Joseph Hickey

Joseph Hickey of UBS asked about the potential for new customer additions to accelerate with increased R&D and the launch of PowerFlex support, and whether there are divergent expansion trends between newly acquired customers and the legacy customer base.

Answer

CEO Rajiv Ramaswami noted that while new offerings like PowerFlex support expand the market, the initial deal size may be smaller than a full HCI conversion. CFO Rukmini Sivaraman added that new logo growth comparisons become more challenging in Q4. She stated there is no significant divergence in expansion trends, as the typical model is to land with a small footprint in large customers and grow over time, regardless of their origin.

Joseph Hickey asked for color on monthly cloud customers and their usage patterns, and also inquired about the factors supporting the reiterated net dollar retention guidance for the full year.

Answer

CEO Shlomi Haim explained the strategy is to incentivize monthly cloud users to convert to annual contracts to reduce volatility. CFO Ed Grabscheid added that monthly customers now represent about 20% of cloud revenue and their contribution is expected to decline. Regarding net dollar retention, he confirmed the mid-teens guidance reflects the company's overall conservative outlook.

Joseph Hickey asked about the spending expansion patterns of existing AI customers and whether the company is currently supply-constrained for its generally available H100 GPU instances.

Answer

CFO Matt Steinfort confirmed they see healthy spending expansion from initial AI customers, not just customer rotation. CEO Paddy Srinivasan added that many AI customers are ISVs, so their spend grows as their own businesses grow. Regarding supply, Matt Steinfort stated they have been able to order and receive enough GPU capacity to meet demand and that supply is not currently a constraint on growth.