Matthew Hedberg

Matt Hedberg asked for an update on the prior $1 billion free cash flow target for fiscal 2026, inquiring if management's confidence in achieving that number has increased since the last quarter.

Answer

Executive VP & CFO Kristian Talvitie stated that while official guidance for FY26 is not yet set, the company feels 'incrementally better' about the target. He cited favorable current FX rates and the recently passed tax policy as tailwinds that provide 'incremental comfort.' He reiterated that a precise forecast depends on several factors, including the FY25 finish and FY26 planning, which will be detailed next quarter.

Matt Hedberg inquired about the effectiveness of Dynatrace's go-to-market improvements over the past several years, specifically asking about the productivity lift from capacity additions and whether the six-month quotas are improving linearity for the year as intended.

Answer

Jim Benson, Chief Financial Officer, confirmed that go-to-market changes, including investments in strategic accounts to lower the number of accounts per representative, are yielding a productivity lift, visible in close rates and pipeline. He also stated that the two six-month quotas are indeed improving business linearity and providing incentives for the sales organization.

Matt Hedberg asked about the effectiveness of Dynatrace's go-to-market improvements over the past several years, specifically regarding the productivity lift from capacity additions and whether six-month quotas are improving linearity.

Answer

CFO Jim Benson confirmed a productivity lift from investments in strategic accounts, noting reduced account loads per rep and improved close rates and pipeline. He stated that the two six-month quotas are indeed improving linearity by incentivizing sales teams to achieve accelerators twice a year.

Matt Hedberg asked if Dynatrace is observing different behaviors in this year's DPS contract cohort compared to last year's, and if ODC trends are changing as the initial cohort enters its second year.

Answer

CFO Jim Benson stated that different cohort classes behave differently, and ODC continues to be driven by a small number of customers. He confirmed that customers on DPS contracts, regardless of cohort, are consuming at a rapid rate, which is a positive trend for the business.

Matthew Hedberg inquired about the go-to-market strategy, focusing on sales productivity following recent changes and any significant new initiatives planned for fiscal 2026.

Answer

CEO Rick McConnell emphasized the success of GSI and hyperscaler partnerships, which now influence over 70% of ACV. CFO James Benson added that for fiscal 2026, the company is introducing 'strike teams' to drive adoption and consumption specifically for logs, application security, and digital experience monitoring (DEM).

Matthew Hedberg asked about the rapidly growing on-demand consumption revenue from the DPS model, questioning its implied impact in Q4 guidance and the conceptual framework for fiscal 2026.

Answer

CFO Jim Benson explained that this trend is a positive, un-forecasted outcome of the DPS model, which drives consumption at twice the rate of legacy contracts. He noted that while it benefits subscription revenue, it's uncommitted and thus modeled cautiously for Q4. Benson emphasized that investors should now consider both ARR growth and on-demand consumption to assess the business's health, as this dynamic is expected to grow with DPS adoption.

Matt Hedberg asked if there were consistent reasons for the unexpected non-renewals in the on-premises business and for an update on SaaS Net Revenue Retention (NRR) trends.

Answer

Yaki Faitelson (CEO) stated there was no single common thread for on-prem non-renewals, and competitive win rates remained stable. He identified issues such as reps focusing on SaaS, insufficient account management for single-threaded on-prem customers, and not consistently following the full sales methodology. Guy Melamed (CFO & COO) confirmed that SaaS NRR trends remain very healthy and well ahead of the total company NRR, with the specific SaaS NRR figure to be disclosed at the end of Q4.

Matt Hedberg inquired about consistent reasons for on-premises deals not renewing, competitive factors, and asked for more specific details on the healthy SaaS NRR trends.

Answer

CEO Yaki Faitelson stated there was no single common thread for on-premise non-renewals, noting stable win rates but identifying sales process issues where reps focused on SaaS customers and neglected on-premise account management. CFO Guy Melamed confirmed healthy SaaS NRR, well ahead of total company NRR, and committed to disclosing SaaS NRR annually, excluding conversion uplift.

Matt Hedberg asked for details on the expanded Microsoft partnership, requesting insights into the potential revenue opportunity and specific go-to-market initiatives.

Answer

CEO Yaki Faitelson described the partnership as a strategic alignment to address the security challenges of deploying Microsoft Copilot, which he called a 'gating factor' for adoption. He noted the go-to-market includes joint pipeline development and compensation for Microsoft's sellers, emphasizing that while it's still early, the synergy is strong.

Matthew Hedberg of RBC Capital Markets inquired about the key factors giving Varonis confidence in its ability to achieve over 20% ARR growth after the SaaS transition is complete.

Answer

CFO and COO Guy Melamed pointed to the very healthy SaaS Net Retention Rate (NRR), which is significantly above the total company NRR and indicates strong upsell momentum from satisfied customers. CEO Yaki Faitelson added that Varonis provides the most effective, automated way to prevent data breaches, a fundamental and growing need for all organizations.

Matthew Hedberg asked for more detail on which parts of Varonis's portfolio are contributing to customer spending on Generative AI and how that product attribution might expand over the next few years.

Answer

CEO Yaki Faitelson explained that the current Gen AI contribution is primarily related to Microsoft Copilot and securing Microsoft 365. He noted that as more knowledge workers use these tools, it exposes significant data security problems, creating urgency to buy protection. Faitelson believes Gen AI will become part of every workflow and that Varonis is well-positioned to solve the associated data security risks.

Matt Hedberg asked about Samsara's traction with AI, how it benefits from AI in a disruptive market, and if the company plans to evolve its monetization, pricing, and packaging for AI-based functionality. He also inquired about the economics and ROI of the largest-ever asset tag deal with Bonnie Plants.

Answer

Sanjit Biswas (CEO) explained AI enhances core product experience, surfaces deeper insights, and enables new products like weather intelligence, with expectations for new AI-enabled products over time. Dominic Phillips (CFO) noted the Bonnie Plants asset tag deal replaced existing losses, saving money on asset loss and theft, and also helped land core telematics and safety products.

Matthew Hedberg of RBC Capital Markets inquired about the impact of Asset Tags on average contract value (ACV) in deals where it is included. He also asked if the company's guidance philosophy for net new ARR has become more conservative following the sales cycle elongations mentioned.

Answer

Chief Financial Officer Dominic Phillips explained that Asset Tags are being used for finding lost assets, improving worker efficiency, and tracking utilization, but noted that full wall-to-wall deployments are not yet common. He affirmed that the company's guidance philosophy has not changed and remains focused on setting targets with high confidence that account for potential downside scenarios.

Matthew Hedberg asked for clarification on the impact of the extra week in the prior year's quarter on ARR and inquired about the potential contribution of asset tags to fiscal 2026 ARR.

Answer

Chief Financial Officer Dominic Phillips explained that quantifying the extra week's impact on ARR is difficult but would be roughly $7 million using the same framework as revenue, noting Q4 of the prior year was a tough comparison. Chief Executive Officer Sanjit Biswas added that while asset tag reception is strong across several use cases, it's too early to quantify its impact for fiscal 2026 as customers are still in the experimental and rollout phases.

Matthew Hedberg asked for more insight into Samsara's AI product development roadmap and inquired about the operational steps needed to drive further international penetration in markets like Mexico and Europe.

Answer

CEO Sanjit Biswas explained that Samsara is leveraging its vast data set to expand AI applications beyond safety into areas like maintenance, fuel efficiency, and asset utilization. For international growth, he stated that the company will continue investing in go-to-market teams, customer support, and developing market-specific product features based on direct customer feedback.

Matthew Hedberg asked for perspective on the large $300,000 Asset Tag deal, specifically if it was an initial purchase, and also inquired about the journey and timeline for bringing generative AI use cases to the platform.

Answer

CFO Dominic Phillips characterized the large Asset Tag deal as part of a phased rollout approach, which he expects to be typical for customers. CEO and Co-Founder Sanjit Biswas added that customers are discovering new use cases internally after trying the tags. Regarding AI, Biswas confirmed they are experimenting with a chat environment powered by Samsara's data and are currently rolling it out to customers to gather feedback for enhancement.

Matthew Hedberg of RBC Capital Markets inquired about the potential uplift in customer spend from adopting Elastic for AI use cases and asked for quantification of the May price increase's impact on the annual guidance.

Answer

CEO Ashutosh Kulkarni explained that while AI workloads are compute-intensive and drive consumption, it is still too early to provide a precise uplift number. CFO Navam Welihinda added that the price increase provides a year-over-year benefit by lifting the growth baseline, but clarified that Q1's strong performance was primarily driven by broad-based business strength and a more stable macro environment rather than the price change.

Matthew Hedberg inquired if GenAI is now the 'tip of the spear' for new customer acquisition and how that momentum benefits the observability and security businesses. He also asked for the approximate revenue mix between the three solution areas.

Answer

CEO Ash Kulkarni agreed that GenAI is a leading discussion topic that helps position the entire platform, driving consolidation and competitive wins in observability and security. Interim CFO Eric Prengel reiterated the historical commitment mix of approximately 40% observability, 25% security, and the rest from search, noting that search has been the fastest-growing segment recently due to GenAI.

Matthew Hedberg from RBC Capital Markets inquired about the drivers behind accelerated consumption from large enterprise customers and the factors contributing to the sales force's improved execution in Q2.

Answer

CFO & COO Janesh Moorjani noted that strong consumption was broad-based but highlighted accelerated usage from some larger customers, which he attributed to new and expanded workloads. He stated the company remains prudent in its guidance, not assuming these higher rates persist. CEO Ashutosh Kulkarni added that sales execution improved due to better pipeline creation and progression, with the benefits of sales segmentation changes now taking hold.

Matthew Hedberg asked about the key actions being taken to improve sales execution after the recent segmentation changes and the expected timeline for seeing results. He also inquired about quantifying the growth in the competitive migration pipeline and how new migration tools could be leveraged by channel partners.

Answer

CEO Ashutosh Kulkarni outlined three primary actions: increased monitoring of deal progression, a deeper focus on large enterprise accounts, and allowing time for sales reps to adapt to new territories. He expressed confidence in returning to strong execution within a couple of quarters, supported by the new Elastic Express Migration program and a specialist GenAI team. Kulkarni added that migration technology like ESQL and Automatic Import, combined with customer incentives, is designed to be scaled through partners to accelerate competitive displacements.

Matt Hedberg from RBC Capital Markets asked for a holistic view on CrowdStrike's strategy for the identity market, particularly in light of the announced Palo Alto Networks and CyberArk deal, and how the market is evolving.

Answer

Founder & CEO George Kurtz explained that CrowdStrike was ahead of the curve, identifying the importance of identity security back in 2020 with the Preempt acquisition. He noted strong customer demand for alternatives to legacy PAM solutions and highlighted the fantastic uptake of their new next-gen identity offerings, which are crucial for preventing breaches in the enterprise SaaS market. Kurtz emphasized that CrowdStrike has been in the market since 2020 and recognized identity's critical role early on.

Matthew Hedberg asked about trends in the U.S. Federal business, what is assumed in the guidance, and requested a comment on a recent Bloomberg article regarding regulatory inquiries.

Answer

CFO Burt Podbere addressed the Bloomberg article, confirming that the company had received requests for information from the DOJ and the SEC. The inquiries relate to revenue recognition, ARR reporting for certain transactions, the July 19 outage, and related matters. The question regarding the Federal business was not addressed.

Matthew Hedberg sought clarification on the Exposure Management business, asking if recent wins represented full replacements of legacy vulnerability management vendors.

Answer

CEO George Kurtz confirmed that CrowdStrike is now executing full replacements of competitive products. He explained that the recent addition of network scanning capabilities, a previously missing feature, has unlocked the potential to fully displace legacy vendors. He noted the solution is fully integrated with CrowdStrike's data and AI infrastructure, and customers had been asking for this capability.

Matthew Hedberg asked about the competitive landscape for Next-Gen SIEM and the key factors compelling customers to switch from legacy solutions.

Answer

CEO George Kurtz identified superior efficiency, speed, and scalability as key differentiators from legacy products. He emphasized that because CrowdStrike's first-party data is already resident in the platform, customers see immediate value and significant performance and cost benefits. The platform's open ecosystem and integration with Charlotte AI further enhance its competitive advantage, driving customers to displace older SIEMs.

Matthew Hedberg asked if the expected business acceleration next year is partly driven by the expanded platform usage from the current customer commitment packages, creating a future tailwind.

Answer

CEO George Kurtz confirmed that Falcon Flex customers tend to consume more modules faster than anticipated, creating future opportunities. CFO Burt Podbere added that this strategy is 'seeding for the future,' with the benefits expected to materialize in the second half of next year.

Matt Hedberg of RBC Capital Markets asked for an update on the Crunchy Data acquisition, inquiring about the integration progress and where Snowflake stands in addressing the combined OLTP and OLAP market opportunity.

Answer

EVP of Product Christian Kleinerman reported that the integration, now called Snowflake Postgres, is progressing 'extremely well.' He emphasized the focus on enterprise-grade capabilities like customer-managed keys and business continuity. He announced that the product will be in preview within the next couple of months and is seeing very strong customer interest.

Matthew Hedberg of RBC Capital Markets asked about adoption trends among the 'AI native' cohort of customers, including their product usage, consolidation patterns, and any tendencies toward do-it-yourself (DIY) identity solutions.

Answer

CEO Todd McKinnon responded that the adoption patterns of AI native companies are similar to other cohorts, with the main difference being their rapid growth. He highlighted that these companies are investing heavily in identity security for their internal operations and are using Okta's platforms, like Auth0 for AI agents, to build secure products and manage the complexity of the emerging AI landscape.

Matthew Hedberg of RBC Capital Markets asked about the go-to-market changes, specifically inquiring if Okta had introduced new product bundles in Q1 to drive cross-sell of products like Okta Identity Governance (OIG).

Answer

CEO Todd McKinnon confirmed the Q1 introduction of 'suite based pricing' for the Okta platform, featuring 'good, better, best' configurations that have seen positive initial results. He noted this strategy aligns with customers' desire to consolidate on an independent identity platform. CFO Brett Tighe added that the largest deal in the prior quarter (Q4) was a workforce suites deal.

Matthew Hedberg asked what the single biggest catalyst for Okta's business will be over the next 12 months.

Answer

CEO Todd McKinnon unequivocally identified large enterprise success as the biggest catalyst. He described the conversations with large, transformative customers as fundamentally different than a year ago, driven by a readiness from buyers and partners to adopt a modern, cloud-native identity platform. He stressed that Okta is the only independent, neutral choice for large enterprises with complex, multi-cloud environments who need to replace dozens of legacy products and cannot standardize on a single vendor like Microsoft.

Matthew Hedberg asked about the competitive landscape for Okta Identity Governance (OIG) and the key factors behind its success that could be leveraged next year.

Answer

CEO Todd McKinnon explained that OIG typically wins in greenfield opportunities for modern SaaS applications rather than by replacing legacy on-premise governance solutions. He compared the market to early SaaS adoption, noting that legacy tools often contain 'shovelware' (unused features). Okta's success stems from its tight integration with access management, fast time-to-value, and focus on core functionalities, which he sees as a winning formula.

Matthew Hedberg inquired about the performance of Rapid7's Detection and Response (D&R) business, specifically the demand for its Managed Detection and Response (MDR) offering, and sought clarity on the company's confidence in its Q4-weighted net new ARR forecast.

Answer

CEO Corey Thomas confirmed that D&R continues to be a core growth driver, now representing over half of ARR and growing in the mid-teens, with strong demand for its enterprise MDR offering. Regarding the forecast, he explained that while deal cycles for larger, strategic consolidations are longer, the company has multiple paths to achieve its narrowed full-year guidance, which is weighted to Q4. CFO Tim Adams added that the Q4 net new ARR expectation is similar to what the company achieved in the prior year.

Matthew Hedberg asked for a potential timeline for the stabilization and eventual improvement of the risk and exposure management business.

Answer

CEO Corey Thomas stated that the company expects moderate stabilization in the risk and exposure management business throughout 2025, with a return to growth thereafter. He acknowledged that the upgrade cycle is slower than initially hoped due to macro pressures on the mid-market but emphasized that the company is actively refining packaging and pricing to accelerate migrations while focusing sales efforts on the resilient Detection and Response business in the interim.

Matthew Hedberg inquired about Rapid7's value proposition and sources of competitive wins in the crowded cloud security market. He also asked about the confidence level that 2025 investments will lead to growth acceleration and margin improvement in 2026.

Answer

CEO Corey Thomas explained that their strategy is to target the broader market by reducing complexity with an integrated exposure management platform, viewing it as a large greenfield opportunity. CFO Tim Adams expressed high confidence in the $30 million investment plan, stating that about half is for MDR expansion and the rest is for the Exposure Command roadmap and a new innovation center in India, which are expected to yield benefits in 2026 and beyond.

Matthew Hedberg of RBC Capital Markets asked about specific go-to-market actions the company could take to combat elongated deal cycles, beyond the strong momentum seen in the channel.

Answer

CEO Corey Thomas explained that the primary strategy is to complement their successful large-deal motion with more 'velocity business.' He stated that while they want to keep the positive dynamics of larger consolidation deals, they are focused on adding more upgrade and upsell motions within the installed base, particularly through the new Exposure Command platform, which is expected to drive smaller, faster deals.

Matt Hedberg from RBC Capital Markets followed up on the decision to maintain full-year revenue guidance after two consecutive quarterly beats, asking if factors beyond conservatism, like deal pull-ins, were at play. He also requested an update on the internal use of AI for operational efficiency.

Answer

CFO Ryan Siurek confirmed no unusual revenue pull-ins occurred and that the guidance reflects a prudent, bottoms-up build for the second half. President Matt Feierstein highlighted significant efficiency gains from using AI in customer support, where AI agents now resolve 25-50% of chat tickets, and noted that AI is being tested across other functions like engineering and marketing.

Matthew Hedberg inquired about specific go-to-market initiatives to enhance cross-sell optimization and asked for a ranking of the most important catalysts for organic growth reacceleration in 2025.

Answer

CEO Eric Remer highlighted the 'Edge' rewards program as a key initiative. COO Evan Berlin added that the company is focusing on an integrated sales motion for core software with payments and reputation management. Regarding 2025 catalysts, Remer noted that while not giving guidance, investments in 2024 are aimed at reacceleration in late 2025, focusing on new customer acquisition, integrated upfront sales, and deeper payments penetration. President Matt Feierstein reiterated that the system of action software is the core driver for future organic growth.

Matthew Hedberg of RBC Capital Markets inquired about the macroeconomic environment, asking if Bentley Systems saw a sequential improvement after recent tariff uncertainty and commenting on the noted strength in the SMB segment.

Answer

CEO Nicholas Cumins responded that the business environment remains very consistent, driven by strong infrastructure investment that is unaffected by noise from tariffs. He emphasized that the primary constraint for customers is a lack of engineering capacity, which fuels demand for Bentley's productivity-enhancing software across both large and small accounts.

Matthew Hedberg asked about macro pressures, specifically if Bentley saw any deal extensions or other signs of weakness in its more cyclically sensitive areas like commercial and industrial, and if recent business trends in April were similar to March.

Answer

CEO Nicholas Cumins acknowledged that commercial facilities and industrial sectors are sensitive to demand and interest rates, which has impacted commercial facilities. However, he noted a more positive sentiment in the industrial sector, particularly in the U.S., due to a push to increase domestic manufacturing capacity. Executive Chair Greg Bentley added that new energy strategies will also help the industrial sector.

Matthew Hedberg asked about the primary factors that could drive Bentley Systems' ARR growth to the higher end of its 2025 guidance, considering the strong demand environment alongside the persistent drag from China.

Answer

CEO Nicholas Cumins identified potential tailwinds, including accelerated U.S. permitting reform which could boost mining and power grid projects. He also noted that an improvement in the commercial facilities sector would provide an uplift. Cumins reiterated that the overall demand environment remains robust and consistent with recent quarters, with the main headwind being the continued challenges in China.

Matthew Hedberg from RBC Capital Markets asked about the primary growth drivers for 2025, considering factors like IIJA funding, E365 momentum, and potentially easing headwinds from China.

Answer

Executive Chair Greg Bentley stated that he expects 2025 to be consistent with 2024, driven by the same building blocks of global project momentum and E365. While uncertain about a recovery in China, he highlighted Asset Analytics as a potential 'wildcard' for growth. He reiterated expectations for low double-digit ARR growth and 100 basis points of annual margin expansion.

Matthew Hedberg asked how Teradata plans to monitor and define success for its Agentic AI initiatives with customers. He also inquired about the potential impact of recent R&D tax law changes on the company's financials.

Answer

President and CEO Steve McMillan outlined three ways to measure AI success: engagement with key partners like ServiceNow and Salesforce, proof-of-concept work with customers on advanced technologies like vector capabilities, and tracking the AI-influenced opportunity pipeline. CFO John Ederer acknowledged that the R&D tax changes could have a positive impact, likely on the cash flow side, but stated it was too early to provide specifics.

Speaking for Matthew Hedberg of RBC Capital Markets, Mike Richards asked if guidance would have been raised absent recent macro uncertainty and inquired about the company's exposure to the U.S. federal government.

Answer

CEO Stephen McMillan reiterated that the guidance is pragmatic and the company is confident in its execution based on go-to-market performance and improving retention. Interim CFO Charles Smotherman clarified that while Teradata has a healthy global government business, its U.S. federal exposure is minimal, with a focus on international, state, and local clients.

Speaking for Matt Hedberg, an analyst asked for commonalities among the 30 GenAI proof-of-concepts and sought a ranking of the key drivers for the company's return to ARR growth in 2025.

Answer

CEO Stephen McMillan highlighted that many POCs are in the customer experience (CX) space, using existing tech to analyze unstructured data for clients like banks, who value Teradata's efficiency at scale. CFO Claire Bramley noted the drivers are interrelated but called the meaningful improvement in retention rates "one of the strongest areas" for achieving growth, supported by go-to-market changes that improve visibility.

Matthew Hedberg asked for more detail on the change in customer cloud migration behavior, questioning if it's an industry-wide trend and how it impacts the medium-term outlook. He also inquired about the potential for a Q4 on-premise budget flush and the building blocks for cloud growth reacceleration.

Answer

CEO Stephen McMillan explained that a handful of large customers are opting for a more 'staged' migration to the cloud, breaking large deals into smaller ones over time, which leverages Teradata's hybrid capabilities. He noted total customer spend is unchanged. CFO Claire Bramley added that the company's guidance does not assume a year-end budget flush and that the company is still driving towards total ARR and free cash flow growth in 2025.

Matt Hedberg of RBC Capital Markets questioned how recent go-to-market improvements are impacting Cloudflare's ability to land larger deals and requested an update on channel partner momentum.

Answer

Co-Founder & CEO Matthew Prince explained that the company has matured from being purely product-led to building strong executive relationships, which is critical for securing large, multi-million dollar contracts. He highlighted that Cloudflare has adopted a 'partner-first' sales strategy, with partner-sourced growth now outpacing the rest of the business. Prince emphasized that partners are increasingly crucial for winning large enterprise deals.

Matthew Hedberg of RBC Capital Markets inquired about current internet traffic trends, particularly in relation to tariff rhetoric, and sought clarification on the company's margin performance and investment strategy.

Answer

CEO Matthew Prince stated that Cloudflare has not observed any significant changes in global internet traffic patterns, noting a broader shift from a search-driven to an AI-driven internet. CFO Thomas Seifert reiterated that the company's guiding principle is the 'Rule of 40,' and they will continue to reinvest revenue upside into growth opportunities, such as go-to-market activities, while maintaining a balance between growth and profitability.

Matthew Hedberg from RBC Capital Markets inquired about the most exciting product innovations for 2025 and asked for details on the financial impact of 'pool of funds' contracts.

Answer

CEO Matthew Prince highlighted that his top priority is achieving world-class go-to-market execution in 2025, alongside the maturation of AI applications on the Workers platform. CFO Thomas Seifert added that 'pool of funds' activity was comparable to the prior quarter and that sales compensation is structured to incentivize customer consumption, which supports future ratable revenue recognition.

Matthew Hedberg asked about Cloudflare's view of the external business environment and for more details on the impact of 'pool of funds' deals on key metrics.

Answer

CEO Matthew Prince stated that the macro environment is slightly improved, with any deal slippage being a result of internal sales execution rather than external factors. CFO Thomas Seifert added that 'pool of funds' deals, now 10% of new ACV, will pressure metrics like DBNR for the next 2-3 quarters but are a long-term positive for platform adoption.

Matthew Hedberg of RBC Capital Markets asked about the drivers of the ongoing consumption optimization trends, whether they were macro or company-specific, and how the growth in production AI workloads might positively impact future subscription growth.

Answer

CEO Jay Kreps explained that the optimization trend is similar to what other consumption-based companies have experienced, where customers ensure they get maximum value from their spend. He noted this hit Confluent later but has persisted. He categorized the AI-native customer's move to self-management as a separate issue. Kreps expressed confidence that AI is a positive long-term force, highlighting the rapid growth of Flink ARR (approaching $10M, up 3x in six months) as a key indicator of the company's expanding platform strategy.

Matthew Hedberg asked for an update on the Data Streaming Platform's (DSP) contribution to cloud revenue, details on Flink adoption, and how the reduced guidance balances new customer additions against Net Retention Rate (NRR).

Answer

CEO Jay Kreps stated that while a specific DSP percentage would not be updated quarterly, the offerings are significantly outgrowing the core cloud business, with strong early success for Flink and Tableflow. CFO Rohan Sivaram explained the guidance is prudent and does not assume a consumption rebound. He noted strong customer adds support the top of the funnel and expects NRR to remain stable around 117%, supported by a consistent GRR above 90%.

Matthew Hedberg asked about the competitive landscape in light of Snowflake's potential acquisition of Redpanda, the significance of the expanded Databricks partnership, and the drivers behind management's confidence in declaring 2025 the 'year of DSP'.

Answer

CEO Jay Kreps explained that the rise of AI and open data formats like Delta Lake is driving the need for real-time data in analytics, positioning Confluent's Tableflow as a critical bridge. He highlighted the Databricks partnership's deep integration and go-to-market alignment. Kreps also noted that confidence in the Data Streaming Platform (DSP) comes from strong open-source adoption, direct customer feedback, and quantitative analysis of consumption growth and pipeline.

Matthew Hedberg inquired about the effectiveness of go-to-market changes on customer acquisition and the consumption levels of new customers, and also asked how GenAI demand is materializing in conversations.

Answer

CEO Jay Kreps stated that go-to-market changes have successfully broadened their reach into the open-source Kafka user base, with a focus on landing high-potential accounts. Regarding GenAI, he noted two impacts: growth from AI providers using Confluent and new enterprise use cases delivering data to AI applications, which he sees as a durable, long-term trend.

Matt Hedberg of RBC Capital Markets inquired about the early customer adoption and usage of Now Assist consumption packs and the potential growth trajectory for this revenue source.

Answer

President, CPO & COO Amit Zavery noted that customer adoption of Pro Plus has been rapid, with usage increasing nine-fold over the last three months. President & CFO Gina Mastantuono reaffirmed the company's confidence in achieving its $1 billion Now Assist ACV target by 2026, with growth consistently beating expectations.

Matthew Hedberg asked for an update on overall IT spending trends, questioning if the environment had improved since the previous quarter and how it compares to the same point last year.

Answer

CEO Bill McDermott stated the IT spending environment is 'similar' to what it has been, but noted a significant shift from 'AI fascination to AI business model innovation.' He observed that CEOs are now creating dedicated AI leadership roles and are willing to invest in solutions with clear ROI. McDermott also highlighted a 'complete renaissance' in public sector spending, driven by a global focus on government efficiency.

Inquired about any potential macro pressure, specifically regarding U.S. Federal government exposure, which has been a point of pressure for other cybersecurity vendors.

Answer

The company stated that it has been 'business as usual' in the federal vertical and they have not seen any material negative impact. They continue to monitor the situation but their business in that sector remains resolute.

Matthew Hedberg from RBC Capital Markets asked about the identity consolidation trend and the competitive landscape, particularly regarding CyberArk's recent IGA acquisition.

Answer

CEO Mark McClain explained that SailPoint's strength is in complex, large enterprise environments where best-of-breed solutions are prioritized. He believes consolidation plays from vendors like Microsoft, Okta, and CyberArk are more suited for the less complex SMB market and that SailPoint has not felt significant competitive pressure from this trend in its target market.

Matt Hedberg from RBC Capital Markets asked about potential macro pressure, specifically within the U.S. Federal vertical, which has been a point of concern for other cybersecurity vendors.

Answer

President Matt Mills stated that for SailPoint, it has been "business as usual" in the federal sector. He confirmed that the company has not observed any material negative impact or challenges related to government spending thus far.

Matthew Hedberg inquired about the impact of the macroeconomic environment on Q1 performance and customer conversations, and also asked about the effectiveness of go-to-market improvements, particularly the new free Capella tier's role in pipeline generation.

Answer

CEO Matt Cain acknowledged that while macro pressures like longer sales cycles persist, the company's strong pipeline and strategic positioning offset these challenges. He explained that go-to-market enhancements, including a focus on strategic accounts and a significantly enhanced free tier for Capella, are successfully lowering barriers to entry for developers and driving a substantial increase in top-of-funnel demand, with trial volumes tripling year-over-year.

Matthew Hedberg asked about the renewal opportunity for the next fiscal year (FY26), questioning how its size and linearity would compare to the current second-half weighted year.

Answer

CFO Gregory Henry explained that while it's early to guide for fiscal 2026, the renewal pool is expected to be larger in totality than in fiscal 2025. He also anticipates it will be more evenly balanced between the first and second halves, similar to the pattern seen in fiscal 2024.

Matthew Hedberg asked for details on the unexpected Q2 customer churn and down-sell, its magnitude, and the drivers behind the strong new customer additions from partners.

Answer

CFO Gregory Henry explained the churn was concentrated in a few accounts, with one ceasing operations after an acquisition, and described it as more pronounced than usual but not a trend. He noted that gross new ARR was one of the best in company history. CEO Matthew Cain attributed the 62 net new logos to strategic go-to-market initiatives, particularly an increasingly effective partner motion with ISVs and hyperscalers, which he expects to continue yielding benefits.

Matthew Hedberg asked why Palo Alto Networks is best positioned to help customers navigate the paradigm shift towards Agentic AI.

Answer

Chief Product Officer Lee Klarich stated that the company is uniquely positioned due to two key strengths. First, its XSOAR platform provides extensive integration and automation capabilities necessary for AI guardrails. Second, its broad enterprise footprint provides a deep understanding of application permissions, which is critical for managing the security of autonomous AI systems.

Matthew Hedberg asked for a high-level view on the necessary security foundation for a broad rollout of 'agentic AI,' noting that some in the industry view identity as the key starting point.

Answer

Chief Product Officer Lee Klarich responded that the foundation is more complex than just identity, starting with securing the AI model itself with proper guardrails. CEO Nikesh Arora added that while identity is a component, the ability to monitor, control, and remediate agentic activity requires a comprehensive, AI-enabled SOC like XSIAM, which can see all relevant data and manage permissions in real time.

Matthew Hedberg asked about the next-generation SIEM replacement opportunity with XSIAM and what catalysts could accelerate large replacement deals against legacy competitors.

Answer

Chairman and CEO Nikesh Arora stated that the SIEM market is undergoing a major replacement cycle as legacy technologies are 10-15 years old. He explained that XSIAM's compelling value proposition is its ability to deliver superior security outcomes and cost savings simultaneously. The IBM QRadar deal has created a specific compelling event, and he predicts the entire $20B SIEM market will face upheaval in the next 3-5 years.

Matthew Hedberg questioned how CyberArk is thinking about its long-term pricing strategy for non-human identities, such as machines and AI agents, given their exponential proliferation.

Answer

CEO Matt Cohen explained that the pricing model is based on a curve where the per-unit cost for a machine or agent identity decreases with volume, but the total deal size is expected to increase significantly. He anticipates that average deal sizes for machine identity solutions will be 2-3 times larger than those for traditional PAM, with a similar dynamic expected for AI agents.

Matthew Hedberg requested an update on the go-to-market strategy for Venafi, particularly concerning sales force integration and incentives for the full year.

Answer

CEO Matt Cohen outlined a simple strategy: core CyberArk account executives will lead sales efforts into the 8,000-strong customer base. The Venafi team has been integrated into an overlay role to provide specialized support. He noted the integration is proceeding quickly and that the CISO-level conversation around Venafi is proving more meaningful than initially anticipated, which he believes will drive future upside.

Matthew Hedberg requested more context on the Workforce business reaching $100 million in ARR, asking about its growth rate and penetration into the customer base. He also asked about Venafi's ARR growth and SaaS mix at the end of Q3.

Answer

CEO Matt Cohen stated the Workforce business is growing faster than the company's core business and has a low penetration rate of about 1,000 out of over 9,000 customers, indicating a large expansion opportunity. Deputy CFO Erica Smith noted Venafi's ARR was growing around 10% with a SaaS mix of approximately 10-12%, though CEO Matt Cohen added its new business pipeline is already shifting heavily to SaaS.

Matthew Hedberg asked about the progress and traction of the reseller channel expansion and sought details on the new Vulnerability Management solution, including its early success and competitive positioning.

Answer

President and CEO John Pagliuca described the reseller expansion as being in the "early innings" but showing positive "green shoots," with a more material impact expected in 2026. He highlighted that the new Vulnerability Management feature, included in the UEM platform, is a key differentiator that addresses a top customer need and is displacing disparate tools, receiving an enthusiastic reception from partners.

Matthew Hedberg sought clarification on the 2025 revenue growth guide, asking if it normalizes to a higher rate after accounting for accounting lumpiness, and also asked about the expected ARR growth trajectory and the single biggest factor for returning to mid-teens growth.

Answer

EVP and CFO Tim O'Brien confirmed that the 2025 revenue growth guide includes a 4% headwind from ASC 606 revenue recognition dynamics. He also clarified that the 7-9% constant currency ARR guide for year-end 2025 implies an acceleration from the 7% pro forma exit rate of 2024. President and CEO John Pagliuca identified two key growth levers: leveraging the Adlumin XDR platform for new customer acquisition and expanding into the reseller channel.

Matthew Hedberg of RBC Capital Markets inquired if Informatica is considering more aggressive tactics, such as sales incentives or end-of-lifing maintenance, to accelerate the final phase of its cloud transition. He also asked for clarification on the change in the full-year constant currency revenue growth guidance.

Answer

CEO Amit Walia explained that while they are not forcing a hard end-of-life, natural compelling events like PowerCenter moving to more expensive extended support are encouraging customer migrations. CFO Mike McLaughlin reiterated that they guide in dollars and are reaffirming their dollar-based full-year guidance, choosing not to micro-adjust for FX volatility after only one quarter.

Matthew Hedberg from RBC Capital Markets asked about the role of PowerCenter Cloud Edition in the recent acceleration of modernization deals and the expected pace of these migrations going forward. He also questioned the stability of the new, lower uplift ratio of 1.5x to 1.7x.

Answer

CFO Mike McLaughlin confirmed that PowerCenter Cloud Edition constituted over 80% of modernization deals in Q4. He noted that while the pace will be lumpy, the company now forecasts a 30-70 mix of modernizations to net new deals for 2025. McLaughlin explained the lower uplift ratio is considered stable and acceptable because modernization deals drive significant customer lifecycle value through upfront expansion, healthy in-term expansion, and much higher renewal rates compared to non-modernization deals.

Matthew Hedberg asked about the potential for accelerating cloud migrations, given the momentum from PowerCenter Cloud Edition. He also questioned if the Q4 guidance was conservative and whether management was anticipating a year-end budget flush.

Answer

CEO Amit Walia noted that strong momentum for PowerCenter Cloud continues and that linking modernization to GenAI readiness is a key message resonating with customers. CFO Mike McLaughlin described the Q4 guidance as prudent, stating it's too early to predict a budget flush but that the quarter feels similar to the previous year.

Matthew Hedberg inquired about the primary drivers for the increased cloud ARR guidance and the financial impact of strategically shifting more professional services revenue to partners.

Answer

CEO Amit Walia attributed the optimistic cloud outlook to a very healthy pipeline, momentum from the Informatica World conference, and customers accelerating modernization to enable GenAI. CFO Mike McLaughlin clarified the professional services shift is margin-neutral, as it's not a profit center, and noted the decline in direct services revenue has been faster than anticipated.

Matt Hedberg asked if customers are still operating at the highly optimized levels established in 2022-2023. He also inquired if the guidance includes any revenue impact from the recent acquisitions of Eppo and Metaplane.

Answer

CEO Olivier Pomel responded that customers are now running tighter, more regular optimization cycles, so there isn't a large overhang of unoptimized usage building up. CFO David Obstler stated that while the second half revenue guidance was not changed, the revenue impact from the acquisitions is expected to be small for the remainder of the year.

Matthew Hedberg noted the uptick in Net Revenue Retention (NRR) and asked what retention assumptions are embedded in the 2025 outlook, and whether guidance assumes a stable contribution from AI-native customers.

Answer

CFO David Obstler explained that the guidance methodology takes the current net retention rate and applies a discount to it. Regarding the AI cohort, he stated that the guidance does not assume any non-proportional acceleration from that segment; rather, the conservatism is applied broadly across the entire customer base.

Mike Richard, on behalf of Matthew Hedberg of RBC Capital Markets, asked for color on the U.S. Federal business performance relative to expectations and potential budget-related impacts. He also requested commentary on geographic performance, particularly the strength seen in the EMEA region.

Answer

President and CEO François Locoh-Donou reported that the U.S. Federal business performed well in Q2 but noted that customers are growing more nervous about potential budget disruptions, which could impact the second half of the year. Regarding geography, he stated that EMEA's strong growth was partly due to an easy year-over-year comparison, and overall international performance was in line with expectations.

Speaking on behalf of Matthew Hedberg, Mike Richard of RBC Capital Markets asked about the performance of the U.S. Federal business relative to expectations and the potential for budget-related pull-ins in Q3. He also requested commentary on the strong performance seen in the EMEA region.

Answer

CEO François Locoh-Donou reported that the U.S. Federal business performed in line with or slightly better than expectations in Q2. He noted that while there is some customer nervousness about future budgets, the security-focused projects F5 is involved with tend to be prioritized. Regarding geography, he stated that EMEA's strong growth was partly due to an easy year-over-year comparison but that overall international business, including Asia, performed as expected.

Matthew Hedberg inquired about the role of Agentic AI, asking how Zscaler sees its position in securing customers' own AI agents, a significant and emerging trend.

Answer

CEO Jay Chaudhry explained that AI agents are simply another entity whose communications must be secured by the Zero Trust Exchange. He anticipates that more communication among users, machines, and agents will increase traffic and the value Zscaler provides. He also noted that Zscaler is using agentic technology to enhance its own products like ZDX, which allows for premium pricing.

Matthew Hedberg asked for an update on the scale of the data protection business, recalling it was previously approaching $250 million in ARR and growing rapidly, and inquired about its contribution to overall growth.

Answer

CEO Jay Chaudhry confirmed that the data protection business continues to grow faster than the company's overall business. He identified the rise of AI as a major catalyst, as customers are increasingly concerned about data leakage when using public AI services. He reiterated that Zscaler's comprehensive platform and its natural position inline for all traffic provide a significant competitive advantage in this market.

Matthew Hedberg asked about the linearity of the quarter, any deal dynamics, and trends observed in August. He also followed up on large deal visibility and Zscaler's role as a consolidator.

Answer

CFO Remo Canessa stated that Q4 was back-end loaded, similar to prior quarters, with nothing unusual. CEO Jagtar Chaudhry added that August trends were normal. On large deals, Chaudhry highlighted that deals are getting bigger, with data protection being a key consolidation driver. Canessa provided metrics on the growth of large customers, including those with over $1M and $5M in ARR, and the platform's scale of processing half a trillion daily transactions.

Matthew Hedberg of RBC Capital Markets inquired about the sustainability of the growth in GitLab's Ultimate tier, which now represents 50% of ARR, and asked for the primary reasons customers are upgrading.

Answer

CFO Brian Robbins confirmed the strong and sustained momentum of the Ultimate tier, noting its performance has remained robust even after a price increase. He identified the primary drivers as the advanced security and compliance features, which provide customers with a rapid payback period of less than six months and a significant ROI of over 480% in three years. This value proposition is resonating strongly with enterprise customers.

Matthew Hedberg asked for an update on the macro buying environment and inquired about the success of the Enterprise Agile Planning module, particularly in competitive replacements.

Answer

CFO Brian Robbins described the macro environment as stable but cautious, noting GitLab's resilience due to its strong ROI. Co-Founder Sytse Sijbrandij added that Enterprise Agile Planning is a key part of Ultimate and is successfully helping customers reduce reliance on competitor products like Atlassian's.

Matthew Hedberg of RBC asked about the importance of generative AI in customer conversations and how customers perceive GitLab's role within their broader AI ecosystem development.

Answer

CEO Sid Sijbrandij stated that GenAI is very important to customers, but they are proceeding cautiously. Key considerations include security, making AI work for large existing applications (not just new ones), and seeing a tangible return on investment that extends beyond just coding. He noted that customers want vendors who can deliver on this comprehensive vision, which is why they are not rushing to deploy coding-only solutions to 100% of their users.

Matthew Hedberg asked about the company's philosophical approach to rolling out and pricing future generative AI features. He also inquired about how to think about a potential 'floor' for revenue growth now that the 10-15% target has been retired.

Answer

CEO Andrew Anagnost stated that the AI focus is on customer productivity, with opportunities to charge more for high-value features. He sees AI expanding their market by making complex tools like BIM more accessible. CFO Janesh Moorjani addressed the growth floor by noting that underlying growth has been consistent with the FY26 guide of 8-9% for the past couple of years, emphasizing the business's resilience and focus on sustainable growth.

Matthew Hedberg asked for more detail on competitive share shifts, particularly regarding VMware post-Broadcom acquisition, and whether ARR growth in 2025 should be expected to track in line with the 8% revenue growth guidance.

Answer

CEO John Strosahl described the competitive landscape as consistent, stating Jamf continues to win customers from competitors like VMware due to concerns about their pace of innovation. CFO David Rudow clarified that while Jamf does not guide to ARR, the 9.8% year-over-year growth in Q4 served as the baseline for the 2025 revenue outlook. He also outlined expectations for revenue and margin seasonality throughout the upcoming year.

Matthew Hedberg from RBC Capital Markets asked management to rank the most important growth drivers for 2025, considering factors like security momentum, product bundles, and channel enhancements.

Answer

CEO John Strosahl did not rank the drivers but listed several key tailwinds giving the company confidence. These include an anticipated device refresh cycle, a rebound in tech and education, strong security ARR growth, increased channel efficiency via a new partner portal, the enterprise 'choice program' trend favoring Apple, and significant opportunities in deskless mobile and international expansion.

Matthew Hedberg of RBC Capital Markets asked if enterprise demand, separate from the federal business, had deteriorated compared to the previous quarter. He also inquired if Nutanix typically sees a December 'budget flush' from enterprises.

Answer

CEO Rajiv Ramaswami stated they have not seen a decline in broader enterprise demand this quarter, noting the ongoing dynamic of increased scrutiny on large deals has been consistent for several quarters. He confirmed that they sometimes see a December budget flush, which is a typical driver of Q2's seasonal strength and is factored into the guidance.

Matthew Hedberg asked about the durability of the positive trends in channel and new products, and whether the Q4 guidance for lighter new business reflects a current trend or conservatism.

Answer

President and CEO Sumedh Thakar stated that customer interest in consolidation and new offerings like ROC and AI is very real and differentiated, suggesting long-term durability, though short-term deal closures can be lumpy due to the macro environment. CFO Joo Mi Kim clarified that the 'lighter new business' outlook for Q4 is based on the current pipeline for the quarter, not a change in the positive year-to-date trend, and is not necessarily indicative of 2025.

Inquired about the demand environment, which seems stronger than described, and asked the new CFO about his guidance philosophy and approach to forecasting.

Answer

The CEO attributed strong results to strategy execution and a diversified customer base, noting demand remains stable without large variations. The new CFO explained his guidance philosophy is consistent with the past, based on performance, market data, and a level of prudence to ensure deliverability.

Asked if the strong Q4 performance was due to an improving macro environment or just seasonal budget flush, and requested specific metrics on the value uplift from maintenance-to-subscription conversions.

Answer

Management attributed the strong Q4 to continued execution focus and normal seasonality, not a significant change in the macro environment. They explained that maintenance conversions are robust because they often involve upselling customers from a single product to the broader observability suite, resulting in a blended rate of simple conversion and significant expansion.

Matthew Hedberg inquired about the implications of the accelerating 5% bookings growth for future revenue trends and asked what specific marketing actions were taken to capitalize on the major social security number data breach.

Answer

CFO Natalie Derse explained that since the majority of the business is ratable annual subscriptions, bookings will roll off the balance sheet into revenue over the next 12 months. She also detailed that the company reallocated marketing dollars to the LifeLock business, focusing on SEO, paid search, and affiliate channels to meet the surge in demand.

Inquired about the impact of the Synopsys-Ansys deal on the market and about key initiatives for new leaders in high-growth verticals like healthcare and federal.

Answer

The Synopsys-Ansys deal is likely creating some customer uncertainty that is advantageous for Altair. In high-growth verticals, the key initiative is being very active in front of customers and building executive relationships.

Asked about the long-term opportunity to leverage generative AI within the HPC business and inquired about the company's spending and investment plans for 2024, including the expected margin trajectory.

Answer

Executives confirmed a significant long-term opportunity to integrate more generative AI into their HPC offerings, noting they are well-positioned to manage the growing complexity and cost in the space. For 2024, they plan to remain disciplined with spending, similar to 2023, while making targeted investments in critical areas. They aim to continue growing margins and are pleased with the recent slowdown in OpEx growth.