik's scale (over $1 billion in ARR) and that the sales leadership has experience with this model. The primary driver is to better align field execution with the company's annual business objectives.

Brad Zelnick asked about the long-term vision, multi-cloud availability, and monetization strategy for the new Rubrik Annapurna platform, and also inquired about competitive win rates.

Answer

CEO Bipul Sinha positioned Annapurna as a multi-year strategy to provide the secure data infrastructure for generative AI applications. He noted it is an API-first platform designed for multi-cloud environments and that monetization strategies will be developed through market experimentation over several years. Regarding competition, he stated that Rubrik continues to win the vast majority of deals due to its unique Zero Trust architecture that integrates DSPM and cyber recovery.

Brad Zelnick asked about the management's confidence level and visibility into the financial guidance for the second half of the fiscal year.

Answer

CFO Kiran Choudary expressed strong confidence in the raised outlook, attributing it to double-digit growth in net new ARR during the first half. He noted that the guidance for second-half net new ARR was increased by over 5%. While acknowledging the macro environment requires prudence, he affirmed confidence based on the visible pipeline and the company's strong execution.

Brad Zelnick asked about Salesforce's competitive advantages within its substantial data infrastructure business, which includes Informatica, Data 360, and MuleSoft, and how these capabilities contribute to the company's overall success.

Answer

CEO Marc Benioff clarified that Salesforce does not build data centers but leverages existing ones to preserve gross margins. He emphasized that the data foundation, comprising Informatica, Data 360, and MuleSoft, is projected to be a $10 billion business next year and is critical for customers' journey to this foundation. Benioff highlighted the importance of data federation (e.g., Data 360 to IBM mainframe) for delivering accurate, reliable, and low-hallucination AI, noting its deep integration with all Salesforce apps and Agentforce.

Brad Zelnick of Deutsche Bank asked about the most advanced use cases, ROI, and impact of AgentForce that Salesforce is currently observing in the market.

Answer

Chair and CEO Marc Benioff described the broad, international demand for an 'agentic layer' around entire companies, citing Fujitsu in Japan as an example. He also highlighted how customers like Smartsheet are embedding AgentForce for digital labor tasks like support and license provisioning. He emphasized that the current rate of innovation is outpacing customer adoption, creating a significant opportunity that justifies aggressive investment in distribution.

Brad Zelnick inquired about the most advanced use cases, ROI, and business impact emerging from AgentForce and its integration with Data Cloud compared to just a few months ago.

Answer

CEO Marc Benioff highlighted international customer demand, such as from Fujitsu, and embedded use cases like in Smartsheet, where AgentForce acts as 'digital labor' for support and license changes. He noted that the current rate of innovation exceeds customer adoption, reinforcing his strategy to aggressively expand the sales organization into high-growth markets after a period of financially-driven restraint.

Brad Zelnick of Deutsche Bank asked for more details on the "More Core" initiative, seeking to understand what it involves and the size of the opportunity it represents.

Answer

CEO Marc Benioff explained that "More Core" is a multi-year effort to integrate all applications, including formerly separate ones like Commerce and Marketing, into a single, unified platform. He stated this integration is critical because effective AI requires seamless access to a comprehensive set of data and metadata. This initiative ensures all products, from sales to Slack, operate as one piece of code, which is a key enabler for the Agentforce strategy.

Brad Zelnick noted the significant headcount additions in Q3, the most in three years, as an expression of confidence. He sought clarification on the interpretation of the CRPO coverage ratio comments for FY27 revenue and the composition of the Q3 headcount adds.

Answer

CFO Brett Tighe provided a detailed explanation for approximating FY27 revenue using the Q4 FY26 current RPO guidance ($2.45 billion), an estimated FY26 coverage ratio (approximately 79%), and professional services. He clarified that headcount additions are a mix of go-to-market roles and positions in lower-cost regions (R&D, G&A) to accelerate product development and improve efficiency.

Brad Zelnick from Deutsche Bank inquired about the stabilization of Okta's Net Retention Rate (NRR), the factors behind removing the macro-related conservatism from guidance, and whether the current NRR level represents a bottom.

Answer

CEO Todd McKinnon provided high-level remarks on the company's solid execution and strategy. CFO Brett Tighe then explained that while macro effects from the 'COVID cohort' are expected to diminish, he anticipates NRR will fluctuate slightly around the current level for the rest of the fiscal year. Tighe noted the macro caveat was removed from guidance as Q2's environment was largely consistent with previous quarters.

Brad Zelnick from Deutsche Bank asked about the increased conservatism in Okta's guidance, questioning the combined impact of the go-to-market specialization and new macroeconomic concerns on Q1 results and the future outlook.

Answer

CEO Todd McKinnon affirmed that Q1 was a solid quarter and the company is on track for the year. CFO Brett Tighe clarified that macroeconomic pressures were not felt in Q1 but are being prudently factored into future guidance based on customer conversations and the general economic tone. He emphasized that despite this new factor, the guidance model still contains less overall conservatism than in previous years.

Brad Zelnick asked for an update on seat-based headwinds, questioning if they are abating or if the strong results are primarily due to success with new products like governance offsetting those pressures.

Answer

CEO Todd McKinnon explained that while the macro environment of cautious buying persists, the headwind is abating as multi-year contracts from the "zero interest rate era" are renewed at more rightsized levels. CFO Brett Tighe clarified that the primary driver of strong results was customers buying more products, as evidenced by the new product bookings percentage, rather than an abatement of the seat-based headwinds.

Brad Zelnick inquired about Workday Go's success in the medium enterprise and emerging enterprise segments, its broader availability, and if Workday needs to deliver different AI products for down-market customers versus large enterprises.

Answer

Gerrit Katzmaier (President of Product and Technology, Workday) stated that Workday Go customers will benefit from the full power of Workday's AI agents. He highlighted specific AI innovation for Workday Go, such as a new deployment agent to reduce setup complexity and payroll AI for automation. Carl Eschenbach (CEO, Workday) discussed Workday Go 2.0, including global payroll options, an expanded partner network, and a payroll agent, noting strong excitement and market attack.

Brad Zelnick inquired about Workday Go's success in the Medium Enterprise and Emerging Enterprise segments, its broader availability, and whether Workday needs to deliver different AI products for down-market customers versus Large Enterprise.

Answer

President of Product and Technology Gerrit Kazmaier stated that Workday Go customers will receive the full power of Workday's AI agents. He highlighted specific AI innovation for Workday Go, such as a new Deployment Agent to reduce setup complexity and a Payroll Agent for automation, leveraging the global partner network. CEO Carl Eschenbach announced Workday Go 2.0 with Global Payroll, an expanded partner network, and the AI Deployment Agent, noting strong market excitement.

Brad Zelnick asked about the strategic vision behind the acquisition of Paradox and for details on its financial profile.

Answer

CEO Carl Eschenbach and President of Product & Technology Gerrit Kazmaier described Paradox as a key addition that rounds out their AI-powered talent acquisition suite. They highlighted its strengths in high-volume, frontline hiring and its mobile-first, conversational AI approach that improves the candidate experience and delivers significant ROI. CFO Zane Rowe confirmed the acquisition is larger than recent deals and that the company is excited about its growth potential and synergies.

Brad Zelnick of Deutsche Bank asked about the potential ceiling for AI adoption in customer expansions and sought clarification on the 0.5 point CRPO contribution from implementation tenants.

Answer

CEO Carl Eschenbach stated that 25-30% of sales back to the customer base have included an AI SKU in recent quarters, and he sees this continuing as new agents are released. CFO Zane Rowe clarified that the 'tenant' contracts were not included in prior forecasts and will be included prospectively. He noted the contribution was 0.5 points in Q1 and is expected to be about 1 point per quarter for the rest of the fiscal year.

Brad Zelnick of Deutsche Bank AG asked about the potential ceiling for AI product adoption within customer expansions and sought clarification on the 0.5 point CRPO contribution from implementation tenants.

Answer

CEO Carl Eschenbach expressed confidence in continued AI adoption, noting that 25-30% of sales to the installed base in recent quarters included an AI SKU and that customers view Workday as a strategic AI partner. CFO Zane Rowe clarified that the CRPO contribution from tenants was not in the prior forecast and will be included prospectively, expecting about a 1-point impact for the rest of the year.

Brad Zelnick of Deutsche Bank asked for an assessment of the European business, noting mixed feedback from partners and seeking to distinguish between environmental challenges and execution.

Answer

CEO Carl Eschenbach acknowledged macroeconomic headwinds and deal scrutiny in EMEA but maintained that the long-term opportunity is intact. He stressed that Workday's win rates in the region remain very strong when customers do commit to large transformation projects, expressing confidence in the European business.

Brad Zelnick asked about particularly exciting areas within the Financials suite, beyond the known success of Accounting Center, that could compel customer adoption and drive upside.

Answer

Co-President Doug Robinson highlighted Accounting Center's expansion into innovative use cases across all industries and pointed to Workday Student as a key driver in higher education. CEO Carl Eschenbach added that workforce planning, an Adaptive Planning product, is another area of strong momentum that tightly links HCM and Financials.

Brad Zelnick asked about the progress and future acceleration of Zscaler's Zero Trust Branch solution, inquiring about product development and go-to-market fine-tuning.

Answer

Chairman and CEO Jay Chaudhry highlighted the product's strong state and the effectiveness of the specialty go-to-market team. He noted impressive adoption, with over 450 Zero Trust Everywhere customers, and sees significant opportunity for expansion within the existing customer base.

Brad Zelnick asked about the progress and future acceleration of the Zero Trust Branch product, inquiring about remaining work on product development and go-to-market fine-tuning.

Answer

Chairman and CEO Jay Chaudhry stated that the product is in great shape with significant technological advancements, and a specialty go-to-market team is engaging with buyers. He highlighted strong demand, with over 450 Zero Trust Everywhere customers, and a large opportunity within the 4,400 enterprise-class customers, of which only 10% have been penetrated.

Brad Zelnick inquired about the ZFlex program's role in enabling strategic customer engagement, its 50% sequential growth in TCV bookings, and how the sales force will leverage it in fiscal 2026, including its broad availability and Mike Rich's sales playbook.

Answer

Chairman and CEO Jay Chaudhry detailed that ZFlex builds on architectural workshops and business value assessments to offer flexible pricing, allowing customers to adopt modules seamlessly over multi-year deals. He noted its expansion from larger customers to a broader base and partners, driving larger and better deals.

Brad Zelnick from Deutsche Bank asked for details on the structure, duration, and accounting of Z-Flex deals and questioned whether billings will remain the most appropriate metric for measuring Zscaler's business momentum.

Answer

CFO Remo Canessa confirmed that Zscaler plans to transition from billings to ARR as its primary metric in fiscal 2026, stating it better reflects the company's platform sales model. CEO Jay Chaudhry added that Z-Flex provides customers flexibility with pre-agreed pricing and that contract durations are lengthening, with more deals extending to four or five years.

Brad Zelnick asked for tangible evidence that the company's go-to-market transformation is effective and durable, and also questioned if the Q3 billings guidance implied any changes to billing schedule assumptions.

Answer

CEO Jay Chaudhry pointed to a growing pipeline, double-digit new ACV growth, and strong C-level engagement as proof of successful GTM changes. CFO Remo Canessa confirmed there were no changes to billing assumptions, stating the full-year guidance was raised due to increased confidence from a strong pipeline and improved visibility.

Brad Zelnick asked about Zscaler's opportunity to displace legacy firewalls during hardware refresh cycles and requested an analysis of the drivers behind the strong 30% bookings growth, noting it appeared to be high-quality growth.

Answer

CEO Jay Chaudhry confirmed that firewall refresh cycles are a significant opportunity that Zscaler is now actively targeting with its Zero Trust SD-WAN and device segmentation solutions. CFO Remo Canessa attributed the strong 30% bookings growth to the 20%-plus growth in unscheduled billings and pointed to strong underlying metrics like 22% CRPO growth and 26% RPO growth as evidence of healthy demand and execution.

Brad Zelnick asked if the recent Microsoft and CrowdStrike outages have changed how customers think about their cyber strategies and Zscaler's role within them.

Answer

CEO Jagtar Chaudhry explained that the outages have heightened customer focus on resilience, which is a core strength for Zscaler. He noted strong interest in Zscaler's Business Continuity Plan (BCP) service, which was introduced in January 2023. Chaudhry also observed a growing sentiment among customers to avoid single-vendor dependency for both applications and security, which positions Zscaler favorably.

Brad Zelnick asked about key learnings from the recent tax extension season and how those insights will be applied to the upcoming tax season. He also questioned the investment strategy for expanding TurboTax's local office footprint to sustain assisted growth, comparing current investments to the previous year.

Answer

Intuit CEO Sasan Goodarzi expressed strong optimism for the upcoming tax season due to platform innovation, including 300 experiments in go-to-market and platform enhancements. He highlighted data and AI for simpler tax filing, end-to-end innovation for assisted methods, and the expansion of local presence from 400 to 600 locations, plus 20 stores, to enhance trust and market presence. CFO Sandeep Aujla added that the local strategy is asset-light and scalable, with relatively small rent and OpEx costs already included in guidance, focusing on high-density areas to drive adoption and trust.

Brad Zelnick asked about key learnings from the recent tax extension season and how they will be applied to the upcoming tax season, as well as the investments required to sustain 15-20% assisted growth, comparing them to last year's investments.

Answer

CEO Sasan Goodarzi expressed strong optimism for the upcoming tax season due to innovation, including 300+ experiments, AI-driven simplification, and early money access. CFO Sandeep Aujla added that Intuit is expanding its local presence from 400 to 600 expert locations and opening 20 stores, including a flagship in New York City. These asset-light, scalable investments are included in the current guidance and aim to build trust and drive adoption.

Brad Zelnick of Deutsche Bank asked for more detail on the factors underpinning the company's confidence in its 15% to 20% growth forecast for TurboTax Live in the upcoming year, following a very strong fiscal 2025.

Answer

CFO Sandeep Aujla clarified that the confidence stems from the tremendous learnings gained during fiscal 2025's successful tax season. Key drivers that will be enhanced include a localized marketing approach, extending the TurboTax brand equity into the assisted tax category, and optimizing the seamless 'better together' experience with Credit Karma, which successfully drove new customer adoption. The plan is to execute this playbook even more effectively in the coming year.

Brad Zelnick requested a deeper analysis of the 47% growth in TurboTax Live and full-service offerings, asking about the specific drivers, the impact of the local strategy, and areas of constructive dissatisfaction.

Answer

CEO Sasan Goodarzi explained the growth came from three areas: retaining existing customers through life changes by offering expert help, breakthrough adoption of full-service by new customers, and a successful go-to-market campaign that drove unprecedented traffic. He identified an area for improvement in the initial customer interaction, noting that requiring authentication upfront created friction for new assisted-tax customers, a key learning for future seasons.

Brad Zelnick requested a deeper analysis of the 47% growth in TurboTax Live and full-service offerings, asking for specific drivers, the impact of the local strategy, and areas where management is 'constructively dissatisfied'.

Answer

CEO Sasan Goodarzi explained the growth came from retaining existing customers through life changes and a breakthrough in acquiring new full-service customers for both consumer and business tax. He identified a key area of dissatisfaction and opportunity: reducing friction in the initial customer journey. For instance, requiring authentication upfront for new users from the assisted category created falloff, an issue they are now addressing.

Brad Zelnick inquired about the drivers for the full-year Global Business Solutions (GBS) guidance, given the 20% online ecosystem growth, and asked about the increased Q1 marketing spend for TurboTax and its implications for the full year.

Answer

CFO Sandeep Aujla explained that confidence in the GBS guidance is reinforced by strong customer engagement, low attrition, a favorable mix shift towards the mid-market (which grew 42%), and strong services adoption. Regarding marketing, he noted the earlier start for the consumer campaign is a strategic move to disrupt the assisted tax market, which has shown strong early ROI. He expects the full-year consumer marketing budget to be up only slightly.

Brad Zelnick asked for more color on the recent restructuring, specifically how any savings would be reinvested and which initiatives would be prioritized.

Answer

CEO Sasan Goodarzi emphasized that the decision was difficult but necessary to position the company for the future. He confirmed that all resulting funds are being reinvested into five key growth areas previously outlined, including AI, live services, and mid-market. He clarified that the FY25 guidance does not depend on these investments yielding immediate returns. CFO Sandeep Aujla added that hiring for these initiatives was already underway before the announcement.

Brad Zelnick asked about the expected cadence of customer count additions going forward, including any seasonality. He also inquired about the broader potential of Via's AI models for cities, beyond transit, given the company's proprietary data and focus on government technology.

Answer

Clara Fain, CFO, stated that customer additions historically range between 8% and 12% year-over-year, and she expects this range to continue, despite Q3 2025 being particularly strong. She mentioned that new products like schools might introduce some seasonality but are still in early penetration stages. Daniel Ramot, Co-Founder and CEO, emphasized Via's focus on its current large market but acknowledged that AI's efficiency in product development could enable quicker expansion into other government technology areas in the future, though this is not an immediate priority.

Brad Zelnick inquired about the expected cadence of customer count growth going forward, asking for clarification on any seasonality or other factors to consider. He also asked Daniel Ramot about the broader potential of leveraging billions of proprietary data points to bring AI and LLMs to cities, exploring opportunities beyond transit into adjacent government technology needs.

Answer

Clara Fain, CFO, stated that the historical range for customer additions is 8-12%, with Q3 being particularly strong, and noted that new products like schools, while early, could introduce some seasonality. Daniel Ramot, Co-Founder and CEO, emphasized the enormous and durable opportunity in the current market. He suggested that AI's ability to accelerate product development could enable quicker expansion into other government technology areas, though this is not an immediate focus.

Brad Zelnick asked about the pacing of contracting out the remaining 1 GW+ capacity from CoreWeave's 2.9 GW committed power, given the insatiable demand and other large deals being announced industry-wide.

Answer

CEO Mike Intrator stated that the broader industry deals validate the strong supply-demand environment. He emphasized that CoreWeave's full-stack product drives significant demand, and they are thoughtfully allocating infrastructure to drive diversification and support meaningful contributors. CFO Nitin Agrawal added that customer concentration has significantly decreased, with 60% of the backlog tied to investment-grade customers.

Brad Zelnick questioned the pacing of contracting out the remaining 1 gigawatt+ capacity, given the insatiable demand and other large industry deals being announced.

Answer

CEO Mike Intrator viewed other large industry deals as validation of overwhelming demand. He emphasized CoreWeave's full-stack product as the most valuable infrastructure, driving significant demand. He stated CoreWeave is thoughtfully driving diversification across its cloud and allocating infrastructure to meaningful contributors as quickly as possible. CFO Nitin Agrawal added that no single customer represents more than 35% of revenue backlog (down from 85% at year-start), and 60% of backlog is with investment-grade customers, guiding their capacity allocation.

Brad Zelnick from Deutsche Bank inquired about the economic differences between inference and training workloads and asked for more details on the new flexible capacity and spot products.

Answer

CEO Michael Intrator stated that under CoreWeave's long-term contract model, the economics for inference and training are identical. He explained that while the spot product is crucial for attracting new users and use cases, its availability is limited because new capacity is immediately consumed by large, long-term customer contracts.

Brad Zelnick asked about the relative economics of inference versus training workloads and requested more detail on the new flexible capacity and spot products currently in customer preview.

Answer

CEO Michael Intrator explained that under CoreWeave's long-term contract model, the economics for inference and training are identical. For the new flexible products, he noted that the primary challenge is that available capacity is almost immediately consumed by large clients for long-term contracts, but the company is committed to expanding its spot offering to attract new users and use cases.

Brad Zelnick asked for any qualitative guidance on the cadence and potential range of outcomes for cash flow, acknowledging that the metric is dynamic and not formally guided.

Answer

CFO Nitin Agrawal advised that cash flow is best understood by analyzing capital expenditures and the profile of new customer contracts. He emphasized that both of these drivers can be 'lumpy' due to the variable timing and size of deals and deployments, but the company would strive to provide advance visibility when possible.

Brad Zelnick asked to reconcile Fortinet's claim of growing above market in each pillar with the 13% ARR growth in SaaS this quarter, inquiring about any specific one-off factors. He also asked about pricing trends and competition in the SaaS market, particularly at the branch level, and changes in win rates.

Answer

Christiane Ohlgart, CFO, clarified that unified SaaS ARR includes SD-WAN and CNAPP components, and noted positive quarter-over-quarter momentum despite previous flatness. She explained that competitive bids depend on customer size, but Fortinet's advantage lies in the ease of implementing SaaS and extending policies from the firewall, which significantly lowers incremental costs and offers operational benefits compared to third-party solutions. Ken Xie, Founder, Chairman, and CEO, highlighted Fortinet's single-box solution for branches (integrating networking, SD-WAN, and SaaS) as a major cost-saving and management advantage over competitors' multi-box approaches, citing the example of 10,000 retail locations.

Brad Zelnick asked to reconcile Fortinet's claim of growing above market in each pillar with the 13% ARR growth in SaaS this quarter, inquiring about any specific one-off factors in Q3, and followed up on pricing trends and competition in SaaS, especially at the branch level.

Answer

Christiane Ohlgart, CFO, explained that unified SaaS ARR includes SD-WAN and that they are pleased with the quarter-over-quarter ARR growth, noting positive momentum after previous flatness due to a CNEP component. On competition, she stated that competitive bids depend on customer size, but Fortinet's easy implementation and policy extension from firewall to SaaS significantly lower incremental costs and offer operational benefits. Ken Xie, Founder, Chairman, and CEO, highlighted Fortinet's single-box solution for networking, SD-WAN, and SaaS at the branch, citing a 10,000 retail location example for cost savings and ease of management.

Brad Zelnick asked about the progress of sales and channel enablement investments for the upcoming refresh cycle and the competitive response. He also inquired about any material impact from the consolidation of Linksys.

Answer

CAO and incoming CFO Christiane Ohlgart stated they see little direct competition for their end-of-support cohort and highlighted new multi-product channel incentives. Regarding Linksys, COO John Whittle called the financial impact immaterial, with Founder, Chairman, and CEO Ken Xie positioning it as a long-term growth opportunity.

Brad Zelnick asked for quantification of the revenue impact from Azure's capacity constraints, whether there's a risk of workloads shifting to competitors, and how Microsoft mitigates these challenges.

Answer

CFO Amy Hood stated that precisely quantifying the revenue impact is difficult, but Azure likely bears most of it due to prioritization of M365 Copilot, security features, and GitHub momentum. She also noted that capacity is prioritized for product teams and AI talent for R&D. Despite mitigation efforts, Azure remains capacity-constrained, and the potential revenue could have been higher.

Brad Zelnick inquired about quantifying the revenue impact of Azure capacity shortages and the potential risk of workloads migrating elsewhere.

Answer

Amy Hood, Chief Financial Officer, stated it's difficult to precisely quantify the revenue impact but confirmed Azure bears most of it due to prioritization of Microsoft 365 Copilot, security features, GitHub, and internal R&D. She acknowledged that Azure revenue could have been higher without these constraints and that Microsoft is working to mitigate the impact, but demand continues to outpace supply.

Brad Zelnick from Deutsche Bank asked about the future of Microsoft's Copilot portfolio, specifically how the company plans to evolve its packaging and go-to-market strategy to reach the broadest possible customer base.

Answer

CEO Satya Nadella highlighted recent moves to drive broader adoption, such as introducing Copilot Chat for all enterprise users and making the advanced 'Think Deeper' feature free for consumers. He explained that as inference costs come down, Microsoft can make premium features more ubiquitous across its entire portfolio, including M365, GitHub, and Security Copilot.

Brad Zelnick asked about the learnings and conversion trends from the go-to-market changes, including field alignment and coverage ratios, and the capacity to handle the accelerated late-stage pipeline. He also inquired about RPO and CRPO acceleration as reliable leading indicators.

Answer

CEO Jay Kreps highlighted the success of the DSP specialization model and field execution, expressing high confidence in the late-stage pipeline as a driver of future consumption. CFO Rohan Sivaram clarified that RPO is a key leading indicator for Confluent Platform, while for Confluent Cloud, short-term focus is on new use cases moving into production, with RPO providing increasing long-term visibility.

Brad Zelnick inquired about the effectiveness of recent go-to-market changes, including field alignment and coverage ratios, and the conversion trends and capacity for the accelerating late-stage pipeline. He also asked about RPO and CRPO acceleration as a leading indicator.

Answer

CEO Jay Kreps expressed high confidence in the late-stage pipeline, noting it represents customer workloads reaching production and driving future consumption. CFO Rohan Sivaram clarified that RPO is a key leading indicator for Confluent Platform, while for Confluent Cloud, short-term drivers include new use cases in production, with RPO providing longer-term visibility.

Brad Zelnick from Deutsche Bank inquired about the operational enhancements being driven by the new CRO, their connection to customer optimization, and the confidence level in the guidance for the second half of the year.

Answer

CEO Jay Kreps clarified that the operational enhancements, such as improving coverage ratios and building a DSP specialist team, are focused on what Confluent can control: driving new use case adoption. He noted early positive signals, including a greater than 40% sequential increase in late-stage consumption pipeline progression. CFO Rohan Sivaram added that the back-half guidance for Cloud assumes month-over-month growth rates will be notably below prior years, but this is partially offset by strength and visibility in the Confluent Platform business, leading to a raised full-year subscription revenue guide at the midpoint.

Brad Zelnick requested more detail on the OEM relationships that drove strong Confluent Platform results and asked about any other factors that could impact the free cash flow trajectory for the year.

Answer

CFO Rohan Sivaram explained that OEM partners, particularly internationally, help amplify Confluent's sales reach and were a factor in Q1's strength, alongside large multiyear deals. He advised looking at CP performance over a 12-month period. For free cash flow, he reiterated the ~6% margin goal for the year and stated that, excluding the one-time compensation change, FCF should track closely with operating margin.

Brad Zelnick asked about the key go-to-market messages for 2025 after the prior year's transformation and requested more detail on how recent packaging changes expand the company's serviceable addressable market (SAM).

Answer

CEO Jay Kreps stated that the 2025 go-to-market strategy involves minor 'tune-ups' to incentives rather than a major overhaul, with a focus on driving consumption of specific DSP components. CFO Rohan Sivaram explained that the addition of Enterprise, Freight, and WarpStream clusters expands their SAM by providing optimal TCO and ROI for a much broader range of customer workloads and deployment models.

Brad Zelnick asked if recent positive signs could be considered 'green shoots' and how that informs sales capacity planning, and also inquired about visibility for the next fiscal year.

Answer

CEO Jay Kreps acknowledged positive signs like stabilization in digital natives but avoided broad predictions on IT spending. He expressed confidence in their current sales capacity, citing good rep ramping and low attrition. An executive noted that while not providing formal guidance, Q3's solid momentum carried into Q4, highlighting DSP, GenAI, and FedRAMP as future growth drivers.

Brad Zelnick asked about the vision for how generally available agents for Adobe Experience Platform (AEP) will drive greater value for customers and how Adobe plans to capture the associated benefits.

Answer

Anil Chakravarthy, President of Digital Experience, described this as a massive transformation from SaaS to an agentic software model. He explained that Adobe builds agents where it has core domain knowledge to democratize application use and also collaborates with partner orchestrators like Microsoft and ServiceNow. He highlighted that agents, such as audience, data insights, and journey agents, empower marketers with conversational interfaces to access data for targeting, thereby accelerating and increasing the efficiency of marketing campaigns, which represents the core promise of this new agentic technology.

Brad Zelnick from Deutsche Bank asked about Adobe's vision for how agents within the Adobe Experience Platform (AEP) will drive greater customer value and how Adobe plans to capture the associated benefits.

Answer

Anil Chakravarthy, President of Digital Experience Business, described the shift from SaaS to an agentic software model, emphasizing that AEP agents democratize application use by enabling marketers to access data and create audiences or journeys through conversational interfaces, thereby accelerating and increasing the efficiency of marketing campaigns. He also noted Adobe's intent to collaborate with third-party agent orchestrators.

Brad Zelnick asked about the vision for how generally available agents for Adobe Experience Platform (AEP) will drive greater customer value and how Adobe plans to capture that benefit.

Answer

Anil Chakravarthy, President of Digital Experience, described the shift from SaaS to an agentic software model, where Adobe builds agents for core domain knowledge and partners with other orchestrators. He explained that agents like the audience agent, data insights agent, and journey agent democratize access to data and accelerate marketing campaigns by enabling marketers to use conversational interfaces for tasks previously requiring data expertise.

Brad Zelnick of Deutsche Bank asked for more details on the new SentinelOne Flex licensing model, including how it compares to past practices and how Flex deals are reflected in the financial statements.

Answer

CEO Tomer Weingarten described Flex as a major step forward with an 'outstanding' reception, noting it simplifies the adoption of the platform's 30+ capabilities. CFO Barbara Larson clarified that from a financial perspective, Flex deals are treated like other ARR contracts, with revenue recognized ratably over the contract's duration.

Brad Zelnick of Deutsche Bank inquired about the assumptions in the full-year guidance, asking if the conservatism assumes the weak April trends persist and if the prior target for over $200 million in ARR is no longer valid.

Answer

CFO Barbara Larson clarified that the outlook accounts for potential future macro disruption, despite seeing improved trends in May. She confirmed that the slight reduction in the full-year revenue guide implies that internal expectations for net new ARR have also been modestly lowered.

Brad Zelnick asked about the key drivers giving SentinelOne confidence in its accelerating ARR momentum and how this positive trend informs the company's outlook for the next fiscal year.

Answer

CEO Tomer Weingarten attributed the momentum to market disruption benefits, a record pipeline, strong win rates, and accelerated endpoint growth, leading to more engagement with large enterprises. CFO Barbara Larson noted that while it's too early to provide a specific FY26 forecast, the company is pleased with the reacceleration of net new ARR in the second half of the year.

Brad Zelnick of Deutsche Bank asked about expectations for Microsoft's upcoming Cyber Summit, potential changes to Windows kernel access, and how such changes might impact SentinelOne's competitive position.

Answer

CEO Tomer Weingarten noted that Microsoft has attempted to move vendors away from the kernel for over a decade with limited success. While encouraged by the renewed discussion, he anticipates a multi-year transition at best. He affirmed that SentinelOne would welcome and adapt to standardized, non-kernel APIs for system monitoring, as it has already done on macOS and Linux. He suggested that any move away from the kernel could pose significant re-factoring challenges for competitors more deeply embedded in it.

Brad Zelnick from Deutsche Bank inquired about the primary drivers of the strong Q4 bookings, questioning if it was due to execution, macro improvements, or the impact of platformization.

Answer

CEO Nikesh Arora attributed the success primarily to the platformization strategy gaining traction with customers and strong sales team execution. He stated the macro environment is "fine" and was not a significant factor in the outperformance. Arora emphasized that Palo Alto's innovation roadmap and the resulting customer conviction in their evergreen platform were the key differentiators, culminating in strong "Q4 magic" as the team accelerated execution.

Brad Zelnick inquired about the impact of competitors' hardware refresh cycles on Palo Alto Networks' opportunities for displacement and potential headwinds from competitive bundling.

Answer

Chairman and CEO Nikesh Arora stated that he views competitor refresh cycles as a significant opportunity for displacement. He noted that customers who adopted Palo Alto's SASE solution are now standardizing on their hardware firewalls due to the consistent management interface, leading to steady, evolutionary market share gains of 200-300 basis points annually.

Brad Zelnick of Deutsche Bank inquired about the drivers behind the largest deal in ZoomInfo's history and the financial impact of the recent 6% reduction in force on the upcoming year.

Answer

CEO Henry Schuck explained the landmark deal standardizes ZoomInfo as the core data and intelligence platform for a major enterprise, replacing legacy tools and embedding Copilot. CFO Graham O'Brien characterized the workforce reduction as a proactive efficiency measure aimed at improving margins in 2026.

Asked for more details on the expanded Intuit relationship and the potential for similar large enterprise deals. Also questioned if any specific negative trends in the last six weeks informed the conservative guidance.

Answer

The company described the Intuit partnership as broad and a good example of the large, underpenetrated opportunity that exists across their enterprise customer base. They clarified that the cautious guidance is due to general macro uncertainty, not any specific negative changes in close rates, pipeline, or other recent business trends.

Sought clarification on the ongoing SMB dynamics, questioning why guidance remains conservative if the Q2 charge-offs 'cleared the deck' and asking about the impact of stricter credit practices.

Answer

The company clarified that the Q2 charge addressed past P&L volatility, but a new growth headwind exists from actively disqualifying more high-risk new SMB sales ($2M+/month in Q3). This headwind will persist until it is lapped in Q2 of the following year, though it is expected to improve the quality of revenue long-term.

Brad Zelnick of Deutsche Bank inquired about the drivers behind the largest deal in ZoomInfo's history and the financial impact of the recent 6% reduction in force on the upcoming year.

Answer

CEO Henry Schuck explained the landmark deal involves standardizing ZoomInfo as the enterprise data foundation for a major client, displacing legacy tools and embedding Copilot. CFO Graham O'Brien characterized the workforce reduction as a proactive measure to enhance efficiency and position the company for improved margins in 2026.

Brad Zelnick of Deutsche Bank questioned ServiceNow's most immediate opportunities and lowest-hanging fruit in front-office workflows, particularly following the acquisition of Logic AI.

Answer

Chairman & CEO Bill McDermott identified a massive opportunity in reimagining CRM with agentic AI, highlighting immediate traction in sales order management and CPQ. President, CPO & COO Amit Zavery added that the strategy focuses on complex, outcome-driven workflows across customer service, sales, and industry-specific solutions like insurance claims.

Brad Zelnick asked for clarification on the significant uptick in headcount and OpEx growth in the second half of the year, questioning if it's catch-up spending or a reflection of future opportunity. He also asked CEO Bill McDermott how ServiceNow maintains its 'elite-level execution' and avoids reverting to the mean.

Answer

CFO Gina Mastantuono confirmed the headcount increase, primarily in quota-bearing reps, reflects confidence in the forward-looking opportunity and that similar growth levels should be expected. CEO Bill McDermott attributed the company's sustained high performance to hiring great leaders, a clear and well-communicated plan, and a culture where employees are driven to win. He emphasized that the company is not near its peak and that new innovations will continue to fuel its growth.

Brad Zelnick inquired about the drivers behind the significant uptick in headcount and OpEx growth in the second half of the year, asking if it was catch-up spending or a reflection of future opportunities. He also asked CEO Bill McDermott to elaborate on the concept of "elite-level execution" and its durability.

Answer

CFO Gina Mastantuono confirmed the headcount increase, particularly in quota-bearing reps, reflects confidence in future opportunities like Now Assist and the new data fabric, with similar growth expected to continue. CEO Bill McDermott attributed "elite-level execution" to hiring great leaders, fostering a collaborative and communicative culture, and the collective will of 26,000 employees to win. He asserted the company is not close to its peak and that constant innovation will prevent any reversion to the mean.

Brad Zelnick from Deutsche Bank asked about Snowpark adoption in media and data science use cases beyond Spark migrations and the impact of Notebooks. He also inquired about the key assumptions underpinning the confident full-year guidance.

Answer

CEO Sridhar Ramaswamy confirmed Notebooks are doing well and are increasingly used for ML model training for use cases like next-best-action prediction. EVP of Product Christian Kleinerman added that Snowpark is also heavily used for unstructured data processing. Regarding guidance, CFO Michael Scarpelli cited confidence from observed customer behavior, good visibility into new workloads going into production, and an uptick in usage of the SnowConvert migration tool.

Brad Zelnick asked about the differentiation of the newly announced Cortex Agents for agent orchestration compared to other offerings and the vision behind the product. He also inquired about Q4 trends with Snowflake's largest customers, including momentum, expansion rates, and the services they are adopting.

Answer

CEO Sridhar Ramaswamy explained that Cortex Agents' key differentiator is its position as a horizontal platform, enabling the creation of novel applications by combining structured and unstructured data from various sources, unlike function-specific agents. CFO Mike Scarpelli commented that momentum with large customers continues to be strong, driving revenue growth. He expressed pleasure with the growth in customers spending over $1 million, $5 million, and $10 million, attributing success to the sales organization's ability to identify new workloads.

Brad Zelnick of Deutsche Bank asked how customers are using Cortex and whether its consumption is incremental. He also questioned if the updated guidance incorporates a reduced headwind from Apache Iceberg adoption.

Answer

CEO Sridhar Ramaswamy and EVP of Product Christian Kleinerman explained that Cortex enables new text, image, and video analytics use cases that were previously impractical, driving incremental consumption. CFO Mike Scarpelli confirmed the guidance factors in all business dynamics but will no longer break out specific headwinds. He reiterated his belief that growth from new data engineering features will more than offset any potential storage revenue loss from Iceberg, viewing it as a net positive opportunity.

Brad Zelnick posed a strategic question about how the role of the data warehouse evolves with generative AI and why Snowflake is positioned to win. He also asked if the Net Revenue Retention (NRR) rate could stabilize.

Answer

CEO Sridhar Ramaswamy explained that Snowflake is evolving into a unified data backplane where AI will naturally gravitate due to data's gravity, with ease of use being a key differentiator. On NRR, CFO Mike Scarpelli stated he would not guide the metric but said it will converge with revenue growth over time and he was 'happy with it' at its current level.

Brad Zelnick inquired about CEO Nadav Zafrir's approach to corporate development and M&A opportunities now that he is more than 100 days into his role.

Answer

CEO Nadav Zafrir described the M&A criteria as straightforward: acquisitions must align with and fulfill the company's core strategy, with a focus on areas like SASE and AI. He confirmed that Check Point has a 'very real appetite' for deals that can accelerate its roadmap or provide novel technology.

Brad Zelnick asked what the new 'closer to the customer' strategy means for the channel, and requested a breakdown of the drivers behind the Q4 growth in sales and marketing expenses.

Answer

CEO Nadav Zafrir stated that channel partners are 'imperative' for scaling the business and that he is actively engaging with them. CFO Roei Golan explained that the increase in sales and marketing expense was driven by the Cyberint acquisition (about 3 percentage points) and higher incentive commissions from strong new business growth.

Brad Zelnick of Deutsche Bank asked for a root cause analysis of the Q3 deal slippage and questioned the financial model impact of the growing mix of recurring revenue products like Infinity, Harmony, and CloudGuard.

Answer

CEO Gil Shwed attributed some softness to seasonal challenges in Europe but emphasized overall positive results and market share gains against some competitors. CFO Roei Golan explained that the shift to Infinity (now 15% of revenue) creates revenue recognition volatility, as revenue is recognized upon utilization, not upfront, which can defer product revenue recognition despite strong orders.

Brad Zelnick of Deutsche Bank asked for specifics on the actions being taken to fix renewal execution issues and whether any disruption from these changes is factored into the guidance. He also questioned if the higher churn seen in newer self-managed contracts could be a precursor to similar issues with new cloud customers.

Answer

CEO Amit Walia stated that the company is implementing non-disruptive process and incentive changes rather than making wholesale organizational changes, expressing confidence in the tenured renewals team. CFO Mike McLaughlin added that the guide does not factor in disruption risk. Regarding churn risk, the executives differentiated the two scenarios, explaining that self-managed products are at their end-of-sale with no new innovation, whereas the cloud platform is where all new innovation, including GenAI capabilities, is focused, making it inherently stickier.

Speaking on behalf of Brad Zelnick, an analyst from Deutsche Bank asked about the potential business impact from a change in the U.S. administration and where new sales headcount is being deployed.

Answer

CEO Yossi Carmil asserted that historically, changes in U.S. administrations have not impacted the business, as the need for digital transformation in law enforcement is a consistent, non-partisan driver. He added that new sales headcount is being focused on specialists for Investigative Units (IU) and on expanding the Customer Success team to drive upsell and cross-sell opportunities.

Brad Zelnick from Credit Suisse asked what provided management with the confidence that current challenges are purely execution-related and inquired about any potential competitive pressures. He also asked for an updated timeline on when legacy subscribers would bottom out, allowing for a return to total organic subscriber growth.

Answer

CEO Rick Stollmeyer stated his confidence stems from strong inbound lead generation, which he views as a measure of brand and industry health. He asserted that he does not see significant competitive threats and believes the salon and spa market is poised for a generational technology shift. CFO & COO Brett White declined to provide a specific timeline for when legacy subs would bottom out, stating they are not providing guidance on total subscribers at this time.