Joseph Gallo

Joseph Gallo of Jefferies inquired about the visibility and confidence behind AvePoint's constant currency ARR guide, seeking details on specific product drivers and whether AI excitement is translating into revenue for cybersecurity vendors now or as a longer-term driver.

Answer

CFO Jim Cassie confirmed the acceleration in constant currency ARR growth, attributing it to consistent demand across all three regions, customer segments, and verticals, supported by a strong pipeline. CEO TJ Jiang noted that while enterprises have AI projects, Copilot adoption lags due to data readiness issues, which AvePoint addresses. He sees tremendous demand for data readiness, indicating AI is a current driver.

Joseph Gallo with Jefferies inquired about the visibility and confidence behind AvePoint's impressive constant currency ARR guide, seeking details on specific product drivers contributing to the acceleration in new constant currency dollar growth compared to the previous year. He also asked if the excitement around AI is now materializing into revenue for cybersecurity vendors like AvePoint, or if it remains a longer-term, gradual driver.

Answer

Jim Caci, Chief Financial Officer, confirmed the acceleration, attributing it to consistent growth across all three regions (North America, EMEA, APAC), a balanced ARR approach across customer segments and verticals, and a strong pipeline. TJ Jiang, Chief Executive Officer, stated that enterprises are deploying AI for efficiency, but broader Copilot usage lags due to a lack of enterprise data readiness and trust issues from suboptimal outputs. He emphasized AvePoint addresses these problems, seeing tremendous demand for data readiness solutions.

Joseph Gallo of Jefferies & Company Inc. inquired about the current macroeconomic environment for commercial and government sectors, specifically asking if guidance accounts for a potential worsening in federal spending, and also asked about go-to-market investments and sales capacity.

Answer

CFO Jim Caci explained that the company had already factored federal spending uncertainty into its guidance at the beginning of the year and has not seen conditions worsen. He noted strong commercial demand across all regions and customer segments. Regarding sales capacity, Caci highlighted significant improvements in sales team efficiency, which is driving leverage in sales and marketing spend, and confirmed they are planning capacity one to two years ahead to support growth targets.

Joseph Gallo asked about the product revenue performance in Q4, noting the mix shift and reallocation in large deals, and if there were other contributing factors. He also questioned the flat product guide for 2026, asking about remaining refresh cycles and customer buying behavior changes due to price increases.

Answer

CFO Roei Golan acknowledged that Q4 product revenue was lower than previous quarters but still saw good demand. For 2026, he explained the flat to low single-digit product growth guidance reflects a prudent approach due to market conditions like memory shortages and raw material price increases, which might cause customers to postpone CapEx projects. He noted continued refresh demand, especially in the second half, but emphasized the impact of memory shortages. CEO Nadav Zafrir added that hardware supply is secured for the first two quarters, and the company sees this as a potential competitive advantage, with SaaS and subscription products becoming a larger part of the business.

Joseph Gallo inquired about the linearity of ASP hikes, specifically when their impact would be seen, and later asked about the product revenue strength in Q4, factors influencing the flat 2026 product guide, remaining refresh cycles, and customer buying behavior ahead of price increases.

Answer

Roei Golan (CFO, Check Point Software) clarified that while price increases (July 2025 subscription, Jan 2026 product) impact billings immediately, the main revenue effect is expected from Q2 2026 due to revenue recognition from prior bookings. For product revenue, Q4 was good but moderated by a subscription price increase causing an accounting allocation shift. The 2026 product guide reflects a prudent approach to flat to low single-digit growth, considering memory shortages, raw material price increases, and potential CapEx project postponements, despite continued refresh demand.

Joseph Gallo of Jefferies & Company Inc. asked for more detail on why discounting on product refreshes is a long-term positive and where the benefits, such as SASE upsells, would materialize. He also requested metrics on new logo performance.

Answer

CFO Roei Golan explained that internal data shows the annual recurring revenue (ARR) from customers who refresh their appliances increases over time. CEO Nadav Zafrir added that growth is also driven by new product lines like email and SASE, which are growing over 40% year-over-year, and by the unified Infinity platform.

Joseph Gallo inquired about the remaining duration of the hardware refresh cycle and whether potential tariffs would increase the cost of goods sold.

Answer

CFO Roei Golan clarified that the maximum exposure from potential tariffs would be less than one percentage point on total margin, and the company is working to mitigate this. He also projected that the current hardware refresh cycle is expected to continue through the end of 2026, presenting opportunities with both the existing install base and competitors' customers.

Joseph Gallo asked for elaboration on the recent go-to-market changes, the expected timeframe for them to take effect, and their potential impact on the company's financial guidance.

Answer

CEO Nadav Zafrir stated the go-to-market changes are designed to flatten the organization and bring leadership closer to customers, with a focus on the Americas. CFO Roei Golan confirmed that the potential impacts of these changes were already incorporated into the company's full-year guidance.

Joseph Gallo of Jefferies asked for an update on the integration of Perimeter 81, the pipeline development for its SASE solution, and the willingness of high-end enterprise customers to adopt it.

Answer

Founder and CEO Gil Shwed reported positive traction and that the integration of Perimeter 81 is on track. He noted a 'nice jump' in sequential quarterly sales for the SASE platform in Q3, with several seven-figure deals in the pipeline for Q4, indicating growing optimism for the solution's adoption.

Joseph Gallo from Jefferies inquired about the drivers behind Radware's strong 14% RPO growth in 2025, which exceeded targets, and sought expectations for RPO growth in 2026. He also asked for an update on the Americas region's growth profile, noting a Q4 decline despite go-to-market investments, and when a rebound could be expected.

Answer

President and CEO Roy Zisapel attributed the RPO strength to very strong bookings in both cloud and product subscriptions, expecting 2026 RPO growth to align with revenue growth. Regarding the Americas, Mr. Zisapel highlighted strong Q4 bookings and significant progress, with increased investments planned for 2026 to drive continued growth.

Joseph Gallo from Jefferies inquired about the drivers behind Radware's strong RPO growth in 2025, which doubled targets, and the company's expectations for RPO growth in 2026. He also asked for an update on the Americas region's performance, given its Q4 decline compared to EMEA's strength, and the impact of go-to-market investments on its growth profile.

Answer

President and CEO Roy Zisapel and CFO Guy Avidan attributed the exceptional RPO growth to very strong bookings in both cloud and product subscriptions, with expectations for 2026 RPO to align with revenue growth. Roy Zisapel further explained that North America saw very strong bookings in Q4, despite revenue declines, and that Radware plans to increase investments in the region for 2026, expressing confidence in its future growth.

Speaking on behalf of Joseph Gallo from Jefferies, Angelie Papadopoulos asked about the forward-looking growth profile for Cloud ARR and sought details on the competitive differentiation of Radware's new API security solution.

Answer

Roy Zisapel, Co-Founder, CEO, President & Director, responded that after surpassing the 20% short-term Cloud ARR growth target, the next goal is 25%, with a focus on accelerating growth. He differentiated Radware's API security by highlighting its Epic AI framework, which automates protection and business logic mapping, unlike competitors' manual processes. He also emphasized the SOCKS AI agent, which drastically reduces attack mitigation times from days to minutes, providing a significant business advantage.

Joseph Gallo of Jefferies inquired about the current macroeconomic environment, asking if Radware observed any changes in customer buying behavior, how April was trending, and what macro factors were embedded in the Q2 guidance, particularly concerning recent tariffs. He also asked for more detail on the new U.S. leadership team, questioning if the changes could cause near-term disruption and if that was factored into the Q2 forecast.

Answer

Roy Zisapel, President and Chief Executive Officer, responded that the business environment has been relatively stable without noticeable acceleration or deceleration in recent months or at the start of Q2. He noted that while there were initial customer questions about tariffs, the situation has since calmed down. Regarding the U.S. leadership changes, Zisapel clarified that the new team members have been in place for several months and are already ramping up productivity. He stated that the company is past any potential disruption phase and is now focused on future growth driven by this new team.

Joseph Gallo asked about the impact of customer consolidation trends on win rates and deal sizes, what's crucial for Rapid7 to benefit from this trend, and when MDR will significantly drive growth acceleration.

Answer

CEO Corey Thomas stated Rapid7 is benefiting from consolidation but needs to improve proposition simplification and integration into customer tech stacks, leveraging partnerships. He believes MDR is close to being big enough to drive growth acceleration, with efforts focused on unlocking its full potential this year while maintaining profitability.

Joseph Gallo inquired about the company's overall profit versus growth framework and whether investments are fluid based on growth acceleration.

Answer

CEO Corey Thomas stated that the company invests behind clear, profitable growth opportunities like Detection and Response (D&R). CFO Tim Adams added that a key point of leverage is selling into the existing installed base of nearly 12,000 customers, which comes at a lower cost of sale. The go-to-market motion is focused on integrated security operations, upgrading the VM base, and driving D&R adoption.

Joseph Gallo asked for elaboration on the competitive and pricing environment to determine if recent performance is a story of delayed pipeline conversion or a result of intensifying competitive pressures.

Answer

CEO Corey Thomas stated that while the traditional VM business did face competitive pressure, the new Exposure Command platform is seeing strong momentum. He cited evidence of both strong pipeline generation and conversion rates that were ahead of internal expectations. Thomas emphasized that while the market remains competitive, Rapid7 has a significant upsell opportunity within its installed base of resource-constrained customers.

Joseph Gallo from Jefferies asked if deal cycle elongation was broad-based or concentrated in certain products and inquired about gross retention trends, particularly for the core vulnerability management business.

Answer

CEO Corey Thomas clarified that deal cycle elongation is primarily based on deal size, not product, affecting larger deals across the board. Regarding retention, he stated that gross retention pressures mentioned earlier in the year appear to be bottoming out, with positive early indicators, partly due to existing VM customers responding well to the new Exposure Command strategy.

Joseph Gallo asked about the potential ASP uplift and monetization opportunity from protecting users and their 'infinite amount of agents,' and also sought insights into any macro factors or MoneyLion seasonality considerations for the Q4 guidance.

Answer

CEO Vincent Pilette stated it's too early to discuss specific ARPU/ASP for AI agent protection, but emphasized the clear and growing pain point for consumers using AI agents without safeguards. He believes there's a significant gap to fill in the AI economy, similar to early antivirus needs, and that users will be willing to pay for this protection. CFO Natalie Derse noted that Q4 guidance bakes in current actuals and known factors, without specific macro or FX assumptions beyond current rates. CEO Vincent Pilette added that consumer sentiment has been stable at a multi-year low, but Gen's offerings (security, financial health) remain highly relevant in this environment.

Joseph Gallo asked about the ASP uplift or monetization opportunity related to protecting users and the 'infinite amount of agents' that represent them. He also inquired about any macro considerations or MoneyLion seasonality that should be factored into the Q4 guidance.

Answer

CEO Vincent Pilette stated it's too early to discuss ARPU or ASP for AI agent protection, as it's a rapidly evolving 'revolution.' He emphasized the current gap in providing safety for the AI economy, similar to early antivirus needs, and expressed confidence that users would be willing to pay for this critical pain point. CFO Natalie Derse noted that all current considerations are baked into the Q4 guidance, without weaving in specific unknowns like FX. Mr. Pilette added that while consumer sentiment is at a multi-year low, it has been stable, and Gen's offerings in security and financial health remain highly relevant in this environment.

Joseph Gallo asked about the cross-sell opportunities between the MoneyLion and Gen Digital Inc. customer bases, which areas are gaining the most traction early on, and if there are more go-to-market efforts yet to be implemented. He also inquired about the performance in other geographical regions beyond America's.

Answer

Vincent Pilette, CEO, indicated that early traction is seen in embedding financial insights and options into the LifeLock app, and bringing Norton Money into Norton. He highlighted the employee benefit channel as a promising area for MoneyLion features, with positive early discussions. He also noted strong, broad-based growth in Europe over the last two quarters, even without financial wellness offerings yet.

Joseph Gallo asked about the cross-sell opportunities between the MoneyLion and Gen Digital customer bases, specifically which initiatives are gaining the most traction early on, and if there are more go-to-market efforts yet to be implemented to accelerate these efforts. He also inquired about the macro environment in other geographies beyond the Americas.

Answer

Vincent Pilette (CEO) noted that cross-sell is in early stages with significant room for acceleration. The most natural and immediate traction is embedding financial insights and options into the LifeLock app, followed by Norton Money into Norton, and MoneyLion features into the employee benefit channel, which is about to launch. Regarding other geographies, Pilette mentioned strong, broad-based growth in Europe over the last two quarters, noting that financial wellness has not yet been introduced there, indicating future growth levers.

Joseph Gallo followed up on the strong quarter and seemingly prudent guidance, questioning the deceleration from 11% growth to a 7% guide and asking at what point exposure management will become material enough to stabilize and inflect overall growth.

Answer

CFO Matt Brown explained that while the overall growth rate reflects a transition, Tenable One is showing significantly higher growth rates. He noted that Tenable One currently represents about a third of the business, and as its percentage climbs and grows faster than non-Tenable One segments, the overall growth rate is expected to stabilize and then inflect higher, with early signs of this already visible.

Joseph Gallo inquired about the recent strength in professional services over the past two quarters and how it should be considered within the context of the company's guidance. He also sought to reconcile the strong Q4 performance and prudent guidance (11% growth to 7% guide), asking if it's a direct result of the transition between VM and exposure management, and when exposure management will become substantial enough to stabilize or accelerate overall growth.

Answer

Co-CEO Mark Thurmond attributed the rise in professional services to the at-scale deployment of the Tenable One platform, which involves rolling out multiple asset types and larger transactions, requiring assistance for quick deployment and high utilization. CFO Matt Brown explained that Tenable One is experiencing significantly higher growth rates, and as it grows beyond its current one-third share of the business, the overall growth rate is expected to inflect higher. He noted early signs of increased Tenable One adoption and growth rates in new and expansion business.

An analyst on behalf of Joseph Gallo inquired about the performance of the channel, current sales quota capacity, and plans for future go-to-market investments.

Answer

Co-CEO Mark Thurmond stated that the channel performed extremely well in Q1, with great momentum from partners. He confirmed that Tenable added sales capacity in Q1 and will continue to evaluate adding more in specific geographies that show significant growth patterns throughout the year.

Joseph Gallo from Jefferies Financial Group Inc. sought further clarification on the end-of-life headwind to free cash flow, questioning if it relates to cash collections despite strong Q4 billings and ARR growth, and asked for quantification of the margin benefits from not supporting on-premise, specifying if this is a 2026 or 2027 story.

Answer

Guy Melamed, CFO and COO, clarified that the free cash flow headwind is primarily due to the lower expected renewal rate of the non-SaaS ARR compared to historical levels, which directly impacts profitability. He emphasized that the end-of-life announcement, while creating a headwind, was crucial for generating conversion urgency and preventing the masking of the strong SaaS business growth. He stated that the benefits of not supporting on-premise will lead to savings and contribute to achieving the 2027 financial model.

Joseph Gallo of Jefferies sought further clarification on the end-of-life headwind to free cash flow, given strong Q4 billings and ARR growth guidance for 2026, asking about cash collections and quantifying the margin benefit of not supporting on-premise in 2026 versus 2027.

Answer

Guy Melamed, CFO and COO, clarified that the free cash flow headwind is primarily due to the lower expected renewal rate of the non-SaaS ARR compared to historical levels, which directly impacts profitability. He reiterated that the end-of-life announcement, while causing a headwind, generated urgency for conversions and prevents the lower non-SaaS renewal rates from masking the strong SaaS business, with benefits on savings expected in 2027 and beyond.

Joseph Gallo asked if Varonis expects to ease on the 25-30% ASP uplift for conversions, what incentives are being offered to remaining on-premises customers to move to SaaS, and if there's a segment of the business unwilling or unable to migrate to SaaS.

Answer

Yaki Faitelson (CEO) stated they are 'uncovering every stone' to understand the unexpected Q3 surprise. Guy Melamed (CFO & COO) noted that Q1 and Q2 renewal rates had increased, and they need to determine if Q3 was an anomaly or a new trend. He emphasized that they are taking active measures, including headcount reduction and cost adjustments, and will evaluate Q4 results to inform 2026 assumptions.

Joseph Gallo asked if Varonis Systems plans to ease the 25-30% ASP uplift for conversions, what further incentives are being considered for on-premises customers to move to SaaS, and if there's a percentage of the business unwilling or unable to convert to SaaS.

Answer

CEO Yaki Faitelson stated the company is 'uncovering every stone' to understand the unexpected Q3 renewal rate decline. CFO Guy Melamed reiterated that Q1 and Q2 2025 saw increased renewal rates, making the Q3 drop a surprise. He mentioned baking in additional conservatism for Q4 guidance and taking actions like a 5% headcount reduction to address the top-line impact.

Joseph Gallo requested specific metrics or data points that provide confidence in Varonis's ability to achieve over 20% ARR growth after the SaaS transition.

Answer

CFO & COO Guy Melamed highlighted that SaaS Net Retention Rate (NRR) is trending higher than the previously reported company-wide NRR and that new customer momentum is strong. He suggested the gap between the current 19% ARR growth and the 20%+ target is small and can be closed by focusing on upsells post-transition. CEO Yaki Faitelson added that R&D investments provide strong visibility.

Joseph Gallo of Jefferies inquired about whether the cycle times for customer conversions to SaaS have changed and asked for details on gross retention and ASP upside for those conversions.

Answer

CFO and COO Guy Melamed confirmed that lessons learned from last year have been implemented, resulting in strong Q1 conversions. He noted that renewal and gross retention rates remain very strong. He also emphasized that momentum was balanced, with strong new customer adoption contributing significantly alongside the efficient conversions, both driven by the superior SaaS offering.

Joseph Gallo of Jefferies asked for any quantitative disclosures on the traction of new data store protections (e.g., Salesforce, Databricks, Snowflake) and which of these areas are expected to be the most significant ARR contributors in 2025, excluding Copilot.

Answer

CEO Yaki Faitelson explained that while it's still early for some of the newly released coverages, demand is strong across all repositories because breaches are happening everywhere. He emphasized that the market now understands the need for automated remediation, not just discovery, and that Varonis sees interest across all data stores where it can apply its full feature set. He also highlighted the traction of their identity-related threat detection, which often catches bad actors before they reach the data.

Joseph Gallo asked about the overall business environment and expectations for a Q4 budget flush, noting that the Q4 net new ARR guidance appears relatively similar to Q3's performance.

Answer

CFO & COO Guy Melamed stated that the company's guidance philosophy has not changed and they do not bake in potential positives, like Gen AI contributions, until they materialize in the data. Regarding seasonality, he noted that while Q4 is historically the largest quarter of the year, Varonis has not typically seen a 'budget flush' phenomenon and does not expect that to change with the move to SaaS.

Joseph Gallo inquired about the top-of-funnel pipeline for new logos, specifically how Agentic security is influencing new customer acquisition and if it's prompting a re-evaluation of human identities.

Answer

Mark McClain, Founder and CEO, and Matt Mills, President, explained that the new Flex pricing model, particularly the Digital Identity Flex, is designed to accelerate interest in Agentic security for greenfield opportunities. Matt Mills noted that almost every new proposal now includes AI, which is expected to boost adoption by simplifying the initial commitment.

Joseph Gallo asked about the impact of agentic security on the top-of-funnel pipeline for new logos, questioning if it prompts a re-evaluation of human identities. He also inquired about the Q4 ARR guidance, specifically the modest acceleration in new business, and any contributing factors like slip deals or FX.

Answer

Mark McClain (Founder and CEO, SailPoint) and Matt Mills (President, SailPoint) highlighted the new Flex pricing model, particularly Digital Identity Flex, as a catalyst for accelerating interest in agentic security among new customers, noting that AI is now integrated into every greenfield proposal. Brian Carolan (CFO, SailPoint) expressed confidence in the Q4 ARR guidance, stating it reflects a typical fourth quarter with no indication of slip deals, and that Q4 will represent about a third of the total year-net new ARR.

Asked for an update on sales capacity, investment areas, and the sources of the operating margin strength seen in the quarter.

Answer

The margin outperformance was partly due to the timing of investments that will occur later in the year. The company is in a good spot with sales capacity and is investing in areas like customer success to drive retention. The strategy is to balance continued investment in its 30% ARR growth with delivering margin expansion.

Joseph Gallo of Jefferies & Company Inc. asked about the drivers behind the quarter's margin strength, the current status of sales capacity, and the balance between investment and operating leverage.

Answer

CFO Brian Carolan explained that the margin outperformance was partly due to the timing of investments that will occur later in the year. He stated they are in a "good spot" with sales capacity and are investing in areas like customer success to drive retention, pursuing a balanced strategy of growth and margin expansion.

Joseph Gallo asked for commentary on Q4 net new ARR expectations and whether net new ARR growth is anticipated for the next fiscal year, given current capacity investments, seeking insight into the future growth trajectory.

Answer

Barbara Larson, CFO of SentinelOne, indicated that while formal ARR guidance for Q4 is not provided, net new ARR is expected to be sequentially higher, consistent with historical seasonality.

Joseph Gallo of Jefferies & Company Inc. inquired about the expected timeline for the Prompt Security acquisition to begin contributing materially to revenue, noting the massive need for AI security.

Answer

CEO Tomer Weingarten stated that while the initial financial impact is immaterial, the need to secure generative AI is exploding. He explained that Prompt Security addresses urgent enterprise risks by providing governance and control at the endpoint, and based on strong early traction, he believes it will be a significant contributor in the years to come.

Joseph Gallo of Jefferies & Company Inc. asked for details on the significant decline in Q1 net new ARR, questioning if it was driven by macro factors, competitive pressure, or higher churn from the Deception business.

Answer

CEO Tomer Weingarten attributed the results to a Q1 macro dynamic causing slipped deals, not elevated churn, and noted that trends improved in May. CFO Barbara Larson confirmed that churn from the Deception business was in line with their expectations.

Joseph Gallo asked new CFO Barbara Larson about any changes to her guidance methodology and also inquired about how customers are thinking about their calendar 2025 budgets.

Answer

CFO Barbara Larson stated her guidance philosophy is to set clear, reasonable expectations based on factors within their control, such as pipeline and win rates. CEO Tomer Weingarten added that customers' 2025 budgets remain focused on cost savings and modernizing infrastructure to defend against new AI-based threats, which aligns well with SentinelOne's value proposition.

Joseph Gallo inquired about which one or two products are expected to have an outsized growth impact for the next fiscal year (FY27) and whether security for AI is already factored into the preliminary FY27 guidance.

Answer

CEO George Kurtz identified Next-Gen SIEM, Cloud, and Falcon Shield as key growth drivers for the coming year, emphasizing their value in consolidation and expanding wallet share by enabling customers to collect previously uncollected data.

Joseph Gallo asked about specific products expected to have an outsized growth impact for fiscal year 2027, given the maintained 20% net new ARR growth guidance on higher numbers, and whether security for AI is already factored into the preliminary FY27 guidance or is a longer-term opportunity.

Answer

CEO George Kurtz identified Next-Gen SIEM as an 'all-star product' delivering significant value through disruptive pricing and expanding wallet share by enabling customers to collect more data. He also pointed to Cloud (driven by displacements and runtime protection) and Falcon Shield (for SaaS application protection) as key opportunities for the coming year, with continued focus on these areas.

Joseph Gallo from Jefferies & Company Inc. asked for an update on the competitive environment for cloud security and where customers are in their journey toward vendor consolidation in this area.

Answer

Founder & CEO George Kurtz stated that cloud security is still in its early days. He differentiated between posture management (CSPM) and the more critical cloud workload protection, an area CrowdStrike pioneered. He noted that as the market matures, customers realize the need for runtime protection. Kurtz highlighted CrowdStrike's comprehensive offering, including ASPM and DSPM, and mentioned that market disruption has led to tremendous interest and customer conversions, positioning the company well as one of the largest cloud security providers by revenue.

Joseph Gallo requested guidance on the free cash flow margin for the current fiscal year and asked about the factors underpinning the company's confidence in achieving over 30% margin next year.

Answer

CFO Burt Podbere reiterated the expectation of a 27% free cash flow margin exit rate in Q4 of the current year. He stated that confidence in reaching over 30% next year is driven by the Falcon Flex model, which results in larger, longer-term deals and faster cash conversion as customers consume credits and repurchase.

Joseph Gallo asked about the competitive landscape in cloud security and the trend toward workload protection, questioning when customers might fully consolidate on a single cloud security solution.

Answer

CEO George Kurtz agreed that workload protection is paramount for stopping breaches, unlike CSPM which is more for reporting. He affirmed that this is CrowdStrike's core strength and that the company is seeing consolidation in the market. He mentioned CrowdStrike has expanded its CNAPP capabilities (including CSPM, ASPM, DSPM) to be the single platform for customers, leading to the $600 million cloud ARR milestone.

Joseph Gallo asked for an update on momentum in the federal sector, which is entering its biggest quarter, and whether the IT outage could slow progress with typically conservative government customers.

Answer

CEO George Kurtz stated that CrowdStrike has good momentum in the federal space, which takes time but continues to yield wins. He also noted strength in state and local government business and expressed confidence in the long-term opportunity in the public sector.

Joseph Gallo asked about customer spending priorities for calendar year 2026, considering recent M&A in the cyber space, and the outlook for fundamental cyber growth.

Answer

Chairman and CEO Jay Chaudhry indicated that while IT budgets remain tight, cyber spending faces less pressure. He identified Zero Trust Security and AI Security as top priorities for customers, emphasizing Zscaler's ability to demonstrate strong cost takeout and its strategic partner status.

Joseph Gallo asked about customer spending priorities for calendar year 2026 and the implications of recent large M&A activities on underlying cyber growth.

Answer

Chairman and CEO Jay Chaudhry indicated that while the macro environment shows no significant growth and IT budgets remain tight, cyber spending faces less pressure. He noted continued scrutiny for large deals. Customers' top priorities are Zero Trust Security, driven by breach concerns, and AI Security, as CIOs seek to avoid being laggards. Zscaler's ability to demonstrate strong cost takeout by eliminating point products, combined with its strategic partner status and strong brand, is driving robust results.

Joseph Gallo inquired about Zscaler's fiscal year guidance methodology, any changes from historical approaches, and considerations for the macro environment or federal spending.

Answer

CFO Kevin Rubin stated there's no fundamental shift in guidance philosophy, maintaining a prudent approach. He noted the shift from billings to ARR as the primary growth metric. Chairman and CEO Jay Chaudhry added that no meaningful change in the macro environment is assumed for the guidance.

Joseph Gallo followed up on earlier comments about scheduled billings, asking if the expected acceleration would peak in Q4 or how it should be modeled for fiscal year 2026.

Answer

CFO Remo Canessa confirmed that scheduled billings are expected to increase in Q4 but declined to provide any commentary or guidance for fiscal year 2026.

Joseph Gallo followed up on the post-CrowdStrike outage sentiment, asking if the 'all eggs in one basket' concern hinders Zscaler's ability to sell incremental products, and also asked about the NRR assumption in the FY25 billings guide.

Answer

CEO Jagtar Chaudhry clarified that customers want to consolidate to a few best-of-breed platforms (e.g., EDR, identity, zero trust access), not a single vendor for everything, which supports Zscaler's platform expansion. CFO Remo Canessa addressed NRR, stating that the 115% rate is outstanding and the company does not guide the metric, focusing instead on overall top-line growth.

Joseph Gallo of Jefferies & Company Inc asked about the specific performance of the cloud security business, customer adoption of the runtime agent architecture, and any changes in the competitive landscape.

Answer

CPO Lee Klarich reiterated the company's conviction that all elements of cloud security—application security, posture, and runtime—are interconnected. He stated that as enterprises move critical applications to the cloud, runtime protection becomes paramount. Klarich highlighted the "shift left" (ASPM) and "shield right" (runtime) strategy enabled by Cortex Cloud, noting that customer response aligns with this integrated vision.

Joseph Gallo asked about the impact of geopolitical volatility in April on business operations, customer conversations, and what assumptions are embedded in the Q4 guidance.

Answer

CEO Nikesh Arora acknowledged that April was an 'anomalous month' with a brief customer pause due to tariff and supply chain concerns. However, he stated the team successfully executed through the uncertainty, and the business climate has since stabilized. He confirmed that customer transformation plans remain intact and the company is back to a normal cadence for Q4.

Joseph Gallo noted that while broader cybersecurity guidance appears tepid, Palo Alto's forecast is strong, and asked what factors are allowing the company to 'defy gravity'.

Answer

CFO Dipak Golechha attributed the strong guidance to three key factors: a robust and differentiated product portfolio, a significant pipeline contribution from the recent IBM QRadar acquisition, and continued confidence in their internal forecasting process. He suggested this outperformance is proof that their unique platformization strategy is working effectively.

Joseph Gallo asked for clarification on whether the full-year guidance incorporates observed macroeconomic headwinds or simply embeds conservatism, and also inquired about sales capacity and comfort in selling the expanded Venafi portfolio.

Answer

CFO Erica Smith confirmed that CyberArk has not seen any macro headwinds and that the guidance reflects prudence given broader market volatility, with potential for upside if current trends hold. CEO Matt Cohen added that the sales team is seeing a strong uptick in Venafi pipeline globally and is effectively running cross-sell campaigns, indicating high comfort with the broader portfolio.

Joseph Gallo asked about the remaining opportunity within the largest customers, given the $1M+ cohort now represents over $1B in total ACV, and whether growth will be concentrated there.

Answer

CEO Todd McKinnon stated that Okta is "really just scratching the surface" even with its largest customers, citing an anecdote of a major Q3 customer doing an even larger upsell in Q4 and still not having purchased Customer Identity. He emphasized that while the large enterprise opportunity is massive, Okta also sees robust, broad-based strength across the mid-market and low-end self-service segments, driven by partner ecosystem investments and specialized sales motions.

Joseph Gallo asked about the performance of the Customer Identity business, its market growth rate, and the maturity of the channel's ability to sell it.

Answer

CEO Todd McKinnon reported a solid quarter for the Customer Identity business, which is now over $1 billion in revenue. He noted its growth is often driven by customer experience needs rather than security, citing a European retailer consolidating logins. He sees an opportunity to accelerate growth by increasing focus on the developer persona, as many large deals originate from self-service, developer-led adoption.

Joseph Gallo asked about the early end-of-life refresh demand, specifically how the average deal size has increased compared to four years ago, to better understand the scale of the cross-sell opportunity.

Answer

CFO Keith Jensen noted that larger enterprises are moving first on refreshes, often swapping out equipment over several quarters as part of their deployment schedules. CAO Christiane Ohlgart added that for large customers with Enterprise Agreements (EAs), purchasing is ongoing, so one might not see a single large deal but rather a continuous replacement habit built into the EA, making a direct deal-size comparison less straightforward.

Joseph Gallo asked about the sustainability of the strong OT billings growth and the competitive landscape. He also inquired about the rebound in the retail vertical and the outlook for other verticals post-election.

Answer

CEO Ken Xie expressed a very bullish view on the OT market, stating Fortinet is a leader and has invested for a long time. He believes most future connections will be OT devices, representing a huge, long-term growth opportunity. Regarding verticals, Xie noted manufacturing was strong in Q3 and expects it to accelerate post-election. He also mentioned the service provider vertical is finally seeing growth after six quarters and that retail, which grew strongly in 2021-2022, is likely approaching a refresh cycle.