Fatima Boolani

Fatima Boolani questioned how Fortinet is achieving strong, independent growth in both Unified SASE (40%) and product refresh (>20%) without cannibalization, especially in branch environments. She also sought quantification of the gross pricing increases implemented, the resulting net pricing yield, and whether these actions contribute to a slower ramp in the services trajectory.

Answer

Ken Xie, Fortinet's Founder, Chairman, and CEO, clarified that SASE complements rather than cannibalizes network security, creating additional business opportunities. He highlighted Fortinet's unique 'three-in-one' solution for branch offices, integrating networking, network security, and SASE into a single device, which he believes will not be replaced by SASE. Christiane Ohlgart, Fortinet's CFO, stated that pricing actions on specific products range from 5% to 20%. She explained that while these increases positively impact services (as service pricing is a percentage of list price), it takes longer for this to materialize in service revenue compared to product revenue.

Fatima Boolani asked how Fortinet is achieving strong, independent growth in both SASE and product refresh without cannibalization, particularly in branch environments. She also sought quantification of gross pricing increases, their net yield, and if they influence the slower services trajectory.

Answer

Ken Xie, Fortinet's Founder, Chairman, and CEO, clarified that SASE complements and adds business opportunities rather than cannibalizing network security. He highlighted Fortinet's unique 'three-in-one' solution (networking, network security, SASE in one FortiGate) for branch offices, which drives strong unit shipments. Christiane Ohlgart, Fortinet's CFO, stated that pricing actions on specific products range from 5% to 20%, positively impacting services (as service pricing is a percentage of list price) but taking longer to materialize in service revenue.

Fatima Boolani asked for a clearer trajectory of services revenue growth over the next 12 months, noting its deceleration for the ninth consecutive quarter and inquiring if the 13% growth is a trough or near-trough.

Answer

Christiane Ohlgart, CFO, stated that service revenue growth is expected to improve in the second half of 2026. She attributed the current trend to negative billings growth in the prior year impacting attach rates, and the current pickup in product sales which will lead to more attached services.

Fatima Boolani asked for clarification on the services revenue trajectory, noting its deceleration for the ninth consecutive quarter and the 29-month catch-up period. She questioned if the 13% services growth represents a trough or near-trough.

Answer

Christiane Ohlgart, CFO, confirmed that service revenue growth is expected to improve in the second half of 2026. She attributed the current deceleration to negative billings growth in the previous year, which impacted attach rates. The recent pickup in product sales is expected to lead to higher service attach rates, with some customers buying hardware ahead of service deployment.

Fatima Boolani asked for more detail on the potential impact of tariffs on both customer demand and the company's supply chain, COGS, and gross margins.

Answer

CFO Keith Jensen stated that the guidance reflects caution due to potential demand disruption in tariff-impacted economies like Mexico and Canada, and from a potential U.S. federal shutdown. On the supply side, he noted that since over 70% of the business is international, it would not be subject to U.S. tariffs. For the U.S. business, he expects any tariff impact would be broad-based across the industry, allowing Fortinet to maintain its pricing advantage.

Fatima Boolani asked about the potential for cannibalization of the firewall refresh as customers migrate from SD-WAN to SASE, and followed up for more detail on the scale of the 2026 refresh opportunity.

Answer

CEO Ken Xie addressed cannibalization by explaining that SASE primarily supports remote work environments, which is additive to on-premise network security firewalls. He stated that customers need the hardware firewall/SD-WAN layer to support SASE, viewing it as an additional service. CFO Keith Jensen quantified the 2026 refresh opportunity by stating it is 'a little bit more than 2x' the size of the 2023 refresh cycle, deferring further details to the upcoming Analyst Day.

Fatima Boolani from Citi asked for a breakdown and stack ranking of the impacts on OpEx and free cash flow expectations, specifically differentiating between the end-of-life headwind, ARR contribution compression from non-renewal assumptions, organic investments in sales capacity, and the Altru acquisition.

Answer

Guy Melamed, CFO and COO, explained that the $30 million-$50 million headwind primarily relates to the lower renewal rate of the non-SaaS business, which directly impacts profitability. He noted that acquisitions (like Altru) have a cost baked into guidance but no significant top-line upside assumed for 2026, suggesting potential upside. He reiterated that the end-of-life announcement, while creating a headwind, prevents the lower non-SaaS renewal rates from masking the strong SaaS business.

Fatima Boolani from Citi requested a detailed breakdown of the factors impacting Varonis' OpEx and free cash flow expectations, specifically stack-ranking the influence of the end-of-life headwind, ARR contribution compression from non-renewals, organic investments in sales capacity, and the Altru acquisition.

Answer

Guy Melamed, CFO and COO, reiterated that the free cash flow headwind primarily stems from the lower renewal rate of the non-SaaS business, which directly impacts profitability more than new customer acquisition. He noted that the end-of-life announcement, while creating a headwind, prevented a larger negative impact and masked growth. He confirmed that acquisition costs are baked into guidance without assuming significant top-line upside for 2026, suggesting potential upside. He concluded that the largest component of the headwind is from non-SaaS renewals, with some impact from acquisitions.

Fatima Boolani questioned the granular assumptions reflected in the reduced ARR guidance for the 24% non-SaaS base, especially with the end-of-life announcement, to understand if the 'floor' for such events has been hit.

Answer

Guy Melamed (CFO & COO) explained that Q4 is the largest quarter, and they need to observe its performance before providing formal 2026 guidance. He noted that if the on-premises subscription renewal rates from H1 2025 or full-year 2024 had persisted, guidance would have been raised. The Q3 reduction was unexpected and occurred late in the quarter. Conservatism is now baked into Q4 guidance to account for Q3 results and the end-of-life decision.

Fatima Boolani asked for granular assumptions and risk parameters for the 24% non-SaaS ARR base, seeking assurance that the company has 'hit the floor' on churn events, especially with the end-of-life announcement.

Answer

CFO Guy Melamed explained that the Q3 reduction in on-premise renewal rates was unexpected, occurring in the final two weeks. He noted that if H1 2025 or full year 2024 on-premise renewal rates had persisted, guidance would have been raised. The company is baking in additional conservatism for Q4 guidance due to Q3 behavior and the end-of-life announcement, awaiting Q4 results for a formal 2026 outlook.

Fatima Boolani asked for clarification on how much of the installed base has converted to SaaS and whether the full-year guidance for SaaS ARR mix of 48% was still intact.

Answer

CFO & COO Guy Melamed stated that reaching 43% SaaS ARR mix would be impossible without existing customer conversions and noted that the Q3 conversion dollar amount was similar to Q2. He then updated the full-year guidance, stating Varonis now expects to end the year with a 49% SaaS mix, an increase from the previous target, which gives them confidence in their execution.

Fatima Boolani of Citi asked how Rubrik's dramatically expanded platform and new capabilities over the past 18 months are influencing its sales strategy, particularly regarding the potential for consumption-oriented models to provide frictionless access to the full portfolio.

Answer

CEO Bipul Sinha reiterated Rubrik's platform strategy, where adopting multiple products enhances customer value through integrated cyber resilience, identity, and AI capabilities. He emphasized the goal of being a strategic IT vendor and confirmed they are exploring all avenues to simplify product adoption and consumption, prioritizing customer delight and retention.

Fatima Boolani requested a detailed breakdown of the drivers behind the significant improvement in subscription ARR contribution margin, seeking micro-level factors like sales efficiency and deal sizes.

Answer

CFO Kiran Choudary attributed the 1,400 basis point year-over-year improvement primarily to operating leverage in sales and marketing, which accounted for approximately 1,200 basis points of the gain. Key drivers included increased sales productivity from having more products to sell, better sales enablement, and the natural efficiency of a growing renewals base. He also noted that larger deal sizes are a contributing factor, evidenced by the increasing ARR contribution from customers with over $100,000 in ARR, which now stands at 84%.

Fatima Boolani inquired about the impact of the sequential doubling in DSPM deal volume on the sales pipeline and deal cycles, and asked for details on consumption-related free cash flow headwinds.

Answer

CEO Bipul Sinha attributed the strong DSPM traction to the growing need for complete cyber resilience, especially with the rise of generative AI. CFO Kiran Choudary clarified that while DSPM deal volume is growing, it's still a smaller part of the business and is not materially impacting overall sales cycle lengths. He explained that free cash flow headwinds are related to shorter contract and invoicing terms for cloud and SaaS products, not consumption-based pricing, and expects this modest compression to continue.

Fatima Boolani inquired about the competitive landscape in Data Security Posture Management (DSPM), the impact of Salesforce acquiring a backup vendor, and the traction of Rubrik's DSPM products.

Answer

CEO Bipul Sinha stated that Salesforce's acquisition validates Rubrik's strategy of protecting mission-critical SaaS data, emphasizing that customers prefer a single, unified platform. He asserted that Rubrik wins the vast majority of deals due to its integrated architecture. On DSPM, he noted it is integral to cyber resilience, with demand accelerated by GenAI, and confirmed that Rubrik now has over 50 DSPM customers.

Fatima Boolani sought to understand the factors behind the 1% net new ARR growth and how it reconciles with the commentary on net retention rates being 'well into expansion territory' and strong RPO/booking performance.

Answer

Barbara Larson, CFO of SentinelOne, explained that Q3 net new ARR was solid, driven by healthy contributions from new customer wins and expansion with existing customers, leading to a record ARR per customer due to adoption of emerging solutions like AI, data, and cloud. She confirmed that NRR remains in expansionary territory and is relatively stable.

Fatima Boolani asked a high-level strategic question about how CrowdStrike's strengthening partnership with AWS might influence or complicate its relationships with other hyperscalers and multi-cloud customers.

Answer

CEO George Kurtz expressed excitement about the AWS partnership, highlighting native data flow into Next-Gen SIEM and new customer acquisition. He stated that it doesn't preclude working with other hyperscalers, as CrowdStrike aims to support all customers and partners with its best-in-market technology.

Fatima Boolani posed a strategic question regarding CrowdStrike's strengthening partnership with AWS and its potential influence or complications with other hyperscalers and customers utilizing multi-cloud infrastructure footprints.

Answer

CEO George Kurtz expressed immense excitement for the AWS partnership, emphasizing native data flow into Next-Gen SIEM, new customer acquisition, and fulfilling a critical need for AWS customers. He clarified that this partnership does not preclude working with other hyperscalers, as CrowdStrike aims to support all customers and partners by providing best-in-market technology.

Fatima Boolani inquired about the Falcon Flex credits provided to CCP customers, asking how quickly they are being consumed and if this is accelerating renewal and upsell events.

Answer

CEO George Kurtz confirmed that the CCP program utilized the Falcon Flex model and that the credits are expected to burn off in the second half of the year, creating renewal opportunities. He noted positively that customers are consuming their Flex credits 'ahead of schedule.' CFO Burt Podbere added that a significant opportunity remains, as many customers have not yet transitioned to the Flex model.

Fatima Boolani asked if the successful Falcon Flex program will now become the predominant go-to-market motion and how renewal cycles might be steered toward these contracts to elongate ARR growth.

Answer

CEO George Kurtz affirmed that Falcon Flex is a primary go-to-market motion due to its success in meeting customer needs. CFO Burt Podbere added that the model encourages higher consumption, which bodes well for future renewals as customers can easily adopt new products, driving long-term value.

Fatima Boolani expressed fascination with agentic commerce and asked about the most relevant parts of Okta's portfolio for this opportunity, the role of the customer identity business, and how customer conversations are trending regarding building a stack for these emerging opportunities.

Answer

CEO Todd McKinnon stated that agentic commerce is a significant trend, particularly for customer support and e-commerce, where Auth0 for AI Agents provides solutions for building agents, connecting to back-end systems, and fine-grained authorization. President and COO Eric Kelleher cited a survey showing 91% of enterprises have agents in production but only 10% are confident in their security. He explained that Auth0 helps builders ensure agents are discoverable and authorized, while Okta's Identity Security Posture Management helps discover deployed agents and protect their identities. Todd McKinnon provided a concrete example of a mortgage company using agents for both B2C and enterprise workflows, demonstrating clear ROI and the integrated value of Okta's platform.

Fatima Boolani asked about the Customer Identity (CIAM) opportunity in the U.S. public sector, specifically whether it is a greenfield market or a battle against DIY or commercial competitors.

Answer

CEO Todd McKinnon acknowledged the massive market opportunity for CIAM across all sectors, including government. He noted that the CIAM business ACV grew faster than Workforce at 16%. He highlighted Okta's leadership in authenticating users for major AI chatbots, even for companies with competing workforce identity products, as an example of the broad and strategic importance of their CIAM platform. The implication is that the opportunity is large and diverse, encompassing both greenfield and competitive situations.

Fatima Boolani asked for commentary on the slowdown in the international business, including demand dynamics and whether operational metrics differ from North America.

Answer

CEO Todd McKinnon acknowledged that the macro environment in Europe has been consistently tougher than in North America. However, he expressed confidence in the international teams and the universal appeal of Okta's solutions. CFO Brett Tighe added that partners are a key focus for international growth and that, aside from the macro challenges, other operational metrics are not significantly different.

Fatima Boolani asked for an elaboration on the SAP on-prem to SAP RISE migration opportunity, comparing its potential tailwind to that of Microsoft Exchange to Office 365, and where newer products offer additional 'option value' not present during the earlier Microsoft migration.

Answer

Chairman and CEO Jay Chaudhry likened the SAP RISE migration to the Office 365 shift, noting that SAP is now pushing cloud adoption. He explained that Zscaler eliminates the need for legacy firewall technology, ExpressRoutes, Direct Connects, and VPNs for SAP RISE access, allowing direct internet access similar to Office 365. This clean architecture creates two opportunities: Zero Trust Cloud for SAP application protection and communication, and improved user experience for accessing SAP, leading to faster deployment, reduced costs, and enhanced user satisfaction.

Fatima Boolani asked for an elaboration on how the migration of SAP from on-prem to SAP RISE could become a tailwind similar to the Microsoft Office 365 migration, and how Zscaler's expanded product portfolio would capitalize on this opportunity.

Answer

Chairman and CEO Jay Chaudhry explained that SAP RISE migration offers opportunities for Zero Trust Cloud technology to protect SAP applications and for users to access SAP with better experience directly over the internet. This eliminates the need for ExpressRoutes, Direct Connects, and traditional firewalls, simplifying architecture and reducing costs.

Fatima Boolani asked for clarification on the ZFlex program's primary target (new vs. existing customers) and its downstream impact on key performance indicators like net retention rate and billings, given its recent launch.

Answer

CFO Kevin Rubin clarified that ZFlex is applicable to both new and existing customers and does not fundamentally change the financial model. Chairman and CEO Jay Chaudhry added that ZFlex increases TCV and ARR by providing flexibility for module adoption over multi-year deals, with predefined rates.

Fatima Boolani asked how Zscaler is navigating ongoing scrutiny of large deals, especially as its business becomes more indexed to them, and whether macro factors like trade tensions could accelerate transformation conversations.

Answer

CEO Jay Chaudhry stated that while macro scrutiny exists, Zscaler's value proposition of providing superior security while also reducing costs is a powerful driver. He noted that larger platform deals deliver greater savings, creating a compelling business case for CFOs. CFO Remo Canessa added that the guidance reflects this strong demand but remains prudent, not assuming a strong federal contribution in the second half.

Fatima Boolani asked about the updated billings guidance and the implied Q2 seasonality, questioning if the strong Q1 performance was due to any deals pulling in from Q2, which might explain the sequential outlook.

Answer

CFO Remo Canessa clarified that the Q2 billings guidance is actually up and that the company passed the entire Q1 beat through to its full-year guidance. He emphasized that the primary driver of seasonality is the scheduled billings mix, which is heavily weighted to the second half (23%) versus the first half (7%), and that fundamentals like pipeline and sales execution remain strong.

Fatima Boolani asked if the Kronosphere acquisition rationale was primarily to modernize/in-source the underlying fabric of Cortex and XIM technology, or to enter a brand new market and win budgets.

Answer

Chairman and CEO Nikesh Arora clarified that the primary rationale was to enter a new, adjacent market (observability) rather than in-sourcing technology for Cortex/XIM. He emphasized the long-standing desire for security and observability convergence, Kronosphere's proven scale and cost efficiency, and the ambition to build a foundational data fabric across enterprises for agentic capabilities and future software innovation.

Fatima Boolani questioned the primary rationale for the Kronosphere acquisition, asking if it was more about modernizing/in-sourcing the underlying fabric of Cortex/XIM technology or entering a brand new market to win budgets.

Answer

Chairman and CEO Nikesh Arora emphasized that the rationale was primarily about entering a new, high-growth adjacent market. He explained that Kronosphere provides the third foundational data platform (observability) in the enterprise, alongside security and IT data lakes, enabling the development of SRE agents and expanding Palo Alto Networks' ambition to be a very large tech company by leveraging this new data for future capabilities.

Fatima Boolani asked about the strategy to migrate the large, captive on-premise QRadar customer base to XSIAM and the potential multiplier effect for the Cortex business.

Answer

Chairman and CEO Nikesh Arora expressed strong confidence in the IBM partnership, calling it potentially the best deal the company has ever done. He confirmed their teams are proactively targeting the entire QRadar base, both on-prem and SaaS, and that the $1B pipeline is a hybrid of both. He emphasized that IBM is a key partner in providing migration services, which he believes will propel Palo Alto into a top-three SIEM player within two years.

Fatima Boolani asked how agentic advancements generally detract from or enhance the value proposition of Datadog's OnCall product, which focuses on intelligently routing requests for remediation. She also inquired about why net retention rates aren't showing more upward pressure despite strong expansionary bookings, seeking directional color on non-AI native NRR trends.

Answer

CEO Olivier Pomel stated that Datadog's entry into OnCall aimed for end-to-end incident resolution, with AI enhancing capabilities like predicting incidents, early notification, and rerouting. CFO David Obstler clarified that net revenue retention is a trailing 12-month metric, and continued strong non-AI native growth would directionally influence it over time.

Fatima Boolani asked how agentic advancements in AI either detract from or enhance the value proposition of Datadog's On-Call product, particularly concerning intelligent routing for remediation. She also questioned why net retention rates aren't showing more upward pressure despite strong expansionary bookings, considering it's a trailing 12-month metric, and asked for commentary on non-AI native net retention rate trends.

Answer

Olivier Pomel, Co-Founder and CEO, Datadog, stated that Datadog entered the On-Call field to own end-to-end incident resolution, believing AI enhances this by enabling incident prediction, early notification, and potential fixes. He noted strong customer adoption, including a 5,000-seat deal. David Obstler, CFO, Datadog, confirmed that net retention is a trailing 12-month metric and rounded, explaining that continued higher rates of landing and expanding in the non-AI native base would directionally move the metric.

Fatima Bulani inquired about the net retention rate (NRR) metric, seeking clarification on why it appears stagnant despite positive business momentum in renewals, expansions, accelerating customer growth, and early customer expansions.

Answer

CFO Jim Benson explained that NRR is a trailing 12-month metric, which takes multiple quarters to significantly move, noting that it stabilized from Q1 to Q2. He highlighted strong net new ARR growth (16% for the quarter, 14% for the half) and overall healthy business momentum, attributing future NRR movement to continued consumption performance.

Fatima Boolani asked about the net retention rate (NRR) metric, seeking clarification on why it appears to be lagging despite other positive business momentum, such as strong renewals, expansions, accelerating customer growth, and early customer expansions.

Answer

Jim Benson, Chief Financial Officer, explained that NRR is a trailing 12-month metric that takes multiple quarters to significantly move, noting it stabilized from Q1 to Q2. He emphasized that the underlying business momentum, including 16% net new ARR growth, is healthy, driven by go-to-market changes, tool consolidation, and rapid consumption growth. He anticipates NRR will show movement over time with continued strong performance.

Fatima Boolani inquired about the trajectory of the Net Retention Rate (NRR) as the DPS model leads to a potential decoupling between actual customer consumption and contractually committed ARR.

Answer

CFO Jim Benson clarified that on-demand consumption is not included in the NRR metric, which only tracks contractually committed revenue. He explained that while DPS customers expand at a greater rate, the NRR benefit is only recognized upon a formal contract expansion. This can create a time lag, as customers may consume on-demand before committing to a larger contract, but NRR is expected to benefit as the DPS model matures.

Fatima Boolani asked about Progress Software's AI strategy, specifically how AI infusion across the portfolio and Agentic RAG will impact external benchmarks like net retention rate (NRR) and pricing power, and the implications for value creation. She also inquired about the conservatism in the full-year EBIT guidance despite strong Q3 performance.

Answer

CEO Yogesh Gupta explained that AI's primary impact will be on net retention rate (NRR) through improved gross retention and expansions, citing ShareFile's NRR improvement due to AI capabilities. He noted indirect pricing opportunities by adding new AI features to higher-end product editions. CFO Anthony Folger addressed the EBIT guidance, stating that the full Q3 beat was rolled into the full-year outlook and did not view it as conservative, attributing Q3's strength to better-than-expected growth and margin.

Fatima Boolani asked about Progress Software's high-level AI strategy, specifically how the infusion of AI and Agentic RAG across the portfolio will impact external benchmarks like net retention rate (NRR) and pricing power, seeking implications of the AI strategy on value creation and ROI for customers.

Answer

President and CEO Yogesh Gupta explained that the primary impact of AI infusion will be seen in the net retention rate (NRR), driven by improved gross retention and expansions as customers adopt new AI capabilities, particularly noting an improvement in ShareFile's NRR. He also highlighted an indirect pricing opportunity through customer upgrades to higher-end product editions that include new AI features, rather than direct price increases. New customer acquisition from AI initiatives is not a near-term focus but could develop over time. Fatima Boolani followed up by asking CFO Anthony Folger about the conservatism in the full-year EBIT guidance, noting a modest increase despite strong Q3 outperformance and successful ShareFile integration, especially given R&D expenses are maintained at 18% of revenue. Chief Financial Officer Anthony Folger clarified that the updated full-year guidance fully incorporates the Q3 outperformance across all metrics, including better-than-expected growth, margin, and EPS. He stated that the company does not view the guidance as conservative, expecting Q4 to maintain its original strong performance, and the entire Q3 beat was rolled into the full-year outlook.

Fatima Boolani asked about Progress Software's AI strategy, specifically how AI investments and the infusion of AI and Agentic RAG across the portfolio will impact external benchmarks like net retention rate (NRR) and pricing power.

Answer

President and CEO Yogesh Gupta explained that the primary impact of AI is seen in NRR, citing an improvement in ShareFile's NRR due to AI capabilities and customer success efforts. He noted an indirect pricing opportunity through higher-end product editions that include new AI features, encouraging customer upgrades. CFO Anthony Folger addressed a follow-up on EBIT guidance, stating that the Q3 outperformance was fully rolled into the full-year outlook, and the company does not view the updated guidance as conservative.

Fatima Boolani of Citigroup Inc. inquired about the business health of ShareFile's SMB customer base amid macro uncertainty and the potential impact of future SaaS acquisitions on gross margin trajectory.

Answer

CEO Yogesh Gupta explained that ShareFile is a mission-critical service for its users, so demand has remained healthy. CFO Anthony Folger added that ShareFile's high gross margins (low 80s) set a target for future SaaS deals, and the company now has the capability to optimize acquisitions to that level, mitigating significant dilution.

Fatima Boolani inquired about the drivers behind the strong organic performance in core products like OpenEdge, DataDirect, and MarkLogic, asking for a breakdown by geography or end market. She also questioned the company's incremental investment strategy for these solutions to boost net retention.

Answer

CEO Yogesh Gupta attributed the momentum to the growing importance of data for mission-critical applications, while noting the lumpy nature of these enterprise deals. EVP & CFO Anthony Folger added that leveraging the platform's AI capabilities is creating more upsell opportunities. Folger also stated that there would be no material change in the investment envelope, as the company is well-positioned with its current budget and acquired technologies.

Speaking for Fatima Boolani, Mark asked about churn and attrition levels during the quarter, whether the new upgrade cycle caused any disruption, and for color on Net Retention Rate.

Answer

CEO Corey Thomas responded that churn was consistent with levels seen at the end of the prior year, particularly in the risk management business. He clarified that the pressure on net ARR growth was more a function of softness in new business acquisition in the mid-market, rather than increased churn. He explicitly stated that the new upgrade cycle for Exposure Command was not causing deal disruption or increasing churn.

Fatima Boolani asked about the secular decline in the vulnerability management market, seeking to understand if the business has hit a trough and what the decline trajectory looks like for 2025. She also questioned how sales productivity and capacity are factored into the 2025 ARR growth guidance following recent workforce changes.

Answer

CEO Corey Thomas noted that while traditional on-prem VM has low growth, a significant opportunity exists in integrated exposure management. He said the 2025 guidance includes modest expectations for the new Exposure Command product. Regarding sales, Thomas stated they expect productivity gains from a full year of selling the new platform with a modestly larger sales force. He acknowledged a delay in re-hiring after the 2024 restructuring, which impacted velocity, and said 2025 is about executing the planned business rotation.

Fatima Boolani of Citigroup asked to reconcile positive customer feedback on the Command portfolio with the updated guidance, questioning why recent organizational streamlining isn't offsetting the impact of elongated sales cycles.

Answer

CEO Corey Thomas responded that while internal process improvements and the Command Platform launch have been successful in rebuilding the pipeline, the mix has shifted toward larger deals. He noted that over half of the Q4 pipeline consists of deals over $100,000, which are more susceptible to the current environment of elongated approval cycles, putting pressure on near-term ARR results.

On behalf of Fatima Boolani, an analyst from Citi asked about the impact of any price increases on ARR and NRR in 2024 and the significance of the new Google Cloud solutions for multi-cloud expansion.

Answer

CFO James Caci stated that price increases were a very small component of NRR improvement, with the primary driver being customers adopting more products from the platform. CEO Tianyi Jiang described the Google expansion as a significant new IP development, moving beyond backup to include risk intelligence and lifecycle management, positioning AvePoint as a more strategic multi-cloud partner.

Fatima Boolani asked if the largest customer (TikTok) uses other Akamai services, particularly security, that could also be at risk, and inquired about the progress and timeline of the company's go-to-market transformation.

Answer

CEO F. Leighton confirmed the customer uses the full portfolio, including delivery, security, and growing compute services, and that this is factored into all guidance. He described the go-to-market transformation as a two-year process in its early stages, focused on increasing sales hunters, specialized sellers for new products, and optimizing pricing and channel strategies to align with the company's product evolution.

Speaking on behalf of Fatima Boolani, an analyst asked why there isn't greater evidence of operating leverage given the outperformance in high-margin compute and decline in delivery, and also inquired about the CapEx trajectory into 2025.

Answer

CFO Ed McGowan explained that the compute business has not yet reached sufficient scale to demonstrate significant operating leverage, as it is still in an investment phase. Regarding capital expenditures, he stated that while the company is not providing 2025 guidance, he does not anticipate another heavy investment year like 2024 and expects CapEx to remain in the current range, barring any unusually large deals.

Represented by Mark, Fatima Boolani's team asked why the traction from bundling initiatives isn't creating a more visible shift in the business mix and what factors are gating this change. They also questioned what gives Fastly confidence in the projected NRR expansion in the second half of 2025.

Answer

CEO Todd Nightingale explained that the business mix has shifted significantly in terms of revenue diversification, with top 10 customer concentration dropping from 40% to 32% over the year, driven by packaged offerings targeting the mid-market. CFO Ron Kisling added that NRR expansion is expected in the second half of 2025 as it's a lagging indicator that will reflect the impact of a complete security portfolio and a sales focus on cross-selling into existing accounts.

Fatima Boolani asked about the composition of the top 10 customer base compared to a year ago and questioned when the compression in the Net Retention Rate (NRR) is expected to bottom out.

Answer

CEO Todd Nightingale described the top 10 customer base as remaining very media-heavy, including streaming video, gaming, and bulk downloads. CFO Ron Kisling explained that because NRR is a trailing twelve-month metric, it will recover slowly, projecting that an expansion would likely begin to be seen around the middle of next year as the 2024 headwinds roll off the calculation.

Fatima Boolani of Citigroup asked about potential changes to sales compensation and incentives designed to balance 'pool of funds' momentum with growth in mass-market developer and Zero Trust services.

Answer

CEO Matthew Prince explained that the company is shifting compensation for 'pool of funds' deals to be based on recognized revenue from customer consumption, rather than just the initial contract value. This aligns sales incentives with driving platform adoption. CFO Thomas Seifert added that the core sales structure is set for the year, with only minor tweaks expected, avoiding major disruptions.

Fatima Boolani inquired about the go-to-market reinvigoration, asking for specifics on sales capacity growth plans for 2025 and any changes to market segmentation or verticalization.

Answer

CEO Nadav Zafrir emphasized that the changes will be a gradual process. He highlighted two key structural changes: elevating the marketing leader to his leadership team and creating a new, consolidated role to lead the high-growth SaaS business (email, SASE), aligning the sales motion with different buyer profiles and consumption models.

Fatima Boolani asked for quantification of the monetization and financial uplift from the Loom acquisition, questioning how it is impacting cloud performance and whether it is bundled with premium product editions.

Answer

CFO Joe Binz stated that while specific figures aren't disclosed, Loom's Q2 revenue was slightly better than expected and reiterated guidance that it would contribute about 1.5 points to FY25 cloud revenue growth. CEO Mike Cannon-Brookes added that Loom is a stand-alone product, not bundled with other editions, and that its value is being enhanced by AI features for both video creation and consumption.

Fatima Boolani asked about the strategy behind Atlassian's more assertive move into consumption-based pricing and how the potential variability of this model is being incorporated into financial guidance.

Answer

CEO Mike Cannon-Brookes explained that while consumption pricing was historically used defensively for overages, it is now being applied to new, high-value offerings like AI virtual service agents where there is a clear, customer-driven ROI. CFO Joe Binz added that the financial model remains predominantly seat-based, with only a very small and modest amount of consumption revenue assumed in the current guidance, reflecting a conservative approach as this model scales.

Fatima Boolani requested more detail on the specific anticipatory investments and costs related to the Venafi acquisition that are impacting the company's free cash flow guidance.

Answer

CFO Josh Siegel clarified that the free cash flow guidance accounts for current spending on Post-Merger Integration (PMI) planning, investments to ensure a successful integration, and direct transactional costs such as legal and advisory fees. He also reiterated that potential interest rate movements and tax obligations were factored into the forecast.

Asked about the focus of the new cloud-first sales motion (conversion of existing customers vs. expansion) and the traction and evolution of product bundles like the Zero Trust bundle.

Answer

The new sales compensation primarily incentivizes new customer lands on the cloud platform, which is expected to simplify future cross-selling. The previous Zero Trust bundle has evolved into a broader 'security lifecycle management' go-to-market motion, which, along with an 'infrastructure lifecycle management' motion, simplifies the overall sales approach into two core conversations.

Asked about the implications for pricing strategy as the company pushes for more cloud adoption in the enterprise and whether the current model needs to be changed to drive this behavior.

Answer

The company's strategy is to maintain consistent pricing between self-managed and cloud offerings to avoid 'taxing' customers for moving to the cloud. Both models are entitlement-based, making the transition contractually straightforward. The focus is on ensuring the cloud platform's capabilities meet enterprise needs.