James Fish

James Fish asked what differentiates Particle and how Digi plans to manage it for growth versus profitability. He also questioned the modest increase in the full-year revenue guidance despite the Particle acquisition and strong Q1 results, seeking clarification on whether it reflects prudence or demand pull-ins.

Answer

President and CEO Ron Konezny highlighted Particle's 'born as a service' culture, processes, and pricing as key differentiators, which Digi aims to integrate into its OEM solutions for profitable growth. CFO Jamie Loch explained that the company's historical practice is not to significantly adjust annual guidance after the first fiscal quarter, preferring a mid-year point for operational raises. He noted a slight operational uptick in the guide, with Particle contributing the majority of the increase, reflecting a prudent approach.

James Fish asked what differentiates Particle and how Digi plans to manage it, focusing on whether the strategy prioritizes accelerating growth or managing profitability. He also inquired about Particle's expected growth rate and overlap with existing products, and asked Jamie Loch to explain why the annual revenue guidance was not raised more significantly despite the Particle acquisition and strong Q1 results.

Answer

Ron Konezny, President and CEO, highlighted Particle's 'born as a service' culture, processes, and go-to-market strategy as key differentiators, which Digi aims to integrate into its OEM solutions. He emphasized Digi's mantra of 'profitable growth' and the potential for scale once Particle reaches $20 million in ARR. Jamie Loch, CFO, explained that the company typically does not increase annual guidance after the first fiscal quarter due to timing elements and prudence, noting that while Particle contributed about 3 points to a 4-point lift in the guide, a more significant operational raise is usually reserved for mid-year.

James Fish from Piper Sandler inquired about the potential impact of tariffs on Digi's supply chain and whether it could cause a pull-in of demand. He also asked how trends like IT budget increases and data center refreshes could serve as tailwinds.

Answer

President and CEO Ronald Konezny addressed the questions, stating that Digi is leveraging its geographically diverse manufacturing partners and is not creating customer urgency around potential tariffs due to fluid policy. Konezny also noted a favorable backdrop from infrastructure investment and a potential uplift in the industrial economy, with Western companies increasingly choosing Western technology providers.

James Fish asked about the typical capacity plus expansion seen in product refreshes and how F5 differentiates AI-related modernizations from traditional general environment increases.

Answer

Cooper Werner, EVP and CFO, explained that customers are refreshing higher up in the portfolio, leading to a higher average selling price (ASB) and additional units. This expansion is driven by higher security needs requiring performance and anticipated downstream AI workloads, indicating customers are being more proactive in their planning compared to prior cycles.

James Fish asked about the typical capacity plus expansion seen during product refreshes and how F5 distinguishes between capacity increases for traditional general environments versus AI modernizations.

Answer

Cooper Werner, EVP and CFO of F5, explained that customers are refreshing higher up in the portfolio (leading to a higher average selling price) and purchasing additional units, driven by increased security needs and anticipated performance requirements for AI workloads. He noted that customers are being more proactive in their planning for these downstream performance needs related to AI.

James Fish from Piper Sandler requested a ranking of the key hardware growth drivers: refresh, data center modernization, competitive displacements, and AI. He also asked for the source of confidence in the second-half software forecast, specifically if it relies on new business growth or higher expansion rates on renewals.

Answer

President and CEO François Locoh-Donou ranked the hardware drivers as: 1) Tech refresh, 2) Data center modernization and hybrid architecture builds, 3) Competitive displacement, and 4) Direct AI use cases. EVP and CFO Cooper Werner confirmed that confidence in the software forecast comes from high visibility into the large renewal base and its expected expansion rate, not from an assumption of strong growth in new business.

James Fish of Piper Sandler asked for a ranking of the key hardware growth drivers: refresh, data center modernization, competitive displacements, and AI. He also questioned what gives F5 confidence in its second-half software forecast, specifically asking if growth in new business is required to meet the target.

Answer

CEO François Locoh-Donou ranked the hardware drivers as: 1) Tech refresh, 2) Data center modernization/expansion (which includes AI prep), 3) Competitive displacement, and 4) Direct AI use cases. CFO Cooper Werner clarified that the software forecast does not assume strong growth from new business; rather, confidence comes from high visibility into the large renewal base and expected expansion rates within those existing contracts, which have been tracking as very healthy.

Asked for clarity on the sustainability of the various growth drivers behind the record results and whether a 'bulge' in the refresh cycle is now occurring.

Answer

The sustainable driver is the company's unique ability to solve hybrid multi-cloud complexity. The hardware refresh confidence comes from upcoming end-of-support dates for over half the installed base, pulling the replacement cycle forward and providing visibility through at least FY26.

James Fish asked about potential price increases for systems and maintenance, whether they are included in guidance, and requested a timeline for the three distinct AI-related revenue tailwinds.

Answer

President and CEO François Locoh-Donou confirmed that modest, single-digit price increases for hardware are planned for the beginning of the calendar year. Regarding AI, he stated the most immediate opportunity is using BIG-IP hardware for data ingestion, with deployments happening now. The second opportunity, software for GPU clusters via the NVIDIA partnership, is a fiscal 2026 and beyond story as the go-to-market model is developed.

James Fish inquired about the impact of the Commvault Cloud Unity Platform on the shift from term licenses to SaaS. He also asked for an explanation regarding the 4% sequential drop in the cloud net retention rate this quarter. In a follow-up, he sought clarification on SaaS penetration among Commvault's total subscription customers and the proportion of standalone SaaS customers.

Answer

Sanjay Mirchandani, President and CEO, explained that Unity facilitates seamless management across hybrid and multi-cloud environments, allowing customers to choose their implementation journey without unilaterally changing the model. Danielle Abrahamson, Chief Accounting Officer, attributed the SaaS NRR change to a larger customer base, strong new SaaS customer acquisition (which doesn't immediately impact NRR), and a modest mix shift in product capabilities among early adopters, emphasizing no unusual churn. She also stated that roughly 30% of SaaS customers also have software tied to them.

James Fish of Piper Sandler inquired about the Commvault Cloud Unity Platform's influence on the shift from term to SaaS revenue and the reasons behind the 4% sequential decline in cloud net retention rate. He also asked about SaaS penetration and the proportion of standalone SaaS customers.

Answer

President and CEO Sanjay Mirchandani stated that Unity helps customers on their hybrid cloud journey but doesn't unilaterally force a model change. Chief Accounting Officer Danielle Abrahamsen explained the SaaS net dollar retention (NRR) decline was due to a larger customer base, strong new SaaS customer acquisition not yet reflected in NRR, and a modest product mix shift, clarifying there was no unusual churn. She also noted that approximately 30% of SaaS customers also use software, and nearly 50% of enterprise SaaS customers use multiple offerings.

James Fish with Piper Sandler asked if shorter contract durations are more prevalent in the existing install base or new deals, the current average duration, and if specific verticals are notably affected. He also questioned why the gross margin decline isn't attributed to competitive pressures or discounting, given the SaaS mix and term duration headwinds.

Answer

Jen DiRico, CFO, explained that shorter durations are broad-based, driven by customers seeking cloud transition flexibility, with a 9% quarter-over-quarter decrease in shift term, normalizing to prior levels. Sanjay Mirchandani, CEO, highlighted Q2 as the second-largest quarter for new term software deals, underscoring Commvault's support for hybrid transitions. DiRico further clarified that gross margin pressure is primarily due to SaaS acceleration and term duration shifts, not competitive pricing.

James Fish inquired about the prevalence of shorter contract durations across the existing install base versus new deals, the current average duration, and if specific verticals are more affected. He also questioned if the gross margin decline was due to competitive pressures or discounting, rather than just SaaS mix and term duration.

Answer

Jen DiRico (CFO, Commvault) confirmed that shorter duration is observed across the board, with customers seeking flexibility for cloud transitions, and duration was down 9% quarter-over-quarter, normalizing to levels seen three or four quarters ago. Sanjay Mirchandani (CEO, Commvault) added that Q2 saw the second-largest number of new term software deals, indicating strong volume despite duration shifts. Jen DiRico reiterated that the bulk of the gross margin impact is solely due to SaaS acceleration and the shift in term duration, with no other major factors.

James Fish asked about the traction of newer SaaS solutions beyond M365, seeking a contribution breakdown. He also inquired about the pipeline of 'shots on goal' and the remaining opportunity for perpetual-to-subscription migrations.

Answer

CFO Jen DiRico acknowledged that M365 and AirGap Protect are the most mature products and represent the lion's share of SaaS ARR. However, she added that the portfolio of security offerings grew double-digits quarter-over-quarter and constituted 20% of net new ARR. Both she and CEO Sanjay Mirchandani emphasized that growth is now driven by new customer 'land' deals, particularly in SaaS, rather than perpetual license conversions.

James Fish asked about the growth and its durability in international regions like EMEA and APAC, specifically questioning why regulatory tailwinds such as DORA would not subside. He also inquired about the company's strategy for product packaging and bundling on the SaaS side versus selling individual SKUs.

Answer

CFO Jennifer DiRico noted that growth was balanced across regions, with EMEA having a particularly strong quarter. CEO Sanjay Mirchandani added that regulatory drivers like DORA are not 'one-and-done' events but are part of an ongoing process for institutions. On packaging, he explained that while individual workload protection remains, the strategy is shifting to selling 'resilience' as a complete outcome, which naturally bundles capabilities like Cleanroom and AD recovery into a unified, hybrid solution.

James Fish asked for Commvault's perspective on further industry consolidation, whether the current organic constant currency growth rate of ~17% is a sustainable level, and for an outlook on the European market in light of new regulations like DORA.

Answer

CEO Sanjay Mirchandani noted that new technology areas like AI will require different protection solutions, making strategic acquisitions like Clumio valuable. He also stated that Europe had a strong quarter and the business is prepared for regulations like DORA. CFO Jennifer DiRico suggested that a 15% organic ARR growth rate is a reasonable baseline for thinking about future performance, acknowledging the current rate is around 17-18%.

James Fish asked about the pipeline related to the DORA regulation in EMEA and sought to understand how much of the raised guidance was organic versus contributions from the Appranix and Clumio acquisitions.

Answer

CEO Sanjay Mirchandani confirmed that the DORA regulation is a contributing factor to their European business, driven by platform capabilities and partnerships with firms like Pure Storage. CFO Jen DiRico clarified that the guidance raise is overwhelmingly organic, stating the Clumio acquisition is not material to the outlook, contributing only a few million dollars per quarter.

James Fish from Piper Sandler asked if rising memory costs could alter demand dynamics between Pure Storage's OpEx (Evergreen One) and CapEx (product purchase) models, and requested a quantification of the revenue versus gross margin delta for every percentage or 10% increase in flash commodity costs.

Answer

CEO Charles Giancarlo anticipates that increasing memory costs will likely shift customer demand towards the Evergreen One OpEx model, which benefits from insulation against spot pricing and the use of renovated equipment. He reiterated that commodity pricing primarily impacts the overall market's top line rather than Pure Storage's gross margins, which are effectively managed.

James Fish from Piper Sandler asked if increased memory costs could alter demand dynamics between Pure Storage's OpEx (Evergreen//One) and CapEx (traditional product purchase) models, and requested clarification on the magnitude of the revenue versus gross margin delta for commodity cost increases.

Answer

CEO Charles Giancarlo anticipated that increasing prices would likely drive more customers towards the Evergreen//One model, which benefits from longer depreciation cycles and the ability to use renovated equipment, thus insulating Pure Storage from spot pricing volatility. He did not provide a specific percentage delta but emphasized the insulation.

James Fish asked about the sales pipeline, inquiring about the progress of licensing conversations with other top cloud and AI providers, and whether calendar 2025 is shaping up to be a significant storage refresh year for the enterprise market.

Answer

CTO Rob Lee stated that discussions with multiple other hyperscalers are progressing, driven by Pure's value proposition on reliability, power savings, and TCO, and that the day's announcements should accelerate these talks. CEO Charles Giancarlo commented on the enterprise market, stating his belief that some pent-up demand is building due to the muted IT environment, but that it remains to be seen how it will materialize next year.

James Fish asked Eric Yuan if the BrightHire acquisition signifies an expansion into other mission-critical business workflows, and Michelle Chang about the duration trends of Zoom's overall install base and enterprise contracts.

Answer

CEO Eric Yuan confirmed that BrightHire aligns with Zoom's strategy to double down on business mission-critical applications beyond video conferencing, leveraging AI and data for specific use cases like remote hiring. CFO Michelle Chang noted consistent RPO trends, with current quarter RPO reflecting large contact center and AI deals, and a relatively stable trend in contract duration.

James Fish asked Eric Yuan if the BrightHire acquisition signals an expansion into other mission-critical business workflows, and Michelle Chang about the duration of Zoom's overall install base.

Answer

Eric Yuan, Founder and CEO, confirmed BrightHire aligns with Zoom's strategy to leverage AI and data for mission-critical departmental and vertical use cases beyond video conferencing, such as Contact Center for support and Revenue Accelerator for sales. Michelle Chang, CFO, noted consistent RPO trends reflecting large Contact Center and AI deals, and a relatively stable contract duration, with AI and Contact Center bringing longer-term agreements.

James Fish of Piper Sandler posed a two-part question regarding the strong momentum of WorkVivo and why the full-year revenue guidance wasn't raised more significantly given the quarterly beat and favorable foreign exchange rates.

Answer

Founder & CEO Eric Yuan stated that the priority for WorkVivo is the smooth transition of Meta Workplace customers, with future growth driven by innovation and expansion into the mid-market. CFO Michelle Chang explained the guidance reflects consistent progress and a partial abatement of deal scrutiny seen in Q1, adding that the forecast methodology remains prudent in a dynamic economic environment.

James Fish asked for specifics on the recent channel transformation, including the changes made and early feedback. He also inquired about the penetration rate of Zoom Contact Center within the existing base of combined Workplace and Phone customers.

Answer

CFO Michelle Chang outlined the channel transformation, which includes expanding the partner ecosystem, adjusting incentives, and streamlining the quote-to-cash process to be faster. While she did not disclose a specific penetration metric for Contact Center, she emphasized that the integrated platform is a key differentiator that drives wins bidirectionally.

James Fish of Piper Sandler inquired about the allocation of AI investments and the reasons for the divergence between current and non-current RPO trends.

Answer

Founder and CEO Eric Yuan explained that AI investments are directed towards talent, GPUs, and cloud infrastructure for both the core Workplace platform and monetizable products like Contact Center. CFO Michelle Chang clarified that the increase in current RPO is a positive sign, resulting from coterminous contracts where new sales temporarily increase the current portion before shifting to long-term as contracts align.

James Fish from Piper Sandler asked for a breakdown of the drivers behind the 98% net dollar expansion rate and questioned if the upmarket segment is now accelerating.

Answer

CFO Kelly Steckelberg confirmed that future growth is being driven by the upmarket, pointing to the 7% YoY growth in customers contributing over $100k in revenue. She clarified that while the externally reported trailing 12-month expansion rate will reaccelerate around the middle of next year, the company is already seeing stabilization in in-quarter calculations. This is driven by strong performance from Zoom Phone, Contact Center, and Workvivo, as well as stabilizing seat retention in the enterprise.

James Fish questioned if the shift to AI implies a move to a consumption model that could compress margins and asked for clarification on what cash flow was 'pulled forward' into FY25.

Answer

CFO Michelle Chang explained that they expect to offset AI costs with ongoing efficiencies and leverage their federated AI approach to manage costs. She clarified that strong FY25 cash flow was aided by the timing of billings and favorable interest/tax conditions, which are expected to differ in FY26.

James Fish questioned the path to Cognigy's projected $85 million ARR exit for 2026, the impact on expansion rates, and the recent decline in cloud net retention rate (NRR) from 111% to 109%, asking how Cognigy could help improve NRR.

Answer

CFO Beth Gaspich clarified that the $85 million is the exit ARR for December 2026, not the full year's revenue contribution, and early positive momentum supports this target. CEO Scott Russell reiterated confidence in the $85 million ARR target based on backlog, bookings, and pipeline. Beth Gaspich explained that NRR is a trailing 12-month metric reflecting changes in cloud growth from 2024, but current in-quarter NRR shows stabilization consistent with 12% growth, with expectations for positive inflection ahead due to backlog and cross-sell/upsell efforts.

James Fish asked for clarification on Cognigy's ramp to $85 million ARR exiting next year, how that target would be achieved, and the impact on expansion rates. Fish also questioned the recent drop in cloud net retention rate (NRR) and how Cognigy could help improve it.

Answer

CFO Beth Gaspich clarified that $85 million is the expected exit ARR for Cognigy at the end of December 2026, not the full-year revenue contribution, and expressed confidence in achieving it. CEO Scott Russell reiterated comfort with the $85 million ARR target, citing positive early indicators in backlog, bookings, and pipeline. Gaspich noted NRR reflects trailing 12 months and showed stabilization consistent with 12% cloud growth, with expectations for positive inflection from cross-sell and upsell efforts, including Cognigy.

James Fish asked about customer perspectives on net agent growth versus AI deployment and requested a breakdown of the drivers behind the Net Retention Rate (NRR), such as core solutions versus AI.

Answer

CEO Scott Russell explained that while AI adoption is proceeding as planned, human agents are handling a growing volume of interactions and taking on more revenue-generating tasks. CFO Beth Gaspich noted the healthy 111% NRR is driven by strong cross-sell and upsell momentum. She highlighted that AI is a key driver, now accounting for 11% of cloud revenue and being a significant component of sales to both new and existing customers.

James Fish asked about customer perspectives on net agent growth versus AI deployment and sought a breakdown of the drivers behind the Net Retention Rate (NRR), such as core cross-sells versus AI solutions.

Answer

CEO Scott Russell noted that while AI adoption is proceeding as planned, human agents are handling higher interaction volumes and more revenue-focused tasks, preventing a dramatic shift in agent counts. CFO Beth Gaspich stated that the healthy 111% NRR is driven by broad cross-sell and upsell momentum, with AI being a key growth driver that now constitutes 11% of cloud revenue.

James Fish of Piper Sandler Companies asked about customer feedback on net agent growth versus AI deployment, particularly given new regulations, and requested a breakdown of NRR expansion drivers.

Answer

CEO Scott Russell explained that while AI agent deployment is proceeding as expected, the total volume of customer interactions is growing, meaning human agents are handling more complex tasks and even revenue-generating activities. CFO Beth Gaspich noted that the healthy 111% NRR is driven by cross-sell and upsell efforts, with AI being a key growth driver, now representing 11% of cloud revenue. She added that a large portion of growth comes from the existing installed base.

James Fish asked for customer feedback on net agent growth versus AI deployment amid potential regulations, and for a breakdown of the 111% NRR between core solution cross-sells, AI adoption, and net agent growth.

Answer

CEO Scott Russell explained that while AI agent deployment is on track, the total volume of customer interactions is growing, leading human agents to handle more complex tasks and revenue-generating activities. CFO Beth Gaspich noted the healthy 111% NRR is driven by a combination of factors, with AI being a key driver (now 11% of cloud revenue), but the largest portion of growth still comes from cross-selling and upselling to the existing customer base.

James Fish inquired about the penetration of Silicon One into Cisco's product portfolio and the reasons for its traction with Hyperscalers. He also asked why Splunk is now seeing greater shifts to cloud subscriptions and its impact on security revenue this quarter.

Answer

Chuck Robbins, Chairman and CEO, stated that Silicon One is expected to be fully integrated across the portfolio by the end of fiscal 2029, gaining traction due to performance, programmability, low power consumption, multiple sourcing, and custom engagements. For Splunk, he noted a significant Q1 mix shift to cloud subscriptions, which negatively impacted security revenue recognition due to ASC 606 but is positive long-term for adoption, expansion, and innovation. Mark Patterson, CFO, added that cloud offers are stickier and lead to more revenue over time, with Splunk's ARR and RPO growing double digits.

James Fish inquired about the penetration of Silicon One into Cisco's product portfolio and the drivers behind its traction with Hyperscalers, comparing it to custom solutions and Broadcom's chips. He also asked why Splunk is now seeing a greater shift to cloud subscriptions and its impact on the security revenue this quarter.

Answer

Chairman and CEO Chuck Robbins stated that Silicon One is expected to be fully rolled across the entire portfolio by the end of fiscal year 2029, with its traction driven by performance, programmability, low power consumption, and custom engagements. Regarding Splunk, he noted a significant mix shift to cloud subscriptions from a prior 50/50 split, which negatively impacted Q1 security revenue due to ASC 606 accounting but is positive long-term for adoption and innovation. CFO Mark Patterson added that cloud offers are stickier and lead to more revenue over time, with Splunk's ARR and RPO growing double digits.

James Fish of Piper Sandler Companies asked about the attach rate of other solutions to the Catalyst 9000 refresh and inquired about capital allocation strategy and Cisco's view on the identity space following recent industry M&A.

Answer

CFO Mark Patterson noted that correlating attach rates is complex but reiterated capital priorities: business growth, dividends, offsetting dilution, and opportunistic returns. CEO Chuck Robbins emphasized that identity is a core pillar of Cisco's platform, citing strong growth in Duo and internal development of 'agentic identity' as key advantages.

James Fish of Piper Sandler questioned why networking growth wasn't stronger given an easy comparison and strong demand signals, and asked for an update on the data center versus campus mix and price-per-port trends.

Answer

CFO Scott Herren and CEO Chuck Robbins clarified that the significant AI infrastructure orders have not yet materially converted to revenue, with that conversion expected to accelerate in the second half of the year. Robbins added that while data center ports have a higher price, campus has higher volume, causing the overall impact to normalize over time.

James Fish from Piper Sandler questioned why networking growth wasn't stronger given easy comparisons and AI demand. He also asked for an update on the data center versus campus mix within networking and price-per-port trends.

Answer

CFO Scott Herren clarified that the strong AI orders have not yet significantly converted into revenue. CEO Chuck Robbins added that while data center ports have a higher price, the much higher volume in the campus market helps to normalize the overall financial impact over time.

James Fish of Piper Sandler asked for the specific RPO and product RPO growth figures for Splunk. He also inquired about the campus refresh opportunity driven by the new WiFi 7 products and whether this would stimulate a campus switch refresh cycle.

Answer

CFO Scott Herren declined to break out Splunk-specific RPO, stating that the deep integration of products and teams makes such a distinction increasingly difficult, but confirmed organic RPO growth remains positive. CEO Chuck Robbins described the campus refresh opportunity as "real," driven by the need for modernized networks to handle AI. He highlighted the new WiFi 7 platform's hardware portability between on-prem and cloud management as a key innovation.

James Fish inquired about the projected mix and adoption curve of Arista's Blue Box solutions over the next 3-5 years, and whether the convergence of front-end and back-end networks might diminish Arista's competitive advantage or open doors for new competition.

Answer

Ken Duda, CTO and SVP of Software Engineering, asserted that the convergence of front-end and back-end networks is advantageous for Arista, given its unique ability to effectively address both, unlike competitors. Jayshree Ullal, CEO and Chairperson, suggested that Blue Box evolution would be more significant in scale-up use cases, characterized by high unit volumes but lower dollar values, representing an incremental opportunity.

James Fish inquired about the expected mix of Blue Box adoption over the next three to five years and whether the convergence of front-end and back-end networks diminishes Arista Networks' advantage or allows for increased competition.

Answer

Ken Duda, Arista Networks' CTO and SVP of Software Engineering, stated that the convergence of front-end and back-end networks is advantageous to Arista due to its ability to effectively tackle both, serving as a significant differentiator. Jayshree Ullal, Arista Networks' CEO and Chairperson, ventured that Blue Box evolution might be more significant in scale-up use cases, potentially high in units but low in dollars, representing an incremental business opportunity.

James Fish of Piper Sandler asked about the strategy for "Blue Box" (Arista hardware with third-party software) and whether Arista needs a more integrated SASE offering rather than just partnering on security for its VeloCloud SD-WAN.

Answer

President & COO Todd Nightingale indicated a preference for partnering with leading cloud security vendors for a full SASE solution. CEO Jayshree Ullal added that while Arista can handle basic branch security, it will partner for advanced SASE overlays. On "Blue Box," she called it an important future strategy that will complement white box offerings, but noted it's not an immediate focus due to the current priority on AI.

James Fish asked a two-part question about the defensibility of Arista's 'Blue Box' hardware against self-development by hyperscalers, and the outlook for inventory turns.

Answer

CEO Jayshree Ullal detailed the hardware's defensibility, citing superior signal integrity, advanced diagnostics, and meticulous engineering in power and cooling. CFO Chantelle Breithaupt stated she was pleased with inventory turns reaching 1.4 and aims for further improvement, with the only caveat being potential buffer builds for tariff uncertainty.

James Fish asked about the updated penetration and competitive landscape within the DSPM market, and Rubrik's assumptions and opportunities within the Fed market, given its historical smaller contribution.

Answer

CEO Bipul Sinha reiterated Rubrik's DSPM strategy of combining data and identity for a holistic view, focusing on posture, access, runtime events, and recovery/remediation, rather than just data classification. For the Fed market, he noted it's still in an investment phase but a high priority due to nation-state threats. Rubrik recently received FedRAMP moderate authorization and continues to win deals, citing an example of a Fed agency replacing a new-generation vendor for faster database recovery, seeing it as a significant growth opportunity.

James Fish inquired about the updated penetration and competitive landscape within the DSPM market, as well as opportunities and potential disruption in the Federal (Fed) market.

Answer

Rubrik CEO Bipul Sinha reiterated the vision of combining identity and data for a holistic DSPM approach. For the Fed market, he noted it's an investment phase with high priority, highlighting recent FedRAMP moderate status and continued wins due to Rubrik's faster recovery times for mission-critical databases.

James Fish asked for an update on DSPM penetration and competitive dynamics within that market, and also inquired about Rubrik's assumptions and opportunities in the Federal (Fed) market, noting its historical small contribution.

Answer

CEO Bipul Sinha reiterated Rubrik's vision for the data security market: combining data and identity for a holistic view, moving beyond just data classification to understand posture, access, and runtime events for recovery/remediation. For the Federal market, Bipul Sinha stated it's still in an investment phase but a high priority due to nation-state threats. He mentioned recent FedRAMP moderate certification and a Q2 win, indicating continued investment and belief in its significant opportunity.

James Fish inquired about the competitive landscape for Data Security Posture Management (DSPM) and asked about the penetration of DSPM within Rubrik's installed customer base.

Answer

CEO Bipul Sinha described the DSPM market as still being in its early stages. He positioned Rubrik's strategy as distinct from competitors by combining DSPM with cyber recovery to offer a complete cyber resilience platform. He argued this integrated approach is a key differentiator and a primary driver of competitive displacements against both legacy and new-gen vendors. He did not provide a specific metric for DSPM penetration.

James Fish asked about Rubrik's exposure to Salesforce data protection and the Total Cost of Ownership (TCO) benefits customers realize from vendor consolidation.

Answer

CEO Bipul Sinha positioned Salesforce as one of over 20 applications supported by the Rubrik platform. He explained that customers consolidate 7-8 product categories onto Rubrik, leading to TCO savings of over 25%. He also noted that customers can realize immediate hard cost savings by starting with a single component, such as cloud-native protection, before expanding across the platform.

James Fish asked for the rationale behind the recent U.S. messaging price increase, its independence from carrier fee hikes, and the source of strong new customer additions, particularly their link to the voice AI opportunity.

Answer

CFO Aidan Viggiano clarified the price increase was distinct from Verizon's A2P fee increase. CRO Thomas Wyatt added that the price hike reflects pricing power in the fast-growing self-service business and attributed strong customer acquisition to reduced onboarding friction and a new email trial model.

James Fish asked how Twilio is framing its relationship with an ISV partner that launched a competing CEP solution, and whether it makes sense to pursue tuck-in acquisitions for international messaging or accelerate share buybacks.

Answer

CEO Khozema Shipchandler stated that coopetition has always existed and he expects the impact from the ISV's new solution to be 'de minimis.' CFO Aidan Viggiano noted the company has been active in its buyback program and will continue to be opportunistic. On M&A, she said the focus remains on smaller tech or talent tuck-ins to accelerate the roadmap, with no specific plans to announce.

James Fish inquired about the impact of the crypto market's resurgence on messaging and email volumes, and asked if the Segment business is bottoming out, given the strong implied billings growth.

Answer

CFO Aidan Viggiano stated that while crypto customer volume is stronger, it remains immaterial to overall results. Regarding Segment, she attributed the growth in Remaining Performance Obligations (RPO) to improved bookings and a higher mix of multi-year deals. CEO Khozema Shipchandler added that operational improvements in Segment are beginning to reflect on the balance sheet and will eventually translate into revenue growth.

James Fish asked for color on the size and relative growth of the ISV channel and questioned how the adoption of RCS might change messaging volumes and the gross margin profile compared to traditional SMS.

Answer

CEO Khozema Shipchandler stated that while the specific size of the ISV channel is not disclosed, it grows faster and carries higher gross margins than the consolidated business. He added that RCS is not expected to materially alter overall business dynamics, revenue, or margins in the near term, viewing it as a complementary technology for specific use cases rather than a replacement for existing messaging.

James Fish of Piper Sandler Companies inquired about the cross-sell initiatives, asking for more detail on their success and the productivity of new security specialists. He also questioned the significant acceleration in RPO, asking if it was driven by one-time events like the Edgeio exit or by more durable tailwinds from top 10 customer bookings.

Answer

CEO Kip Compton explained that the platform strategy is resonating with customers, leading them to adopt more products to enhance their use cases. CFO Ron Kisling added that the industry's shift toward platforms and Fastly's expanded security portfolio are key drivers. Regarding RPO, Kisling confirmed that Edgeio's exit was a factor, but also highlighted performance differentiation and a disciplined strategy of trading larger discounts for higher revenue commitments. Compton emphasized that the focus on securing commitments is a durable strategic shift.

James Fish asked for a breakdown of the business gains from the Edgio situation between new logos and traffic from existing customers. He also inquired about Fastly's opportunity and right to win in the AI Accelerator market.

Answer

CEO Todd Nightingale stated the Edgio transition is ongoing, with more business gained from traffic increases at existing customers than from new logos, though both have been healthy. He asserted Fastly's right to win in AI due to its performance leadership for low-latency experiences and highlighted AI's integration into its security products.

Represented by Quinton Gabrielli, James Fish's team noted that the edge computing story seems lost and asked what Fastly is doing from a go-to-market and messaging perspective to drive adoption. They also asked if shared customers from the Edgio shutdown are looking to replace Edgio with another provider to maintain diversification.

Answer

CEO Todd Nightingale expressed bullishness on compute, highlighting the AI Accelerator launch as a key driver for AI workloads. He conceded that the focus in 2025 is more on security growth but affirmed that compute demand is increasing. CFO Ron Kisling addressed the Edgio question, stating that Fastly has seen no indication that customers are looking to add another provider to replace Edgio, as most are already multi-CDN, creating an opportunity for Fastly to capture that share.

James Fish of Piper Sandler Companies noted the significant second-half guidance step-up and asked for the key drivers and linearity expectations. He also inquired about GPU pricing dynamics and utilization.

Answer

CFO Matt Steinfort explained the guidance raise reflects a full quarter of macro visibility, passing through beats from Q1 and Q2, and confidence in durable improvements from new customer acquisition and the new migration motion. He noted the guide does not fully reflect large deal potential. CEO Paddy Srinivasan addressed GPU dynamics, stating utilization is robust and that for inferencing customers, price-performance is more critical than the specific GPU generation, giving DigitalOcean flexibility in allocating its fleet.

Building on the topic of larger deals, James Fish asked how DigitalOcean is thinking about CapEx investments for the year and the size of the ARR pipeline that necessitates exploring new financing options.

Answer

CFO Matt Steinfort clarified that the front-loaded Q1 CapEx for the new Atlanta data center supports the current 2025 growth outlook. He explained that exploring alternative financing like leasing is a forward-looking strategy to potentially accelerate growth *beyond* the current plan by funding larger, lumpier deals without compromising the company's strong free cash flow generation.

James Fish asked about GPU droplet adoption trends, the mix between on-demand and contract-based usage, GPU supply availability, and why the Net Dollar Retention rate remains at 97% despite AI contributions.

Answer

CEO Paddy Srinivasan noted GPU adoption is broad, with contracts used for production workloads and on-demand for experimentation. CFO Matt Steinfort clarified that AI revenue is not included in the NDR calculation due to its project-based, lumpy nature. He stated the core cloud NDR is improving, but the reported figure is weighed down by a headwind from the managed hosting business lapping a price increase.

James Fish of Piper Sandler inquired about the strategy for the broader Workers platform in capturing workloads from hyperscalers and asked for an update on the company's FedRAMP progress.

Answer

Co-Founder & CEO Matthew Prince explained that the strategy for Workers often involves landing a single, critical function of an application to demonstrate significant cost and performance benefits, which then leads to larger workload migrations from hyperscalers. He reiterated that Act Three (Workers) is a key driver for potential nine-figure deals. On the federal front, Prince confirmed that Cloudflare is on track to meet its FedRAMP requirements by the end of the year, which will unlock further business opportunities.

James Fish from Piper Sandler Companies asked about the competitive pricing environment in messaging, specifically whether a competitor's recent price changes provide Bandwidth with leverage to increase its own pricing.

Answer

CFO Daryl Raiford responded that Bandwidth's pricing improved year-over-year, supported by the high-value services it provides, which is reflected in its strong customer retention. CEO David Morken added that pricing moves by competitors are actively creating new competitive opportunities for Bandwidth as customers re-evaluate their options.

James Fish asked for details on the partner ecosystem's current and future contribution versus the direct sales channel. He also questioned the strategy for regaining share and accelerating growth in the programmable messaging business, noting its growth rate relative to a larger competitor.

Answer

CEO David Morken and CPO John Bell explained that the partner channel is growing nicely, offering benefits like compressed deal cycles and larger, more complex opportunities via MSPs and integrators. Regarding messaging, John Bell acknowledged the 9% commercial growth and outlined a strategy focused on winning large senders from other platforms, expanding usage with existing customers through new channels like RCS, and leveraging Bandwidth's premium support as a key differentiator.

James Fish of Piper Sandler & Co. inquired about the anticipated market dynamics between RCS and SMS and the potential impact on gross margins. He also asked for the specific drivers behind the stronger-than-expected voice revenue.

Answer

Chief Product Officer John Bell stated that it is still early for Rich Communication Services (RCS) and its economic impact remains uncertain. CEO David Morken attributed the strong voice performance to broad-based usage across enterprise verticals, with the contact center segment being a particular area of strength both domestically and internationally.

James Fish of Piper Sandler Companies asked about the exclusivity of Samsara's OEM partnerships and their expected long-term impact on gross margins. He also inquired about the specific drivers behind the accelerated growth in the transportation vertical.

Answer

Co-Founder and CEO Sanjit Biswas explained that most OEM partnerships are not exclusive, as the strategy is to provide a 'single pane of glass' for customers with mixed fleets. Chief Financial Officer Dominic Phillips noted that while OEM integrations could be gross margin accretive long-term, they are not a significant part of the business today. Sanjit Biswas attributed the strong transportation growth to the industry's focus on efficiency and safety, coupled with Samsara gaining market share.

James Fish questioned whether Samsara expects to see pressure from macroeconomic uncertainty and asked about the confidence in maintaining a stable net retention rate (NRR) for core customers.

Answer

Chief Executive Officer Sanjit Biswas stated that Samsara's customers are always seeking efficiency in their large-scale operations, and the platform's ROI is valuable in any economic climate. Chief Financial Officer Dominic Phillips added that the customer base has operated through many economic cycles and that the balanced 50/50 mix of new logos and expansions, along with new product rollouts, provides confidence in the NRR target of approximately 115% for fiscal 2026.

James Fish asked for the main use cases behind the strong growth of the Asset Tag product and inquired about the planned mix of domestic versus international sales rep hiring.

Answer

CEO Sanjit Biswas detailed three core use cases for Asset Tags across industries: finding lost/stolen items, saving worker time, and improving asset utilization. CFO Dominic Phillips stated that while the absolute number of new sales hires will be higher in the U.S., the growth rate of hiring may be higher internationally, with final plans to be set after Q4.

James Fish asked about the drivers of the apparent acceleration in mid-market ARR, the split between new versus existing customer ACV, and whether the company is currently seeing any macro impacts on deal cycles.

Answer

CFO Dominic Phillips clarified that the quarter was balanced, tilting slightly towards expansion, but was also a very strong new logo quarter, consistent with recent trends. He stated that customer demand remains robust with no current macro impact, but the company embeds a potential for worsening macro conditions into its guidance to ensure confidence in its targets.

James Fish of Piper Sandler Companies inquired about the macroeconomic environment, deal linearity throughout the quarter, and the progress of Nutanix's platform services, such as managed Kubernetes.

Answer

President and CEO Rajiv Ramaswami described the macro environment as dynamic, noting longer deal cycles in the federal business but long-term optimism. He stated that the Kubernetes platform is in its early days but showing good product-market fit. CFO Rukmini Sivaraman added that the company has not seen a direct impact from tariffs and that there were no systematic changes in deal pull-ins or push-outs, though macro uncertainty is factored into the outlook.

James Fish from Piper Sandler asked about the confidence in the sales pipeline for Global 2000 customers, the readiness for AHV stand-alone with external storage like PowerFlex, and the stability of the 110% Net Retention Rate (NRR).

Answer

CEO Rajiv Ramaswami noted that Global 2000 wins are often 'second vendor' opportunities and that the Dell PowerFlex solution, expected in the second calendar quarter, will be a market expansion opportunity. CFO Rukmini Sivaraman explained that the 110% NRR has stabilized, but its growth is challenged by the expanding ARR base and elongated sales cycles. She affirmed the company's focus on all three expansion vectors: selling more of the same workload, new workloads, and more of the portfolio.

James Fish from Piper Sandler sought to quantify the size of the U.S. federal vertical in Q1 and its specific impact on the Net Retention Rate (NRR). He also asked about plans for stand-alone AHV integration with other storage arrays beyond Dell and the strategy for increasing AHV attach rates.

Answer

CFO Rukmini Sivaraman declined to quantify the federal business or its specific impact on NRR but reiterated that Q1 is seasonally the strongest quarter for federal and that its underperformance was a challenge. CEO Rajiv Ramaswami noted that while they plan to selectively expand to other storage arrays over time, there are no new announcements. He explained that the goal isn't 100% AHV penetration, as supporting VMware's ESX is key to winning in those accounts.

James Fish inquired about trends in workload repatriation, updates on GPT-in-a-Box, and the expected contribution to the fiscal 2025 guidance from the VMware opportunity, Cisco and Dell partnerships, and renewals.

Answer

President and CEO Rajiv Ramaswami observed that customers are realizing it is more cost-effective to run steady-state workloads on-prem and sees the enterprise GenAI opportunity as primarily on-prem due to data sensitivity. CFO Rukmini Sivaraman added that the FY25 guidance accounts for expected growth from the Cisco partnership and a small initial contribution from the new Dell offering, but declined to provide a specific exit ARR forecast.

James Fish of Piper Sandler asked about top-of-funnel marketing initiatives, potential changes to sales compensation, and whether the recent dip in the net retention rate has reached a bottom.

Answer

Executive Michael Burkland mentioned that sales compensation plans are always being fine-tuned with potential new KPIs to drive desired behaviors. President Bryan Lee explained that the dip in the dollar-based retention rate to 107% was anticipated due to tough comparisons. While expecting fluctuations, he noted positive offsets from AI momentum and the higher retention of large customers should provide stability.

James Fish asked for details on the compute transition, including which products are being phased out and the current network utilization. He also questioned the confidence in achieving the 10% security CAGR goal, given past performance against long-term targets.

Answer

CFO Ed McGowan reiterated that products like video/image management and visitor prioritization are moving to partners, which will cause a temporary flattening before reacceleration. On security, he expressed confidence, noting the business just grew 16%, is adding hundreds of millions in revenue annually, and the 10% goal reasonably reflects the maturation of large products like WAF while newer areas like Guardicore and API Security scale rapidly.

James Fish inquired about the timing of the shift in go-to-market investments towards hunters and specialists, asking why the change was made now rather than at year-end, and about the expected mix of investment between direct and channel sales.

Answer

CEO Tom Leighton responded that the investment is happening now due to proven traction and momentum in new product areas, specifically citing the targeted $50 million ARR for API Security and $100 million ARR for enterprise compute. He noted these new offerings attract a broader enterprise market and are more channel-friendly than traditional services, justifying the immediate need for more 'hunting' sales roles, specialists, and partner ecosystem support.

Asked about security pipeline strength, the product roadmap for Boundary, the balance between new business and expansion in the FY25 guidance, and drivers for RPO growth.

Answer

The security pipeline is robust, helped by a more complete portfolio offering (Vault, Radar, Boundary). Key features for Boundary (Windows/RDP support) are a focus for the year and are expected in the second half. The FY25 guide relies more on customer expansion and extension rather than a major shift in new business, although both are expected to improve. Contract durations have not changed meaningfully.