Managing Director and Security and Infrastructure Software Analyst at BTIG
Gray Powell is a Managing Director and Security and Infrastructure Software Analyst at BTIG, where he specializes in in-depth research coverage of leading technology companies such as CrowdStrike, Palo Alto Networks, Zscaler, Datadog, Okta, Splunk, and Cloudflare. With a 54% success rate and an average return of 9% per recommendation, he has received top performance recognition, including a standout 2020-2021 Buy call on CrowdStrike that generated over 200% returns. Powell's career spans two decades, during which he served as Director and Senior Analyst at Deutsche Bank (2017–2020) and spent seventeen years at Wells Fargo focusing on security, infrastructure software, and telecom services before joining BTIG. He holds a BS in mathematical economics from Wake Forest University, the CFA charter, and is registered with FINRA for relevant securities licenses.
Gray Powell asked about the macro environment, tariffs, and how things have changed in the last few months, as well as visibility on demand.
CFO Brian Carolan stated they have not seen a material impact to funnels and are in a resilient market with a balanced growth strategy.
Gray Powell asked a high-level macro question about how the environment, including tariffs, has changed over the last three to four months and how SailPoint's visibility on demand and pipeline feels today compared to a few months ago.
Brian Carolan, SailPoint's CFO, stated that the company operates in a resilient, mission-critical market and has not seen a material impact on its funnels from the macro environment or tariff situation. He noted that SailPoint's balanced growth strategy across many different verticals provides stability, and they feel good heading into the second half of the year.
Gray Powell asked a high-level macro question about how much the macro environment and tariff situation have changed in the last three to four months, and how visibility on demand and the pipeline feels today compared to a few months ago.
CEO Mark McClain stated that SailPoint operates in a resilient, mission-critical market and has not seen a material impact on its funnels from the macro environment or tariffs. He noted balanced growth across all verticals, reducing reliance on any single one, and expressed confidence heading into the second half of the year.
Gray Powell asked a high-level macro question regarding changes in the macro environment, including tariffs, over the past three to four months, and how the company's visibility on demand and pipeline feels today compared to a few months prior.
Mark McClain, Founder and CEO, SailPoint, stated that the company operates in a resilient market where identity security is mission-critical. He reported no material impact from the macro environment or tariff situation on their funnels, noting that while they are cognizant of these factors, they are not overly concerned. McClain highlighted a balanced growth strategy across all verticals, expressing confidence heading into the second half of the year.
Asked about the current customer willingness to migrate from legacy IGA solutions (like Oracle and IBM) and whether macro uncertainty affects these projects.
The company is seeing an acceleration in migrations from legacy systems, as the current security landscape highlights the flaws in older, heavily customized solutions. They continue to win these displacement opportunities at a high rate. The recent Gartner report showing their market share gain at 5x the nearest competitor validates this trend.
Gray Powell of BTIG asked for insights into the free cash flow outlook, considering the recent debt paydown and the potential for future scaling.
CFO Brian Carolan noted that after a final interest payment and some non-recurring IPO-related costs in Q1, the company's cash flow profile will be 'very clean.' He expects that over the next one to two years, free cash flow margins will approach the company's adjusted operating margins, signaling significant potential for scaling.
Gray Powell of BTIG inquired about the current customer willingness to migrate from legacy IGA solutions like Oracle and IBM, and whether macro uncertainty affects these modernization projects.
President Matt Mills noted an acceleration in migrations, as the current threat landscape exposes the flaws of older, customized systems. CFO Brian Carolan supported this by citing a recent Gartner report showing SailPoint gaining market share at approximately five times the rate of its nearest competitor.
Gray Powell inquired about the potential of Zero Trust for Branch, a newer component of Zero Trust Everywhere, and whether its demand is primarily driven by SD-WAN replacement, segmentation, or other factors.
Chairman and CEO Jay Chaudhry stated that demand for Zero Trust Branch is exceeding expectations, largely driven by customers seeking to replace complex, lateral-movement-prone SD-WANs and firewalls. He emphasized the solution's ability to eliminate legacy network infrastructure and provide secure segmentation.
Gray Powell from BTIG inquired about the competitive impact of aggressive Enterprise License Agreements (ELAs) from other vendors, which can lead to shelfware, and asked if this trend puts Zscaler in a better position during customer conversations.
CEO Jay Chaudhry stated that customers generally dislike ELAs due to the risk of shelfware, and Zscaler avoids that model. Instead, Zscaler focuses on demonstrating a clear journey to improved security and cost savings by replacing legacy products. He emphasized that a key internal focus is ensuring high deployment and usage of their solutions, which aligns with delivering long-term customer value.
Gray Powell followed up on the firewall refresh opportunity, asking about the specific marketing tactics being used and the expected timing for this trend to materially impact financial results.
CEO Jay Chaudhry identified the Zero Trust branch solution as the key to capitalizing on the refresh cycle. He explained that marketing is highly targeted through account-based teams, webinars, and executive summits. He highlighted that 57% of Zero Trust branch customers are new logos, indicating the strategy is already helping to expand their customer base, suggesting an immediate impact.
Gray Powell asked about the expected linearity for billings in 2025 and whether it might be more back-end loaded due to the cautious comments on U.S. Federal business.
Co-CEO and CFO Stephen Vintz clarified that the full-year CCB outlook is consistent with prior directional comments, though it includes incremental caution on U.S. Federal. He noted the Vulcan acquisition will add about 0.5 point of CCB growth, primarily in the second half of the year. Otherwise, the typical seasonal flow is expected to remain the same.
Gray Powell from BTIG asked if U.S. election uncertainty was impacting security budgets and requested clarification on the definition of 'sales' for a key metric.
CEO Amit Yoran noted no impact on commercial or international clients from election uncertainty but acknowledged caution in the federal space is factored into guidance. CFO Steve Vintz clarified that 'sales,' as in '35% of total sales,' refers to internal bookings.
Gray Powell asked how Zscaler's acquisition of Red Canary might change the competitive landscape for Managed Detection and Response (MDR).
CEO Corey Thomas stated that he does not believe the acquisition significantly changes the competitive dynamics, as the MDR market is large and highly fragmented. He emphasized that Rapid7's success will depend on its own execution, including delivering a high-quality service and more effectively communicating its story and capabilities to the market, noting the opportunity is massive for many providers.
Gray Powell asked about the tone of customer conversations in April and May, and whether sentiment had improved after an initial period of caution.
CEO Corey Thomas confirmed that some deals that had slipped from March did close in April, suggesting some stabilization. However, he characterized the environment as still being volatile with a wide range of potential outcomes. While not overly pessimistic and feeling that the 'worst of the worst' may be over, he stated it is not yet a stable macro environment, which is why the company widened its guidance range.
Gray Powell of BTIG asked for context on the 70% sequential pipeline growth for risk visibility and exposure, specifically questioning if this growth was from a small base and how meaningful it is.
CEO Corey Thomas clarified that the company had deliberately reduced pipeline generation for its risk management business while retooling the strategy. He stated that the 70% growth signifies that the risk business pipeline is now returning to levels seen in mid-2023. More importantly, it has helped the total company pipeline recover from a Q2 deceleration and is now steadily rising.
Gray Powell from BTIG asked about the sustainability of A10's strong Q2 product revenue growth and whether the service provider segment has reached a turning point. He also inquired about the quarter's linearity and any notable trends in July.
President, CEO & Board Chair Dhrupad Trivedi stated that the product revenue growth reflects successful penetration of large enterprise customers and a partial return to normal spending patterns for some North American service providers. He noted this is a positive leading indicator for future growth. Trivedi also confirmed that Q2 linearity was normal, without a back-end loaded skew, and that July trends did not alter the company's outlook.
Gray Powell inquired about the impact of tariff uncertainty on customer conversations in recent weeks and asked for insights into A10's visibility on large AI data center build-outs.
Executive Dhrupad Trivedi explained that the net impact of tariff uncertainty is currently neutral, as some customers delay orders while others procure ahead. He noted broad caution, especially on large, long-term service provider projects. Regarding AI, Trivedi stated A10 has reasonably good visibility into the first wave of build-outs by major cloud and enterprise companies. He believes the larger, more durable opportunity will emerge in one to two years as enterprise customers build out on-premise inference models, particularly outside the U.S.
Gray Powell inquired about the nature of Q4 seasonality compared to previous years, specifically asking if the company observed a typical budget flush, and sought details on the timeline and potential revenue impact of new products like bot detection, DDoS enhancements, and solutions for GPU-based AI infrastructure.
CEO Dhrupad Trivedi stated that Q4 seasonality was consistent with prior years but with less of a 'budget flush' phenomenon due to increased spending scrutiny. He outlined that new security products are expected within a 6- to 12-month window, while AI-related data center solutions should positively impact results in the second half of 2025, leveraging A10's advantages in throughput and latency. CFO Brian Becker confirmed the seasonal pattern was in line with their typical 48% front-half, 52% back-half revenue split.
Gray Powell of BTIG highlighted the strong Q1 free cash flow, asking if there were any one-time benefits and whether the market is underestimating the potential for high full-year free cash flow margins.
CFO Brian Robbins confirmed that Q1 is a seasonally strong collections quarter following strong Q4 billings. He stated there was nothing anomalous or one-time in nature that contributed to the record free cash flow, attributing it to normal business operations and ongoing improvements in operating leverage.
Gray Powell asked about the current visibility into the sales pipeline and demand environment compared to 6 or 12 months ago.
CFO Brian Robbins reported that the demand environment has been consistent, with no major changes from the previous quarter. He noted that while spending remains cautious, the pipeline provided enough confidence to raise the full-year guidance after the Q3 revenue beat.
Gray Powell of BTIG asked about the full-year revenue guidance of 9-10% growth, contrasting it with the ~12% growth in Q1. He sought clarity on the implied Q4 exit rate and which products might drive upside.
CEO Todd McKinnon focused on the significant opportunity in the large enterprise segment, evidenced by 20% growth in customers with over $1M in ARR. He cited cloud migration, security, and AI as key catalysts. CFO Brett Tighe declined to comment on future exit rates, stating it was too early in the fiscal year to provide that level of detail.
Gray Powell asked about the potential ACV uplift when customers with Lifecycle Management or Workflows upgrade to the full Okta Identity Governance (OIG) product, and the expected growth of the combined governance business.
CEO Todd McKinnon stated that an upgrade to OIG can increase a customer's ACV by 30% to 40% or more, representing a significant upsell opportunity across the entire Workforce Identity customer base. CFO Brett Tighe added that the new specialized sales force is designed specifically to drive these types of advanced capability upsells, helping customers solve more use cases and demonstrating the value of the platform.
Gray Powell asked what factors contributed to the company's performance inflecting higher in Q3 compared to Q2 and questioned the sustainability of this execution.
CEO Todd McKinnon attributed the solid Q3 to stronger deal execution, suggesting the fiscal year is more back-end loaded than initially thought. He pointed to momentum from large deals and new products, which constituted 15% of bookings. CFO Brett Tighe added that healthy contract durations and a strong U.S. federal year-end also contributed positively to the results.
Gray Powell asked new CFO Barbara Larson about any material changes to the company's guidance philosophy or key performance indicators.
Tomer Weingarten (CEO) responded, stating that the guidance represents a reasonable starting point for the year based on pipeline activity, new product contributions, and conversion rates. He noted that while the macro environment remains volatile, the company believes the guidance is appropriate.
Gray Powell inquired about the specific factors that drove stronger-than-historical quarter-over-quarter growth in Q3 and questioned the sustainability of these drivers.
CEO Tomer Weingarten explained the outperformance was due to a combination of two main factors: strong leverage from emerging products like Purple AI, Cloud, and Data, and customer migrations resulting from the July 19th competitor outage. He affirmed that based on the current pipeline, this trend appears sustainable.
Gray Powell of BTIG asked if SentinelOne has implemented specific marketing programs, such as free trials or other incentives, to target and ease the transition for potentially upset CrowdStrike customers.
CEO Tomer Weingarten stated that the company has not devised specific takeout programs, as they don't feel it's warranted. The focus is on educating the market about architectural differences through literature and collateral. He emphasized that their strategy is to be present for customers and partners, staying true to facts and avoiding aggressive or opportunistic marketing tactics, letting the technology's superiority speak for itself.
Gray Powell asked for management's perspective on the business's current standing compared to a year ago, given the strong 2024 results, and inquired about the discrepancy between the strong 2025 ARR guidance and the more modest total revenue growth forecast.
CEO Victor Limongelli stated the company is in a 'tremendously better shape' due to cost structure improvements and growth opportunities in Security and Digital Agreements. He and CFO Jorge Martell explained the guidance difference is due to the ongoing, expected decline in hardware revenue, the revenue recognition mechanics of multiyear term licenses, the impact of end-of-life products on revenue, and a cautious stance on the euro-dollar exchange rate, which affects about 40% of revenue.
Gray Powell sought clarification on NGS ARR statistics, noting that organic net new ARR appeared to be down year-over-year and asked for the driver of this trend.
CFO Dipak Golechha and CEO Nikesh Arora addressed the question. Dipak explained that the year-ago quarter included a one-time reclassification of advanced firewall subscriptions into the NGS ARR metric, creating a difficult comparison. Nikesh added that the QRadar contribution was a one-time inorganic benefit and no further inorganic ARR is expected in the fiscal year.
Gray Powell asked for the approximate growth rate of the SD-WAN component within the Unified SASE pillar and whether it could reaccelerate, particularly due to VMware customers seeking alternatives.
CFO Keith Jensen noted the high penetration of SD-WAN in their large enterprise base (around 65-70%) and stated that future growth will come from winning new whitespace accounts. He anticipates a renewal cycle for early SD-WAN adopters in 2025-2026, creating an opportunity to displace incumbents. CEO Ken Xie added that Fortinet's internally developed solution has a technology and cost advantage over competitors who relied on acquisitions, positioning them well to win replacement deals as the fragmented market consolidates.
Gray Powell inquired about the market opportunity for the new Datadog OnCall product, asking if it could be a full displacement for competitors like PagerDuty or if it's primarily an add-on for existing customers.
CEO Olivier Pomel explained that while the product was initially built for a fully integrated experience within the Datadog platform, the customer response has been exceptionally strong. This has created high demand for integrations with external tools, which the company now plans to build. He emphasized the strategic goal is full incident automation, not just paging.