Brent Thill

Brent Thill questioned why CRPO constant currency growth remained at 15%, asking how Elastic plans to bridge to its 20%+ midterm target and why a stronger AI tailwind isn't more evident in the near term.

Answer

Navam Welihinda, CFO, highlighted CRPO crossing $1 billion with 19% growth and RPO at 22%, the best in two years, driven by strong customer commitments and sales execution. He reiterated that AI tailwinds are growing, especially with increased AI penetration in the $100,000 ACV cohort, supporting the trajectory towards and potentially beyond the 20%+ midterm target. Ash Kulkarni, CEO, added that the full-year sales-led subscription revenue guide shows continued business strength, and faster-growing AI cohorts will help exceed past targets.

Brent Thill questioned why the CRPO constant currency growth remained at 15%, asking about the lack of a faster inflection, how Elastic plans to bridge to its 20% growth target, and why the AI tailwind isn't stronger in the near term.

Answer

CFO Navam Welihinda highlighted that CRPO crossed $1 billion with 19% reported growth, and RPO grew 22%, the best in two years, driven by strong customer commitments and sales execution. He noted AI tailwinds are growing as more 100K ACV customers adopt AI workloads, indicating a strong trajectory. CEO Ash Kulkarni added that the full-year sales-led subscription revenue guide shows continued strength, and the 20%+ midterm target is a baseline to exceed, with increasing AI adoption by faster-growing cohorts expected to drive this.

Brent Thill from Jefferies asked for clarification on the guidance, which implies a deceleration from strong 20% Q1 growth to mid-teen growth for the full year. He also probed the source of the CEO's notable excitement for the security business.

Answer

CFO Navam Welihinda explained that the raised full-year guidance reflects increased confidence based on strong Q1 execution and a more stable macro environment than initially assumed. CEO Ashutosh Kulkarni clarified that his enthusiasm for security is long-standing, fueled by a consistent and building trend of competitive displacements, which he expects to continue as recent product innovations make it easier for customers to migrate.

Brent Thill asked for an update on sales productivity levels, whether the team is at peak capacity, and how current productivity reconciles with the guidance, given the strong AI momentum.

Answer

CEO Ashutosh Kulkarni stated that he was very happy with the sales productivity seen in fiscal 2025, especially in Q4, as the earlier segmentation changes took full effect. He noted that the company uses AI internally to improve sales productivity and feels good about the current state, with a continued focus on this area.

Brent Thill from Jefferies challenged management's satisfaction with the sales team, pointing to flat year-over-year RPO growth, and asked for the current revenue split between Search and Observability.

Answer

CFO & COO Janesh Moorjani clarified that while year-over-year RPO is impacted by the Q1 shortfall, the sequential RPO growth in Q2 was positive, which is an improvement over the sequential decline seen in the same quarter last year. CEO Ashutosh Kulkarni added that while the overall business mix shifts slowly, the Search business has been accelerating faster than other areas, driven by strong GenAI tailwinds.

Brent Thill requested more detail on the scope of the sales segmentation changes, asking for a simplified way to understand what percentage of the go-to-market team was affected. He also questioned why the guidance did not include a larger cushion given the magnitude of the disruption.

Answer

CEO Ashutosh Kulkarni clarified that the changes impacted nearly all teams in the Americas region, with the exception of the U.S. public sector. He reiterated his belief that the changes were correct for the long term but acknowledged flaws in the execution of the account transitions. CFO and COO Janesh Moorjani added that while some disruption was factored into the initial guidance, the full impact became apparent too late in the quarter to recover, necessitating the revised outlook.

Brent Thill questioned the variance in CoreWeave's guidance, noting revenue was in line, operating income lower, and CapEx significantly higher than anticipated. He asked if variables from Q4 2025 were now accounted for in the guidance and how the company's guidance approach might have changed.

Answer

CFO Nitin Agrawal clarified that CapEx is driven by the $66.8 billion contracted customer backlog, with revenue expected to ramp as contracts begin generating income in 2026. He explained that margin progression reflects deliberate investments, with Q1 2026 being the trough, and margins expanding quarterly to low double digits by Q4. CEO Mike Intrator added that current margins reflect the cost of building future revenues, with stabilized facility margins in the mid-twenties, and that the variance is a function of the significant infrastructure brought online (260 MW in Q4).

Brent Thill questioned the variability in CoreWeave's guidance, specifically the revenue guide being in line, op income lower, and CapEx significantly higher, asking if variables from Q4 were adjusted in future guidance given the difficulty of estimation.

Answer

CFO Nitin Agrawal explained that CapEx is driven by the $66.8 billion contracted backlog, with almost all contracts generating revenue in 2026. He noted Q4's 30% active power addition caused near-term margin compression, with Q1 2026 being the trough before sequential margin expansion. CEO Mike Intrator added that margins reflect the cost of building future revenues, with fundamental margins at stabilized facilities in the mid-twenties.

Brent Thill asked for clarification on the 40% CapEx cut for the year, confirming if it's solely due to one customer's delay and not indicative of other widespread delays.

Answer

CFO Nitin Agrawal confirmed that the CapEx reduction is associated with a single data center provider partner and its delays. He reiterated that the vast majority of this CapEx will be recognized in Q1 2026, leading to a significant build-up in construction in progress in Q4 2025.

Brent Thill sought clarification on the 40% CapEx cut for the year, asking if it was solely due to one customer's delay and if other widespread delays were not being assumed.

Answer

CFO Nitin Agrawal confirmed that the CapEx reduction is associated with a single data center provider partner and its delays. He reiterated that the vast majority of this CapEx will be recognized in Q1 2026, leading to a significant build-up of construction in progress in Q4 2025.

Brent Thill posed a two-part question, asking CEO Mike Intrator about CoreWeave's long-term software strategy relative to hyperscalers, and CFO Nitin Agrawal about the customer pipeline beyond the largest AI labs.

Answer

CEO Michael Intrator described a strategy of building a purpose-built software stack from the bottom-up to maximize performance, with the Weights & Biases acquisition adding top-of-stack MLOps capabilities. CFO Nitin Agrawal confirmed they are seeing an acceleration in AI adoption by enterprise customers and a growing use of their platform for Inference, both of which are reflected in the pipeline.

Brent Thill asked for an update on the engagement and monetization of Opera Neon since its wide rollout a few months prior, and questioned the sustainability of the incremental gross margin trend, seeking insight into steady-state gross margins with the scaling of the off-platform business.

Answer

CEO Lin Song stated that Neon, widely available since mid-December, is a testing ground for advanced AI features, many of which have been integrated into Opera AI across all products, contributing to strong Western market growth. He mentioned potential subscription revenue streams for Neon. CFO Frode Jacobsen explained that while Opera Ads (off-platform) grows faster and adds a couple of points to cost of revenue, its healthy EBITDA contribution allows for a slight tick up in the overall EBITDA margin expectation for 2026.

Brent Thill asked for an update on the engagement and monetization of Opera Neon since its wide rollout a few months prior, and questioned the sustainability of the incremental gross margin trend, seeking insight into steady-state gross margins with the scaling of the off-platform business.

Answer

CEO Lin Song stated that Neon, widely available since mid-December, is a testing ground for advanced AI features, many of which have been integrated into Opera AI across all products, contributing to strong Western market growth. He mentioned potential subscription revenue streams for Neon. CFO Frode Jacobsen explained that while Opera Ads (off-platform) grows faster and adds a couple of points to cost of revenue, its healthy EBITDA contribution allows for a slight tick up in the overall EBITDA margin expectation for 2026.

Brent Thill from Jefferies questioned Salesforce's strategy behind the $50 billion share repurchase authorization, asking why the company isn't prioritizing technology acquisitions, especially given current market multiples, over buying back its own stock.

Answer

Marc Benioff, Chair and CEO, outlined Salesforce's multi-faceted capital allocation strategy, including dividends, aggressive share repurchases, accretive acquisitions using a new formula, and leveraging debt, emphasizing that the current stock price presents a compelling opportunity for buybacks. Robin Washington, COO and CFO, reinforced that this strategy does not preclude future growth investments and aims to optimize the balance sheet while returning significant value to shareholders.

Brent Thill inquired why Salesforce is leaning heavily into a $50 billion share buyback, given the falloff in big multiples, instead of prioritizing acquisitions for technology and M&A.

Answer

Marc Benioff, Chair and CEO, outlined Salesforce's multi-faceted capital allocation strategy, including increased dividends, aggressive buybacks, strategic acquisitions using a new accretive formula, and leveraging debt. He emphasized that the current stock price presents a compelling opportunity for buybacks. Robin Washington, COO and CFO, reiterated that the buyback does not preclude other growth initiatives, both organic and inorganic, and is part of optimizing the balance sheet to return value to shareholders.

Brent Thill inquired about the 'halo effect' of Agentforce on Salesforce's other core clouds, such as Sales, Service, and Slack, and specifically asked about the resurgence observed in Slack's growth.

Answer

CEO Marc Benioff confirmed that Agentforce acts as an accelerator for core products, dispelling the notion that large language models jeopardize existing SaaS. He explained that Agentforce extends core applications, delivering enhanced value through autonomous interactions between humans, agents, apps, and data, as seen in Sales, Service, and Slack, with plans for Marketing, Commerce, and Tableau. President, Chief Engineering and Customer Success Officer Srini Tallapragada elaborated that agents require enterprise context (data foundation with Informatica, MuleSoft, Data 360) and tools, emphasizing the complexity of unified data profiles and deterministic reasoning. He noted that the rebuilt platform (Hyperforce, Data 360, metadata layer) enables faster development of new agentic applications like ITSM and Life Sciences Cloud, abstracting complexity for customers.

Brent Thill inquired about the impact of macroeconomic and tariff uncertainties on customer behavior and the sales pipeline, despite strong reported RPO.

Answer

President and CFO Robin Washington stated that the company's balanced portfolio across geographies and industries helps mitigate risk and that known headwinds are factored into the guidance. She expressed confidence based on momentum in data and AI, a modest contribution from AgentForce, favorable foreign exchange rates, and the planned ramp-up of sales capacity in the second half of the year.

Brent Thill from Jefferies inquired about the impact of macroeconomic and tariff uncertainties on customer behavior and the sales pipeline.

Answer

President and CFO Robin Washington stated that Salesforce's balanced portfolio across geographies, segments, and industries helps mitigate macro risks. She confirmed that current guidance accounts for these headwinds, and the company remains confident due to momentum in Data and AI, a modest contribution from AgentForce, and planned AE capacity expansion for the second half of the year.

Brent Thill asked about Salesforce's role and the potential impact related to the federal government and its agencies.

Answer

Chair and CEO Marc Benioff emphasized Salesforce's strong, ongoing partnership with the U.S. government, highlighting work with the Veterans Administration and the use of Slack by agencies. He positioned the company as a partner ready to help the government succeed and improve efficiency, including achieving a balanced budget.

Brent Thill from Jefferies asked about the halo effect of Agentforce, questioning how it is pulling through other products like Data Cloud and driving broader platform adoption.

Answer

CEO Marc Benioff responded by highlighting that top customer deals now average five clouds, creating an "agent first cocktail." He emphasized that Salesforce offers a uniquely integrated platform where Sales, Service, Marketing, Data Cloud, and Slack operate as a single piece of code. Benioff asserted this comprehensive suite is a key differentiator and essential for Agentforce's effectiveness, citing a customer win over Adobe in Marketing Cloud as evidence of the platform's strength.

Brent Thill posed a two-part question, first asking CFO Amy Weaver about the timing and reasoning for her decision to step down. He then asked COO Brian Millham about the Americas business, which saw growth slow to 8%, and what is needed to return to double-digit growth, questioning if saturation or competition were factors.

Answer

CFO Amy Weaver explained that after an extraordinary 11 years and achieving key goals like doubling operating margin and establishing capital return programs, it felt like the right time for a smooth transition and new adventures. COO Brian Millham attributed the Americas slowdown to the 'measured buying environment' impacting its large transactional and SMB business, not market saturation or competition. He expressed confidence that new product innovation and multi-cloud deals would drive a return to double-digit growth.

Brent Thill asked about Snowflake's competitive advantage in the context of large AI labs potentially taking over the stack, specifically regarding its native availability of models from Gemini, OpenAI, and Anthropic. He questioned if customers fully understand this advantage and if it's translating into increased demand.

Answer

CEO Sridhar Ramaswamy asserted that the winners in the AI era will be platforms providing a single source of enterprise truth, built-in security, auditability, trust, and governance. He emphasized Snowflake's secret sauce: packaging the best models (from multiple providers) into a cohesive, easy-to-use product, citing the synergy between Snowflake Intelligence and Cortex Code. He believes this combination of capabilities and Snowflake's role as a trustworthy steward of enterprise information positions it as a strong partner for businesses.

Brent Thill asked about Snowflake's competitive advantage in having Gemini, OpenAI, and Anthropic models available natively on its platform, whether customers fully grasp this benefit, and if it is translating into increased demand.

Answer

Sridhar Ramaswamy, CEO, asserted that the winners in the AI era will be companies providing a single source of enterprise truth, built-in security, auditability, and governance, combined with access to the best models. He highlighted Snowflake's 'Easy, connected, and trusted' motto and the synergy between Snowflake Intelligence and Cortex Code as key differentiators, positioning Snowflake as a trustworthy steward of enterprise information and driving demand.

Brent Thill asked CEO Sridhar Ramaswamy about the trajectory of AI go-lives following the reported bookings inflection, inquiring when these go-lives are expected to accelerate and their potential impact on platform excitement and revenue beyond fiscal year 2026. He also asked CFO Brian Robbins about the $200 million Anthropic partnership and what portion of it contributes to the backlog.

Answer

CEO Sridhar Ramaswamy stated that the Q4 guidance reflects current consumption trends and that accelerating go-lives, aided by AI, remains a priority. CFO Brian Robbins clarified that the $200 million Anthropic partnership is a buy-side commitment, reflecting Snowflake's confidence in AI driving future revenue, and is not directly added to the customer backlog.

Brent Thill inquired about the trajectory of AI bookings inflection, asking when a significant ramp-up in 'go-lives' is expected to further boost platform excitement and if this will have a larger impact beyond fiscal year 2026. He also asked Brian Robbins about the $200 million Anthropic partnership, specifically if it is included in the backlog.

Answer

Sridhar Ramaswamy, CEO, stated that the Q4 guidance reflects current consumption trends and that accelerating go-lives, aided by AI, remains a priority. He clarified that the $200 million Anthropic partnership is a 'buy-side' commitment, reflecting confidence in AI driving revenue, and is part of a broader go-to-market motion, linking it to the $100 million AI consumption revenue ARR.

Brent Thill from Jefferies pointed out that the full-year guidance was raised by more than the quarterly beat and asked about the source of visibility and confidence for the second half of the year.

Answer

CFO Mike Scarpelli explained that this has been a consistent pattern for the last six quarters. The confidence stems from strong current consumption trends, significant uptick in new products, and a rapid pace of innovation, with 250 new features launched in the first half alone. He stated that these new features all drive new revenue streams for Snowflake.

Brent Thill of Jefferies inquired about Snowflake's progress and outlook in the U.S. federal market and asked for characterization of the large deal environment, specifically if multi-million dollar deals are returning.

Answer

CEO Sridhar Ramaswamy noted the recent Night Shift acquisition will bolster their federal business, which he views as a large, long-term opportunity. CFO Mike Scarpelli added that federal is currently a very small part of the business but has significant upside. Regarding deal size, Scarpelli stated that Q4 is expected to be a strong bookings quarter with several large deals in the pipeline, primarily renewals with built-in growth from existing customers.

Brent Thill requested an update on the adoption trends for Cortex and asked for an explanation for the growing gap between the high RPO growth and the product revenue growth rate.

Answer

EVP of Product Christian Kleinerman reported 'strong' adoption and interest across the Cortex product suite. CFO Mike Scarpelli explained the RPO-revenue gap is partly because some top 10 customers have fulfilled their long-term contracts and are now consuming on a monthly basis, which is not fully captured in the RPO metric.

Brent Thill inquired about the operating margin guidance, which seemed lower than expected, asking if there were additional factors beyond go-to-market and AI investments. He also followed up on the recent sales leadership changes.

Answer

Zane Rowe (CFO) stated that the margin guidance reflects increased investments in AI across engineering, delivery, and go-to-market, prioritizing growth. Aneel Bhusri (CEO) expressed optimism for upside to the margin guidance, driven by reaccelerated growth from both organic and inorganic agents. Rob Enslin (President, Chief Commercial Officer) explained that with Patrick Blair's departure, regional leaders now report directly to him, flattening the organization to enable faster decision-making and accelerate consumption.

Brent Thill (Jefferies) questioned the operating margin guide, asking why there isn't more operating improvement and what factors, beyond go-to-market and AI investments, are influencing it. He also asked about the transition following Patrick Blair's departure as head of sales.

Answer

CFO Zane Rowe stated that the focus is on AI investments across engineering, delivery, adoption, and go-to-market, aiming to grow the business. CEO Aneel Bhusri expressed optimism for upside to margin guidance, driven by re-accelerated growth from organic and inorganic agents. President, Chief Commercial Officer Rob Enslin explained that regional sales leaders will now report directly to him, flattening the organization for faster decision-making and speed in driving consumption.

Brent Thill asked about Paradox's go-to-market strategy, specifically if Workday plans to sell it agnostically to other ERP/HCM platforms, and a follow-up on CRPO guidance.

Answer

Carl Eschenbach (CEO, Workday) confirmed Paradox can be sold back into Workday's customer base as an attachment to recruiting, and also as a 'land-only' product into competitor environments, leveraging its existing non-Workday customer base. Zane Rowe (CFO, Workday) stated the CRPO guide is 'fairly clean,' with Paradox adding over a point and Sana a small impact. He expressed confidence in Q4 strength and coverage for next year's subscription growth.

Brent Thill asked about Workday's go-to-market vision for Paradox, specifically if it will be platform-agnostic and sold into competitor environments. He also requested clarification on the CRPO guidance, including any headwinds, tailwinds, or modeling considerations.

Answer

CEO Carl Eschenbach confirmed Paradox will be sold both as an attachment to Workday's recruiting platform and as a land-only product into competitor environments, leveraging its existing customer base. CFO Zane Rowe stated the CRPO guidance is 'fairly clean,' with Paradox contributing over a point and Sana a quarter point, expressing confidence in Q4 strength and coverage for next year's subscription growth.

Brent Thill requested more color on the metric that AI net new ACV doubled and asked about any outsized 'elephant' transactions during the quarter.

Answer

CEO & Director Carl Eschenbach provided context on AI growth, noting that over 70% of net new sales include AI solutions, contributing to the 100%+ year-over-year growth in net new AI SKUs. He highlighted several significant deals, including a large competitive win at the University of Virginia and UVA Health for HCM, Financials, and Student, a major Financials upsell at Nationwide Insurance, and a go-live at Salesforce.

Brent Thill of Jefferies questioned the plan to re-hire after the reduction in force, given the uncertain environment and strong margin performance, and also asked for an update on the European business.

Answer

CFO Zane Rowe confirmed the intention to grow headcount thoughtfully, focusing on key areas like AI, while remaining prudent. CEO Carl Eschenbach added that investments in go-to-market and product are not slowing down. Regarding Europe, Eschenbach reported a solid Q1 in both EMEA and APAC, continuing a rebound from the previous year. He noted they are monitoring the macro environment but are pleased with performance and strong competitive win rates.

Brent Thill of Jefferies Financial Group Inc. asked about hiring plans following the recent reduction in force and for an update on business performance and pipeline in Europe.

Answer

CFO Zane Rowe confirmed the intention to grow headcount back thoughtfully, focusing on key areas like AI and product development. CEO Carl Eschenbach added that investments in go-to-market and product are not slowing down. Regarding Europe, he noted a solid Q1 in EMEA and APAC, continuing the rebound from the previous quarter, but reiterated they are watching for potential macro headwinds.

Brent Thill of Jefferies asked about the momentum in Workday's federal business and how potential administrative changes could impact its trajectory over the next year.

Answer

CEO Carl Eschenbach expressed confidence in the federal opportunity, arguing that the government's antiquated, on-premise systems create a need for modernization to drive efficiency, regardless of the administration. He cited recent wins at the Department of Energy and the DIA as foundational successes that provide a springboard for future growth in the federal market.

Brent Thill of Jefferies asked if Workday's guidance methodology has become more conservative and sought assurance that the appointment of a new president would not create go-to-market disruption.

Answer

CFO Zane Rowe characterized the FY26 guidance as an 'early look' based on current line of sight, hence the point estimate. CEO Carl Eschenbach expressed strong confidence that the leadership transition will be smooth and only 'net positive,' citing the new president's experience and a lengthy transition period with the outgoing executive.

Brent Thill questioned the source of management's confidence in sustaining mid-teens growth for the foreseeable future, especially after slightly lowering the long-term growth rate.

Answer

CEO Carl Eschenbach outlined several key drivers for his confidence: the growing partner ecosystem, a significant international market opportunity, momentum in the Financials business as workloads move to the cloud, and a strong pipeline of innovation centered on AI, GenAI, and the Extend platform.

Brent Thill sought Matthew Bromberg's insights on Google Genie and its potential implications for Unity's business going forward.

Answer

Matthew Samuel Bromberg (CEO, Unity Software) explained that AI, including World Models like Google Genie, will be a massive tailwind for the video game industry by increasing leisure time and making game creation more efficient. He clarified that World Models are complementary asset generators, not game engine replacements, and Unity's role is to operationalize these advancements by integrating 3D assets into its engine for physics, gameplay logic, and monetization, turning them into full-fledged games.

Brent Thill asked for Unity's perspective on Google Genie and its implications for the future.

Answer

CEO Matthew Samuel Bromberg articulated that AI, including World Models like Google Genie, will be a massive tailwind for the video game industry by increasing leisure time and making game creation more efficient. He clarified that these models are complementary asset sources, not replacements for game engines, and Unity's role is to operationalize these advancements by integrating 3D assets into its engine for physics, gameplay logic, and monetization, transforming them into full-fledged games.

Brent Thill from Jefferies asked about the next steps in the evolution of the Grow product and requested details on a non-recurring perpetual deal within the Create segment.

Answer

CEO Matthew Bromberg explained that the future of Grow involves continued investment in the Vector AI, with a future inflection point coming from integrating unique consumer data starting in 2026. CFO Jarrod Yahes clarified that the Create deal was a small, upfront revenue recognition component of a larger strategic partnership, and that the underlying strategic Create business grew 16% year-over-year.

Brent Thill of Jefferies asked CEO Matt Bromberg to outline the key milestones for Unity Vector for the rest of the year. He also asked CFO Jarrod Yahes to discuss the drivers of the strong margin upside and opportunities for continued cost efficiencies.

Answer

CEO Matthew Bromberg characterized the current state as 'Vector 1.0,' emphasizing that future opportunities involve leveraging platform-wide data insights, with initiatives expected in H2 2025 and into 2026. CFO Jarrod Yahes stated that while Q1 saw 19% EBITDA margins, the top priority is resourcing the business for accelerated growth, especially in Ads, while maintaining cost discipline through automation and prudent headcount management.

Brent Thill asked about the progress made in assembling the new leadership team and how far along the company is in that process.

Answer

CEO Matthew Bromberg stated that the company feels "really good" about its progress, having attracted key external talent like a new CFO and CTO while also elevating strong leaders from within the organization. He emphasized that the new team is aligned on the company's vision and focused on execution.

Brent Thill asked about Datadog's long-term operating margin target, or 'true north,' given past mid-20s% margins and current low 20s% guidance, and the framework for the bottom line. He also inquired about any significant changes or investments in go-to-market strategies for the AI cohort this year.

Answer

David Obstler, CFO of Datadog, explained that the framework involves planning with conservative revenues and prioritizing investment in revenue growth, then layering in additional investment if targets are exceeded. He stated that go-to-market efforts for the AI cohort are similar to previous years, focusing on capacity growth, geographic deepening, and expanding channels, with no major changes planned for this year.

Brent Thill asked about Datadog's 'true north' for operating margin, noting the difference between past mid-20s% margins and the current low 20s% guidance. He also inquired about any significant changes or investments in go-to-market strategies for the AI cohort this year.

Answer

David Obstler, CFO, Datadog, explained that the operating margin framework prioritizes investment in revenue growth, with additional investments layered in if revenues exceed targets. He stated that go-to-market investments for the AI cohort are consistent with previous years, focusing on capacity growth, geographic deepening, and channel expansion to prove value to clients.

Brent Thill of Jefferies inquired about plans for hiring quota-carrying sales reps for the rest of the year and the CEO's perspective on headcount efficiency compared to other tech firms.

Answer

CFO David Obstler stated the company is executing its front-weighted hiring plan for the year and will re-evaluate for next year based on performance metrics. CEO Olivier Pomel affirmed that despite shifts in engineering spend towards AI compute, Datadog remains constrained by its ability to ship products and sees strong ROI in current headcount additions.

Brent Thill asked whether the current 25-30% sales capacity growth is planned to continue for the rest of the year or if it is expected to fade in the second half.

Answer

CFO David Obstler clarified that the company is continuing with its hiring plans. He explained that as new hires complete their 6-to-12-month ramp period, the investment in headcount should translate into a higher increase in fully ramped capacity, contingent on successful hiring, training, and retention.

Brent Thill expressed concern about the decelerating growth in Remaining Performance Obligations (RPO) and asked for more context on the pipeline and the factors driving this metric.

Answer

CFO David Obstler and CEO Olivier Pomel attributed the RPO deceleration primarily to variable contract durations, noting a difficult comparison to the prior year which had a surge in longer-term deals. They emphasized that RPO is a volatile metric influenced by renewal timing and that revenue and customer usage are better indicators of business health, confirming the sales pipeline remains strong.

Brent Thill asked for an update on monday.com's enterprise go-to-market motion and what the company is observing at the higher end of the market. He followed up by asking if the company is still aggressively hiring enterprise sales representatives.

Answer

Casey George, CRO, reported accelerating upmarket momentum driven by client satisfaction, vendor consolidation trends, a healthy product portfolio, and the early acceleration of AI leading to new conversations. Eran Zinman, Co-CEO, added that gross retention for the $50K+ ARR cohort is at historical highs (91%) and growing, with renewal rates in the high 90s. Mr. George confirmed that headcount is growing in the mid-teens, particularly for AI specialists.

Brent Thill asked for an update on monday.com's enterprise go-to-market motion and what the company is observing at the higher end of the market. He also inquired about the aggressiveness of hiring enterprise sales representatives.

Answer

Casey George, monday.com CRO, reported accelerated upmarket momentum driven by product appeal, vendor consolidation, fertile expansion ground, and AI-driven conversations. Eran Zinman, monday.com Co-CEO, added that the 50K+ cohort shows high gross retention at 91% and renewal rates in the high 90s. Casey George confirmed headcount growth in the mid-teens, particularly for AI specialists.

Brent Thill pressed for a more quantitative measure of the impact from Google's search changes, linking the issue to the smaller-than-usual guidance raise and suggesting it pointed to weakness in the SMB segment.

Answer

Co-CEO Roy Mann responded by emphasizing that high-intent, quality customers are still finding them, and the impact is more on search volume than lead quality. He stated that this volume can be acquired through other channels. The company did not provide a specific percentage for the impact, maintaining that it could be mitigated quickly.

Brent Thill asked about business trends observed in April compared to March and whether there were any notable differences in performance between the enterprise and SMB segments.

Answer

Co-CEO Eran Zinman responded that business trends were consistent across all segments, including enterprise and SMB, throughout Q1 and into April. He noted that while enterprise remains the fastest-growing segment, there were no major changes or special trends to report, with demand remaining strong and in line with expectations.

Brent Thill asked about the growth rate of quota-carrying sales reps relative to the overall 30% headcount growth target and requested the year-over-year growth for reps. He also inquired about how product packaging is evolving with the addition of monday Service, particularly for enterprise customers.

Answer

co-CEO Eran Zinman stated that quota-carrying reps grew 26% year-over-year to 395, slightly below the overall headcount growth, with plans to ramp up hiring in H1 2025. Regarding packaging, he noted that while a future with bundled products is likely, especially for Work Management and Service, the current focus remains on driving cross-sell between the products.

Brent Thill asked about the transition plan following the departure of CRO Yoni Osherov and sought an update on the traction and next chapter for monday CRM.

Answer

Co-CEO Eran Zinman explained that Yoni Osherov will remain as CRO until year-end and then serve as an adviser until a successor is found, ensuring an orderly transition with strong leadership in place. Co-CEO Roy Mann added that the focus for monday CRM is on scaling up to larger businesses by enhancing infrastructure to support large datasets and integrating AI to make sales processes more robust.

Brent Thill (Jefferies) asked about Dynatrace's go-to-market plans, specifically regarding sales hiring, rep capacity, productivity, and expected distribution adds over the next year.

Answer

Jim Benson, CFO, stated that Dynatrace continues to improve sales rep productivity and will continue to hire reps. He emphasized the significant traction gained from leveraging partner channels, including GSIs and hyperscalers, which contribute to improved productivity per rep. More details on fiscal 2027 hiring will be provided in the Q4 call.

Brent Thill inquired about Dynatrace's sales hiring plans, rep capacity, and overall distribution additions for the upcoming year, considering the current strong productivity.

Answer

Jim Benson, CFO of Dynatrace, stated that the company will continue to hire reps and drive improvements in sales rep productivity, significantly leveraging partner channels like GSIs and hyperscalers. More details on fiscal 2027 plans will be provided in the Q4 call.

Brent Thill inquired about the current state of enterprise AI adoption, asking if growing clarity and decision-making in this area are creating a tailwind for Dynatrace's core business.

Answer

CEO Rick McConnell confirmed that AI adoption is accelerating, with more frequent customer discussions about AI in observability. He highlighted Dynatrace's innovations in causal, predictive, and generative AI, and its strategic push towards an Agentic AI ecosystem, which he sees as a critical evolution for the industry.

Brent Thill asked about the 45% pipeline growth in strategic accounts and questioned when deal close rates might accelerate to match this strong pipeline growth.

Answer

CFO James Benson acknowledged the resilient demand environment but cautioned that a more uncertain macro landscape could lengthen sales cycles for large, strategic deals. He stressed the company's focus on driving consumption, which serves as a leading indicator for future revenue, even if there is a lag before it appears in ARR or ODC.

Brent Thill asked about the durability of the 45% backlog related to OpenAI, addressing investor concerns about exposure and seeking Microsoft's perspective on the partnership's health.

Answer

Amy Hood (CFO) emphasized the 55% of RPO (roughly $350 billion) from the broad portfolio, highlighting its significant size, diversification, and 28% growth. She described the OpenAI partnership as 'great' and a 'provider of scale,' contributing to Microsoft's leadership in app innovation.

Brent Thill raised concerns about the durability and exposure related to 45% of Microsoft's backlog being tied to OpenAI.

Answer

CFO Amy Hood reframed the question by highlighting that the remaining 55%, or approximately $350 billion, of the RPO is diversified across Microsoft's broad portfolio, growing 28% year-over-year, demonstrating impressive breadth and adoption. She expressed strong confidence in the OpenAI partnership, noting its role as a provider of scale and a leader in app innovation for Microsoft.

Brent Thill inquired about potential concentration risk given Microsoft's significant bookings and 51% RPO growth, seeking insights into the global breadth and scope of these deals.

Answer

CFO Amy Hood clarified that the nearly $400 billion RPO balance spans numerous products and customer segments, with a weighted average duration of approximately two years, indicating rapid consumption. She emphasized that this growth is fueled by real-world value creation in AI platforms and solutions, with the OpenAI partnership contributing to learning and system building that benefits all customers.

Brent Thill inquired about the commercial bookings blowout, concerns regarding concentration risk, and the confidence in the breadth and extent of deals given the 51% RPO and 110%+ bookings growth.

Answer

Amy Hood, Chief Financial Officer, clarified that the nearly $400 billion RPO balance is broad, covers numerous products and customer sizes, and has a weighted average duration of approximately two years, indicating rapid consumption. She highlighted that OpenAI is a component of this, and the focus remains on creating real-world value, which drives commitments and usage across a diverse customer base.

Brent Thill from Jefferies asked if any specific area of the quarter's broad-based strength was particularly surprising to the management team.

Answer

CEO Satya Nadella responded that while not a surprise, he is observing a rapid evolution in the AI platform beyond simple API calls. He highlighted the emergence of sophisticated, stateful application patterns that leverage the full stack, including Azure Search, Fabric, and Cosmos DB. He noted the speed of building these serious applications is much faster than with previous technological shifts.

Brent Thill of Jefferies asked if any specific area of the broad-based strength in the quarter was particularly surprising to management.

Answer

CEO Satya Nadella noted that while not a total surprise, he was impressed by the rapid maturation of the AI platform beyond simple API calls. He highlighted the emergence of sophisticated, stateful application patterns that require rethinking the entire app stack, enabling the creation of complex applications at a much faster pace than in previous technology shifts.

Brent Thill from Jefferies asked if any specific area of the company's broad-based strength during the quarter was particularly surprising to management.

Answer

CEO Satya Nadella responded that while not a surprise, he is impressed by the rapid evolution of the AI platform beyond simple APIs to sophisticated, stateful application patterns. He highlighted the maturity of tools like Azure Search, Fabric, and Cosmos DB, which are enabling customers to build complex applications at an unprecedented speed.

Brent Thill of Jefferies requested more detail on management's comment about accelerating demand for cloud migrations, asking for specifics on what Microsoft is seeing.

Answer

CEO Satya Nadella detailed four parallel trends driving cloud growth: classic migrations (SQL/Windows Server), strong data growth (Postgres, Cosmos, Fabric), healthy cloud-native compute consumption, and the halo effect of AI workloads which also consume core compute, storage, and databases. He emphasized that the new AI platform shift builds directly upon their existing, large infrastructure business.

Brent Thill from Jefferies asked for CEO Satya Nadella's perspective on the AI model DeepSeek and whether the industry is reaching a point where AI can scale at a lower cost.

Answer

CEO Satya Nadella explained that AI is experiencing compounding efficiency gains from both hardware (Moore's Law) and software optimizations, similar to past compute cycles. He noted that innovations like DeepSeek and Microsoft's own work on inference are dramatically lowering costs, which in turn drives more consumption and app development, ultimately benefiting Microsoft as a hyperscaler and platform provider.

Brent Thill from Jefferies asked for clarification on the guided Q2 deceleration in Azure growth, questioning if factors beyond a tougher year-over-year comparison were at play.

Answer

CFO Amy Hood clarified that Q1's 34% constant currency growth included a benefit from in-period revenue recognition, making the underlying consumption growth closer to 33%. She attributed the guided Q2 deceleration primarily to AI supply pushouts from third parties, which are now expected in the second half. Hood reiterated that underlying consumption growth remains stable from Q1 to Q2 and expects acceleration in the second half as supply comes online.

Brent Thill asked about the components driving IBM's software growth acceleration to double digits in 2026, inquiring about the organic lead initiatives and other significant aspects of the software portfolio not evident in 2025.

Answer

CEO Arvind Krishna detailed the dynamics of software subsegments, including automation's secular demand increase, data's benefit from organic innovation and partnerships, mainframe's low-to-mid single-digit growth following hardware placement, and Red Hat's strong demand in Linux and OpenShift. CFO Jim Kavanaugh emphasized the strength and diversification of IBM's software portfolio, its multi-year strategic repositioning, and the pervasive double-digit growth across categories, driven by ARR, GenAI momentum, and M&A synergies.

Beau, on behalf of Brent Thill, asked for management's view on the current business climate, particularly for the software segment, and what they are hearing from customers about their 2025 software budgets.

Answer

CEO Arvind Krishna acknowledged ongoing macroeconomic headwinds but described a more optimistic business climate for 2025. He stated that clients view technology and software as essential tools for growth and productivity, making software budgets the last area they would consider cutting. This customer sentiment underpins IBM's confidence in its forecast for software revenue growth approaching double digits.

Brent Thill asked about the sustainability of the Software segment's strong 30% profit margin, which was significantly higher than in past third quarters.

Answer

CFO Jim Kavanaugh stated that the company is pleased with the software performance, which now accounts for about 45% of revenue and two-thirds of profit. He attributed the margin strength to the strategic portfolio shift to higher-value areas, the high-margin transaction processing business, and productivity initiatives. He expressed confidence that this performance is sustainable and sees 'a lot of headroom' for future margin expansion.

Brent Thill of Jefferies inquired about Roper Technologies' 2026 guidance for Deltek, specifically how the company is protecting against potential government shutdowns, and what actions are needed for ProCare to meet expectations.

Answer

Jason Conley, Executive Vice President and Chief Financial Officer, stated that the 2026 guidance for Deltek does not assume improvement, noting a comp benefit from depressed perpetual license revenue in Q4 2025. Neil Hunn, President and Chief Executive Officer, explained that ProCare's issues are fixable, focusing on improving implementation speed for software and payments after addressing cost infrastructure and go-to-market strategies.

Brent Thill asked about Roper Technologies' 2026 guidance for Deltek, specifically how the company is protecting against potential government shutdowns, and what needs to happen for Procare to meet expectations.

Answer

Jason Conley, Executive Vice President and Chief Financial Officer, explained that the 2026 guidance for Deltek does not assume improvement, noting Q4 2025 was impacted by depressed perpetual license revenue. Neil Hunn, President and Chief Executive Officer, added that Procare, despite being a market leader with improved payments and go-to-market, needs to enhance implementation speed for software and payments, which is a fixable problem.

Brent Thill asked about Roper Technologies' decision to authorize a share repurchase program, questioning why the company isn't leaning harder into M&A, and later inquired about how Roper plans to de-risk its guidance given recent setbacks despite portfolio diversification.

Answer

President and CEO Neil Hunn clarified that the $3 billion open-ended share repurchase is opportunistic and complements, rather than changes, the M&A strategy, reflecting strong conviction in Roper's talent and execution. Regarding de-risking, Mr. Hunn explained that recent setbacks were 'frustratingly bespoke situations' like government contracting instability and a freight recession, while EVP and CFO Jason Conley noted consistent strong cash flow generation.

Brent Thill inquired about Roper Technologies' new $3 billion share repurchase program, asking about the strategy behind it versus leaning harder into M&A, and questioned how the company de-risks its guidance given recurring setbacks despite portfolio diversification.

Answer

Neil Hunn, President and CEO, clarified that the opportunistic buyback is not a strategy change but reflects conviction in Roper's direction, with M&A remaining the primary capital deployment. Mr. Hunn attributed setbacks to 'frustratingly bespoke situations' like government contracting instability and freight recession, while Jason Conley, EVP and CFO, emphasized consistent strong cash flow generation despite these challenges.

Brent Thill inquired about business trends throughout the quarter, asking if there were any signs of impact from tariff headlines or a government spending slowdown, and how business was trending into July.

Answer

President and CEO Neil Hunn stated that the impact from tariffs is relatively small and being mitigated. He noted that while Deltek's government contracting business remains muted, the recently passed 'Big Beautiful Bill' is viewed as a significant future catalyst for that market, though the timing of its impact is uncertain. EVP & CFO Jason Conley added that the demand and pipeline at Deltek are strong. Overall, Hunn described the sentiment from business units as 'cautiously optimistic.'

Brent Thill asked for perspective on the current private equity deal environment and inquired about the federal government exposure within the Deltek business.

Answer

President and CEO Neil Hunn explained that while macro uncertainty suggests a slowdown, Roper's M&A pipeline remains robust and active, noting that uncertainty often creates unique opportunities. He clarified that Deltek's government contractor business, representing 60% of its revenue, is seeing some deals push to the right due to budget uncertainty, slightly lowering its growth outlook for the year. CFO Jason Conley added this primarily impacts perpetual license sales.

Brent Thill questioned whether AI is becoming a distraction for software buyers and impacting sales cycles, or if Roper's customers are more insulated. He also asked if the company's M&A strategy would remain focused on its traditional verticals or if it might expand into new areas.

Answer

President and CEO Neil Hunn responded that he has not seen AI cause buyer distraction recently, as Roper's products are the essential systems of record for its customers, who look to Roper to apply AI to their specific workflows. On M&A, he confirmed the company will remain 'wildly focused' on its established criteria: acquiring vertical market leaders with enduring competitive advantages, acting as business pickers rather than thematic investors.

Brent Thill inquired about the specific macro headwinds that are showing signs of turning and asked for details on the confidence in Neptune's recovery from its recent production challenges.

Answer

President and CEO Neil Hunn noted cautious optimism based on two consecutive quarters of strong enterprise software bookings and stabilization in the freight market. Executive VP and CFO Jason Conley added that Neptune's mechanical meter production issues, related to plastic molding yields, have been remedied, and production output trends in September give them confidence for Q4 and beyond.

Brent Thill questioned the fungibility of Oracle's AI infrastructure, specifically how quickly a data center could be converted and reallocated from one large customer to another if a customer were unable to pay.

Answer

Clay Magouyrk, CEO, explained that Oracle's AI infrastructure uses the same cloud technology as its general offerings, allowing for bare metal virtualization and secure hardware wipes. He stated that capacity can be reallocated to another customer in a matter of hours, with new customers typically spinning up capacity within two to three days, demonstrating high fungibility and demand.

Brent Thill questioned the rationale behind the record buyback in the age of AI, asking why DocuSign isn't leaning more into M&A to support Allan's vision for double-digit growth, potentially through inorganic means.

Answer

Blake Grayson (CFO, DocuSign) stated that M&A is actively discussed, with a high bar for acquisitions that can propel growth through retention or expansion, and the balance sheet optionality is maintained for such opportunities. Allan Thygesen (CEO, DocuSign) added that while organic growth is strong, they are strategically exploring additive M&A, citing the successful Lexion acquisition as an example.

Brent Thill questioned the margin progression and the timing of top-line acceleration towards double-digit growth, asking where current investments are directed. He also inquired about when the cloud transition would cease to be a headwind.

Answer

CFO Blake Grayson explained that three factors (higher hosting costs, one-time legal benefits, and a shift to cash compensation) created a 150 basis point operating margin headwind, though half of this was offset. He emphasized balancing efficiency gains with investments in go-to-market and R&D for IAM. He stated that FY2026 is the peak year for cloud migration headwinds, expecting mitigation in FY2027 and beyond.

Brent Thill of Jefferies asked for an assessment of the magnitude and duration of the Q1 sales changes, questioning how long it would take for them to settle in. He also asked if the sequential decline in customers spending over $300,000 was just seasonal.

Answer

CEO Allan Thygesen characterized the changes as 'medium size' and expressed confidence that they have already settled in, noting stabilization early in Q2. He emphasized they were the right long-term decisions. CFO Blake Grayson confirmed the sequential dip in the $300k+ customer count is mostly seasonal and highlighted the year-over-year growth in that cohort.

Brent Thill from Jefferies requested context on the magnitude of the sales organization changes and asked about the average uplift in average selling prices (ASPs) being observed with IAM deals.

Answer

CEO Allan Thygesen characterized the sales changes as significant but manageable, positioning them as a key step in becoming a major enterprise company. CFO Blake Grayson stated that while they are seeing larger deal sizes with IAM, the company is not yet providing a specific range for the uplift, as most deals to date have been in the SMB and mid-market segments.

Brent Thill asked for CEO Allan Thygesen's high-level macro outlook for the next nine months and whether the go-to-market team would receive more capital for a bigger push into the next year.

Answer

CEO Allan Thygesen stated that he has seen a marginal improvement in the enterprise tech environment and that the company is not projecting any material change to the current reasonably positive economic conditions. He added that while the company won't hesitate to invest if incremental opportunities arise, the current sales and marketing investment envelope is considered appropriate, and they plan to maintain operational efficiency without giving up hard-won gains.

Brent Thill of Jefferies LLC questioned DocuSign's medium-term growth aspirations, particularly the contrast between the 7% revenue growth guide and the lower 3.5% billings growth forecast. He also asked about the future trajectory of operating margins and whether the company can continue to expand them while investing in revenue growth.

Answer

CEO Allan Thygesen expressed confidence in growth, citing the stabilization of the core eSignature business and promising early indicators for the new IAM platform, which shows larger deal sizes and faster closes. He noted that while international and CLM provide short-term growth, IAM is the primary long-term lever. CFO Blake Grayson addressed margins, stating that while he is proud of the record 32% margin (30.5% normalized), the immediate focus is on balancing productivity with investing in the IAM growth engine. He anticipates future efficiency opportunities but emphasized prioritizing investment in the IAM launch.

Brent Thill (Jefferies) inquired about the drivers behind the highest CRPO growth in seven quarters and sought specifics on the most significant improvements observed in Procore's go-to-market execution.

Answer

Matt Puljiz, SVP of Finance, explained that CRPO growth reflects a strong quarter and longer contract durations, with underlying growth aligning with revenue. Tooey Courtemanche, Founder, CEO, and President, added that the large market opportunity and platform leadership are key. Matt further detailed go-to-market benefits including higher pipeline conversion, improved expansion rates, and reduced sales attrition since Q4 2024.

Brent Thill asked about the drivers behind the highest CRPO growth in seven quarters and sought details on the biggest improvements seen from Procore's go-to-market model changes.

Answer

Matt Puljiz, Senior Vice President of Finance, Procore Technologies, attributed CRPO growth to a strong quarter and increasing contract duration, noting that normalized CRPO growth aligns with revenue growth. Tooey Courtemanche, Founder, CEO, and President, Procore Technologies, highlighted the large market opportunity, Procore's category leadership, and strong go-to-market motion. For go-to-market improvements, Tooey Courtemanche emphasized enhanced customer intimacy through additional resources, leading to goodwill and increased product sales. Matt Puljiz added tangible benefits such as higher pipeline conversion, improving expansion rates, and lower voluntary sales headcount attrition since Q4 of the previous year.

Brent Thill of Jefferies asked for an explanation of the delta between the 19% cRPO growth in Q4 and the 12% revenue growth guidance for fiscal 2025.

Answer

CFO Howard Fu explained that the 19% cRPO growth was significantly boosted by early renewals; without them, growth would have been in the mid-teens. He added that the 12% full-year revenue guidance, while a raise, reflects an additional layer of conservatism due to the ongoing go-to-market transition.

Brent Thill of Jefferies asked about the playbook to return Mailchimp to growth, questioning what the most critical element is and the expected timeline for the turnaround.

Answer

CFO Sandeep Aujla outlined a two-part strategy. For the mid-market, Intuit is seeing good ROI from scaling its sales and account management team. For its core small business segment, the focus is on simplifying the product to ensure customers realize value quickly, which is already improving customer satisfaction scores. He reiterated confidence in exiting fiscal 2026 with double-digit growth but noted that due to the subscription model's lag, the revenue impact will take a couple of quarters to materialize.

Brent Thill asked to identify the most impactful breakthroughs that drove the significant upside in TurboTax and what provides confidence in the durability of this performance.

Answer

CEO Sasan Goodarzi responded that it wasn't one single thing but a combination of factors working together, including outsized performance in full-service offerings, better conversion, improved expert productivity, and the contribution from Credit Karma for early access to money. For durability, he emphasized that TurboTax Live is now 40% of the franchise, and the team is already focused on improving the platform for next year by addressing areas that 'didn't work' this season, which gives them confidence.

Brent Thill asked to identify the most impactful breakthrough that drove the significant upside in TurboTax and what gives management confidence in the durability of this performance into next year.

Answer

CEO Sasan Goodarzi responded that it was not one single thing but a combination of factors, including strong full-service performance, expert adoption, go-to-market changes, and Credit Karma's contribution. For durability, he emphasized that with TurboTax Live now at 40% of the franchise, the growth dynamics are changing. He expressed confidence in the 15-20% long-term growth target for Live, fueled by learnings from this season.

Brent Thill asked for early signs of traction and customer response to the new, innovative marketing campaigns launched for the tax season.

Answer

CEO Sasan Goodarzi confirmed the new campaigns are resonating and building confidence. He highlighted the focus on three key benefits for the assisted segment: a superior virtual experience, immediate access to money, and the best price. He explained that the shift from being a "software provider" to a "service provider" in the assisted segment, where experts do the work for customers, has significantly improved the experience and strengthened the customer funnel.

Brent Thill asked for an update on Intuit's mid-market strategy and addressed investor concerns that this expansion could be a lower-margin business requiring a heavier operational lift.

Answer

CEO Sasan Goodarzi argued the opposite, stating the mid-market is a 'very high margin, very lucrative, high ARPC' business. He explained that the strategy leverages Intuit's existing platform, data, and AI investments, making it highly efficient. The incremental cost is primarily the new sales team. He expects the mid-market to not only accelerate growth but also contribute to higher margins over time, drawing a parallel to the favorable variable margin of TurboTax Live.

Brent Thill asked what specific actions are needed to reaccelerate growth for Mailchimp.

Answer

CEO Sasan Goodarzi outlined a three-pronged strategy for Mailchimp's reacceleration. The first is deeper data, technology, and workflow integration with the QuickBooks platform. The second is a heightened focus on the mid-market, supported by a unified go-to-market team for both QuickBooks and Mailchimp. The third key area is continued international expansion. Goodarzi expressed confidence based on solid progress against KPIs in these three areas.

John, on behalf of Brent Thill of Jefferies, questioned the drivers behind LegalZoom's confidence in raising its full-year revenue growth guidance by three points amid a volatile macro environment. He also asked about the potential financial benefits from the new AI partnerships with Perplexity and OpenAI.

Answer

CEO Jeff Stibel explained that the business is now more predictable and subscription-driven, making it less dependent on new business formation trends. CFO Noel Watson added that confidence stems from multifaceted strength in core compliance subscriptions, strong renewals, and contributions from partnerships and the Formation Nation acquisition. Regarding AI, Stibel positioned the partnerships as a strategic signal of LegalZoom's market leadership and its focus on augmenting human expertise with AI to solve the 'last mile' problem in legal services, rather than detailing immediate financial terms.

Brent Thill from Jefferies asked whether management is more or less bullish on achieving its 'true north' of double-digit growth, considering the impact of AI.

Answer

Chairman & CEO Shantanu Narayen confirmed he is more bullish. He cited strong performance metrics, including 15% revenue growth in the business professional and consumer segment and an accelerating 10% growth in creative subscription revenue. He stated that the company has been successfully rearchitected for AI-driven growth, pointing to innovation in AI Assistant, Express, and enterprise automation as key drivers for future expansion.

Brent Thill from Jefferies asked about the timeline for Adobe's AI-driven revenue to become more material, questioning when the new AI book of business would represent a more significant portion of total revenue.

Answer

Chair and CEO Shantanu Narayen explained that significant AI monetization is already occurring through improved acquisition, retention, and upsell within core Creative Cloud and Document Cloud subscriptions. He clarified that the reported $125 million AI book of business, which is expected to double by year-end, only includes new stand-alone products like Acrobat AI Assistant, Firefly, and GenStudio, representing purely incremental revenue streams.

Brent Thill asked for more detail on the Q4 guidance, questioning if there were any other contemplated factors, such as changes in end-market demand or shifts in geographic performance.

Answer

CEO Shantanu Narayen responded, stating that Q3 was strong and momentum continues. He characterized the Q4 targets as 'typical considered targets' and affirmed that the company is not seeing any change in business dynamics. He pointed to traditional strength returning after the summer and the exciting innovation agenda planned for the upcoming Adobe MAX conference as reasons for confidence.

Brent Thill requested the latest AWS backlog number and asked for an update on the migration of core enterprise workloads to the cloud, questioning if AI was impacting the timing.

Answer

Executive Dave Fildes provided the AWS backlog figure of $189 billion, up 20% year-over-year. CEO Andy Jassy explained that enterprises are re-engaging with core cloud migration plans alongside AI initiatives, describing a 'resurgence' as companies recognize that moving infrastructure to the cloud is fundamental to realizing AI's full potential.

Brent Thill from Jefferies asked about the strength in the upmarket segment, the state of the sales pipeline, and the potential impact of the recent departure of the head of sales.

Answer

CEO and President Dennis Woodside described the pipeline as strong and highlighted continued momentum in the mid-market segment (5,000-20,000 employees), with key wins against legacy players. He confirmed the former head of sales left for personal reasons and that interim leader Ian Tickle has ensured a smooth transition with no disruption while a search for a permanent replacement is underway.

Brent Thill commented on the impressive 50% attach rate for Freddy Copilot on large new deals and asked if the company could quantify the average ACV uplift from this attachment.

Answer

COO & CFO Tyler Sloat stated that the company has not yet broken out the specific dollar uplift from AI attach rates, noting it is still early. He mentioned plans to provide more detail on the monetization strategy for Freddy products at the company's upcoming Investor Day. CEO Dennis Woodside added that the growing portfolio of expansion products, including AI, ESM, and Device42, provides multiple levers to drive growth that didn't exist two years ago.

Brent Thill questioned how to split the credit for improving execution between a better macro environment and internal initiatives. He also asked if the 2025 margin guidance represents a 'pit stop' or part of a longer-term plan for balancing growth and profitability.

Answer

CEO and President Dennis Woodside credited internal execution, highlighting success in moving the EX business upmarket and strong AI adoption as key drivers independent of the macro environment. COO and CFO Tyler Sloat added that while the 2025 targets reflect a focus on efficiency and profit, the company remains committed to investing in growth, particularly around its stated strategic imperatives.

Brent Thill asked for clarification on the scale of the go-to-market changes, questioning if they were a major overhaul or a fine-tuning. He also asked for help reconciling the strong low-20% RPO growth with the high single-digit revenue growth guidance.

Answer

COO Anne Raimondi described the sales changes as a "fine tune," focused on reallocating resources to higher-growth areas like channel, vertical teams, and AI specialists to boost productivity. CFO Sonalee Parekh reiterated that RPO excludes the one-third of the business on monthly contracts and that ARR growth will outpace revenue growth in FY26, setting up for reacceleration. CEO Dustin Moskovitz added that the strong multi-year deal motion is new, causing its contribution to RPO growth to be temporarily outsized.

Brent Thill asked for management's sense of the demand environment over the next six to nine months, with a specific focus on trends within the tech sector.

Answer

Co-Founder and CEO Dustin Moskovitz characterized the environment as stable rather than improving, stating he is not banking on a bullish macro year. He believes Asana's strength will come from controllable factors like its multi-product strategy. Regarding the tech sector, he noted it is mixed, with some segments like AI hiring rapidly while others face budget constraints, and he does not yet see a broad rebound signal.

Brent Thill asked for a high-level perspective on the causes of the broader software industry slowdown and requested an update on the sales organization changes implemented since Ed Harris joined a year ago.

Answer

CEO Dustin Moskovitz attributed the slowdown to the unwinding of pandemic-era overspending, intense budget scrutiny, and macro uncertainty compounded by the transformative potential of AI. COO Anne Raimondi detailed progress in the sales organization, including establishing a global leadership team, hiring a new channel chief, focusing on key verticals, and tightening the partnership with marketing.

Brent Thill asked for the underlying assumptions in the Q1 guidance, noting that it embeds a further deceleration of the business and seeking clarity on what is being factored in.

Answer

CFO David Longo explained the guidance is based on a continuation of trends from late December, including the stabilization of retention and the known traffic and acquisition levels observed two-thirds of the way through the quarter. He stated the primary driver for the year-over-year decline is the significant drop in traffic, which continues to impact new subscriber acquisitions.

An analyst on behalf of Brent Thill asked about the potential for the overall dollar-based net retention (DNR) rate to surpass 100% again and the primary growth drivers for it. They also inquired about the level of conservatism embedded in the 2025 financial guidance.

Answer

CEO Eric Friedrichsen expressed satisfaction with the DNR improvement, noting software DNR returned to 100% and total DNR rose to 96%, driven by larger customers, and he is confident it can continue to improve. CFO Michael Lafair added that the guidance represents their best estimate, acknowledging that the strategic shift to larger customers may take time to fully materialize, but he remains confident in the full-year outlook.

An analyst on behalf of Brent Thill asked about the primary sources of free cash flow margin expansion beyond the expected gross margin improvement. He also inquired about current top-of-funnel trends and whether Wix was observing the typical seasonal bump in activity at the start of the year.

Answer

CFO Lior Shemesh identified operating expense leverage as the other key driver of margin expansion, projecting 1-2 percentage points of improvement even with increased marketing investments for new products. President & COO Nir Zohar confirmed that Wix is seeing 'positive trends' at the top of the funnel and will continue its successful strategy of focusing marketing efforts on attracting high-intent users, a strategy validated by strong cohort value and rising net revenue retention.

Brent Thill of Jefferies asked about the focus of the recent workforce reduction and what specific changes, including in leadership, were made within the software development team to get the user experience back on track.

Answer

Interim CEO Tom Conrad explained the layoffs were concentrated in the product organization, as the reorganization into a functional structure revealed significant redundancies. He confirmed leadership changes were made, stating that about half a dozen vice presidents in the product organization were exited and teams were restructured around the "most effective leadership" to drive improvements to the core experience.

Brent Thill from Jefferies questioned the specific software and process changes implemented to prevent future app launch failures, the key drivers for continued EBITDA growth, and the rationale for pausing the share buyback program.

Answer

CEO Patrick Spence detailed that key app metrics like setup and connectivity are now better than the old app, and the company has implemented new commitments, including rigorous quality benchmarks and a more gradual rollout of major changes. CFO Saori Casey identified operating efficiency through a company-wide transformation as the primary lever for EBITDA improvement. Casey also explained the share repurchase was paused in Q4 due to uncertainty surrounding the app recovery and its impact on new product launches, but confirmed the program remains a key part of their capital allocation framework.

Brent Thill pointed out the strong Q2 operating margin beat and questioned why that outperformance was not fully reflected in the guidance for the second half of the year, asking where investments are being directed.

Answer

CFO Joe Binz explained that second-half operating margins are expected to be slightly lower than the first half due to two factors: the timing of some Q2 expenses pushing into H2, and a planned increase in R&D and S&M investments to capitalize on strong momentum in the enterprise segment. He reiterated the full-year margin target of roughly 23.5% and the long-term goal of over 25% by FY27.

Brent Thill questioned Atlassian's conservative guidance, which cites macro headwinds, contrasting it with more optimistic demand signals from other major cloud providers like Amazon and Google.

Answer

CFO Joe Binz defended the company's prudent stance, stating that the conservative, risk-adjusted guidance approach adopted last quarter remains appropriate. He cited ongoing macro uncertainty from elections and geopolitical conflicts, as well as internal execution risk related to the company's enterprise go-to-market evolution. He also noted that Q1 is a seasonally low bookings quarter, making it unwise to extrapolate its strength to the full year.

Brent Thill questioned whether deal pushouts were more pronounced this quarter due to go-to-market changes and asked about the role of Workers in platform adoption.

Answer

CEO Matthew Prince clarified that while performance management in North America was a factor, the key takeaway is that the company has passed an inflection point, with ramped sales capacity set to increase in Q1 2025. He described Workers as being in the early stages of its growth S-curve, currently optimized for adoption, and often serving as the catalyst for broader platform deals.

Brent Thill asked for a characterization of the selling environment in Q2 compared to Q1, whether there's a tailwind from customers consolidating point solutions onto Smartsheet, and for a confirmation on whether there has been any downsizing among the largest customers.

Answer

Mark Mader attributed Q2's performance to both the macro environment and improved execution of their sales playbook. He noted that large deals are driven more by customers choosing Smartsheet as a strategic platform for future growth rather than by consolidating smaller tools. Pete Godbole gave a direct 'No' to the question about downsizing among the largest customers.

Asked for a view on the health of the enterprise spending environment and if there were any notable differences in growth or adoption between enterprise and SMB customers.

Answer

The company stated that enterprise customers consistently demand clear ROI, which Smartsheet addresses with its use-case framework. Enterprise continues to be a major strength. In contrast, the SMB segment is more driven by product and packaging, with fewer deals requiring the same level of formal ROI justification as in the enterprise.

Questioned the modest margin improvement guidance in the face of significant revenue deceleration and asked if the weakness in the SMB segment could be due to execution or competition rather than macro factors.

Answer

The company is balancing investment for growth with profitability, setting a conservative initial margin target with the ability to increase it if investment performance targets are not met. They believe the SMB weakness is a broad market trend of cautious spending, not a specific competitive or execution issue, citing their relatively strong NRR compared to peers.

On behalf of Brent Thill, James asked about the impact of Google's shifting plans for third-party cookie deprecation on Dotdash Meredith's outlook and whether IAC is deploying alternative identifiers across its portfolio.

Answer

IAC CEO Joey Levin stated that the eventual outcome of a shrinking cookied audience remains unchanged, which he views as a long-term positive for Dotdash Meredith. He emphasized that DDM's core advantage is its ability to provide advertisers with access to the valuable, non-cookied audience (e.g., iOS users) through its high-intent, performance-driving content.

Brent Thill from Jefferies inquired about the specific nature of MINDBODY's operational growth challenges and questioned the reasons for the Q4 loss estimate being significantly higher than consensus, asking about incremental costs. He also sought confirmation that these issues were execution-based rather than market-driven.

Answer

CEO Rick Stollmeyer clarified that the challenges are primarily in go-to-market execution, stemming from scaling two separate sales teams after hiring 51 new reps and dealing with operational complexities like integrating Salesforce instances. He affirmed the market opportunity remains strong. CFO & COO Brett White added that costs are higher due to continued investment in the new sales hires, marketing, and R&D, while revenue expectations for Q4 have been moderated.

Brent Thill sought clarification on the slight reduction in full-year revenue guidance, asking if it was purely due to integration friction with Booker or if there were underlying issues in the core boutique business. He also inquired about sales capacity for the second half of the year.

Answer

CEO Rick Stollmeyer attributed the adjustment to near-term integration friction, such as aligning systems, and the strategic decision to onboard new salon customers to the superior Booker platform. He stressed that the core boutique fitness business saw strong growth in Q2. CFO & COO Brett White confirmed that the company is actively adding sales reps to increase capacity.

Brent Thill asked about the potential for short-term disruption from the new organizational alignment and the specifics of the go-to-market motion for the separate beauty and fitness sales forces. He also questioned if the guidance reflected conservatism due to these changes.

Answer

CEO Rick Stollmeyer acknowledged that while they are working to ensure a smooth transition by blending teams and creating an integration office, there is a near-term effort that adds OpEx and some disruption from retraining. He confirmed that this uncertainty is factored into the guidance, especially since MINDBODY has only owned Booker for about a month.

Brent Thill asked about MINDBODY's biggest go-to-market opportunities for 2018 and questioned the cause of the deceleration in the year-over-year growth rate of high-value subscribers.

Answer

CEO Rick Stollmeyer identified fitness as the strongest vertical, with integrative health showing surprising momentum, and noted a balanced focus on acquiring new customers and expanding existing relationships. Both he and CFO/COO Brett White addressed the subscriber growth question by emphasizing a strategic shift towards acquiring higher-quality subscribers in target markets, which improves long-term value and lowers churn, even if it means slower unit growth.