Managing Director and Senior Software Equity Research Analyst at Goldman Sachs
Gabriela Borges is a Managing Director and Senior Software Equity Research Analyst at Goldman Sachs, specializing in the technology sector with a focus on software and cloud infrastructure. She covers leading technology companies such as CrowdStrike, Cloudflare, Fortinet, Palantir Technologies, Okta, Shopify, and Zeta Global, with a performance record that includes a 52% success rate and an average return of 5.6% per rating, highlighted by notable calls like a 187% gain on CrowdStrike. Borges began her Wall Street career in 2012, advancing from Vice President to Managing Director at Goldman Sachs after previous investment roles, and her coverage now spans over 50 technology stocks. She holds FINRA securities licenses and is recognized among the top 25% of Wall Street analysts by platforms such as TipRanks, with over 360 published ratings.
Gabriela Borges questioned the ebb and flow of the business mix between SaaS and term over the next 12 months and what's being seen in the pipeline.
CFO Brian Carolan stated the Q2 mix was in line with targets, with 90% SaaS of net new bookings, and expects Q3 to be heavier for term.
Asked how SailPoint is using AI internally to speed up implementations and vendor switching, and conversely, the risk of AI lowering barriers to entry for new competitors.
The company uses AI to accelerate the creation of deep connectors for bespoke applications and to simplify the process for non-technical users. They differentiate their 'deep' governance connectors from the 'shallow' ones offered by newer vendors. They believe their high win rate in complex environments persists once customers understand this key difference in capability.
Gabriela Borges from Goldman Sachs asked for an update on the company's module strategy, including penetration rates and which modules could be significant ARR drivers.
CEO Mark McClain highlighted three modules with high potential: Non-employee Risk Management, which has seen strong uptake; the recently launched Machine Identity Security; and the forthcoming Agent Identity module. CFO Brian Carolan added that growth is balanced, with Non-employee Risk Management being a leading cross-sell product in fiscal 2025.
Gabriela Borges of Goldman Sachs asked how SailPoint is using AI to accelerate customer implementations and about the potential risk of AI lowering barriers to entry for new competitors.
CEO & Founder Mark McClain explained that AI is being used to speed up the creation of deep, entitlement-level connectors, a key differentiator. He contrasted this with newer vendors whose claims of rapid connectivity often refer to "shallow" connectors for login only, expressing confidence in SailPoint's high win rate in complex environments.
Gabriela Borges of Goldman Sachs sought to better understand the rationale behind the full-year guidance, questioning what factors are making the company more prudent about the second half now compared to 90 days ago, despite the strong Q2 net new ARR beat.
CFO Barbara Larson reiterated that while the second-half outlook has improved due to strong Q2 results, the company is being prudent and measured in its assumptions. She cited potential variability in large deal timing, the overall macro environment, and the federal sector as factors being taken into account for the back-half forecast.
Gabriela Borges of Goldman Sachs requested more specific commentary from customers regarding slipped deals, asking if they anticipate more certainty later in the year and when those deals are expected to close.
CEO Tomer Weingarten explained that the macro environment in April led customers to pause spending decisions but that no deals were cancelled. He noted that while trends improved in May, the unpredictable environment necessitates a more cautious outlook, despite strong win rates and platform adoption.
Gabriela Borges of Goldman Sachs inquired about SentinelOne's architectural strengths, such as requiring fewer updates and less kernel dependency, and how these advantages are influencing pipeline conversations and the industry trend towards dual-sourcing security vendors.
CEO Tomer Weingarten explained that a competitor's recent major IT outage highlighted the risks of kernel-dependent architectures. He emphasized that SentinelOne's patented Behavioral AI and minimal kernel usage, particularly on macOS and Linux, enhance system stability and resilience. Weingarten noted that customers have full control over deployment, a stark contrast to competitors, and this differentiation is driving significant customer interest and a re-evaluation of single-vendor strategies.
Gabriela Borges of Goldman Sachs asked about the competitive dynamics in the core EDR market, inquiring if customers using Flex contracts show equal interest in EDR compared to newer modules and to what extent CrowdStrike is still landing new customers on EDR.
Founder & CEO George Kurtz emphasized that the modern SOC is built on EDR and Next-Gen SIEM, making EDR data fundamental. He positioned CrowdStrike as the pioneer and continued innovator in the space. Kurtz explained that EDR is the entry point for telemetry that enables all other modules through a "collect once, reuse many" philosophy. He also highlighted the superior service layer, like Falcon Complete, as a key differentiator that competitors cannot match, creating a winning combination with Next-Gen SIEM and Charlotte AI.
Gabriela Borges asked about the budgeting process for "reflex" deals, questioning where the incremental budget comes from when customers consume a multi-year plan in just a few months.
CEO George Kurtz stated that these conversations are part of a demand planning and business value assessment process. The incremental budget is justified by the tangible ROI and financial savings achieved from replacing multiple point products with the Falcon platform. He noted that Falcon Flex removes procurement friction, allowing customers to see value quickly and justifying the accelerated spend and subsequent reflex.
Gabriela Borges requested insight into the assumptions behind the full-year guidance, particularly regarding the expected reversal of dynamics like paused demand generation and the renewal of CCP contracts in the second half.
CFO Burt Podbere expressed confidence in a second-half reacceleration. He cited the expiration of one-time CCP incentives as a key driver for upsell opportunities, as customers are already using and liking the products. He also noted that customers are consuming their Falcon Flex credits ahead of their demand plans and that the company's broad 29-module portfolio provides ample opportunity for growth.
Gabriela Borges asked if there were observable differences in Falcon Flex customer cohorts before and after the July 19 incident that might influence future upsell rates.
CFO Burt Podbere stated it was too early to determine long-term trends but highlighted strong current indicators. He noted that post-incident Flex deals are slightly larger, with over 150 such deals closed in Q3. These accounts represent over $1.3 billion in total deal value, with an average of over nine modules adopted per customer. This momentum gives CrowdStrike confidence in its ability to reaccelerate net new ARR in the second half of the next fiscal year.
Gabriela Borges requested more detail on the customer commitment packages, specifically how the $30 million per quarter impact was calculated and what guardrails are in place for concessions like duration and discounting.
CFO Burt Podbere detailed that the financial impact was calculated by considering delayed pipeline generation, longer sales cycles, and muted upsell value. He explained the packages include various levers like discounts, duration extensions (impacting net new ARR), and product additions (impacting COGS), which were all factored into the guidance.
Gabriela Borges from Goldman Sachs asked for an update on go-to-market progress with security buyers and challenged the assertion that the Palo Alto Networks-CyberArk deal won't change the competitive landscape, given Palo Alto's strong relationships with CSOs.
CEO Todd McKinnon responded that pure-play security vendors will struggle to cover the full breadth of identity types (e.g., customer) and use cases (e.g., operational efficiency, compliance) that customers require. He argued that identity is more than a pure security sale and that ultimate success depends on having the comprehensive product portfolio that enables consolidation, which is Okta's strength.
Gabriela Borges of Goldman Sachs asked about the impact of cross-selling on the growth algorithm, whether Q1 sales productivity was negatively affected by go-to-market changes, and how the company benchmarks productivity.
CFO Brett Tighe stated that despite significant changes in the sales organization, Q1 productivity metrics were as good or better than the prior year, which he views as a positive sign. He believes specialization will ultimately be additive to NRR. President & COO Eric Kelleher added that specialization helps sellers master a complex portfolio, benefiting customers. CEO Todd McKinnon also noted that rep tenure and attrition trends are positive indicators.
Gabriela Borges asked for insights from past experiments with the Auth0 go-to-market strategy and what makes the current approach different.
CEO Todd McKinnon explained the evolution: post-acquisition, they merged sales teams into one generalist force for broad coverage. Now, with both Okta and Auth0 platforms having expanded with more complex features (like FGA, Highly Regulated Identity), they are re-specializing. The new model creates dedicated Okta and Auth0 sellers to provide deeper expertise to different buyers (IT/security vs. developers), which they believe will drive long-term growth. CFO Brett Tighe added that reps are being placed in roles where they already have specialized skills, leveraging the momentum from Auth0's record bookings quarter.
Gabriela Borges asked how the 15% of bookings from new products compares to historical levels and when the cross-sell tailwind might offset headwinds to the net retention rate (NRR).
CEO Todd McKinnon stated his sense is that 15% is higher than in the past, driven by multiple new products beyond just Identity Governance. CFO Brett Tighe confirmed the percentage is up year-over-year. Regarding NRR, he noted that macro pressures on seat counts and headwinds from older COVID-era cohorts persist, and he expects NRR to tick down slightly in Q4, deferring a full FY'26 outlook.
Gabriela Borges from Goldman Sachs inquired about the mix within NGS ARR between advanced subscriptions and the emerging portfolio, and asked about the durability of virtual firewall growth.
CFO Dipak Golechha responded that the company is largely past the transition of its advanced subscriptions. He clarified that future NGS ARR growth will be driven by durable, next-generation products like software firewalls, SASE, and XSIAM, as well as newer offerings like Prisma AIRS, rather than conversions of legacy products.
Gabriela Borges inquired about the future evolution of the AI product portfolio, the balance between organic and inorganic growth, and the strategy to maintain a technological lead in the fast-moving AI space.
CEO Nikesh Arora explained that the company is applying lessons from cloud security's evolution by focusing on AI runtime security from the outset. He emphasized a strategy of relentless innovation, leveraging existing native firewalls in public clouds, and using strategic M&A, such as the Protect.AI acquisition, to accelerate the product roadmap and acquire top talent.
Gabriela Borges asked about the internal framework and guardrails that guide the sales team in deciding when to offer multi-year versus single-year billing and when to use financing.
CFO Dipak Golechha clarified that requests for deferred payments typically come with larger, high-end deals, as smaller transactions and firewall appliance sales are usually paid upfront. For other deals, the terms are part of the negotiation, managed by internal guardrails like sales compensation structures and approval processes, all designed to facilitate the broader platformization strategy.
Gabriela Borges from Goldman Sachs asked about the long-term durability of growth in the Control Suite, questioning if the current demand is a temporary surge due to AI preparation, and also inquired about the cause of the services revenue outperformance.
CEO Tianyi Jiang asserted that growth is sustainable as the market is still in the 'early innings' of AI adoption, with enterprise AI deployment extending far beyond just Microsoft CoPilot. He does not see demand slowing down. CFO Jim Caci attributed the services revenue outperformance to the planned conclusion of several large, SI-like projects within their global services business during the quarter.
On behalf of Gabriela Borges, Maxime Gamperl questioned the competitive landscape for Data Security Posture Management (DSPM) and sought details on the Ydentic acquisition's integration and future M&A strategy.
CEO Tianyi Jiang acknowledged the competitive DSPM market but emphasized AvePoint's platform approach as a key differentiator. He explained the Ydentic acquisition accelerates IP expansion for its MSP offerings. Regarding M&A, Jiang confirmed AvePoint has a healthy balance sheet and will actively pursue acquisitions to support its profitable growth strategy.
Gabriela Borges of Goldman Sachs inquired about the drivers behind Kaltura's bookings momentum for the second half of the year and the reasons for the previously elevated churn in the Media & Telecom (M&T) segment.
Ron Yekutiel, Co-Founder, Chairman, President & CEO, attributed bookings strength to the maturity of the events platform, customer consolidation, and new AI offerings. Regarding M&T churn, CFO John Doherty noted it was anticipated due to industry shifts to the cloud, while Yekutiel added that the churn was concentrated in less strategic legacy customers and that the renewal of the Vodafone contract validates the strength of their core offering. Yekutiel also signaled a renewed sales focus on the M&T segment.
Gabriela Borges inquired about the current macroeconomic sentiment from customers, particularly those with consumer or ad spending exposure, and asked for details on the company's strategy for allocating resources to its gradually growing sales team.
Ron Yekutiel (executive) stated that while the company is being cautious, it has not seen a direct negative impact from the macro environment on its large enterprise customer base. He noted that Kaltura's SaaS model is insulated from tariffs and can be counter-recessionary by helping clients reduce travel and OpEx. Regarding sales team growth, he explained that after reducing headcount to achieve profitability, the company is now gradually re-investing across all segments—Enterprise, Media & Telecom, and Education—to capitalize on renewed market interest and expanded product offerings.
Gabriela Borges inquired about customer spending willingness, considering exposure to consumer/ad trends, and differences between large and mid-market customers.
CEO Ron Yekutiel stated they haven't seen negative impacts, catering to larger organizations with mid-to-long-term thinking. CFO John Doherty added they can manage through the macro environment, highlighting the product suite's efficiency.
Gabriela Borges from Goldman Sachs inquired about Kaltura's incremental strategic priorities for 2025 compared to the previous year and asked whether customer demand for AI is a 'pull' or a 'push' from the company.
CEO Ron Yekutiel outlined five key growth drivers for 2025: market regrowth, vendor consolidation, new product maturity, GenAI capabilities, and sales force expansion. CFO John Doherty added that this involves continued investment in sales and marketing. On AI, Ron Yekutiel described customer conversations as being 'in the middle,' where clients are highly intrigued and open to co-innovation, appreciating Kaltura's ability to deliver AI value through its integrated platform without data privacy concerns.
Gabriela Borges of Goldman Sachs & Co. LLC inquired about the specific company initiatives driving recent business stability and asked for an early outlook on the 2025 revenue and margin framework.
Executive Ron Yekutiel attributed the performance to an industry turnaround and strong execution, highlighting two 7-digit deals, customer consolidation, and a record average ARR of approximately $200k. CFO John Doherty deferred specific 2025 guidance but pointed to a focus on customer profitability, targeted price increases, and operational efficiency as drivers for a "modestly improving growth and profitability profile."
Gabriela Borges from Goldman Sachs asked for perspective on competition from frontier models as they add more agentic capabilities, and the importance of HubSpot's domain expertise as a defense.
CTO Dharmesh Shah opined that frontier models will likely focus on horizontal, consumer-facing agents or on building platforms for others like HubSpot to use. He argued that HubSpot's 19 years of domain expertise, embodied in millions of lines of code capturing complex B2B workflows, is a significant and messy moat that frontier models are unlikely to tackle as they pursue larger, trillion-dollar opportunities.
Gabriela Borges from Goldman Sachs asked for perspective on competition from frontier models adding their own agentic applications and the importance of HubSpot's domain-specific expertise.
CTO Dharmesh Shah opined that frontier models will likely focus on horizontal, consumer-facing agents or on building platforms for third parties like HubSpot to use. He argued that the deep, domain-specific expertise embodied in HubSpot's 19 years of code and data models for CRM is a significant moat. He believes frontier models will pursue larger, trillion-dollar opportunities rather than trying to replicate complex, vertical B2B workflows one by one.
Gabriela Borges asked about HubSpot's market share momentum in the mid-market (200-1,000 employees), especially with new HIPAA compliance, and what characteristics define the ideal HubSpot customer in that segment.
CEO Yamini Rangan clarified that HubSpot's upmarket focus is on the 200-2,000 employee segment and that momentum is broad-based rather than concentrated in specific verticals. She attributed the success to improved product-market fit for larger customers without sacrificing the platform's core ease of use. Rangan highlighted that the value proposition of being easy to use, offering fast time to value, and providing a unified data platform is what resonates most with mid-market and upmarket customers.
Gabriela Borges asked about HubSpot's framework for activating consumption-based pricing for AI and agents, and how the company maps customer productivity gains to future price increases.
CEO Yamini Rangan reiterated HubSpot's long-standing philosophy of innovating extensively and ensuring customers receive consistent value before monetizing. For AI, the initial focus has been on embedding features to drive awareness and adoption. She stated that once HubSpot observes repeatable value and usage from its AI agents, it will be comfortable adding a monetization component, with driving that value being the core focus for 2025.
Gabriela Borges asked about the competitive dynamic in the mid-market and how HubSpot's sales team navigates conversations when competitors offer aggressive pricing, given HubSpot's focus on value.
CEO Yamini Rangan stated that HubSpot competes on value, not price, focusing on total cost of ownership (TCO) and fast time to value. She emphasized that HubSpot's ease of use drives high user adoption (80-90%), a key differentiator from competitors where CRM adoption is often low. This tangible value proposition, delivered in weeks not months, is how HubSpot wins in a competitive environment.
Gabriela Borges of Goldman Sachs questioned why the large 2026 refresh cohort isn't driving more upside to guidance this year and asked to reconcile past comments on sales hesitancy with current statements about a resilient macro environment.
CFO Christiane Ohlgart explained that the refresh impact was already factored into guidance and that some customers might have excess capacity from prior years. CEO Ken Xie added that the refresh involves products sold when the company was much smaller. Regarding the macro environment, Ohlgart stated that despite uncertainty, the business remains resilient, and strong sales confidence and pipeline prompted the raised billings guidance.
Gabriela Borges followed up on sales team hesitancy, asking for specifics on customer conversations causing this caution and how management expects the situation to resolve.
CAO and incoming CFO Christiane Ohlgart acknowledged that while feedback from customer events and channel programs is positive, the constant influx of negative macroeconomic news creates hesitancy, as purchase orders can be delayed at any time before being finalized. She noted they have not seen delays yet but remain cautious.
Gabriela Borges inquired about the implications of the upcoming hardware refresh opportunity specifically for subscription revenue growth.
CAO Christiane Ohlgart stated that growing subscription revenue requires upselling more services with the new hardware, and the company has implemented sales and channel incentives to drive this. CEO Ken Xie added that new, higher-capacity hardware enables customers to run additional services, including new Unified SASE and SecOps functions, creating new revenue opportunities.
Gabriela Borges asked about the go-to-market strategy for SASE, inquiring about key learnings over the past year and areas of focus for 2025.
CEO Ken Xie noted huge progress in the direct go-to-market and that 90% of SASE business comes from existing customers, who find the migration easy. CFO Keith Jensen added that customer feedback on their SASE architecture is very positive and the focus now is on 'more at bats'—getting more customer meetings, building reference customers, and partnering more closely with the channel. An unnamed executive compared the focus on SASE to their successful execution with SD-WAN, which took time to build into a market-leading position.
Gabriela Borges from Goldman Sachs questioned the long-term growth algorithm, asking if Shopify can sustain growth rates near 30% as the company scales, given the durability of its product cycles.
President Harley Finkelstein pointed to multiple durable growth avenues, including new on-ramps like enterprise and B2B, TAM expansion into new verticals, and payment innovation. CFO Jeff Hoffmeister added that market dynamics, such as the increasing need for omnichannel capabilities and rising e-commerce penetration, continue to drive merchants to Shopify's platform, supporting a durable long-term growth outlook.
Gabriela Borges followed up on the enterprise momentum mentioned at NRF, asking for internal indicators of this trend and for highlights from the product roadmap designed to win share from sticky incumbents.
President Harley Finkelstein cited recent wins like David's Bridal, Hunter Douglas, and Crocs as evidence of a shift, as these brands historically did not choose Shopify. He emphasized the speed of launch and total cost of ownership as key differentiators. He highlighted the flexible product suite (Hydrogen, Plus, CCS) and the growing partner ecosystem (WPP, EY, Oracle) as critical to winning enterprise clients.
Gabriela Borges of Goldman Sachs inquired about Klaviyo's progress in the mid-market, seeking both qualitative and quantitative details on pipeline development, investment levels, and sales productivity improvements.
Co-Founder and CEO Andrew Bialecki explained that the platform's consolidation story, combining marketing and service with a core data platform, is resonating with enterprise customers. CFO Amanda Whalen provided quantitative support, highlighting the 38% year-over-year growth in customers with over $50,000 in ARR and strong growth in average revenue from top customers.
Gabriela Borges from Goldman Sachs asked for the relative sizing of the 'cautiously optimistic' versus 'on the offensive' customer cohorts and questioned the forecasting approach for the second half of the year.
CFO Amanda Whalen did not provide specific sizing for the cohorts due to customer diversity but stated the raised guidance reflects strong Q1 performance and robust demand signals. She emphasized that the back-half guidance includes a 'healthy dose of prudence' based on extensive scenario planning, with key operational metrics remaining consistent through April.
Gabriela Borges inquired about the growth and sustainability of Klaviyo's mid-market pipeline and the cohort of customers generating over $50,000 in ARR.
Co-Founder and CEO Andrew Bialecki confirmed strong results and pipeline growth in the mid-market, attributing it to Klaviyo's clear value proposition as a unified data platform. He highlighted that complexity plays to their advantage and noted that average revenue per customer in this cohort grew 15% year-over-year, indicating strong market depth and a durable growth driver for 2025 and beyond.
Callie on for Gabriela Borges asked about the observed increase in AI-driven campaigns and resulting customer behavior changes, as well as details on the sales headcount investments for the OneZeta initiative.
CEO David Steinberg confirmed a 'massive adoption' of AI tools, noting that clients using the AI agent studio grew significantly faster. He attributed this to Zeta's native AI and data integration, which provides a superior ROI. Regarding OneZeta, he mentioned that the initiative, led by Chief Growth Officer Ed C., is accelerating investment in specialized sales talent, funded by the company's strong overall growth and profitability.
Gabriela Borges from Goldman Sachs inquired about the current trends in replacement cycles for legacy marketing cloud competitors, particularly in light of new AI agent strategies being announced across the industry.
CEO David Steinberg confirmed that the replacement cycle for legacy marketing clouds continues to accelerate. He attributed this to Zeta's superior architecture, where AI and data are native to the platform, eliminating latency and tech debt that plagues competitors whose AI operates outside the core application. This architectural advantage, he stated, drives superior ROI and is fueling market share gains.
Gabriela Borges of Goldman Sachs asked for an update on the unit economics of the AI business, specifically gross margin and LTV to CAC, and questioned whether the Q2 incremental ARR of $32 million represents a new sustainable high watermark.
CFO Matt Steinfort stated the company is comfortable with AI margins, noting that higher layers of the stack have better margins than pure infrastructure, which is viewed as a good investment that pulls through other cloud services. CEO Paddy Srinivasan added that optimizing for inferencing workloads, which have long tails, also drives usage of core cloud primitives. Regarding ARR, both executives confirmed the momentum was secular and durable, driven by PLG enhancements, a new migration motion, and scaled inferencing customers, not a one-time event.
Gabriela Borges noted a strategic shift toward more predictable, larger deals and asked for details on the $20 million multiyear deal. She also inquired how DigitalOcean secures long-term commitments in the rapidly evolving AI inference market.
CEO Padmanabhan Srinivasan explained that conversations for large, multiyear commitments are occurring for both core cloud and AI inferencing workloads. He attributed this to new product capabilities like Partner Network Connect, which enables staged migrations, and a maturing go-to-market motion. He emphasized that such deals are becoming more common, driving a company-wide evolution in how they build, sell, and finance their services to improve predictability.
Gabriela Borges of Goldman Sachs asked for an update on the ARR generated per dollar of GPU-related CapEx, questioning if moving up the stack from IaaS to PaaS improves this metric, and inquired about the gross margin profile of the AI services business.
Executive Matt Steinfort explained that higher-level services like the Gen AI platform have superior margins and drive significant 'pull-through' revenue from core cloud products like storage and bandwidth. He noted that while core GPU-as-a-service margins are currently modest due to high costs, the company expects improvement as they leverage infrastructure for higher-margin inferencing over time.
Gabriela Borges questioned the business's seasonality, the size of the quarterly revenue beat, and asked for key learnings on the AI strategy and differentiation against hyperscalers like AWS.
CFO Matt Steinfort stated there is no significant seasonality and the company is focused on its full-year outlook. CEO Paddy Srinivasan shared that a key learning is their customers' need for application-layer simplicity. He differentiated DigitalOcean's AI platform by highlighting its ease of use for customers without deep AI expertise, enabling them to quickly build and deploy applications with clear cost models, unlike more complex hyperscaler tools.
Gabriela Borges of Goldman Sachs inquired about the dynamics of 'pay-per-crawl' discussions with AI companies and how the media vertical is becoming more attractive for Cloudflare.
Co-Founder & CEO Matthew Prince noted a surprisingly positive reception from AI companies, who recognize that original content is essential fuel for their models. The key is creating a level playing field for content access. Regarding the media vertical, he suggested the strategy is not about maximizing direct revenue but about enabling a new business model where Cloudflare helps content creators get paid by AI companies, leveraging the vast amount of content, including from free users, on its network.
Gabriela Borges from Goldman Sachs asked how Cloudflare manages enterprise sales when parts of a customer's organization are more technically advanced than others, and about any pushback on the Workers platform ecosystem.
CEO Matthew Prince described a two-pronged strategy. The first is a bottoms-up, self-serve model that allows small, innovative teams to easily experiment with the platform. The second, new for 2025, is a targeted 'speedboat' go-to-market team focused on winning strategic accounts to build a library of case studies, which can then be used to drive broader enterprise adoption.
Gabriela Borges from Goldman Sachs followed up on the on-premise to cloud flip commentary, asking for clarity on whether the projected 25% year-over-year growth refers to the number of flips or dollar value, and how that growth might progress.
EVP & CFO Brian Miller clarified that the 25% growth projection is for the number of flips. He anticipates a similar percentage increase in the number of flips over the next couple of years. However, he stressed that the average dollar value per flip is expected to increase continuously as they migrate larger clients, meaning the ARR growth from flips should outpace the growth in the number of flips.
Gabriela Borges of Goldman Sachs asked about the risk that currently marginal issues like DOGE, consultant delays, and deal scrutiny could become more mainstream, and how the company assesses that potential risk.
President and CEO Lynn Moore responded that the company monitors these risks regularly and that direct client feedback provides comfort. She shared an anecdote where a client indicated that efficiency mandates like DOGE would actually increase their need for Tyler's automation software. The current outlook is based on this direct client sentiment.
Gabriela Borges asked what percentage of Tyler's business resembles the low-margin, commodity-style Texas payments contract and might be de-emphasized over time.
CEO H. Moore stated the portion is 'pretty small' and not a strategic focus. CFO Brian Miller added that besides Texas, there is only one other payments-only state contract, which has more value-added services. Moore reinforced the strategy by noting that executive compensation now excludes merchant fees to discourage the pursuit of low-margin ARR, showing a clear focus on profitable growth.
Gabriela Borges asked about the sustainability of the healthy demand from state and local governments and inquired about the magnitude of the benefit from ARPA funds, both currently and in the future.
CEO Lynn Moore indicated that leading sales indicators like RFP and demo counts remain strong, suggesting the robust demand environment will continue for the foreseeable future. On ARPA funds, she reiterated that while helpful for specific deals, they have not been a 'major tailwind' for overall growth. CFO Brian Miller added that the deadline to spend these funds extends to the end of 2026.
Asked if customers are already seeing a negative impact from agentic search, requested examples of how product data needs to be more sophisticated for AI, and inquired about the availability of before-and-after customer case studies.
Yes, customers are seeing a substantial negative impact, creating angst and demand. Product data needs to be more sophisticated by synthesizing both structured and unstructured data (e.g., reviews, guides) for LLMs. The company has early results with large brands in closed beta and is focused on evangelizing the efficacy of its solutions, starting with discoverability.
Asked for an overview of the competitive landscape in the enterprise segment, including where BigCommerce is winning and the source of new logos. Also inquired about the macro factors that influence an enterprise's decision to replatform.
Wins are against legacy systems in B2B and driven by the value proposition of 'curated composability' in B2C. New logos come from a variety of competitors. The primary driver for enterprise change is risk mitigation; as implementation times and costs decrease, the risk of switching is reduced, which is expected to drive demand.
Asked about the key internal metrics that will signal a turnaround before it shows up in revenue, and inquired about the competitive environment for 'discerning customers,' specifically against Shopify.
The key leading indicator of a turnaround will be sequential growth in total and enterprise ARR; when ARR growth outpaces revenue growth, it will signal reacceleration. Competitively, BigCommerce positions itself as an open, composable platform (like Android) for discerning customers who need to scale with customization, contrasting with Shopify's more closed, one-size-fits-all approach (like the iPhone).
Gabriela Borges asked to reconcile conflicting signals, such as lower sequential growth versus strong current RPO (cRPO) and competitive wins, and questioned when positive company-specific dynamics might overcome the uneven macroeconomic environment.
CFO Isabelle Winkels advised against over-relying on cRPO as a leading indicator due to renewal cycle volatility, pointing to revenue as the primary metric to watch. CEO Bill Magnuson highlighted strong bookings momentum from Q4, particularly in the Americas and EMEA. He acknowledged that elevated churn from prior-year cohorts renewing in Q1 impacted dollar-based net retention but stated that churn is forecasted to improve due to focused preventative efforts.
Gabriela Borges from Goldman Sachs addressed the 'SaaS-native vs. AI-native' debate, asking why Braze chose to acquire OfferFit rather than build its capabilities in-house and what limited OfferFit's ability to scale independently. She also inquired about recent demand trends given mixed economic signals.
CEO Bill Magnuson responded that the acquisition was driven by synergy and the ability to accelerate innovation together, not an inability to build the technology. He noted the strong existing partnership, with nearly a third of OfferFit's customers already using Braze. CFO Isabelle Winkles stated there have been no specific changes in leading demand indicators recently, while Bill Magnuson added that Braze has been proactively expanding its global data center footprint to address trends like data sovereignty.
Gabriela Borges asked for an update on go-to-market improvements, including flexible credits and sales productivity, and inquired about the Braze for Startups program and the health of the SMB ecosystem.
CEO Bill Magnuson reported that over 450 customers have adopted flexible credits, which speeds up new channel adoption like LINE and RCS. He also highlighted the completion of the global sales leadership transition. Regarding SMBs, he stated the sector remains challenged, and the free trial program is a key product-led growth investment for both top-of-funnel awareness and as a sandbox for enterprise sales.
Gabriela Borges asked about the potential for business reacceleration from company-specific initiatives like 'Braze for Startups' and free trials. She also inquired about the product roadmap and the journey to dominate adjacent categories.
CEO Bill Magnuson detailed that initiatives like 'Braze for Startups' and product-led growth are long-term investments to improve acquisition efficiency and win mindshare, establishing Braze as a premier skill set. He emphasized that while the company has a huge runway within the expanding definition of customer engagement, the immediate focus is on establishing a dominant position in its core category before expanding into other enterprise workloads.
Gabriela Borges of Goldman Sachs followed up on positive commentary about eTMF by asking for an update on customer conversations for EDC and the expected revenue ramp from already-announced EDC wins.
CEO Peter Gassner expressed pride in nearing 20 of the top 20 pharma on eTMF, viewing it as a signal to double down on investment. For EDC, he stated that while 9 of the top 20 use it, many are early, and he sees a path to add more over time but nothing is imminent. He remains confident in EDC's long-term success due to the structural advantage of an integrated clinical platform.
Gabriela Borges asked why some customers are hesitating to make a Vault CRM decision and how Veeva addresses this, and also requested more detail on the 'version 1 vs. version 2' cloud application theory.
EVP, Strategy Paul Shawah explained that reasons for delay vary, from formal RFP processes to other priorities, and Veeva's approach is to continue delivering innovation to make the case more compelling. CEO Peter Gassner elaborated that a 'version 2' platform would be designed with AI-native interfaces and data access in mind, which is difficult to retrofit onto existing 'version 1' platforms.
Gabriela Borges asked for an update on the commercial business, specifically the dynamic between seat counts and add-on product growth. She also inquired about key learnings from early Vault CRM conversions.
EVP of Strategy Paul Shawah stated that the CRM seat count market has stabilized, and the company continues to offset any pressure by increasing attach rates for add-on products. Regarding Vault CRM, he said key learnings include refining migration tools to be less disruptive and seeing how quickly customers can adopt new innovations post-migration.
Gabriela Borges asked for an update on legacy replacement cycles, inquiring how Clearwater's ability to influence these cycles has evolved since its IPO and what the key drivers for switching are today.
CEO Sandeep Sahai explained that the company's strategy has evolved to continuously add more compelling reasons for clients to switch from legacy systems. This began with operational efficiency and expanded to include regulatory reporting, compliance, and risk. He stated that the most significant recent evolution is the ambition to provide a full front-to-back solution for the entire investment lifecycle, a goal accelerated by the Enfusion acquisition. This now addresses a key hesitation for prospects who previously did not want to manage a separate front-office platform.
Gabriela Borges asked what new priorities have emerged for the 2025 planning process, given the significant progress made since the company's Investor Day.
CEO Sandeep Sahai responded that increased confidence in the company's ability to scale has given them a 'license to be more ambitious.' He said a key change for 2025 is a pivot to a more aggressive market position, actively pursuing opportunities in partnerships, M&A, and technology like GenAI, enabled by a strong balance sheet.
Gabriela Borges requested an update on ZPA as a growth driver for fiscal 2025, asking about the maturity of the VPN replacement cycle, the competitive landscape, and current catalysts for enterprises to adopt a Zero Trust strategy.
CEO Jay Chaudhry positioned the opportunity as being much larger than just VPN replacement, encompassing the entire inbound DMZ and Zero Trust segmentation. He noted that ZPA has grown from a single-digit percentage of new and upsell business to now representing over 40% of the combined ZIA and ZPA new business mix, expressing his belief that all customers will eventually adopt ZIA, ZPA, and ZDX.
Gabriela Borges of Goldman Sachs inquired about the potential business models Check Point could deploy to monetize the opportunity with embedded DPU chips from NVIDIA as shipment dates approach.
Founder and CEO Gil Shwed described the NVIDIA DPU collaboration as a 'huge opportunity' to secure AI hardware infrastructure. He confirmed that the company is building sales leadership to focus on this area and working with NVIDIA and AI hyperscalers, but stated it is still 'too early to say' what the financial impact or business model will be.
Gabriela Borges asked for help reconciling the commentary on emerging solution adoption with the broader deceleration in total revenue growth, suggesting that new business dynamics might also be slowing.
CFO Brian Herb clarified that the full-year growth guidance of 9% remains at the high end of their long-term range. He attributed the second-half deceleration to three factors: tougher year-over-year comps from onetime items in 2023, a one-point headwind from soft claim volumes, and normal quarter-to-quarter variability in the timing of deal flow.
Inquired about the long-term financial profile, specifically if the company aims for a 'Rule of 40' by balancing its 20%+ free cash flow margin target with a 20%+ revenue growth target. Also asked for an update on sales force enablement, churn, and hiring plans for fiscal '25.
Management affirmed that a 'Rule of 40' profile is achievable long-term as the market opportunity is large, but the current macro environment makes 20% growth harder. Near-term focus is on productivity. Sales retention improved in Q4, and the company feels it has enough sales capacity to hit FY '25 targets, with plans to balance further hiring with macro conditions.
Inquired about the company's growth algorithm, specifically the relationship between sales force hiring and revenue growth, sales force productivity, and churn. Also asked for commentary on demand trends across different market segments and industry verticals.
The 20% sales hiring target is considered optimal due to the large market opportunity, and productivity is expected to increase as the average tenure of the sales force grows. Demand is healthy across all segments (SMB, mid-market, enterprise), with particular strength noted in food & beverage and professional services, while manufacturing has shown more modest performance.
Asked for color on the back book cross-sell motion, questioning how much is driven by company initiatives versus macro pressures, and questioned the rationale for maintaining full-year guidance given the stated macro uncertainty.
The company stated that back book upsell is driven by partnerships and increased engagement, but is also affected by macro pressures on client seat counts. They maintained guidance because the front book's strong performance is providing a buffer against back book volatility, and they felt it was prudent to wait for more market clarity before making adjustments.