James Schneider

James Schneider asked about customers' inventory behavior, specifically OEM inventories, and if Microchip is seeing any signs of customers restocking or if they are still in reduction mode. He also inquired about the backlog building for the June quarter, the level of orders seen thus far this year, and expectations for the June quarter's seasonal performance.

Answer

Steve Sanghi (Executive Chair) stated that customers are not yet restocking, but as high inventories have come down, expedite requests have increased. He noted broadening constraints in foundry processes, leading to firming pricing. Steve Sanghi (Executive Chair) highlighted extremely strong bookings in January and December, and that the June quarter backlog is currently higher than the March quarter backlog was at the same point in time, expressing optimism for a good June quarter.

James Schneider from Goldman Sachs asked about Microchip's customers' inventory behavior, specifically OEM inventories, and whether there are signs of restocking across any verticals or if customers are still in reduction mode. He also inquired about the backlog building for the June quarter, the level of orders seen this year, and expectations for the June quarter's seasonal performance.

Answer

Executive Chair Steve Sanghi stated that customers are not yet restocking, but direct customer inventories, which were previously high, are being drawn down. He noted an exponential increase in expedite requests for certain products where inventory has corrected, while other products are still in reduction mode. He also observed broadening constraints in foundry capacity, leading to firmer pricing and customers prioritizing availability over price. Regarding the June quarter, Steve Sanghi reported extremely strong bookings in December and January, with the June quarter backlog currently higher than the March quarter backlog was at the same point in time, leading to optimism for a strong June quarter.

James Schneider asked about any end markets that are materially lagging in the recovery and whether they are showing improvement. He also inquired about potential tariff exemptions for companies with U.S. manufacturing investments, as recently mentioned by President Trump, and if Microchip would qualify.

Answer

COO Richard Simoncic identified the automotive market as lagging the most compared to other markets like data center and industrial. Regarding tariffs, CEO Steve Sanghi stated that while the situation is unclear, his interpretation is that Microchip's significant U.S. manufacturing investments would likely qualify the company for an exemption, potentially giving it an advantage over some competitors.

James Schneider asked which end markets are lagging in the recovery and inquired about Microchip's eligibility for potential tariff exemptions based on its U.S. manufacturing investments.

Answer

COO Richard Simoncic identified the automotive market as lagging the most. Regarding tariffs, CEO Steve Sanghi stated that while the policy is unclear, their interpretation is that Microchip's substantial U.S. manufacturing presence would likely qualify the company for an exemption, potentially providing a competitive advantage.

James Schneider asked about specific synergies between SiTime's oscillators and Renesas' timing products within the data center, beyond cross-selling, and whether the combined entity could offer a more holistic timing solution. He also sought details on the duration of the 1.5x book-to-bill backlog and the expected growth rate for the mobile and consumer business in 2026.

Answer

Rajesh Vashist, CEO of SiTime, clarified that the acquisition is solely for the timing product division. He emphasized the opportunity to leverage the combined engineering teams to deliver superior, integrated timing solutions addressing density, power, resilience, and lower latencies across various segments. Beth Howe, CFO, stated that the 1.5x book-to-bill backlog is typically within 12 months, weighted towards Q1 and Q2, and expects continued growth in the consumer business driven by a meaningful design win ramp in 2026.

James Schneider inquired about current inventory levels, asking if they are at an optimal point (either in days or dollars) or if further reductions are desired, and then asked about the prospects for a return to growth or turnaround in the personal electronics and communications end markets, including associated Embedded Processing products.

Answer

CEO Haviv Ilan and CFO Rafael Lizardi expressed satisfaction with the current inventory position, highlighting it as an asset for serving real-time, just-in-time customer demand. Regarding personal electronics, Haviv Ilan noted full-year 2025 growth of 7% despite a weak Q4, with mobile phones performing best. Rafael Lizardi added that personal electronics was an early market to correct and recover, leading to tougher year-over-year comparisons.

James Schneider from Goldman Sachs asked about the company's inventory levels, specifically whether they are now at an optimal point after recent reductions, or if further decreases are anticipated. He also inquired about the prospects for a return to growth in the personal electronics and communications equipment end markets, including related Embedded Processing product areas.

Answer

CEO Haviv Ilan and CFO Rafael Lizardi expressed satisfaction with the current inventory position, emphasizing its strategic value for supporting real-time customer demand. Regarding personal electronics, they noted full-year growth but a weak Q4, with varied performance across sectors and a tougher year-over-year comparison due to its earlier market correction.

James Schneider from Goldman Sachs Group, Inc. requested an update on the IP business, specifically addressing the headwinds mentioned last quarter (foundry customer, China, custom IP execution), the progress made, and the overall IP outlook for the year. He also asked for more color on the rationale behind NVIDIA's investment in Synopsys, beyond a strategic partnership.

Answer

Sassine Ghazi, CEO of Synopsys, expressed strong confidence in the long-term mid-teens IP growth, assuming a status quo for China and foundry uptake in the FY26 guide. He noted changes in IP development and sales leadership, with gaps expected to close by mid-FY26, positioning 2026 as a transitional year. Regarding NVIDIA, Ghazi explained the investment stemmed from NVIDIA's excitement for Synopsys' silicon-to-systems solutions, the acceleration potential with GPUs, Ansys' multi-physics simulation for Omniverse, and Ansys' market reach, with the financial aspect being secondary to Jensen Huang's endorsement.

James Schneider asked about the sources of weakness in the Q4 outlook, questioning if the reduced visibility in China would extend into 2026 and when the softness in leading-edge logic might recover.

Answer

CFO Brice Hill explained the outlook is impacted by two main factors: a multi-quarter digestion of capacity in China and a non-linear, uneven ramp in leading-edge logic demand due to customer concentration and fab timing. While confident in the long-term strength of Gate-All-Around (GAA) nodes, he noted that near-term visibility is lower than previously expected and declined to provide a specific recovery timeline.

James Schneider from Goldman Sachs asked if there was conservatism in the Q3 guidance due to potential pull-ins and whether recent presidential announcements on semiconductor tariffs could create a competitive advantage for MKS.

Answer

EVP and CFO Ramakumar Mayampurath stated there is no conservatism in the guidance; it's based on the best information available. President and CEO John Lee added that it's too early to determine the impact or any competitive advantage from the tariff announcement, noting the situation remains dynamic, though mitigation actions are beginning to reduce the impact.

James Schneider of Goldman Sachs asked if network densification activity for fixed wireless has broadened beyond a single lead customer and inquired about SBA's revenue exposure and potential churn related to U.S. Cellular and DISH.

Answer

President and CEO Brendan Cavanagh confirmed that activity has broadened among major customers, with the activity gap closing. He quantified the exposures, stating U.S. Cellular represents about $20 million in annual revenue with minimal expected impact, while DISH represents roughly $55 million. He noted that DISH continues to sign some new leases and amendments, and the situation is being monitored.

James Schneider inquired about the U.S. carrier spending environment, the specific impact of fixed wireless access on network demand, and SBA's capital allocation priorities, including its new $1.5 billion buyback plan, in the context of a 'higher for longer' interest rate environment.

Answer

President and CEO Brendan Cavanagh confirmed a positive U.S. leasing environment with growing backlogs, noting that fixed wireless access is a significant driver of network capacity needs. He stated that SBA's capital allocation approach remains a flexible mix of buybacks, asset investments, debt repayment, and dividends, supported by a strong balance sheet with leverage below historical levels.

James Schneider asked about SBA's ability to grow domestic leasing in future years given relatively flat carrier CapEx outlooks and requested clarification on whether demand for fixed wireless capacity was separate from conventional mobile capacity.

Answer

President and CEO Brendan Cavanagh stated he is not concerned about flat overall carrier CapEx, as even minor shifts in their large budgets can meaningfully impact SBA. He sees increased activity in macro networks, noting that limited new spectrum forces carriers to maximize existing assets, which is beneficial for SBA. Regarding fixed wireless, he clarified that while it's hard to distinguish from 5G mobile upgrades on the tower, anecdotal evidence from carrier conversations confirms it is a meaningful driver of incremental investment.

James Schneider asked about the strategic implications of the Millicom deal on potential larger, out-of-footprint M&A, such as in Europe, and requested qualitative details on the drivers of new domestic leasing, specifically the mix between rural expansion and urban densification.

Answer

President and CEO Brendan Cavanagh clarified that while the deal doesn't rule out future expansion, the company's primary focus is on strengthening its position in existing markets. He confirmed the increase in domestic leasing is driven by a combination of both rural build-outs, partly due to regulatory mandates, and suburban network densification, a trend he expects will persist.

James Schneider asked if Lam Research's business could grow in 2026 even if overall industry CapEx is flat, and whether the recent increase in NAND-related spending is sustainable.

Answer

EVP and CFO Douglas Bittinger reiterated Lam's potential to outperform WFE due to its expanding SAM and strong product portfolio but did not provide a 2026 forecast. He affirmed the company's view of a multi-year, approximately $40 billion NAND upgrade cycle remains unchanged. President and CEO Timothy Archer added that new technology drivers like Moly and CBA are also fueling NAND investment.

James Schneider of Goldman Sachs asked if Lam Research could grow its business in 2026 even if industry CapEx is flat, and questioned the sustainability of the recent strength in NAND-related spending.

Answer

EVP and CFO Doug Bittinger reiterated confidence in Lam's relative outperformance due to an expanding SAM and strong product portfolio but declined to give a 2026 forecast. He emphasized that the need for roughly $40 billion in NAND technology conversion spending over several years remains unchanged. CEO Timothy Archer added that AI is driving technology advancements in NAND, such as Moly adoption and QLC, which require new tool capabilities.

James Schneider of Goldman Sachs questioned the timing of a potential recovery in the mobile SoC business, asking if it would be a 2026 event. He also asked about the gross margin impact from the increasing mix of compute SoC business in the second half of the year.

Answer

President & CEO Greg Smith indicated that a mobile recovery is more likely a second-half 2026 event, as capacity additions typically occur in Q2/Q3 but could drift later. CFO Sanjay Mehta addressed the margin question, stating that while higher volume brings efficiencies, product margins are driven by tester configurations, and he expects the overall portfolio to remain in the 59-60% range.

James Schneider of Goldman Sachs inquired about the revenue contribution from HAMR technology in the quarter, its expected growth in September, and the resulting impact on gross margins.

Answer

CEO Dave Mosley stated that HAMR is growing steadily, is accretive to gross margin, and the company is focused on ramping its four-terabyte-per-platter platform. CFO Gianluca Romano added that with three major cloud customers qualified, they expect higher HAMR volume, revenue, and a positive impact on gross margin in the upcoming quarter.

James Schneider asked for more detail on the defense business performance, its growth outlook for the September quarter, and the potential for M&A in the defense sector, including the current valuation environment.

Answer

SVP & President of High Performance Analog, Philip Chesley, confirmed the defense business strength is aligned with forecasts, supported by a design funnel that grew by $2 billion to over $7 billion. He cited increased clarity on U.S. government spending priorities as a tailwind. SVP & CFO Grant Brown added that the defense and aerospace market remains an attractive area for M&A, and Qorvo is actively evaluating opportunities where strategic merit and valuations align.

James Schneider asked if the $10 million revenue from the DE1 data center is a good run rate for 2026 and about the expected organic growth for the CoreSite segment. He also asked if the Latin America business has bottomed and if acceleration is possible in 2026.

Answer

EVP, CFO & Treasurer Rod Smith clarified the $10 million for DE1 is an in-year 2025 number and would be higher on a full-year basis. He noted CoreSite's double-digit growth is expected to continue for a couple of years. President & CEO Steven Vondran stated that Latin America is expected to see low single-digit growth through 2027, with a significant inflection point not expected until 2028.

James Schneider inquired about any marginal changes in U.S. carrier leasing priorities for the remainder of the year and asked if the company's cost efficiency program is directionally aimed at achieving double-digit AFFO growth in the future.

Answer

CEO Steven Vondran stated that U.S. carrier activity is proceeding as expected with a steady ramp in mid-band 5G deployments and early signs of densification. He declined to provide a multi-year AFFO growth target but emphasized that the globalization effort is focused on long-term, sustainable efficiencies, not short-term cuts. CFO Rod Smith added that SG&A has already seen consistent reductions in recent years.

James Schneider of Goldman Sachs asked for commentary on U.S. carrier activity related to fixed wireless access (FWA) and inquired about the long-term sustainability of Europe's 5% organic growth rate, including the potential for acceleration and M&A opportunities in the region.

Answer

CEO Steven Vondran responded that while it's difficult to isolate FWA-specific activity, any application that adds demand to the network is a long-term positive. For Europe, he views mid-single-digit growth as a durable rate, supported by escalators and the need for carriers to catch up on mid-band 5G deployment. Regarding M&A in Europe, he remains 'cautiously optimistic' but will stay disciplined, as current opportunities have not met the company's strict criteria on price and contract terms.

James Schneider asked about the potential for a large-scale acquisition in the European tower market and sought clarification on a recent land purchase and management's comments about AI inference development at CoreSite.

Answer

Steven Vondran, President and CEO, stated that while American Tower would consider a strategic European acquisition, it remains highly disciplined on asset terms and valuation. He clarified the recent land purchase was to expand the Los Angeles campus for CoreSite. He also specified that his comment on slower development referred to the mobile edge opportunity, not AI inferencing, for which he sees robust demand.

James Schneider of Goldman Sachs inquired about the expected volume ramp for Amkor's 2.5D program this year and the directional capacity plans for the technology into next year.

Answer

CEO Giel Rutten stated that the 2.5D program, previously affected by trade restrictions, now has an opportunity to ramp further due to a more open trade environment. He emphasized that the next-generation focus is on high-density fan-out, which they have launched with a lead customer. Mr. Rutten described this RDL-based technology as a critical and foundational enabler for future growth in both the Compute and Communications markets.

James Schneider from Goldman Sachs requested more detail on the drivers behind the strong Core EDA results and the outlook for the second half of the year.

Answer

President & CEO Anirudh Devgan attributed the strength to Cadence's comprehensive portfolio and the proliferation of its AI-driven tools, highlighting significant wins at customers like SK Hynix and ADI. SVP & CFO John Wall added that the second half looks particularly strong for both software and hardware within the Core EDA segment, driven by proliferation at marquee customers.

James Schneider of Goldman Sachs questioned the current broadband market trends, including the gross add environment for fixed wireless and Fios, and asked about the expected contribution from the MDU (multi-dwelling unit) rollout.

Answer

Chairman and CEO Hans Vestberg noted a softer mover market impacted Fios but expects overall broadband performance to improve in the second half of the year. He explained that as the C-band build moves to less dense areas, the number of homes available for fixed wireless naturally moderates. He also stated the MDU solution is now rolling out commercially and will be a more significant contributor in 2026.

James Schneider questioned if there were any significant changes in consumer behavior, such as trade-downs or upgrade pull-forwards, and asked about the sustainability of the Business segment's EBITDA growth.

Answer

CEO Hans Vestberg noted that general consumer behavior and payment trends remain stable, with no major shifts observed. Consumer Group CEO Sowmyanarayan Sampath added that while Q1 upgrades were soft, the company maintains its full-year outlook for mid-single-digit growth, with recent strength driven by new offers. Regarding the Business segment, Hans Vestberg confirmed the goal is to continue driving year-over-year bottom-line improvements.

James Schneider of Goldman Sachs inquired if the underlying wireless service revenue growth pace could be maintained into 2026 as promo amortization headwinds fade. He also asked about the timing for material revenue recognition from the $1 billion AI Connect sales pipeline and its expected split between connectivity and data center services.

Answer

CEO Hans Vestberg reiterated that the underlying service revenue growth is nearly double the guided range for 2025 and that the promo amortization headwind will begin to fade by year-end, positioning the company well for 2026, though he did not provide specific guidance. Business Group CEO Kyle Malady stated that the current $1 billion AI Connect funnel is almost entirely for connectivity services (lit services, wave, and dark fiber) for web scalers. He confirmed that Verizon already recognized revenue from these deals in Q4 2024 and expects to drive more in 2025, with plans to bundle power, space, and cooling with networking in the future.

James Schneider questioned if the underlying wireless service revenue growth rate could be sustained into 2026 as promo amortization headwinds fade. He also asked about the timing for the AI Connect $1 billion sales pipeline to materialize as revenue and its expected long-term composition.

Answer

CEO Hans Vestberg confirmed the underlying growth is nearly double the guided rate and that the promo headwind will ease by year-end 2025, but did not guide for 2026. Business Group CEO Kyle Malady revealed that the current AI Connect funnel is entirely connectivity, and that revenue was already recognized in Q4 2024, with plans to drive more in 2025.

James Schneider asked for confirmation that the strong Q1 results were in line with internal expectations, inquired about potential risks to the 2025 outlook, and sought clarity on the future of the asset sale program following the Rwanda disposal.

Answer

CFO Steve Howden confirmed that Q1 performance met expectations, attributing some strength to a temporary FX tailwind in Nigeria and the pace of MTN churn. He stated that while the business outlook is strong, guidance was reiterated due to global macroeconomic uncertainties. CEO Sam Darwish and CFO Steve Howden both affirmed that the asset disposal program is ongoing and opportunistic, as they believe the stock remains undervalued and are committed to unlocking shareholder value through various strategic options.

James Schneider of Goldman Sachs asked for an update on the strategic review, specifically the remaining scope of asset sales, the company's appetite for acquisitions, and which markets outside Nigeria show positive signs for increased carrier CapEx.

Answer

CFO Steve Howden confirmed the $500 million to $1 billion asset disposal target is ongoing and stated that acquisitions are not a current priority, with the focus remaining on deleveraging and cash generation. He pointed to positive momentum in francophone Africa and long-term potential in Brazil. CEO Sam Darwish added a bullish macro outlook for Africa, expecting carriers to increase CapEx.

James Schneider from Goldman Sachs inquired about the progress of the strategic review, specifically the targeted $500 million to $1 billion in asset sale proceeds, and asked how current capital market conditions might affect the prioritization for the use of those proceeds.

Answer

CFO Steve Howden explained that while he could not share specifics on the strategic review until an announcement is made, progress is good and the company aims to provide updates soon. He reiterated that the primary use of proceeds remains debt paydown, with share buybacks and a potential dividend also under consideration, and noted that the company's refinancing activities are complementary to this strategy.

James Schneider asked for an assessment of the contract backlog and its coverage of the revenue guidance compared to last year, and also requested details on which parts of the U.S. business experienced a slowdown.

Answer

CFO Juan Urthiague explained that visibility for Q2 is high but more uncertain for the second half, leading to a conservative full-year forecast built on current visibility. CEO Martín Migoya specified that the U.S. slowdown was widespread across consumer-facing verticals like entertainment, high tech, and travel, while financial and professional services remained more stable. Juan Urthiague added that B2B2C customers were most impacted by tariff uncertainty.

James Schneider asked for an overview of the demand environment across Globant's key regions, including the U.S., Europe, the Middle East, and Latin America, and inquired about potential catalysts for a demand recovery in Latin America.

Answer

CEO Martín Migoya described the demand picture as positive, highlighting a strong U.S. pipeline, well-structured growth in Europe with major clients, and significant new contracts in emerging markets. He noted that Latin America is stabilizing after recent political turmoil. Migoya emphasized that while the overall pipeline is robust, particularly for AI-related work which grew 110%, the conversion of these deals had slowed but is now showing signs of acceleration.

James Schneider asked about the expected evolution of Globant's AI-related client work into 2025, specifically regarding project size and focus areas.

Answer

An executive explained that AI work has matured from small, exploratory proofs-of-concept in 2023 to more intentional, larger-scale projects with clear business objectives in 2024. This trend is expected to continue into 2025, providing greater visibility and a stronger pipeline as clients direct investments toward achieving specific results with AI.

James Schneider asked for specific factors driving EPAM's seemingly better client outlook compared to peers and requested a quantitative assessment of the second-half backlog.

Answer

CEO Arkadiy Dobkin attributed the positive outlook to clients returning to EPAM for quality, engaging in both new and resumed projects. He reiterated that second-half visibility remains challenging as decisions are made in real-time, and declined to provide a more detailed prediction for Q3 and Q4 at this time.

James Schneider of Goldman Sachs questioned the expected timing for converting the remaining PCF pipeline and whether hyperscaler or enterprise deals would materialize first. He also asked if the current enterprise spending environment could accelerate the decommissioning of legacy services.

Answer

President and CEO Kate Johnson stated that while discussions for the PCF pipeline are active and progressing, she could not provide a specific timeline due to the complexity of designing new routes. She highlighted increasing enterprise demand for both physical and digital connectivity driven by AI data needs. Johnson emphasized that fiber networking is critical infrastructure for the AI economy, making it a strategic, long-term investment for customers despite broader market uncertainty.

James Schneider asked for Lumen's perspective on the recent Deepseek AI announcement and its potential impact on the connectivity market, as well as the competitive landscape for private dark fiber (PCF) deals going forward.

Answer

CEO Kathleen Johnson positioned innovations like Deepseek as positive, stating they accelerate AI democratization and expand the total available market for Lumen's network fabric. Regarding competition, she expressed confidence in Lumen's significant head start, unmatched network coverage, unique routes, and advanced fiber solutions. She emphasized that the digital platform being built on top of the physical infrastructure is the key long-term differentiator.

James Schneider of Goldman Sachs sought clarification on the PCF sales pipeline, asking if there was $4 billion remaining from the initial opportunity or if the total pipeline had expanded. He also asked for an update on the Mass Markets business and any potential acquisition interest.

Answer

EVP and CFO Chris Stansbury clarified that roughly half of the $7 billion opportunity has been secured, with the remainder involving new routes that will take several quarters to finalize. He stated the company will no longer update the pipeline total, as it is now 'normal course of business.' Regarding Mass Markets, he noted industry consolidation is happening and that while Lumen has no news to report, a separation could have a significant deleveraging impact.

James Schneider asked about the company's backlog coverage for its full-year revenue outlook, especially given the current client emphasis on cost-takeout deals. He also sought clarification on gross margin trends and why margin improvement is expected to come more from operating expenses than from gross margin itself.

Answer

CFO Jatin Dalal explained that the midpoint of the guidance reflects the current environment, supported by a healthy 1.3x trailing 12-month book-to-bill ratio and strong net new bookings. Regarding margins, he stated that in the current environment, pricing power is limited, making cost discipline and SG&A leverage the primary drivers of operating margin expansion. He reiterated that gross margin improvement will continue to be pursued through utilization, AI-driven productivity, and pyramid optimization. CEO Ravi Kumar S added that a strong pipeline of mega-deals and improved new logo acquisition provide further confidence.

James Schneider asked for directional guidance on which verticals might outperform or lag in 2025 and inquired about the sustainability of gross margin leverage, considering utilization, AI, and the mix impact from the Belcan acquisition.

Answer

CEO Ravi Kumar S indicated that Financial Services and Health Care are expected to continue leading growth, while CMT needs to rebuild momentum. Regarding margins, he stated that Belcan will not have a material impact. He identified key levers for gross margin improvement, including utilization (which has 'some flex left'), AI-led automation ('a tremendous opportunity'), and pyramid optimization (a multi-year lever), while noting pricing remains competitive.

James Schneider asked about the Board's criteria for a new permanent CEO, considering the company's new streamlined focus compared to 18 months ago.

Answer

Interim CEO Daniel Schlanger explained that, based on his conversations, the Board is seeking a leader who can make Crown Castle a best-in-class tower operator, improve customer experience, and drive revenue. He added that the ideal candidate would likely have public company experience and be aligned with the strategy of being a U.S.-focused tower company that balances dividends, share repurchases, and investment in the business.

James Schneider asked about the organic growth strategy for towers, particularly regarding rural expansion and new builds, and for a breakdown of the future CapEx budget.

Answer

CEO Steven Moskowitz stated that the company is evaluating rural opportunities but remains focused on the economics of colocation. He confirmed a significant portion of the future $150-$250 million annual CapEx will be allocated to purchasing land under existing towers to improve margins, with the remainder for corporate systems and other investments.

James Schneider asked if the structural case for small cells remains intact despite recent cancellations and higher return hurdles, and inquired about the company's opportunity in data center interconnection for its fiber business.

Answer

CEO Steven Moskowitz affirmed the long-term case for small cells, citing rising data demand and the high-return colocation mix in the current backlog. CFO Dan Schlanger clarified that Crown Castle's strategy is not to build long-haul fiber to new rural data centers, but to leverage its dense metro fiber to connect existing data centers within major cities, which they see as a significant opportunity driven by AI.

James Schneider asked for an update on broader consumer behavior, including any signs of mobile substitution, trade-down effects, or credit pressure amid macroeconomic uncertainty.

Answer

CEO Chris Winfrey stated that Charter has not seen significant signs of consumer stress, noting that sales are up and churn is stable despite the end of the ACP program. He believes Charter's value proposition, focused on saving customers money through bundles, is well-positioned for any economic environment, including a potential recession.

James Schneider of Goldman Sachs Group inquired about the backlog, asking if the hyperscale backlog is also at a record level and whether the current environment could impact leasing momentum in Q2 and Q3.

Answer

CEO Andrew Power confirmed the enterprise pipeline is at a record and noted that while he wasn't certain about the hyperscale pipeline being a record, deal velocity has been exceptionally fast. He emphasized the overall record backlog of $1.3 billion in signed-but-not-commenced contracts, which have attractive rates and escalators. He highlighted that the 2026 component of this backlog grew 40% in the quarter, providing strong future growth visibility.

James Schneider from Goldman Sachs asked about customer conversations following a major AI infrastructure announcement and the general willingness of hyperscalers to pre-lease capacity further into the future.

Answer

CEO Andrew Power noted that recent announcements reflect a continued conviction from top customers to deploy significant capital. He emphasized the diversity of their hyperscale customer base, with different top customers leading bookings in various quarters. While demand is strong, he cautioned that large deals require high-level approvals and can be lumpy, but Digital Realty is well-positioned with its development pipeline and land bank to meet this demand.

James Schneider requested details on the composition of the quarter's bookings, asking about customer concentration and whether any of the substantial deals were signed with new customers.

Answer

CRO Colin McLean detailed a broad-based booking quarter with approximately 1,000 customers, including 149 new logos primarily from the commercial segment. He highlighted a growing focus on large enterprises, which accounted for an all-time high of 52% of the $66 million in 0-1 megawatt bookings, demonstrating diverse platform demand.

James Schneider from Goldman Sachs requested context on the expected contribution from broadband to full-year postpaid net additions and asked about the gross additions environment and momentum heading into Q2.

Answer

Michael Katz, President of Marketing, Strategy and Products, highlighted the success of 5G broadband, evidenced by record-low churn and leading NPS scores, but deferred providing specific fiber targets until the Metronet deal closes. CEO Mike Sievert declined to provide intra-quarter commentary on Q2 but expressed strong confidence in meeting full-year guidance, pointing to the all-time record results in Q1.

James Schneider questioned T-Mobile's outlook on the broadband market, including its fiber strategy and ability to segment pricing for its wireless and fiber products. He also asked about the capital allocation plan for 2025, specifically the expected pace of share buybacks given the cash requirements for pending acquisitions.

Answer

CEO G. Sievert stated that T-Mobile is focused on share-taking in broadband rather than overall market growth, highlighting a new pricing construct that addresses value shoppers while driving ARPU gains. On capital allocation, CFO Peter Osvaldik confirmed the 2025 buyback authorization of up to $14 billion already accounts for pending M&A and that the pace of buybacks is expected to be more ratable throughout the year compared to 2024.

James Schneider from Goldman Sachs inquired about T-Mobile's 2025 network upgrade plans, particularly the prioritization between deploying 3+ GHz spectrum and expanding in rural areas. He also asked if the company sees any macro indicators pointing to a slowdown in consumer wireless gross adds.

Answer

Executive Ulf Ewaldsson explained their 'customer-driven coverage' model, an AI-based algorithm that prioritizes network projects based on customer value, rather than broad geographic mandates. He noted C-band is not urgently needed due to ample mid-band capacity. CEO G. Sievert added that the $9-10B CapEx envelope is sufficient to extend their 5G lead. On the macro environment, Sievert stated the industry is not a great leading indicator, but noted the continued strong trend of prepaid-to-postpaid migration as a positive sign.

James Schneider asked about the macroeconomic impact on IBM's Software and Consulting segments, questioning if consumption-based revenue is softening or if Transaction Processing is slowing. He also inquired if the subsegment guidance provided at Investor Day for Software and Consulting would change.

Answer

CEO Arvind Krishna stated that IBM did not see a significant slowdown in Q1 for consumption-based software but projects a potential small slowdown ahead, while noting tailwinds for Transaction Processing. He acknowledged some impact on Consulting from government initiatives but stressed most of their work is mission-critical. CFO Jim Kavanaugh reaffirmed the company's long-term financial thesis, maintaining a cautious but stable outlook for Consulting while expecting an accelerating growth profile for Software and a secular growth trend for Infrastructure.

James Schneider asked for insights on two topics: first, the level of confidence in the Consulting segment's revenue recovery in the second half of 2025, and second, which specific products within the AI software business are expected to be standouts.

Answer

CFO Jim Kavanaugh addressed the Consulting question, expressing confidence in a 2025 growth inflection due to record Q4 signings, a strong backlog, and a growing GenAI book of business that positions IBM as a strategic partner. CEO Arvind Krishna answered the software question, highlighting the watsonx family of products (including Code Assistant for Z, Java, and Ansible) and Red Hat's AI deployment solutions as the key drivers of its $1 billion AI software business.

James Schneider inquired about the conversion rate of consulting signings to revenue and its impact on 2025 confidence, and also asked about the strategy for future M&A targets in the Software segment.

Answer

CFO Jim Kavanaugh noted that Gen AI consulting deals have longer durations and lower initial revenue yields, but the growing volume will drive a growth inflection in the second half of 2025. CEO Arvind Krishna added that the M&A strategy remains focused on hybrid cloud, automation, and data & AI to ensure synergy, clarifying that while open-source is a component, it is not an exclusive filter for acquisitions.

James Schneider of Goldman Sachs inquired about the current health of the consumer and asked for clarification on whether the share buyback plan is contingent on or independent of any potential M&A activity.

Answer

CEO John Stankey reported seeing no significant changes in consumer behavior, noting that connectivity services are not highly discretionary. He stated that the capital allocation plan, including the share buyback, is a firm priority that the management team is committed to executing. He emphasized that starting the buyback now, despite reduced macro visibility, demonstrates their strong belief in the program.

James Schneider asked for an expansion on competitive trends in the broadband market, particularly regarding more aggressive cable pricing. He also inquired about potential catalysts for the Business Wireline segment, such as fiber connectivity for AI, that could moderate its EBITDA declines.

Answer

CEO John Stankey reiterated that AT&T's tactic is to win on a superior fiber product, not price, noting that lower-price shoppers are likely migrating to fixed wireless. For Business Wireline, he stated that the recovery forecast already includes being effective in deploying fiber for new services like AI infrastructure. He confirmed seeing the best-ever fiber growth in business in Q4 but emphasized the need to outrun legacy declines.

James Schneider inquired about the requirements, particularly in sales force productivity, to drive positive growth in corporate connections and sought confirmation on the long-term sustaining CapEx run rate.

Answer

CEO David Schaeffer stated that corporate connections face a couple more quarters of headwinds from product grooming. He noted that sales force productivity, currently at 3.5 units/rep/month, needs to return to the long-term average of just under 5. He also confirmed that the sustaining CapEx run rate is expected to normalize to around $100 million annually by the second half of the year.

James Schneider inquired about the wavelength business, specifically the drivers behind the revenue increase, improvements in provisioning times, and the status of the sales backlog. He also asked for the go-forward outlook on network costs (cost of revenues) considering one-time expenses from Sprint site conversions and vendor contract terminations.

Answer

CEO David Schaeffer explained that the wavelength revenue uptick was due to diverting resources to provision key orders, with a goal to reduce install times from 90 days to two weeks by year-end. He anticipates the sales funnel will accelerate in 2025 as they prove delivery capabilities. Regarding costs, Schaeffer stated that the cost of revenues line will improve as unprofitable products are eliminated, a significant one-time contract buyout expense is now gone, and accelerated data center demolition work, which hits COGS, will decrease over the next few quarters.

James Schneider asked for an update on TaskUs's largest customer, Meta, inquiring about potential risks from changes in content moderation policies and the company's margin profile for 2025.

Answer

CEO Bryce Maddock affirmed the strong and growing relationship with the largest client, clarifying that TaskUs does not perform fact-checking and focuses on illegal and toxic content, mitigating risk. He expects revenue from this client to grow faster than the overall business in 2025. CFO Balaji Sekar added that 2025 adjusted EBITDA margins are guided to be ~21%, with Q1 at 20% and sequential improvement expected through Q3 before a slight seasonal dip in Q4, factoring in investments in AI, security, and growth.

James Schneider inquired about the company's investment philosophy, asking if margins would remain under pressure in 2025 due to continued investments and when those investments might stabilize. He also asked about the potential future scale of the new large healthcare payer client.

Answer

CEO Bryce Maddock affirmed that the focus for 2025 is sustaining double-digit growth, which requires continued heavy investment in operations, sales, and service expertise. While the 'North Star' is adjusted EBITDA dollar growth, he expects to gain SG&A leverage over the next few years. Regarding the new client, Maddock stated that the healthcare payer has the potential to become one of TaskUs's largest clients if they execute well, highlighting healthcare as a massive strategic opportunity.

James Schneider asked about the divergence in competitive trends between the West and East, and what tactics were proving effective. He also inquired about the expected contribution of the new video strategy to margin trends.

Answer

CEO Dennis Mathew explained the West is more pressured by low-priced overbuilders and a higher concentration of income-constrained households (38% vs 18% in the East). They are countering with hyperlocal pricing and a new income-focused strategy. In the East, AI-driven retention offers and mobile bundles are working well. CFO Marc Sirota added that video gross margins are improving on both rate (video ARPU up 7% YoY) and cost (programming cost inflation down to 4% from 6-8%), giving them confidence in their 70% gross margin target by 2026.

James Schneider asked for the rationale behind the CapEx reductions for the current and future years, questioning if it was purely efficiency-driven, and how the company is balancing free cash flow goals with subscriber growth.

Answer

Executive Dennis Mathew attributed the CapEx reduction to significant efficiency gains, such as using new technology to manage network congestion at a fraction of the cost of traditional node splits. Executive Marc Sirota emphasized a balanced approach to maximize free cash flow, highlighting the company's progress from a steep decline in 2022 to expected growth in 2024. He noted that a laser focus on ROI and improved procurement processes allow for efficient investment without sacrificing growth opportunities.

James Schneider questioned the deceleration in underlying revenue growth into 2025, asking for the recurring revenue outlook and the company's confidence in reaccelerating growth. He also asked about the pace of xScale capacity additions relative to market announcements and if it could be accelerated.

Answer

CEO Adaire Fox-Martin stated the 2025 guide implies a step-up in recurring revenue growth through the year, from ~$28M in Q1 to ~$40M later in the year, creating a strong exit into 2026. CFO Keith Taylor added that growth is coming from the recurring line and is dependent on bringing new inventory online. Regarding xScale, Adaire Fox-Martin noted strong hyperscaler demand and that the 'build bolder' strategy is focused on executing the pipeline as fast as possible to capture market opportunity.

James Schneider of Goldman Sachs questioned the expected pace and timing of new capacity additions from the new xScale joint venture and asked for an outlook on the momentum of net cabinet additions.

Answer

CEO and President Adaire Fox-Martin estimated a 12-to-18-month cycle to bring new xScale capacity online after the JV closes, starting with the Atlanta campus. CFO Keith Taylor added that long-lead items are already ordered, suggesting value delivery will begin well before 2029. Regarding cabinet additions, Adaire Fox-Martin expressed confidence that the strong momentum from Q3's 3,100 net adds will remain solid into Q4 and early 2025, supported by a robust backlog of sold-but-uninstalled capacity.

James Schneider asked about the range of outcomes for discretionary spending in 2025 client budgets and the specific impact of interest rates on their outlook. He also sought to understand if there are quantitative changes in the size and scope of AI projects and when clients might pivot to larger, more transformative GenAI initiatives.

Answer

CEO Julie T. Sweet explained that the impact of interest rates varies by industry but emphasized that Accenture is positioned to help clients pivot regardless of the change, whether it's for cost-cutting or funding capital projects. On AI, she noted that clients who have already invested in their digital core and data foundations are now starting to scale larger projects. For others, the focus is accelerating data foundation work, which is fundamental for GenAI and is driving an increase in data-related projects.

James Schneider asked what specific catalysts clients are looking for to increase discretionary spending and which industry verticals are expected to show the most improvement or potential deterioration in fiscal 2025.

Answer

CEO Julie T. Sweet explained that client focus is less on waiting for a macro catalyst and more on executing large, industry-specific transformations, such as in energy, consumer goods, and public service. Incoming CFO Angie Park added that for fiscal 2025, the company anticipates broad-based growth across all industries and markets within its guidance range.

James Schneider asked if increasing fiber build-outs from competitors would prompt Frontier to accelerate its own fiber passing plans, either organically or with capital partners.

Answer

President and CEO Nick Jeffery responded that while he is encouraged by the industry's validation of fiber's attractiveness, Frontier does not necessarily plan to accelerate its build. He emphasized that the company's build pace is scaled to work in harmony with its sales, service, and provisioning capabilities to maximize overall investor returns, leveraging its first-mover advantage in scaling its build.