Ittai Kidron

Ittai Kidron asked which of the newer products have the best chance of reaching $100 million in ARR, and also requested any initial thoughts on customer investment priorities for 2025.

Answer

CEO Olivier Pomel declined to single out specific products but reiterated that products like Database Monitoring are on a strong trajectory, and the goal is for all new products to eventually exceed $50 million in ARR. Regarding 2025, he did not provide guidance but stressed that Datadog is investing heavily in engineering and sales capacity, which will be reflected in future plans.

Ittai Kidron sought clarification on the linearity of product billings, asking if product growth might decelerate in the second half of next year due to the completion of end-of-life cycles and difficult comparisons. He also asked about the percentage of SaaS billings that are still standalone SD-WAN.

Answer

Christiane Ohlgart, CFO, clarified that the H2 2026 acceleration comment was for *revenue*, not billings, and expressed confidence in solid product revenue growth for next year based on multiple drivers. Ken Xie, Founder, Chairman, and CEO, emphasized that the fragmented market across Fortinet's three pillars allows for continued market share gains, driving product revenue growth for the next 5-10 years. Regarding SaaS billings, Ken Xie explained that SD-WAN is an integral part of FortiOS, making precise standalone tracking difficult, but noted Fortinet's leadership in SD-WAN facilitates quick customer migration to SaaS. John Whittle, COO, added that disruption from competitor SD-WAN acquisitions creates opportunities for Fortinet's combined solution.

Ittai Kidron asked about the linearity of product billings, specifically if product growth might decelerate in the second half of next year, given the end-of-life cycle completion and difficult comparisons, and followed up on the percentage of SaaS billings that are standalone SD-WAN.

Answer

Christiane Ohlgart, CFO, clarified her previous comment was on service *revenue* and expressed confidence in solid product revenue growth for next year based on multiple drivers, without providing specific guidance. Ken Xie, Founder, Chairman, and CEO, reiterated his belief in a normal 10-15% product/hardware growth rate for the next 5-10 years, driven by market share gains in fragmented markets. Regarding SaaS billings, Ken Xie explained SD-WAN is part of FortiOS, making precise tracking difficult, but emphasized Fortinet's leading SD-WAN position and its role in quick SaaS migration. John Whittle, COO, noted that disruption from SD-WAN market acquisitions creates opportunities for Fortinet's combined solution.

Ittai Kidron asked for the specific revenue contribution from the hardware upgrade cycle in Q4 and in the 2025 guide. He also asked if SASE adoption is primarily displacing competitors (brownfield) or entering new environments (greenfield).

Answer

CFO Keith Jensen explained that precise data is difficult due to the two-tier distribution model, especially in SMB, but they are working with channel partners to improve data gathering. CEO Ken Xie pointed to a slide showing SASE penetration at around 10% of the install base. An unnamed executive clarified that some of the biggest SASE deals are indeed displacements of legacy VPN or SASE providers, indicating a significant brownfield opportunity.

Ittai Kidron of Oppenheimer & Co. Inc. requested color on the U.S. versus international revenue mix for the quarter and asked if there were any changes in contract duration affecting RPO.

Answer

CFO Barbara Larson reported that international revenue constituted 38% of the total, an increase from the prior quarter, showing nice performance. Regarding RPO, she confirmed that contract duration was relatively stable in Q2 with no major changes to highlight.

Ittai Kidron of Oppenheimer & Co. Inc. asked about the progress of sales productivity and bundled platform sales, and also requested specifics on where elongated sales cycles were most pronounced by region and vertical.

Answer

CEO Tomer Weingarten stated that elongated sales cycles were a global phenomenon, most pronounced in larger enterprise deals, while the mid-market remained strong. He highlighted progress in platform adoption, with the data business surpassing $100M in ARR and Purple AI driving price uplifts.

Ittai Kidron from Oppenheimer & Co. Inc. asked about the growth of the core business, excluding SIEM, identity, and cloud. He noted its ARR growth has decelerated from 18% a year ago to 11% now and asked about the outlook for this core segment.

Answer

Founder & CEO George Kurtz pushed back on separating the "core" business, stating he views it as a single platform where modules like EDR are foundational. He explained that the telemetry from the initial deployment is what enables the high-growth identity, cloud, and Next-Gen SIEM modules. Kurtz asserted that the company continues to innovate and win new business across the entire platform because customers are seeking the best technology to stop breaches, which is what CrowdStrike provides.

Ittai Kidron asked about the go-to-market motion for the AI opportunity, questioning if it requires a more targeted approach beyond the standard enterprise versus self-serve split. He also inquired about the mix of multiyear versus annual deals in the non-Atlas business and the rationale for customers choosing multiyear contracts.

Answer

President & CEO Dev Ittycheria explained that the company has a proven model for transitioning fast-growing self-serve customers to a high-touch sales model when needed. CFO Mike Berry stated that the company does not break out the percentage of multiyear deals but noted the rationale remains consistent: customers want to lock in pricing for their long-term strategic platforms.

Ittai Kidron of Oppenheimer requested specific proof points on the progress of the upmarket enterprise strategy and asked for clarification on the slower-than-planned headcount growth and the rationale for the revenue guidance raise.

Answer

CEO Dev Ittycheria highlighted that 75% of the Fortune 100 are already customers and that the focus is on expansion, citing recent strategic discussions with large enterprises. CFO Mike Berry explained that the headcount slowdown was broad-based, not a pullback, and the prudent guidance reflects rolling forward the Atlas beat while accounting for timing in the non-Atlas business amid macro uncertainty.

Ittai Kidron asked about the potential addressable market for B2 OverDrive among existing customers, the possibility of tiered pricing, and the strategy for the Computer Backup business, including potential price increases.

Answer

CEO Gleb Budman explained that B2 OverDrive is ideal for multi-petabyte AI and high-performance computing customers, but the company aims to keep pricing simple to avoid the complexity of competitors. CFO Marc Suidan and Budman stated the focus has been on B2 growth, but a 'tiger team' is now applying learnings to the Computer Backup business, leveraging new features like Legal Hold. They confirmed there are no current plans for a price increase.

Ittai Kidron asked for details on AI use cases, the key factors required to achieve the guided B2 growth acceleration, and the long-term strategy for the Computer Backup business.

Answer

CEO Gleb Budman detailed that AI customers use Backblaze across the entire data pipeline, from collection to model training and inference, often in multi-cloud GPU environments. CFO Marc Suidan noted that achieving B2 growth acceleration depends on consistent execution and ramping new sales capacity. Budman added that while the consumer backup market is declining, the business backup segment holds opportunity.

Ittai Kidron asked for details on the 12% workforce reduction, the expected exit cash balance upon reaching free cash flow positivity in Q4 2025, and the confidence level in the sales team's ability to adapt to the new go-to-market strategy and achieve acceleration by Q2 2025.

Answer

CFO Marc Suidan stated the workforce reduction was broad-based, with a notable shift in marketing from headcount to demand generation spend. He did not provide a specific 2025 exit cash balance but expects it to be stable before turning positive. CEO Gleb Budman expressed high confidence in the sales transformation, citing strong early indicators like a record, higher-quality pipeline and significant new deals closed under the new leadership.

Ittai Kidron asked if Commvault was observing any customer budget pull-forwards from calendar 2026 into 2025, a trend seen in the channel. He also inquired about any changes to sales compensation plans for the new fiscal year.

Answer

CFO Jen DiRico responded that the company is not seeing any budget pull-forwards and attributes the strong performance to market strength, product fit, and solid execution. Regarding compensation, she stated that while details are not public, plans are structured as pay-for-performance and incentivize the sales team to drive overall recurring revenue.

Ittai Kidron from Oppenheimer & Co. Inc. asked about Zscaler's strategy for maintaining salesforce focus amid a rapidly expanding product portfolio and the rollout of the new Z-Flex purchasing program, questioning its scope and potential bottlenecks.

Answer

CEO Jay Chaudhry explained that Zscaler uses a two-tier sales model with a broad, account-centric team supported by specialized "takeoff teams" for new products. He noted that the Z-Flex program, which originated from customer demand for flexibility and simpler procurement, had a strong start with over $65 million in TCV bookings. The program will be rolled out prudently, starting with larger customers before expanding.

Ittai Kidron requested an update on the company's full-year ARR target and asked for a breakdown of the largest components within the emerging products category, as well as their current percentage of new business activity.

Answer

CFO Remo Canessa confirmed that Zscaler is on track to meet its $3 billion ARR target for the fiscal year. CEO Jay Chaudhry identified ZDX as the largest component of emerging products, followed by Zero Trust branch solutions, workload protection, and new AI products. He reiterated that emerging products are expected to comprise the mid-20% range of new and upsell business for the year.

Ittai Kidron pressed for more detail on the billings guidance, specifically the significant difference in year-over-year growth between the first half (7%) and the second half (23%).

Answer

CFO Remo Canessa explained that the lower growth in scheduled billings for the first half of FY25 is a direct result of a more challenging macro environment during the first halves of FY23 and FY24, which impacted bookings at that time. He reiterated that the business is also becoming more second-half weighted, and the 23% growth in H2 reflects contracted billings from stronger prior periods.

Ittai Kidron of Oppenheimer & Co. Inc. asked for a breakdown of the Q1 business contribution from seats, new products, and cross-sell relative to the company's plan, and requested an update on new products as a percentage of bookings.

Answer

CFO Brett Tighe described Q1 as a nice quarter for new products and a particularly strong quarter for new business. He noted that while the pipeline remains tilted toward upsell and cross-sell, all areas performed well. Regarding new products as a percentage of bookings, he stated it was 'in the zip code as the last few' quarters.

Ittai Kidron asked why full-year cRPO guidance wasn't provided and requested an update on the business progress and contribution from Privileged Access Management (PAM).

Answer

CFO Brett Tighe stated that Okta's policy is to only guide cRPO one quarter at a time. CEO Todd McKinnon addressed PAM, noting it's part of the new products that constituted 20% of Q4 bookings. He highlighted a Q4 deal with a Global 2000 financial services firm that added PAM, ISPM, and ITP, increasing the account's ARR by over 30%. He emphasized the market is moving toward a single, integrated identity platform for governance, PAM, and access management, positioning Okta favorably against point solution vendors.

Ittai Kidron asked about the guidance philosophy for 2025, seeking to understand the potential for upside given the new acquisitions of Venafi and Zilla.

Answer

CFO Erica Smith stated that the guidance philosophy for 2025 is very similar to 2024. It assumes no major changes in the macroeconomic environment and projects a net new organic ARR figure similar to the prior year. She indicated that while there is significant opportunity with the new acquisitions, the fundamental approach to guidance has not changed.

Ittai Kidron inquired about the breadth of customers with over 10,000 seats and asked if there was a risk of seat cannibalization resulting from the adoption of monday.com's new AI solutions.

Answer

co-CEO Eran Zinman noted the potential for more large deals in 2025 but found it hard to predict specific timing. Regarding AI, he explained that the decision to price based on consumption rather than seats was made specifically to avoid cannibalization, allowing customers to scale automation and capabilities independently of their user count.

Ittai Kidron commented on the underwhelming performance of monday dev and asked what needs to change in its product or go-to-market strategy. He also inquired about the evolution and monetization timeline for the company's AI blocks.

Answer

Co-CEO Eran Zinman stated that while monday dev may not be growing as fast as CRM, the company is pleased with its progress and focus on software developers. He noted that the go-to-market has been refocused, which may slow net adds in the short term but builds a strong long-term foundation. Regarding AI, Zinman highlighted strong adoption growth and said the company plans to roll out monetization over time where it provides clear value, potentially in 2025, though Co-CEO Roy Mann added it is not modeled into the 2025 plan.

Ittai Kidron requested a quantification of the EPS impact from convertible note dilution and higher interest expense in the FY25 guide. He also questioned why the FY25 operating margin guidance wasn't higher, and asked about the risks of managing multiple go-to-market motions and the potential for higher churn from ShareFile.

Answer

EVP & CFO Anthony Folger quantified the year-over-year EPS headwind at approximately $0.75 from interest expense and $0.20 from convert dilution. He explained the margin guide reflects ShareFile's initial sub-20% margin, which will improve throughout the year. CEO Yogesh Gupta defended the multi-channel GTM strategy as highly efficient. Both executives noted ShareFile's net retention is similar to Progress's and its churn profile is manageable and in line with other high-velocity products.

Ittai Kidron from Oppenheimer & Co. Inc. asked for a breakdown of new versus existing customers adopting Search AI, its penetration rate, and details on the top competitors in both GenAI and SIEM.

Answer

CEO Ashutosh Kulkarni explained that GenAI adoption is a mix of new customers attracted by vector search and existing customers expanding their use cases, with significant room for growth across the installed base. In SIEM, he identified competition as legacy players like Splunk, QRadar, and ArcSight. For GenAI, he noted competition comes from pure-play vector databases and other data platforms adding vector functionality, but Elastic's strength is in unstructured data.

Ittai Kidron inquired about remaining 'low-hanging fruit' in go-to-market improvements and future sales compensation changes for DSP, and also asked for clarification on whether win rates improved generally or just against smaller vendors.

Answer

CEO Jay Kreps explained that after this year's 'radical' GTM shift, future changes will be minor 'tuning.' He noted that maturing DSP products will enable a new motion of landing use cases directly. He clarified that win rates improved overall, and the specific call-out of >90% against startups was to address a particular point of interest.

Ittai Kidron pressed for assurance that the Q2 churn was not a sales execution issue and asked for a definition and quantification of the 'strategic projects' expected to close in the second half.

Answer

CEO Matthew Cain asserted that the churn was isolated and not a sales execution problem, pointing to the third-highest gross ARR quarter in company history as evidence of strong demand. He defined strategic projects as deals with potential for 7-figure plus ARR increases and noted there are 'many' such opportunities in the back-half pipeline. CFO Gregory Henry added that most of these deals have a compelling event, like a renewal, in the second half.

Asked to differentiate the impact of a better environment versus internal initiatives on the FY25 guidance and questioned if the guided 'U-shape' recovery would apply to other key metrics like customer adds and expansion rate, which had decelerated.

Answer

The internal initiatives (GTM, commercial differentiation, cloud focus) are already in progress and are expected to contribute significantly to FY25 performance, not just FY26. The U-shaped recovery in bookings is expected to lead to a similar recovery pattern in other key metrics like $100k customer adds and revenue growth. The drop in total customer count was attributed to small, non-material pay-as-you-go customers moving to the free tier.