Joshua Tilton

Joshua Tilton sought clarification on whether Anthropic's AI functionality, as discussed in their recent blog post, primarily focuses on application security testing and vulnerability discovery prior to the use of traditional VM tools. He also asked Joo Mi Kim to compare the level of investment baked into the 2026 EPS guidance with prior years that saw significant leadership changes.

Answer

Sumedh Thakar (President and CEO, Qualys) confirmed that Anthropic's focus is largely on analyzing open-source code and commit logs to find vulnerabilities in the code base. Qualys's role, he explained, is to assess and validate these vulnerabilities in a runtime environment once the software is deployed, which is distinct from code discovery. Joo Mi Kim (CFO, Qualys) stated that with a strong, tenured executive team, the implied EBITDA margin contraction for 2026 (mid-40s from 47%) is less significant than the guidance provided at the beginning of 2025, indicating a more stable investment approach.

Joshua Tilton sought clarification on Anthropic's cybersecurity focus, asking if it primarily relates to application security testing and vulnerability discovery before traditional VM tools. He also inquired about the level of investment for 2026 baked into the EPS guidance compared to prior years, especially during periods of leadership changes.

Answer

Sumedh Thakar, President and CEO of Qualys, clarified that Anthropic's focus is largely on analyzing open-source code to find vulnerabilities, which is distinct from Qualys's runtime assessment. He explained that Qualys's role is to quickly assess and fix these vulnerabilities once they are discovered and compiled into applications running in diverse customer environments. Joo Mi Kim, CFO of Qualys, stated that the 2026 EPS guidance implies a slight contraction in EBITDA margin (mid-40s) compared to 2025's 47%, which is less significant than the implied contraction guided at the beginning of 2025, reflecting a strong and tenured executive team.

Joshua Tilton of Wolfe Research asked if the deltas in growth rates among publicly traded vulnerability management vendors are due to changes within the VM market or broader platform plays and non-VM products, and if the latter, which non-VM products are driving Qualys's growth separation. He also asked about current billings growth expectations for the full year.

Answer

CEO Sumedh Thakar attributed Qualys's differentiated growth to its 'awesome organic platform' and pivot towards prioritization, remediation (Patch Management, ETM, Eliminate), and award-winning threat intelligence, emphasizing the business alignment of cybersecurity spend. CFO Joo Mi Kim projected full-year 2025 current billings growth at around 8%, implying a lower Q4 growth rate due to a tough prior-year comparison.

Joshua Tilton of Wolfe Research, LLC asked for details on channel initiatives expected to drive large deals and whether these were included in guidance. He also questioned if new marketing and product investments were fully baked into the second-half outlook.

Answer

CEO Sumedh Thakar clarified his comments referred to the strategic MROC partner initiative, which is building pipeline over time, not specific large deals baked into guidance. CFO Joo Mi Kim confirmed that the planned increase in operating expenses, including sales and marketing, is fully factored into the current full-year guidance.

Joshua Tilton from Wolfe Research asked if the quarter's billings growth was in line with expectations and how to model billings growth relative to revenue growth going forward. He also questioned what actions could reignite growth in the direct sales business to better align with the partner-led growth.

Answer

CFO Joo Mi Kim stated that the 7% current billings growth was not a surprise and was in line with the expected annual revenue growth rate of 6-8%. She clarified that the company is intentionally taking a partner-first approach and is not focused on accelerating the direct business this year. The strategy involves building the channel team and transitioning some direct accounts to partners to drive overall growth, rather than trying to moderate the deceleration on the direct side.

Joshua Tilton, acknowledging past concerns, sought reassurance and specific details to instill confidence that the current deferred ARR balance will convert in Q4, and how much of it is already factored into the guidance.

Answer

CEO Neil Barua addressed concerns about deferred ARR conversion by highlighting the tighter integration between sales and customer success, ensuring informed contracting on implementation and payment schedules. He emphasized that deals are structured for durable, multi-year growth, not short-term ARR maximization, significantly reducing the risk of implementation schedule changes. He concluded that PTC has "little risk" regarding the deferred ARR converting as planned.

Joshua Tilton questioned the channel driving over 80% of net new ARR in the quarter, asking if there were one-offs in the direct business, if it was tied to deferred ARR, and when the direct business might contribute at a similar level.

Answer

Jennifer DiRico (CFO, PTC) explained that a single large deal could influence the mix, and customer preference often dictates whether a deal is fulfilled through direct or channel. Robert Dahdah (Chief Revenue Officer, PTC) added that the company actively fosters partner engagement and collaboration, noting no weakness in direct sales. Neil Barua (CEO, PTC) emphasized that the strong demand capture, predominantly deferred ARR, reflects overall go-to-market transformation, with timing affecting in-quarter ARR.

Joshua Tilton referenced the CRO's comment that 'the work has been put in' on the go-to-market transition and asked for a timeline on when the full impact of these efforts will be visible in top-line growth.

Answer

Chief Revenue Officer Robert Dahdah clarified that while foundational work is complete, the process of refining messaging and upskilling the team is ongoing. He stated that given typical deal life cycles, a more significant lift in results could be expected 'out into next year,' specifically aiming for 'mid to late next year.' However, he noted they are already seeing early benefits, such as saving deals with the new messaging.

Joshua Tilton asked if the midpoint of the new guidance includes a buffer for more widespread deal delays and whether the customer conversations were so alarming as to make the prior low-end guidance the new high-end.

Answer

CEO Neil Barua characterized the macro situation for PTC's end markets as 'dramatic' since early April, causing customers to become uncertain about their own outlooks and investment plans. He clarified the conversations are not 'scary' but reflect real business uncertainty. He reiterated that the 7% to 9% range is a transparent assessment based on a thorough analysis of the pipeline and potential risks, and the team is focused on capturing as much demand as possible within that framework.

An analyst on behalf of Joshua Tilton asked about the Q1 net ARR performance, noting it appeared to be below prior year levels and questioning if there was any channel underperformance.

Answer

CEO Neil Barua and CFO Kristian Talvitie clarified that the Q1 results were in line with their internal expectations, as the guidance had already accounted for the sluggish macro environment and go-to-market transitions. Talvitie specifically stated that the channel had a strong quarter, refuting any notion of underperformance from that segment.

Joshua Tilton from Wolfe Research questioned whether the uplift Varonis is achieving from on-premise to SaaS conversions is below the previously communicated 25%-26% blended rate, asking for clarification on the actual uplift rate and expectations for the upcoming year.

Answer

Guy Melamed, CFO and COO, redirected the focus to SaaS growth excluding conversions as the primary driver, stating that for 2026 modeling, conversions are assumed to come in flat from an uplift perspective. He highlighted the significant $65 million in conversions (including uplift) in Q4 2025, reducing non-SaaS ARR to approximately $105 million, and emphasized that the company's future growth is driven by new licenses and expanded platform value, not just uplift. Yaki Faitelson, CEO, reinforced that growth is driven by new licenses and adding value through platform expansion.

Joshua Tilton of Wolfe Research sought clarification on the uplift Varonis is achieving from converting its on-premise base to SaaS, noting it appears below the previously communicated 25-26% blended rate, and asked for expectations for this rate in the coming year.

Answer

Guy Melamed, CFO and COO, redirected the focus to SaaS growth excluding conversions as the primary driver, stating that for 2026, conversions are assumed to come in flat from a modeling perspective. He highlighted the significant $65 million in conversions in Q4, reducing non-SaaS ARR to $105 million, and emphasized that new licenses and platform expansion are the main growth drivers, not just uplift.

Joshua Tilton sought clarification on the specific reasons for lower-than-expected on-premises renewals in both federal and non-federal segments, asking if federal underperformance was related to a shutdown and if non-federal customers were aware of the end-of-life announcement pre-quarter.

Answer

Guy Melamed (CFO & COO) cited multiple factors for non-renewals, including sales process issues, conversions not related to contracts, and additional budgetary scrutiny, but no single overarching theme. Federal underperformance was a contributing factor. Tim Perz (VP of Investor Relations) confirmed competitive win rates did not change. Yaki Faitelson (CEO) added that some customers were single-threaded, and sales teams sometimes failed to follow the full sales methodology. The end-of-life announcement was made post-quarter.

Joshua Tilton sought clarification on the specific reasons for lower-than-expected on-premises renewals in both federal and non-federal segments, asking if the federal decline was related to the shutdown and if non-federal customers were aware of the end-of-life announcement.

Answer

CFO Guy Melamed cited multiple factors for the Q3 decline, including sales process issues, budgetary scrutiny, and federal underperformance, but no single overarching theme. He confirmed competitive win rates remained unchanged. CEO Yaki Faitelson added that some customers were single-threaded, and sales teams sometimes failed to follow the full sales methodology. The end-of-life announcement was made post-Q3.

Joshua Tilton asked a two-part question regarding the current macroeconomic environment compared to the previous quarter and how the accelerated SaaS conversion is tracking against internal plans.

Answer

CFO & COO Guy Melamed stated that the SaaS conversion is tracking very well, evidenced by the increased SaaS mix in the full-year guidance. He described the macro environment in Q2 as very similar to Q1, with continued deal scrutiny, but noted that demand for data security, amplified by AI tools like Copilot, remains a powerful tailwind.

Joshua Tilton of Wolfe Research asked about the specific impacts of the macroeconomic environment during the quarter and how those expectations are incorporated into the full-year guidance.

Answer

CFO and COO Guy Melamed acknowledged macro uncertainty but noted the company had a strong quarter driven by the SaaS transition, MDDR, and GenAI tailwinds. He stated that despite the macro environment, the company's confidence in its long-term opportunity has never been higher, leading them to raise the full-year ARR guidance and SaaS mix target while focusing on factors within their control.

Joshua Tilton from Wolfe Research questioned the decision to accelerate the SaaS transition, asking if something changed to make conversions more challenging, and how necessary this acceleration is to achieving the 2025 ARR guidance.

Answer

CFO and COO Guy Melamed stated that the guidance philosophy is consistent with last year, using the prior year's net new ARR as a starting point, and that the acceleration is not a reaction to new challenges. He reiterated that the commentary on conversions being a drag on growth is consistent with past quarters. CEO Yaki Faitelson added that the strategic driver is the superior functionality and value of the SaaS platform; getting customers there faster allows them to realize benefits like better security with less effort, which is a win-win.

Joshua Tilton asked how Varonis views the increasingly noisy competitive landscape in data security as Gen AI adoption becomes more mainstream, and how this might change its competitive positioning heading into 2025.

Answer

CEO Yaki Faitelson stated that Varonis has seen no change to the competitive landscape at this point, which they verify through their proof-of-concept (POC) sales process. He believes the 'noise' is actually positive awareness, as it makes data security front and center for organizations. He emphasized that solving this complex problem is something Varonis excels at and that the increased market attention has not impacted their competitive standing.

Joshua Tilton of Wolfe Research asked for a characterization of the organic business performance, excluding DAT, Neptune, and Deltek, assumed in the 2026 guidance. He also inquired about learnings from ProCare's performance being applied to other inorganic businesses converting to organic in the second half of 2026.

Answer

Jason Conley, Executive Vice President and Chief Financial Officer, stated that the rest of the organic business is assumed to get 'a little bit better, but not a lot,' contributing perhaps 10 basis points to the enterprise. Neil Hunn, President and Chief Executive Officer, confirmed that significant learnings from ProCare's governance are being applied to Subsplash and CentralReach, leading to immediate corrective actions for variances, which has resulted in CentralReach being ahead of its model and Subsplash on track.

Joshua Tilton asked for a characterization of the organic business performance for 2026 guidance, excluding DAT, Neptune, and Deltek. He also inquired about learnings from Procare's challenges being applied to CentralReach and Subsplash as they transition to organic growth.

Answer

Jason Conley, Executive Vice President and Chief Financial Officer, stated that the rest of the organic business is broadly expected to get 'a little bit better, but not a lot,' contributing maybe 10 basis points to the enterprise, with swing factors primarily within Neptune. Neil Hunn, President and Chief Executive Officer, confirmed that significant learnings from Procare's governance are being applied to CentralReach and Subsplash, leading to immediate corrective actions for small variances. This approach has resulted in CentralReach being ahead of its underwrite model and Subsplash being on track.

Joshua Tilton asked for more details on Roper Technologies' guidance, specifically how the organic revenue growth has been de-risked, with a breakdown between Deltek and Neptune, and later inquired about Roper's unique internal AI collaboration and how knowledge is shared across the portfolio.

Answer

President and CEO Neil Hunn outlined segment-specific outlooks, noting mid-single-digit growth for Application Software (contingent on Deltek's perpetual licenses), mid-single-digit plus for Network, and low single digits for TEP due to Neptune's tariff. Regarding AI, Mr. Hunn described a common purpose across vertical market companies, frequent internal AI showcases, weekly tech updates, and group executive coaching, emphasizing the decentralized structure as an 'unlock' for AI success.

Joshua Tilton asked Roper Technologies for further details on de-risking its organic revenue growth guidance, specifically the confidence in the current base for the rest of the year and the breakdown of de-risking from Deltek versus Neptune. He also inquired about Roper's unique AI positioning, knowledge sharing, and best practices across its portfolio.

Answer

Jason Conley, EVP and CFO, outlined segment-specific outlooks, noting Deltek's perpetual license activity and Transact projects as key variables for the Application Software segment, recurring revenue for Network, and Neptune's tariff activity for TEP. Neil Hunn, President and CEO, described Roper's AI approach as a 'clarity of purpose' across similar vertical market businesses, emphasizing extensive internal information sharing through showcases and weekly updates, and highlighting the decentralized structure as an 'unlock' for AI success.

Joshua Tilton followed up on Deltek, asking if its performance was ahead of the conservative expectations set last quarter. He also asked about the Subsplash acquisition, seeking to understand what gives Roper confidence in improving its already high-teens growth profile.

Answer

EVP & CFO Jason Conley clarified that while they are more bullish on Deltek's pipeline due to recent legislation, the timing of orders is uncertain, so the outlook remains conservative for 2025. President and CEO Neil Hunn corrected the premise of the Subsplash question, explaining the goal is to sustain its high-teens growth while significantly improving the margin profile by executing on numerous operational levers left by the prior owner.

Joshua Tilton asked for clarification on the interplay between management's commentary on 'uncertainty' and 'durability' in relation to the reiterated guidance, and sought more detail on Deltek's durability.

Answer

EVP and CFO Jason Conley affirmed that the portfolio's durability provides confidence in the guidance, with puts and takes like slight weakness at Deltek being offset by strength elsewhere. President and CEO Neil Hunn emphasized Deltek's durability stems from its 80-85% recurring revenue base, which offers significant predictability despite short-term uncertainty.

Joshua Tilton sought to reconcile the positive tone of the earnings call and strong customer embrace of SailPoint's vision with what he perceived as a 'lighter beat' in the quarter, asking about factors like Fed performance or term ARR to SaaS ARR migrations.

Answer

Brian Carolan, CFO, emphasized the strong overall health of the business, highlighting the annual ARR guidance beat (surpassing $1 billion), net new ARR of $58 million (up 24% YoY and 20% above guidance), and SaaS net new ARR growth of 52% YoY. He reiterated confidence in the business, strong performance across all verticals including Fed, and a robust attach rate for new offerings, dismissing any notion of a 'lighter' performance.

Joshua Tilton sought to reconcile the positive earnings call tone and customer embrace of SailPoint's new vision with a 'lighter beat' in the quarter, specifically asking about Fed performance or how term ARR converts to SaaS ARR during migrations.

Answer

Brian Carolan (CFO, SailPoint) clarified that the annual ARR guidance beat was significant, equivalent to a 4% quarterly beat. He highlighted that net new ARR was up 24% (20% above guidance) and SaaS net new ARR grew 52% year-over-year with a strong attach rate. He emphasized the overall health of the business, surpassing $1 billion ARR with consistent growth and margin expansion across all verticals, including strong Fed performance.

Joshua Tilton asked if the appointment of a 'growth officer' as interim CFO, following a period of increased focus on profitability, signals a shift in the company's strategic priorities.

Answer

Tomer Weingarten, CEO of SentinelOne, clarified that there was no intent to signal a change in strategy. He affirmed that the company will continue its path of consistent year-over-year operating margin expansion, striving to achieve the Rule of 40 as quickly as possible, and extracting further operating leverage from the business.

Josh Tilton noted that year-to-date bookings growth aligns with the street's revenue growth expectations for next year and asked about management's comfort level with these street estimates.

Answer

CFO Brett Tighe stated that the business momentum is growing, driven by successful specialization and a favorable market for new products like Okta securing AI, governance, and PAM. He highlighted increasing confidence, productivity, and optimism within the organization, reinforcing the goal of accelerating growth in the medium term. Brett Tighe also mentioned adding sales capacity to address demand, indicating a positive outlook without directly commenting on specific street estimates.

Joshua Tilton from Wolfe Research LLC asked which part of the identity stack is best positioned to benefit from AI and questioned what the Acxiom Security acquisition adds to Okta's strategy beyond its existing cross-app access initiative.

Answer

CEO Todd McKinnon explained that AI exacerbates current identity challenges like service accounts, which Okta monetizes today via products like OPA and ISPM. He clarified that the Acxiom acquisition is primarily about acquiring a talented PAM team and their technology to enhance OPA's capabilities for infrastructure connections. He noted that cross-app access is a separate, open standard to govern application connections, a problem that is also being supercharged by AI.

Joshua Tilton of Wolfe Research LLC asked if the emergence of an 'agentic world' with AI makes the decision to buy identity solutions versus building them in-house an even more obvious choice for customers compared to the traditional SaaS era.

Answer

CEO Todd McKinnon opined that the general trend is already toward 'more buy, less build' because commercial solutions like Auth0 are now far more robust and easier to use than a decade ago. He views the move to AI as being 'on trend' with this existing dynamic rather than a major new accelerant of the buy-versus-build decision itself.

Joshua Tilton asked which side of the business, Workforce or Customer Identity (CIAM), has a more exciting or nearer-term monetization opportunity from agentic AI.

Answer

CEO Todd McKinnon identified the Customer Identity side as more exciting for agentic AI. He explained that enterprise developers are building agentic applications that require a strong identity foundation. These developers use CIAM tools like Auth0's Fine Grained Authorization and the new 'Auth for GenAI' platform to securely build and scale these new applications, representing a direct and immediate monetization path as enterprises embrace AI agents.

Joshua Tilton asked how ongoing pressures on seat and MAU counts affect visibility into next year and how this is factored into the FY'26 guidance.

Answer

CFO Brett Tighe confirmed these pressures are fully accounted for in the preliminary FY'26 guidance. He identified two main factors: the macro trend of license scrutiny and pressure from older COVID-era customer cohorts. He anticipates the impact from the older cohorts will materially conclude by the end of the first half of FY'26.

Josh Tilton asked about the drivers behind the significant increase in the billings growth guide for Q4. He also inquired about the levers Autodesk has to incentivize the newly formed channel to drive better new business growth following the agency transition.

Answer

CFO Janesh Moorjani attributed the Q3 outperformance and raised Q4 guidance to consistent strong execution and a stable macroeconomic environment, which was more favorable than the prudent, severe scenario assumed in earlier guidance. CEO Andrew Anagnost explained that Autodesk is enabling the channel with better customer intelligence and automating renewals. The goal is to incentivize partners more on new business generation than on renewals, aligning with long-term objectives and allowing the channel to build capacity for new business while handling renewals more efficiently through automation and self-service.

Josh Tilton asked about the specific factors driving the significant increase in the Q4 billings growth guidance. He also inquired about the levers Autodesk plans to use to incentivize the newly formed channel, post-agency transition, to drive new business growth.

Answer

CFO Janesh Moorjani attributed the Q3 outperformance and Q4 guide increase to consistent strong execution and a stable macroeconomic environment, which contrasted with the more prudent, severe macro assumptions in earlier guidance. CEO Andrew Anagnost explained that Autodesk will leverage better customer intelligence, automate renewals, and shift channel incentives to prioritize new business generation over renewals, aligning partners with long-term growth objectives.

Joshua Tilton of Wolfe Research LLC asked whether the business momentum is simply stable or improving if macro uncertainty doesn't materialize, and which AI application across the portfolio is most exciting for the near term.

Answer

EVP & CFO Janesh Moorjani responded that if the environment remains stable, they expect to beat the low end of guidance, with underlying momentum continuing as it has. President and CEO Andrew Anagnost highlighted the 'nuts and bolts' capabilities of the upcoming Autodesk Assistant, which will use prompt-driven workflows to make jobs easier and provide immediate, tangible productivity gains.

Joshua Tilton requested a detailed explanation of the mechanics behind the full-year billings guidance and asked for color on multiyear deals renewing as annual contracts.

Answer

CFO Janesh Moorjani clarified the billings guidance: the core underlying business forecast was slightly lowered to reflect macro prudence, but this was offset by a stronger-than-expected tailwind from the new transaction model adoption. He also corrected the premise of the second question, stating the company did not say multiyear deals were renewing as annual, but rather that the annual billings stack is rebuilding post-transition.

Joshua Tilton asked where the Net Retention Rate (NRR) finished for the year relative to the FY26 revenue guide and how much of the benefit from the recent restructuring is factored into the current year's operating margin guidance.

Answer

CFO Janesh Moorjani stated that the NRR range for FY26 is expected to be 100% to 110%, the same as FY25, and typically hovers around the middle of that range. Regarding the restructuring, he confirmed the savings are baked into the guidance but are part of an integrated plan. He pointed to the slowdown in total spending growth (from 7% in FY25 to 4% in FY26) as the best indicator of the overall impact.

Joshua Tilton asked if the incoming CFO might alter the company's long-term 10-15% underlying business growth framework.

Answer

CEO Andrew Anagnost responded that while the new CFO will evaluate all frameworks, the 10-15% target still makes sense for the long term. He cautioned that due to accumulated headwinds, the company expects to perform at the low end of that range in the short term, as it takes time for a subscription model to recover.

Joshua Tilton asked if Zscaler's full-year ARR assumptions for Red Canary had changed and if the full-year ARR raise reflected the organic outperformance in the first quarter.

Answer

CFO Kevin Rubin reiterated that Red Canary is trending slightly better but is not material to the overall business, and specific commentary will cease. He confirmed that the Q1 outperformance was indeed passed through to the full-year guidance. Chairman and CEO Jay Chaudhry clarified that organic growth in Q1 was consistent with Q4 and exceeded internal expectations.

Joshua Tilton asked if the assumption for Red Canary's contribution to full-year ARR had changed, and if not, whether the full-year ARR raise was solely attributable to the organic outperformance in Q1.

Answer

CFO Kevin Rubin confirmed that Red Canary is trending slightly better than previous guidance but reiterated that its contribution is not material to the overall business, and specific commentary will cease. He stated that the outperformance was indeed passed through to the full-year guide. Chairman and CEO Jay Chaudhry further clarified that organic growth in Q1 was consistent with Q4 and exceeded internal expectations.

Joshua Tilton sought clarification on the net new ARR growth trajectory, asking for the previous year's net new ARR growth (excluding Red Canary) to better gauge the acceleration or deceleration implied by the fiscal 2026 guidance.

Answer

CFO Kevin Rubin stated that Zscaler is guiding for a high single-digit net new ARR growth in fiscal 2026 on an organic basis.

Joshua Tilton asked for clarification on sales productivity, questioning if the Q2 improvement was ahead of schedule and what level of productivity is needed to achieve the updated full-year billings guidance.

Answer

CFO Remo Canessa stated that the increase in sales productivity was in line with expectations. He anticipates productivity will continue to improve throughout the year and confirmed that the current trajectory fully supports the company's prudent full-year guidance.

Joshua Tilton followed up on identity security's benefit in an agentic future, asking how AI-driven volume and inspection impact traditional firewall and SASE businesses, and distinguishing identity security from IAM.

Answer

Chief Product and Technology Officer Lee Klarich explained that AI creates an extraordinary increase in data volume and movement, driving demand for network traffic inspection. Chairman and CEO Nikesh Arora clarified that true identity security involves privileged access controls beyond basic IAM, and CyberArk provides the best platform to extend these capabilities across all enterprise identities, similar to how firewall subscriptions have expanded.

Joshua Tilton followed up on identity security, asking how investors should expect network traffic volume to change in an agentic future and its implications for traditional firewall and SASE businesses.

Answer

Chief Product and Technology Officer Lee Klarich explained that AI drives an extraordinary increase in data volume and movement, particularly for model training and enterprise deployments, leading to more network traffic. Chairman and CEO Nikesh Arora further elaborated on identity security, distinguishing IAM from true security, and emphasized the future need for privileged access management for almost every identity, leveraging CyberArk's platform and expanding firewall subscriptions.

Joshua Tilton (Wolfe Research) asked Tooey Courtemanche about the key areas where incoming CEO Ajay Gopal is expected to drive the most significant positive improvements for Procore. He also questioned Matt Puljiz on the feasibility of maintaining margin expansion commitments while simultaneously allowing Ajay to pursue growth initiatives.

Answer

Tooey Courtemanche, Founder, CEO, and President, emphasized Ajay Gopal's proven track record in scaling global businesses and building partner ecosystems as crucial for Procore's future. Matt Puljiz, SVP of Finance, confirmed that margin expansion is achievable, citing 400 basis points expansion this year and potential for more next year, while ensuring Ajay has the necessary flexibility for growth.

Joshua Tilton asked Tooey Courtemanche where the new CEO, Ajay Gopal, could make the biggest positive improvements to the business and questioned Matt Puljiz on maintaining margin expansion while allowing for growth profile improvements under the new leadership.

Answer

Tooey Courtemanche, Founder, CEO, and President, Procore Technologies, highlighted Ajay Gopal's experience in scaling businesses from $1 billion to $3-5 billion, his global business expertise, and his ability to build partner ecosystems as key areas for significant improvement. Matt Puljiz, Senior Vice President of Finance, Procore Technologies, affirmed that Procore can remain committed to margin expansion while allowing Ajay Gopal flexibility for growth, noting that 400 basis points of non-GAAP EBIT expansion is achievable next year, potentially higher, with specific quantification to follow Ajay's onboarding.

Joshua Tilton asked for clarification on how Cadence's updated guidance for the coming quarter handicaps any potential negative impacts in the China region, given ongoing tariff negotiations.

Answer

SVP and CFO John Wall stated that Cadence's guidance assumes the current export control regime remains substantially similar through the end of 2025. He noted that the company always incorporates prudence for regulatory variability and believes geopolitical tensions are currently lower than expected.

Joshua Tilton asked for clarification on how Cadence's updated guidance for the coming quarter handicaps any potential negative impacts in the China region, given ongoing tariff negotiations.

Answer

SVP and CFO John Wall stated that Cadence's guidance incorporates prudence for regulatory variability and assumes the current export regime remains substantially similar through the end of 2025. He added that it is difficult to predict future geopolitical events, but current reports suggest geopolitical tensions are lower than expected.

Joshua Tilton of Wolfe Research asked about the long-term trajectory for recurring revenue and the durability of growth as the hardware cycle potentially moderates.

Answer

SVP & CFO John Wall noted that while upfront businesses like IP and hardware have grown faster, he believes the 80/20 recurring/upfront revenue split could be sustainable. He explained that the core EDA software business is also performing very well, with strong growth across the entire portfolio, providing a durable foundation for total company growth.

Joshua Tilton sought clarification on the China outlook, asking if the decision to maintain a 'flat for the year' guidance, despite a strong Q1, is based on prudence or on an actual expectation of a slowdown.

Answer

CFO John Wall confirmed the stance is based on prudence amid the current macro environment. He reiterated that Q1 bookings were solid and stronger than expected, particularly in recurring revenue. This positive performance is what enabled the company to raise its overall 2025 guidance, even while maintaining a conservative assumption for China.

Joshua Tilton from Wolfe Research sought clarification on two points: whether conviction regarding China's performance has changed since last quarter, and if the hardware guidance is still based on approximately six months of visibility.

Answer

CFO John Wall confirmed the hardware guidance methodology is unchanged, with good visibility for about two quarters and more clarity on the second half expected mid-year. Regarding China, he stated the flat guidance reflects prudence and difficulty in prediction at the start of the year, not a change in conviction. He did note that China's revenue improved sequentially through 2024.

Joshua Tilton asked for insight into the historical pattern of China revenue recovering after a down year, questioning if it relies on non-recurring items like hardware sales. He also requested an update on the revenue contribution from the BETA CAE acquisition.

Answer

CFO John Wall explained that historically, China revenue recoveries have been correlated with new hardware launches, which pull through software revenue, and he expects a similar dynamic this cycle. Regarding BETA CAE, Wall stated that while it is performing well and driving pull-through revenue in automotive, the company does not guide for the small tuck-in acquisition separately.

Joshua Tilton questioned the rationale for lowering the high end of the ARR guidance given that Q2 results were in line with expectations. He also asked about the immediate expectations for the newly appointed Chief Commercial Officer.

Answer

CEO Corey Thomas explained that the ARR guidance range was narrowed as a prudent measure, reflecting a shift in deal mix towards larger, more strategic deals which have less predictable closing times. For the new CCO, Thomas stated the focus will be on fundamentals, specifically operationalizing the customer expansion engine and improving cross-sell motions, with tangible improvements expected heading into the next year.

Joshua Tilton asked for clarification on whether the D&R deal slips were macro-driven and if a similar dynamic affected the risk and exposure business.

Answer

CEO Corey Thomas confirmed the D&R slips involved a couple of very large, material deals and were indeed due to macro pressures in sectors like education and retail, noting most have since closed. He explained that while the risk management business also saw slippage, it was less concentrated due to smaller average deal sizes. The full-year guide assumes consistent D&R performance and a more modest pace for risk management upgrades.

Represented by Patrick, Joshua Tilton's office asked about the year-over-year and sequential decline in new logo additions and whether this level should be considered the new run rate.

Answer

CFO Jim Benson acknowledged that new logos were lighter and expects a heavier expansion mix this year, partly due to segmentation changes that prioritize installed base opportunities. He stressed that the focus is on the quality and size of new lands—aiming for over $100k on a DPS contract—rather than the sheer number of units.

Joshua Tilton of Wolfe Research sought clarification on whether Q2 China revenue was below expectations, prompting the updated full-year view. He also asked if Synopsys's long-term target of double-digit revenue growth remains achievable even if all sales to China were hypothetically halted.

Answer

CEO Sassine Ghazi clarified that Q1 and Q2 China results were in line with internal forecasts and that the full-year guidance was reiterated with an assumption of a decline in China to show confidence in the overall business. Setting aside speculation on China, he affirmed strong confidence in achieving the company's long-term, organic, industry-leading double-digit growth target.

Joshua Tilton of Wolfe Research sought to clarify if the updated full-year outlook for China was due to an underperformance in Q2. He also asked about the company's confidence in its long-term double-digit revenue growth target if sales to China were to be halted entirely.

Answer

CEO Sassine Ghazi clarified that Q2 China results were in line with internal forecasts and the guidance reiteration reflects confidence in the full year even with a potential annual decline in China. He affirmed strong confidence in achieving industry-leading, double-digit organic growth for the company, separate from any speculation about a hypothetical halt in China sales.

Joshua Tilton sought clarification on the updated China outlook, confirming the expectation has shifted to below-average growth. He then asked what provides confidence to reiterate full-year guidance despite this headwind and requested specifics on the offsetting areas of strength.

Answer

CEO Sassine Ghazi confirmed the weaker outlook for China is due to strengthening headwinds but reiterated confidence in the full-year guide. He cited several areas of offsetting strength, including high demand for the new HAPS 200 and ZeBu 200 hardware families, strong IP demand from system and AI/HPC companies, and robust customer adoption of advanced EDA and AI-driven optimization tools.

Joshua Tilton asked for more specific details on how the company's conservative stance on China is embedded in the FY25 guidance. He also inquired how the mission-critical nature of Synopsys's software translates into better pricing power with customers.

Answer

CEO Sassine Ghazi reiterated that the balanced view on China stems from observable economic deceleration and the unpredictable nature of expanding U.S. restrictions, with expectations for China's growth to be in line with the corporate average. CFO Shelagh Glaser explained that the software's mission-critical nature translates to value during regular contract renewals, where they align with customers on the benefits of new innovations like AI, which in turn supports consistent, company-wide operating margin improvement.

Joshua Tilton asked for a direct clarification on whether Intel's recent comments about efficiency and layoffs have caused any changes in Synopsys's forward growth expectations and what provides confidence that there will be no impact.

Answer

CEO Sassine Ghazi stated directly that there is no short-to-midterm impact, positive or negative, on growth expectations. He explained that confidence stems from the nature of Synopsys's engagements, which are structured as multi-quarter, long-term commitments. Any shift in a customer's strategy, such as moving more IP development to Synopsys, would take a full development cycle before impacting revenue.

Speaking for Joshua Tilton, an analyst asked about the resiliency of Department of Transportation (DOT) budgets and what impact, if any, is being seen on them.

Answer

Executive Chair Greg Bentley stated that he has not heard of any negative impact on DOT budgets. He expressed hope that governments will continue to prioritize getting more efficient at infrastructure provisioning, noting the U.S. has an opportunity to catch up with the rest of the world in applying digital twins, a trend already underway in certain states.

Joshua Tilton sought a simplified assessment of the demand environment for 2025 compared to 2024, asking if it is more, less, or similarly favorable given all the moving parts.

Answer

Executive Gregory Bentley described the overall environment as 'full up' and busy, with the significant exception of China, which he called 'disappointing.' He stated that for the first time, the company's internal plan for 2025 is for a continued decline in China. CEO Nicholas Cumins summarized that outside of China, the demand backdrop remains 'very consistent and very favorable.'

Joshua Tilton of Wolfe Research asked if Bentley's high visibility will continue as the volatile SMB segment grows, and whether the company's initial skepticism towards the SMB opportunity has now fully shifted to a strategic focus.

Answer

Executive Chair Greg Bentley affirmed that visibility in the core enterprise business is stronger than ever, which allows the company to take on more volatility from high-growth areas like SMB. He confirmed that any initial skepticism about SMB is 'out the door,' crediting the success of the direct digital engagement model and the fresh perspective of new management.

An analyst on behalf of Joshua Tilton asked about the progress of the Vulcan Cyber acquisition, including early customer feedback and whether the ~$5 million revenue contribution for the year is still expected.

Answer

Co-CEO Stephen Vintz confirmed the expected contribution of roughly $5 million, weighted towards the second half of the year. He explained that Vulcan's IP is being integrated to allow Tenable One to ingest third-party data, with an expanded offering planned for Q2. Vintz highlighted that Vulcan was the catalyst for a recent 7-figure VM displacement deal.

Joshua Tilton of Wolfe Research asked about any post-election changes in construction demand, what capabilities Trimble might seek in a large construction acquisition, and how Transporeon's bookings might perform in a freight market recovery.

Answer

CEO Robert Painter stated there has been no discernible change in construction demand and that potential M&A would focus on geographic expansion or filling product feature gaps. Regarding Transporeon, he explained that a market recovery would impact transaction volumes more than bookings growth, leading to significant operating leverage and a rapid improvement in profitability due to its transactional model.

Joshua Tilton asked new CEO Nadav Zafrir to define what an 'industry-leading growth rate' would look like for Check Point and requested the organic growth figures for Q4, excluding the Cyberint acquisition.

Answer

CEO Nadav Zafrir defined leadership as achieving 'healthy, sustainable growth' while maintaining the company's strong efficiency, rather than targeting a specific growth number. CFO Roei Golan clarified that the Cyberint acquisition contributed less than 1% to Q4 billings and revenue, indicating that the quarter's growth was almost entirely organic.

Joshua Tilton asked about strategic pricing initiatives in the workforce portfolio that are driving win rates, and also inquired about the changing demand for certificate management ahead of the Venafi acquisition.

Answer

CEO Matt Cohen explained their solution-based pricing, where even the 'standard' workforce package bundles SSO/MFA with advanced features like secure web sessions and a secure browser, creating superior value. Regarding certificate management, he noted an inflection point in the market as shrinking certificate lifecycles and complexity make DIY approaches impractical, driving demand for enterprise-grade solutions like Venafi.

Asked for an explanation of the seemingly light Q1 billings growth and for an update on the demand environment compared to last year.

Answer

Q1 billings were in line with internal expectations, impacted by FX, lower services revenue, and expected seasonality. The demand environment is viewed as improving, and the company feels 'conservative but positive.'

Asked about the level of conservatism in the 2024 outlook, the embedded macroeconomic assumptions, and the comparative growth rates of the data analytics business versus the core simulation business.

Answer

The 2024 guidance is described as pragmatic and prudent, reflecting increased investment to capitalize on opportunities. Regarding business segments, simulation growth was strong in 2023 while data analytics led in 2022. The company sees these technologies converging, making distinctions difficult, and expects growth from all areas as they blend.