Keith Weiss

Keith Weiss inquired about investor concerns regarding CapEx growing faster than expected and Azure revenue growing slower, questioning the return on investment (ROI) for Microsoft's CapEx spend and how to evaluate capacity expansion in relation to future Azure growth.

Answer

CFO Amy Hood clarified that CapEx spend, particularly for short-lived assets like GPUs and CPUs, supports multiple areas including M365 Copilot, GitHub Copilot, R&D, and Azure. She noted that if all new GPU capacity from Q1 and Q2 were allocated solely to Azure, its KPI would exceed 40%. CEO Satya Nadella added that Microsoft optimizes for a long-term lifetime value (LTV) portfolio across all its businesses, not just Azure, and views compute as a form of R&D.

Keith Weiss asked about investor concerns regarding CapEx growth outpacing expectations and Azure growth being slower, inquiring about the ROI on CapEx spend and its correlation with Azure revenue growth.

Answer

Amy Hood (CFO) clarified that CapEx supports multiple areas beyond Azure, including M365 Copilot, GitHub Copilot, Dragon Copilot, Security Copilot, and R&D. Satya Nadella (Chairman and CEO) added that Microsoft optimizes for a long-term 'LTV portfolio' across various incremental businesses and views compute as R&D.

Keith Weiss asked about potential shifts in computing architectures, including AGI, and whether these could weaken Microsoft's strong market positioning, especially in light of the OpenAI agreement.

Answer

Satya Nadella, Chairman and Chief Executive Officer, addressed the AGI definition in the OpenAI contract, emphasizing the 'jagged intelligence' of AI systems. He explained Microsoft's strategy to build 'organizing layers for agents' like GitHub Agent HQ and Microsoft 365 Copilot to smooth these edges and deliver real-world value, expressing confidence in Microsoft's progress despite AGI not being achieved soon.

Keith Weiss asked about Microsoft's stock underperformance despite strong results, the potential impact of AGI or evolving computing architectures on Microsoft's market positioning, and concerns regarding the future of generative AI models.

Answer

Chairman and CEO Satya Nadella addressed the AGI definition in the OpenAI contract, noting that AI systems will likely exhibit 'jagged intelligence.' He explained that Microsoft's systems, like GitHub Agent HQ and M365 Copilot, serve as 'organizing layers for agents' to smooth these inconsistencies and deliver value. Nadella expressed confidence in driving customer value through AI advances via these systems, stating that AGI, as defined in their contract, is not expected soon.

Keith Weiss of Morgan Stanley asked about the diffusion of AI applications, questioning how Microsoft sees the balance between major 'head apps' shaping the platform versus the broader adoption by smaller applications.

Answer

CEO Satya Nadella responded that Microsoft tracks both the usage of major applications and the broader diffusion of Tier 2 applications. He stated that seeing growth in both areas is a positive indicator of healthy platform development and that he feels very good about the company's current standing and future prospects.

Keith Weiss from Morgan Stanley asked about the sustainability of AI workload growth, questioning if it's driven by a few large applications or a broader diffusion across many smaller ones.

Answer

CEO Satya Nadella responded that growth is occurring on both fronts. He explained that while major 'head apps' are crucial for platform development and learning, Microsoft is also seeing a broad diffusion of smaller, Tier 2 applications being built, which he views as a positive indicator for sustained, long-term growth.

Keith Weiss of Morgan Stanley asked for insight into the drivers behind Microsoft's strong quarterly performance, specifically questioning the balance between major 'head apps' and broader platform diffusion in the AI space.

Answer

CEO Satya Nadella explained that growth is occurring on two fronts simultaneously. He stated that learnings from building major AI applications are crucial for enhancing the underlying platform, and that Microsoft is seeing strong adoption in both top-tier apps and the wider ecosystem of smaller applications, indicating healthy, broad-based diffusion.

Keith Weiss from Morgan Stanley asked about Microsoft's data center strategy, inquiring about potential shifts in commitments and the risk of a future GPU oversupply previously mentioned by management.

Answer

CEO Satya Nadella explained that Microsoft continuously adjusts its data center build-and-lease strategy based on future workload growth, shape, and location to optimize for efficiency and the latest technology. CFO Amy Hood added that these are long-lead-time decisions and confirmed that while capacity is coming online faster, strong demand means they will be slightly short on power and space exiting the quarter.

Keith Weiss of Morgan Stanley asked for clarification on why Azure revenue came in at the low end of guidance, seeking details on the 'execution issues' and whether Microsoft remains confident in a back-half acceleration.

Answer

CFO Amy Hood specified the challenges were in non-AI services within 'scale motions' (indirect sales channels) and that adjustments are being made. She affirmed confidence in AI growth, noting the team successfully pulled in some capacity delivery dates. CEO Satya Nadella added that AI growth was better than expected and that prioritizing new platform shifts like AI is crucial, even if it temporarily affects older sales motions.

Keith Weiss of Morgan Stanley inquired about the internal and external constraints on Microsoft's AI investments, focusing on the capital required for future foundational models and the challenges of sustainably powering new data centers.

Answer

CEO Satya Nadella explained that capital outlay for training new models is ultimately rate-limited by the monetization of inference demand, similar to how cloud build-out was tied to demand signals. He noted that short-term external constraints like data center availability and power have been challenging due to rapid demand growth but expressed confidence that supply and demand would better align in the second half of the fiscal year.

Keith Weiss (asked by Sanjay Singh) inquired about the performance of ServiceNow's federal business in Q4 2025, particularly in light of the government shutdown, and the outlook for 2026, including large deals and global government traction.

Answer

Chairman and CEO Bill McDermott highlighted strong federal business performance despite the shutdown, noting significant traction in state and local government, and an 80% year-over-year growth in the global government business across Europe, Middle East, and Asia.

Keith Weiss of Morgan Stanley questioned why the full-year operating margin guidance was not raised despite a strong Q2 beat and AI-driven productivity gains, and asked if the cost of selling AI solutions is inherently higher.

Answer

President & CFO Gina Mastantuono attributed the stable full-year margin guide to the timing of marketing spend, prudence for the pending Moveworks acquisition, and strategic reinvestment of savings into AI talent and sales. President, CPO & COO Amit Zavery clarified that co-innovating with customers on AI is not a higher cost of sale but an acceleration of product development.

Keith Weiss of Morgan Stanley inquired about the conservatism baked into the 2025 guidance, particularly concerning potential delays or sales cycle elongations among enterprise customers in the current uncertain environment.

Answer

President and CFO Gina Mastantuono confirmed that while demand remains strong, the guidance incorporates a healthy degree of conservatism to reflect real-world complexity and potential geopolitical risks. She emphasized that pipelines are robust and the ServiceNow platform is a deflationary tool customers lean on during uncertainty, setting the company up for success.

Keith Weiss asked for clarification on the cRPO duration headwind from the federal business, questioning if it was absent in Q3. He also asked if the emergence of AI agents changes the sales cycle for Now Assist and the Pro Plus SKU or if it's a natural extension of the conversation.

Answer

CFO Gina Mastantuono confirmed the duration headwind from the federal business was not present in Q3 but is expected to return in subsequent quarters until Q3 of the next year. CEO Bill McDermott stated that AI agents are a natural, complementary evolution in the innovation story, reinforcing the value of the platform and serving as another upsell opportunity without disrupting the existing sales cycle for Now Assist.

Keith Weiss asked for confirmation that the cRPO duration headwind from the strong federal business in the prior year was not present in Q3. He also questioned if the emergence of agentic AI changes the sales cycle for Now Assist and the Pro Plus SKUs, or if it flows naturally into the existing conversation.

Answer

CFO Gina Mastantuono confirmed that the duration headwind from federal deals was not a factor in Q3 but will return in subsequent quarters until lapping the cycle next year. CEO Bill McDermott stated that agentic AI is a natural, complementary evolution in the innovation story. He believes it reinforces the value of the platform, serves as another upsell opportunity, and further solidifies ServiceNow as a key strategic partner for enterprises.

Keith Weiss asked about the longer-term growth trajectory for Adobe, specifically when the proliferation and monetization of AI technologies would lead to a stabilization or acceleration of total Adobe ARR growth, beyond the current leading indicators.

Answer

CEO Shantanu Narayen stated that Q4 FY25 represented a strong quarter and an inflection point, with leading indicators providing confidence for future growth. He highlighted progress across business professionals and consumers (MoM increase, freemium usage), creative professionals (Creative Cloud, Firefly app, Firefly Foundry automation), and enterprise, noting that the record Digital Media ARR was a result of these combined efforts and that the underlying business has shifted towards AI-infused, higher-value products.

Keith Weiss asked about the technical contribution of Adobe's infrastructure in the 'Adobe Magic' video demo, specifically regarding Nano Banana integration, and the potential risk to Adobe from advertising platforms like Google and Meta integrating diffusion engines directly, inquiring about the percentage of Adobe's customer base that consists of single-channel marketers.

Answer

David Wadhwani, President of Digital Media, explained that Adobe's strategy focuses on choice and deep integrations, making all third-party models available within Adobe applications and blending precision tools like Photoshop with generative capabilities. Shantanu Narayen, Chair and CEO, added that the 'magic' lies in Adobe's ability to seamlessly integrate diverse models within its applications. For advertising platforms, he noted that while small businesses might use direct integrations, larger enterprises prioritize multi-channel campaigns, attribution, and analysis, which Adobe supports through Gen Studio for Performance Marketing with integrations for platforms like TikTok, Meta, Google, and Amazon.

Keith Weiss inquired about the specific value Adobe brings to generative AI workflows, differentiating between the core diffusion engine (e.g., Nano Banana) and Adobe's underlying infrastructure for fine-grained manipulation. He also asked about the risk posed by advertising platforms integrating diffusion engines directly, particularly for single-channel marketers, and the percentage of Adobe's customer base that might be affected.

Answer

David Wadhwani, President of Digital Media, highlighted Adobe's differentiation through choice of third-party models and deep integrations, emphasizing the seamless workflow combining generative capabilities with Photoshop's precision. Shantanu Narayen, Chair and CEO, added that Adobe's applications provide the 'magic' by integrating various models, and for larger companies, Adobe offers comprehensive campaign creation, cross-channel execution, attribution, and analysis, mitigating risks from ad platforms.

Keith Weiss from Morgan Stanley inquired about Adobe's unique value proposition in integrating third-party diffusion engines like Nano Banana with its core applications, and the potential risk posed by advertising platforms directly embedding diffusion engines for single-channel marketers.

Answer

David Wadhwani, President of Digital Media Business, highlighted Adobe's differentiation through choice and deep integrations, emphasizing the seamless workflow between generative capabilities and precision tools like Photoshop. Shantanu Narayen, Chairman & CEO, added that Adobe's applications provide the 'magic' for integrating various models and addressed the advertising platform risk by noting that larger enterprises prefer Adobe's multi-channel campaign creation, attribution, and analysis capabilities, with strong support for third-party ad channels.

Keith Weiss of Morgan Stanley asked for two clarifications on the full-year guidance: first, the assumed customer mix between Creative Cloud Pro and standard plans, and second, any changes to foreign exchange assumptions.

Answer

Chairman & CEO Shantanu Narayen answered that the goal is for Creative Cloud Pro to be the 'sweet spot' for most creative professionals, with the transition occurring over time as annual contracts renew. Regarding guidance, he stated that while there was a minor FX benefit, the vast majority of the revenue guidance increase was driven by strong underlying ARR performance and its conversion to revenue.

Keith Weiss from Morgan Stanley asked if the faster growth in the 'business professionals and consumer' group versus the 'creative and marketing professionals' group was expected, and also inquired if the accelerated pace of share repurchases could be sustained.

Answer

Chair and CEO Shantanu Narayen confirmed the growth dynamics were logical, noting the creative and marketing group has a large untapped opportunity with solutions like GenStudio. Regarding buybacks, EVP and CFO Daniel Durn stated the company has been opportunistic, repurchasing nearly $11 billion in the last four quarters, and will continue to be strong capital allocators supported by robust cash flow. Shantanu Narayen added it was a 'vote of confidence' in the business.

Keith Weiss pointed out the disconnect between management's excitement for innovation and the stock's underperformance, highlighting decelerating growth in Creative Cloud ARR and asking if there is a 'leak in the bucket' such as market share loss.

Answer

Shantanu Narayen, Chair and CEO, responded by noting that Adobe beat all of its financial targets for the year. He clarified that the core Creative business (excluding Acrobat's contribution) showed stronger growth than the headline number suggests. He emphasized strong traction at both the low end with Express and the high end with Creative Pros and enterprises, highlighting GenStudio as a key future growth driver. He also acknowledged the opportunity to better align pricing with value through new tiers.

Keith Weiss inquired about the latent opportunity within Samsara's existing customer base for emerging products, asking about the potential uplift from expanded solution adoption. He also sought clarification on the drivers behind the acceleration in net new ARR growth over the past two quarters.

Answer

Dominic Phillips, CFO, Samsara, noted that most net new ACV comes from existing customer expansions, and emerging products are still scratching the surface, enabling larger multi-product deals. He stated there isn't a specific rule of thumb for uplift but emphasized the broader system-of-record value. Phillips added that the acceleration in net new ARR was broad-based, driven by record large customer additions, emerging product strength, and international momentum.

Keith Weiss of Morgan Stanley asked for clarification on deal cycle elongation, seeking to distinguish between macro-related delays and those caused by selling larger, more complex solutions. He also inquired about which verticals were most impacted and the drivers behind the record gross margins, including the potential impact from OEM relationships.

Answer

Chief Financial Officer Dominic Phillips attributed the deal elongation directly to macro uncertainty, citing customer conversations about prioritizing spending on tariff-impacted goods, and noted the impact was widespread across verticals. Regarding gross margins, he stated that while the 79% result was a record, he doesn't expect significant near-term leverage, but future expansion could come from scaling software-only SKUs and achieving greater economies of scale. He clarified that OEM partnerships are not yet a material contributor to margins.

Keith Weiss inquired about the business mix between upsells and new customers and asked if the new Samsara Intelligence products would be monetized separately or serve to enhance the core platform.

Answer

CFO Dominic Phillips noted the quarter was slightly tilted toward expansion, a natural result of moving upmarket, and confirmed the sales model remains integrated without separating 'hunters' and 'farmers'. CEO Sanjit Biswas added that the new AI products are in beta, and the company will determine pricing and packaging based on customer feedback, while also continuing to embed AI into the core platform.

Keith Weiss asked about the perceived mismatch between investor expectations regarding generative AI's potential to disrupt SaaS applications and Salesforce's observed business inflection, seeking insight into customer preferences for building their own AI solutions versus adopting vendor offerings like Salesforce's Agentforce.

Answer

Chief Revenue Officer Miguel Milano explained that a new, large secular demand trend for the 'agentic enterprise' is emerging, with customers realizing the difficulty of DIY solutions after experimentation. He emphasized that successful enterprise AI requires context, data, metadata, deterministic workflows, and AI embedded where humans are, which Salesforce provides as the 'last mile.' CEO Marc Benioff concurred, highlighting the exponential monetization opportunity this new paradigm presents.

Keith Weiss of Morgan Stanley asked about the timeline and mechanism for new products like AgentForce and Data Cloud to accelerate Salesforce's overall revenue growth beyond the current rate.

Answer

Chair and CEO Marc Benioff affirmed a commitment to growth transformation while maintaining margin and cash flow discipline. He highlighted strong performance in SMB and mid-market segments and plans to hire 1,000-2,000 more salespeople. President and CRO Miguel Milano added that AE capacity is planned to grow 22% year-over-year, driven by strong pipeline velocity and momentum in the lower end of the market.

Keith Weiss asked about the timeline and mechanism for new products like AgentForce and Data Cloud to meaningfully accelerate Salesforce's overall revenue growth beyond the current trajectory.

Answer

Chair and CEO Marc Benioff affirmed a commitment to growth alongside margin discipline, highlighting plans to hire 1,000-2,000 more salespeople to target high-growth areas like SMB and mid-market. President and Chief Revenue Officer Miguel Milano added that sales capacity is set to grow 22% by year-end, supported by a strong pipeline and momentum in the run-rate business and through the AWS Marketplace.

Keith Weiss asked about the pricing model for Agentforce, specifically the dynamics of shifting from a seat-based model to one with consumption elements and its net effect on contract sizes.

Answer

Chair and CEO Marc Benioff explained that pricing is a hybrid model, combining per-human (seat-based) and per-agent (consumption-based) fees, citing a large telecom deal as an example. President and COO Brian Millham added that the model will likely evolve toward 'universal credits' for customer flexibility, which they view as a significant pricing upside.

Keith Weiss of Morgan Stanley requested more detail on the initial 200 Agentforce deals, asking about their structure, typical customer uplift, and which clouds they are most commonly attached to.

Answer

President and COO Brian Millham explained that the initial Agentforce deals are primarily add-ons for existing Service Cloud customers. However, he stressed that customers recognize the broader platform opportunity, with significant potential in Sales, Marketing, and Commerce Clouds. Millham noted that Data Cloud is a foundational component included in all Agentforce deals, positioning it as the "tip of the iceberg" for the product's potential.

Keith Weiss asked about Salesforce's growth equation, questioning how various pillars like industry clouds and international expansion contribute, and when generative AI will become a material factor. He also inquired about the pricing model for Agentforce, particularly how Salesforce will capture value from productivity gains if it leads to fewer user seats.

Answer

CEO Marc Benioff outlined a three-pronged growth strategy: technology stack transformation (apps, Data Cloud, agents), verticalization, and international expansion. He explained that Agentforce pricing will be consumption-based, citing a potential model of around $2 per conversation, representing a new, high-margin revenue stream. COO Brian Millham added that new AI innovations enhance core apps, and Salesforce can monetize the efficiency gains by focusing on the customer's total cost of operations. He also pointed to channel diversification, like the AWS Marketplace, as a key growth driver.

Keith Weiss asked about the early success of Workday's AI solutions, specifically the 1.5 points of ARR growth, seeking metrics like typical deal uplift, customer base penetration, and future extrapolation.

Answer

Garrett Katzmeyer (President of Product and Technology, Workday) confirmed AI solutions added 1.5 points of ARR growth, with 75% of new sales and 35% of customer expansions including AI. He highlighted strong traction for acquired companies like Sana and Paradox, and organic solutions like Eversort (record quarter) and ExtendPro (50% YoY growth). He noted that a HiredScore recruiting agent adds approximately $2.50 for every $1 of standard recruiting SKU.

Keith Weiss asked for more details on the early success of Workday's AI solutions, specifically the 1.5 points of ARR growth, seeking rules of thumb for modeling uplift, customer base penetration, and future extrapolation.

Answer

CEO Carl Eschenbach and President of Product and Technology Gerrit Kazmaier confirmed that AI solutions added 1.5 points to ARR growth. They noted that 75% of new sales and 35% of base expansions included an AI solution. Gerrit Kazmaier provided an example, stating that for every dollar of standard recruiting sold, approximately $2.50 of HiredScore Recruiting Agent is sold on top.

Speaking for Keith Weiss of Morgan Stanley, an analyst asked for an update on the agent partnership with Salesforce, including the integration progress and any impact on win rates.

Answer

Chief Product Officer David Somers explained that the partnership with Salesforce is progressing well and that the collaboration has been instrumental in providing key learnings for Workday's own agent system of record. He noted that it helped them understand how to enable communication between agents on different platforms, but emphasized that it is still early days for the partnership.

Keith Weiss asked about Intuit's insights into the health of the U.S. consumer and small businesses, seeking to understand if Intuit's strong results reflect broader economic stability or Intuit's outperformance in a potentially shaky environment, and the durability of these trends.

Answer

Intuit CEO Sasan Goodarzi reported seeing stability in data across 100 million consumers and 10 million+ businesses, with stable or increasing profits and cash flows, and payroll hours worked being up. He noted industry-specific variations but overall aggregate success. Goodarzi also emphasized that Intuit's platform fuels business success, with platform users being significantly more successful. CFO Sandeep Aujla reinforced the resilience of Intuit's 'must-have' offerings, citing strong charge volume growth (29% with bill pay, 18% excluding) and continued Credit Karma engagement as indicators of stability and opportunity.

Keith Weiss inquired about the health of the overall U.S. consumer based on Intuit's data signals and the durability of the company's strong results in a potentially shaky economic environment.

Answer

CEO Sasan Goodarzi and CFO Sandeep Aujla reported stability in data across 100 million consumers and 10 million+ businesses, with stable and increasing profits and cash flows. Payroll hours worked are up, though industry-specific variations exist. They emphasized that Intuit's offerings are 'must-have' and resilient, with charge volume up 29% (18% excluding bill pay) and strong Credit Karma engagement, reinforcing confidence in the business's stability.

Keith Weiss of Morgan Stanley inquired about the expected timeline for monetizing the new AI agents and asked for the drivers behind the confidence in Mailchimp's return to double-digit growth in fiscal 2026.

Answer

CEO Sasan Goodarzi explained that while AI agent engagement is significantly above expectations, no monetization is assumed in the fiscal 2026 guidance, positioning it as a future opportunity. For Mailchimp, he expressed confidence in exiting fiscal 2026 with double-digit growth, driven by a new sales playbook targeting mid-market customers and product improvements that have resulted in the highest customer satisfaction since the acquisition.

Keith Weiss asked about expense management, questioning if the strong Q2 margin expansion was due to hiring timing or if there's more leverage opportunity than previously expected.

Answer

CFO Sandeep Aujla explained that the company is on track with hiring, which was slightly less than planned due to internal efficiencies from AI, such as a 40% increase in engineer productivity and a 20% reduction in TurboTax support contact rates. He attributed the strong margin performance to disciplined spending, earlier-than-expected AI efficiencies in customer success, and a slower start to the tax season, all of which solidify confidence in the full-year margin guidance.

Keith Weiss asked about the churn observed at the lower end of Mailchimp's customer base, questioning if it was a new phenomenon, and also requested an update on the progress of creating a deeply integrated, bundled solution with QuickBooks.

Answer

CEO Sasan Goodarzi clarified that the churn is not macro-related but an idiosyncratic issue resulting from rapid innovation for mid-market customers that made the product's usability tougher for very small businesses. He stated the company is focused on improving the first-time use experience. Regarding integration, he indicated that a deeply integrated end-to-end experience is still 'several quarters' away.

Keith Weiss asked for the drivers behind the expected Q1 acceleration in QuickBooks Online and for details on which parts of the business were reduced during the recent restructuring.

Answer

CEO Sasan Goodarzi attributed the QBO acceleration to three factors: growth in services (payments, payroll, live, Mailchimp), traction in the mid-market, and pricing power derived from the value of the integrated business suite. Regarding the restructuring, he explained it was not concentrated in one area but was a company-wide effort focused on performance management and consolidating technology talent from sites in Boise and Edmonton into key hubs. CFO Sandeep Aujla added that larger customers have higher service adoption rates, contributing to the growth.

Keith Weiss inquired about the risk of overcapacity, specifically concerning AI labs, and the fungibility of CoreWeave's infrastructure—whether it's usable for any customer, for both inference and training, or if it's built to suit specific clients.

Answer

CEO Mike Intrator confirmed that CoreWeave's infrastructure is fungible and can be transferred between clients. He stated it's built to the most demanding specifications, suitable for both training and inference workloads. He also highlighted the critical role of CoreWeave's robust software suite in enabling effective infrastructure utilization and maintaining flexibility.

Keith Weiss inquired about the risk of overcapacity, particularly concerning AI labs, and the fungibility of CoreWeave's infrastructure. He asked if the infrastructure is built to suit specific customers or is adaptable for any customer, including for both inference and training workloads.

Answer

CEO Mike Intrator confirmed that CoreWeave's infrastructure is fungible, built to the most demanding specifications, and usable for both training and inference. He emphasized the company's focus on maintaining optionality and flexibility, attributing much of this to their robust software suite.

Keith Weiss inquired about the mix of business between training and inference workloads and asked where the most acute supply chain challenges currently lie, whether in chips or power.

Answer

CEO Michael Intrator explained that CoreWeave's infrastructure is fungible for both training and inference, noting a 'massive increase' in inference workloads. He identified the primary supply chokepoint as 'powered shells'—data centers with available power—rather than a shortage of GPUs or other components.

Keith Weiss of Morgan Stanley asked about the mix of training versus inference workloads on CoreWeave's platform and inquired about the most significant supply constraints, whether in chips or power.

Answer

CEO Michael Intrator explained that the infrastructure is built to be fungible for both training and inference, noting a significant increase in inference workloads. He identified 'powered shells' and data center capacity as the primary supply bottleneck, rather than semiconductor chips alone.

Keith Weiss asked about the primary drivers behind CoreWeave's significant Q1 revenue outperformance and sought clarification on the accounting treatment that places the large OpenAI contract in revenue backlog but not yet in Remaining Performance Obligation (RPO).

Answer

CEO Michael Intrator attributed the revenue beat to a strategic effort to accelerate infrastructure investment and delivery to meet client contracts more quickly. CFO Nitin Agrawal explained that the accounting treatment for the OpenAI deal has not been finalized, which is why it is not yet included in RPO, but clarified this does not impact the timing of revenue recognition, deal economics, or cash flows.

Keith Weiss inquired about the strategic implications of the Weavy acquisition, specifically how it expands Figma's design paradigm and user base, and whether it reinforces the belief that value accrues more within the design platform than in the underlying AI models.

Answer

Dylan Field, Co-founder and CEO of Figma, explained that Weavy, with its modular approach to composing AI model outputs with professional editing tools, enhances craft and will benefit existing product and brand personas while potentially opening new ones. He affirmed that the acquisition aligns with Figma's decade-long thesis that design, craft, and point of view are differentiators, and value is captured within the platform beyond the initial AI prompt.

Keith Weiss asked about the strategic implications of Figma's Weavy acquisition, specifically how it expands the design paradigm and user base, and where value accrues in the AI tool chain between the platform and models.

Answer

Dylan Field, Figma's Co-founder and CEO, explained that Weavy enhances craft and sculpting of AI model outputs, aligning with Figma's thesis that design and craft are key differentiators. He noted it could open new personas but primarily benefits existing product and brand teams by enabling higher craft results.

Keith Weiss asked two questions: first, about the Accelerated Application Management segment's potential to displace existing solutions and contribute to net new ARR growth; second, about customer growth expectations, including new logo growth and how Agentic and solution breadth might attract customers, referencing the growth in $250k and $1M ARR customer counts.

Answer

Brian Carolan, SailPoint's CFO, stated that Accelerated Application Management will contribute to NRR over time by providing faster time to value and stickiness across application tiers. Regarding customer growth, he emphasized the quality and size of new customer lands over sheer volume, highlighting a 48% year-over-year increase in customers with over $1 million ARR, a 30% increase in average ARR per new SaaS logo, and a 40% attach rate for add-on modules.

Asked about the drivers behind the strong growth in large customers (those with over $250k and $1M in ARR) and if there have been any changes to the sales strategy.

Answer

The growth in large customers is driven by broad expansion opportunities, including overall identity growth, suite upgrades, and cross-selling of new modules, which has pushed the average ARR per customer above $300k. There has been no significant change to the go-to-market or selling strategy; they continue to execute on their target account list.

Keith Weiss of Morgan Stanley inquired about the durability of strong growth in large customers (over $1M ARR) and the reasons for more tempered margin guidance in FY26.

Answer

CFO Brian Carolan stated that large customer growth is durable as SailPoint is only 14% penetrated into its 15,000-account target list. Regarding margins, he explained the FY26 guidance reflects a 50 bps headwind from public company costs and a 200-300 bps headwind from the ongoing transition to SaaS, which impacts in-period revenue recognition.

Keith Weiss of Morgan Stanley asked about the drivers behind the strong growth in large customers (those with over $250k and $1M in ARR) and whether there have been any recent changes to the sales strategy.

Answer

CFO Brian Carolan attributed the growth to broad expansion opportunities, including suite upgrades and cross-sells, noting the average ARR per customer now exceeds $300,000. President Matt Mills confirmed there has been no significant change to their go-to-market strategy, which remains focused on a target account list.

Keith Weiss of Morgan Stanley asked about the discrepancy between market concerns over AI's impact on developer roles and Atlassian's positive outlook, seeking clarity on current seat expansion trends.

Answer

CEO Mike Cannon-Brookes stated that Atlassian is not seeing any negative impact on its metrics from code-generating AI tools. He expressed a strong belief that AI will lead to more software creation and an increase in the number of developers, thereby expanding Atlassian's opportunity. He noted that internal data shows customers using AI tools actually see faster growth in business users within Jira, reinforcing its role as a central workflow hub.

Keith Weiss from Morgan Stanley questioned the market's concern about AI code generation tools negatively impacting developer seat growth, asking for Atlassian's perspective on the trend.

Answer

CEO & Co-Founder Mike Cannon-Brookes stated that Atlassian is seeing no negative impact on its business metrics from AI code generation tools. He argued that as AI makes software creation more accessible and efficient, it will lead to more software being built by more people, thus increasing the need for Atlassian's collaboration and workflow management products. He views AI as a significant tailwind for the business, expanding the overall opportunity.

Keith Weiss asked for Atlassian's perspective on the increasingly crowded market for AI 'agents,' seeking to understand the competitive dynamics and Atlassian's specific right to win in this area.

Answer

CEO Mike Cannon-Brookes acknowledged the hype around the term 'agent' and detailed Atlassian's key differentiators. He highlighted the company's rapid R&D cycle, a multi-model AI strategy using over 30 models, and a unique data advantage through its proprietary Teamwork Graph. He emphasized that these factors, combined with direct access to over a million AI users, give Atlassian a strong competitive position.

Keith Weiss asked for help distinguishing how much of the strong cloud revenue performance was driven by a stabilizing macro environment versus Atlassian's proactive upselling and cross-selling initiatives on its cloud platform.

Answer

CFO Joe Binz attributed the outperformance to a stable macro environment, which led to continued stabilization in the SMB segment and healthy enterprise trends, complemented by steady sales execution. CEO Mike Cannon-Brookes added that while macro is a factor, the key long-term growth levers—enterprise go-to-market, the 'system of work' driving seat expansion, AI adoption, and cross-selling of products like JSM and Loom—are within Atlassian's control and are resonating with customers.

Keith Weiss from Morgan Stanley asked about Appian's durable competitive advantages against generative AI and AI labs, and questioned how much more operating efficiency the company can achieve.

Answer

CEO Matt Calkins asserted that AI provides an "engine," but Appian provides the complete "car"—a secure, scalable, enterprise-grade platform with integrated data fabric and high-availability features that AI cannot replicate. CFO Serge Tanjga added that future efficiencies will come from improved sales productivity, cost-effective R&D expansion, and internal use of Appian's own AI technology.

Keith Weiss of Morgan Stanley asked for details on the business model for Cloudflare's 'Agentic Web' initiative (Act Four), including how it will be enabled for customers and monetized.

Answer

Co-Founder & CEO Matthew Prince explained that it is too early to define a precise business model, comparing it to the evolution of music streaming. He noted that potential models could involve per-transaction fees but the immediate focus is on driving adoption and establishing Cloudflare's network as the core infrastructure for agentic transactions. Prince emphasized that Cloudflare's strategic position, with a significant portion of the internet running through its network, provides a unique opportunity to define these new standards.

Keith Weiss of Morgan Stanley requested details on the use case for the landmark $100 million Workers deal and inquired about the dynamics behind the strong overall customer growth versus the slower growth in customers paying over $100k.

Answer

CEO Matthew Prince described the Workers deal as a win over a traditional hyperscaler, driven by superior performance, lower cost, and faster developer velocity for a new project. Regarding customer metrics, Prince and CFO Thomas Seifert explained the slower $100k+ customer additions were due to timing, a tough prior-quarter comparison, and a shorter quarter affecting ratable revenue recognition, not an increase in churn.

Keith Weiss of Morgan Stanley asked about the potential for Check Point to use generative AI internally to drive efficiencies, which could offset the need for higher investment and help sustain operating margins while pursuing growth.

Answer

CFO Roei Golan confirmed this is a priority with an active internal task force, but he anticipates the benefits will be realized in the longer term (2026-2027) rather than the short term. CEO Nadav Zafrir added that the primary goal is to use AI to 'do more with the same' to fuel growth, not just to cut costs.

Keith Weiss asked about the demand drivers from generative AI, seeking to distinguish between what is impacting business today versus what is a more forward-looking opportunity.

Answer

CEO George Kurtz explained that today, AI is driving demand through products like Charlotte AI, which automates SOC workflows and delivers immediate security outcomes. Looking forward, he highlighted a massive opportunity in protecting autonomous AI agents, which he described as "superhuman identities" that will require visibility, control, and protection, significantly expanding the addressable market.

Keith Weiss questioned how the AI imperative extends beyond Prisma AIRS to the broader portfolio and how this trend provides confidence in achieving future Next-Generation Security (NGS) ARR growth targets.

Answer

CEO Nikesh Arora detailed that securing AI involves runtime AI firewalls, an extension of existing capabilities, which pulls through demand for software firewalls. He noted this accelerates the hardware-to-software shift, creating a tailwind for NGS ARR. He also cited the strategic acquisition of Protect.AI as a move to bolster these critical runtime security capabilities.

Keith Weiss asked about changes in the competitive environment given the increased industry focus on identity, and tactically, whether organic net new ARR grew year-over-year when excluding M&A contributions.

Answer

CEO Matt Cohen asserted that while many vendors talk about identity, they typically solve narrow use cases, and he sees no significant change in the competitive landscape as customers seek a unified platform. CFO Erica Smith confirmed that organic subscription net new ARR did grow year-over-year, but declined to provide a specific breakout due to increasing platform-level sales and synergies.

Keith Weiss from Morgan Stanley acknowledged Shopify's quality but raised concerns about gross margin degradation. He asked about the durability of these pressures, the impact of the PayPal accounting change, and when margins might stabilize.

Answer

CFO Jeff Hoffmeister explained that Subscription Solutions margins remain stable, while Merchant Solutions margins are pressured by the growing mix of the lower-margin Payments product. He noted that while newer, higher-margin products like Tax and Capital are growing well, they are not yet large enough to offset the mix shift. He did not quantify the PayPal impact but confirmed it contributes to the headwind.

Keith Weiss questioned the source of confidence in a stronger second-half performance, asking about the risk of customers delaying upgrades and how much of that expected strength is already factored into the annual guidance.

Answer

CAO and incoming CFO Christiane Ohlgart expressed confidence based on new product releases that offer significant TCO improvements and noted that FortiGate revenue grew faster than overall product revenue. Founder, Chairman, and CEO Ken Xie added that Fortinet continues to gain market share across its three pillars (Secure Networking, SASE, SecOps) due to its technological advantages.

Keith Weiss of Morgan Stanley asked about the strategic fit of the recent Cyral acquisition for database activity monitoring and how Varonis views the evolving competitive landscape for data security.

Answer

CEO Yaki Faitelson described the Cyral acquisition as a natural extension driven by customer demand to replace legacy database security tools and unify data protection. Regarding competition, he stated that the rise of DSPM tools has increased market awareness and ultimately benefits Varonis by highlighting its superior automation, remediation, and forensics capabilities.

Keith Weiss of Morgan Stanley inquired about the adoption ramp for new AI products like Cortex compared to Snowpark's early trajectory and asked about how the company is offsetting investment acceleration with cost efficiencies, given the modest headcount growth.

Answer

CFO Mike Scarpelli stated that the core data warehousing and data engineering business remains strong. He noted Cortex is in its early innings but showing promise, while Snowpark is on track to represent 3% of revenue for the year. Regarding costs, Scarpelli clarified that efficiencies are being driven by ongoing performance management, particularly in sales, and by combining teams to slow backfills, rather than through a large-scale reduction in force.

Keith Weiss asked if recent industry events, such as the cybersecurity incident, the CrowdStrike outage, or the rollout of Iceberg tables, had any outsized negative impact on consumption during the quarter.

Answer

CFO Mike Scarpelli stated that the cybersecurity incident had "no impact at all" on consumption and the CrowdStrike outage was "minimal." He added that Iceberg adoption is progressing as expected, with 400 customers using it for new workloads, and they have not yet seen customers move existing storage out of Snowflake. Storage revenue remains stable at around 11% of total revenue.

Keith Weiss questioned the guided deceleration in core revenue growth from Q1 to Q2, asking if it reflected conservatism or a specific one-time factor. He also asked for confirmation of the company's belief in a long-term path back to over 20% growth.

Answer

Chairman, CEO and Founder René Lacerte explained the cautious Q2 guidance is due to prudence amid remaining macroeconomic uncertainty. Both executives reaffirmed their conviction in accelerating long-term growth. President and CFO John Rettig added that early positive results from strategic investments increase their confidence in returning to higher growth rates, and that more specific details on fiscal 2026 would be provided at the end of the current fiscal year.

Keith Weiss of Morgan Stanley probed the commentary on Net Revenue Retention (NRR), asking why it's expected to continue declining despite strong cross-sell and the fact that larger initial deals simply shift revenue timing.

Answer

CFO Amanda Whalen explained that the largest component of NRR is the expansion of existing products, which remains pressured by macro effects on SMBs and larger initial lands upmarket. Because NRR is a trailing 12-month metric, these consistent pressures continue to impact the calculation, leading to the expectation of a further near-term decline.