Michael Richards

Michael Steven Richards, on for Matt Hedberg, requested more details on the recent restructuring, including its size and the areas impacted, and asked if any potential business disruption was factored into the financial guidance.

Answer

CEO Daniel Dines explained the restructuring largely impacted central functions like sales operations and enablement to improve efficiency and agility. CFO & COO Ashim Gupta added that no incremental disruption was factored into guidance, as the changes targeted areas with a disconnect from the field and were not expected to impact the company's growth rate.

Michael Richards from RBC Capital Markets asked for more detail on the ARR guidance, questioning if Q2 strength was a pull-in, and requested an update on new pricing and packaging bundles.

Answer

CEO John Pagliuca clarified that after neutralizing for foreign exchange impacts, the ARR guidance implies slightly more growth in the second half of the year than the first. He also mentioned that product bundling continues to resonate with customers and that while it's still in an experimental phase, the company will lean into it more through the rest of 2025 and into 2026.

Representing Matt Hedberg, Michael Steven Richards sought clarification on the moderated guidance for long-term contracts, asking if it was due to fewer customers signing up or increased optimization. He also asked if the strong bookings momentum from Q2 continued into Q3.

Answer

EVP and CFO Tim O'Brien clarified the guidance change was not from increased optimization but from a higher mix of new customers choosing SaaS offerings (which lack upfront revenue recognition) and a lower-than-expected conversion of existing on-premise customers to long-term contracts. CEO John Pagliuca confirmed that demand remained strong in Q3, with bookings growing in the teens year-over-year.

Michael Richards, on for Matthew Heiberg, asked for an update on the U.S. Federal business and whether there was any pull-in during the quarter. He also inquired about any guardrails for free cash flow next year related to R&D tax credits.

Answer

CFO Cooper Werner reported that the Federal business was on plan for the year, though Q3 was slightly softer due to some project delays, but the overall pipeline remains healthy. Regarding free cash flow, he stated that no material impact is expected from the R&D tax credit changes, though the company is still evaluating its options.

Speaking for Matt Hedberg, Michael Richards of RBC Capital Markets asked for a breakdown of recent success between the resonance of ROI messaging in the current macro and go-to-market productivity improvements, also asking what "inning" they are in with GTM enhancements.

Answer

CEO Jay Chaudhry responded that success is a combination of factors, including a strong go-to-market team, an expanded platform, and a compelling cost-savings message. He highlighted Zscaler's unique ability to save customers money by displacing legacy network and security products as a key driver of productivity and strong results, without specifying a particular "inning" of their progress.

Michael Steven Richards of RBC Capital Markets asked about the maturity of Snowflake's go-to-market motion specifically to support its AI product developments.

Answer

CEO Sridhar Ramaswamy expressed pleasure with the company's ability to seize the AI opportunity. He described a successful model using specialized 'AI ninjas'—solution engineers deeply versed in AI products—to support sales teams globally. This specialist-led approach, which pioneers use cases and then enables the broader sales force, is now being applied to other areas like data engineering, heralding a new era of data-driven go-to-market.

Michael Steven Richards asked for insights on customer reactions to macroeconomic pressures and whether it's accelerating tech adoption. He also asked about Olo's strategic position as a 'center of gravity' in the restaurant tech ecosystem.

Answer

Founder and CEO Noah Glass noted that while macro pressures are a challenge, Olo's enterprise and limited-service clients often benefit from consumer trade-down effects, a pattern seen in past downturns. He positioned Olo as the 'guest data gravity control point,' emphasizing how the platform, especially with Olo Pay card-present, helps brands capture comprehensive guest data to drive profitable traffic and long-term value.

Michael Richards asked for early feedback from the sales team on the FreedomPay partnership, whether it alters the long-term view on the Card-Present versus Card-Not-Present mix, and if the current economic climate is increasing customer demand for data analytics.

Answer

Noah Glass, Founder and CEO, confirmed the FreedomPay partnership addresses widespread customer demand for a broader Olo Pay Card-Present solution. He noted that greater payment volume and scale will improve Olo Pay's economics over time. Glass also affirmed that brands are increasingly focused on using data analytics via the Olo guest data flywheel to drive profitable traffic, viewing it as a superior alternative to margin-eroding discounts in the current environment.

Michael Steven Richards asked about the impact of potential tariffs on customer behavior and whether the fiscal 2026 guidance accounts for macroeconomic uncertainty. He also inquired about the drivers for continued momentum in the cybersecurity business, specifically which newer products beyond core DDoS are exciting customers.

Answer

Anil Singhal, President and CEO, responded that NetScout is seeing some delayed sales cycles and the guidance range accounts for this uncertainty. Regarding cybersecurity, he broadened the scope, explaining that both the Service Assurance business (becoming part of the observability/AI market) and the DDoS business (expanding into the broader cybersecurity market) represent significant growth opportunities. He mentioned Adaptive DDoS as a new automated offering but emphasized the overall market expansion for both segments.

Michael Steven Richards of RBC Capital Markets questioned the unexpected strength in the service provider segment, asking if a large order pull-in signaled a broader trend shift and seeking details on spending priorities and the overall IT environment. He also inquired about the progress of the emerging opportunity in fixed wireless.

Answer

Anil Singhal, President and CEO, clarified that the large service provider order was accelerated due to customer-specific budget timing (calendar year-end) rather than a strategic market shift. He noted that while the business has stabilized, future growth will come from 5G cloud, slicing, and other new areas. Regarding fixed wireless, Mr. Singhal described it as an early-stage opportunity with ongoing customer evaluations but no significant revenue contribution to report yet.

Michael Steven Richards, on for Matt Hedberg, asked about the new CFO's guidance philosophy and the key levers for the expected growth acceleration in the second half of 2025. He also requested more detail on the investments being made in the payments platform and the primary frictions to adoption.

Answer

CFO Ryan Siurek stated the guidance philosophy is to provide a balanced view they are confident in, noting consistent beats in 2024. CEO Eric Remer added the approach is to be 'prudent.' Regarding payments, Siurek detailed investments across the entire adoption funnel, including integrated sales motions, dedicated payment sales reps, and customer success resources to overcome customer 'inertia of change.' Product enhancements like tap-to-pay are also being implemented to expand wallet share.

Representing RBC Capital Markets, Michael Steven Richards inquired about expected changes to the sales motion following the CRO's departure and asked for an update on customer feedback, growth potential, and the competitive landscape for the TotalAI solution.

Answer

CEO Sumedh Thakar detailed that the sales motion will pivot more heavily toward partners, enabling them with the Managed Risk Operations Center (mROC) platform to drive services revenue. Regarding TotalAI, he noted that early customer feedback is very positive, with AI security being a top CISO priority. While the market is greenfield and Qualys's approach is unique, he stated it's too early to quantify the financial impact as customers are still determining budgets, expecting a gradual ramp over the next few years.

Mike Richards, on behalf of Matt Hedberg at RBC Capital Markets, inquired about potential upside to the flat net new ARR growth guidance, asking about conservative assumptions around Copilot adoption or base conversions, and the specific methods for accelerating the Phase 2 SaaS transition.

Answer

CEO Yaki Faitelson attributed the acceleration to strong customer demand for effortless data security, especially with the rise of AI agents like Copilot, which makes Varonis's automated platform a necessity. CFO and COO Guy Melamed added that the company is applying learnings from 2024 by making strategic investments in sales, support, and legal, and by starting the renewal process earlier to manage the additional paperwork associated with SaaS conversions.

Michael Steven Richards, on behalf of Matt Hedberg, requested an update on Project Bernini, including customer reception and the potential monetization strategy for foundational AI models.

Answer

CEO Andrew Anagnost described Bernini as a top-down AI innovation currently in a phase of targeted customer engagement to improve its intelligence, noting it is not yet commercially available. He outlined several potential monetization paths for AI, including enhancing competitive position, charging for high-value features, and licensing technology, while emphasizing that it is still early days.

Michael Richards from RBC Capital Markets asked how the hunter-farmer sales model has trended relative to expectations and if there are plans to expand it to other customer segments.

Answer

CFO Brett Tighe explained that it is still too early to definitively assess the model's success after only two quarters, with the first quarter involving significant change management. However, he expressed long-term optimism, stating that specialization is crucial given Okta's expanding product portfolio and large customer base. He indicated more information would be available after a few more quarters of operation.