Michael Turrin

Michael Turrin inquired about the 3x quarter-over-quarter increase in generative credit consumption, the influence of third-party models, Adobe's confidence in monetizing and forecasting this consumption, and the implications of different large model mind share scenarios for the company.

Answer

President of Digital Media David Wadhwani detailed that generative credits are included in plans or purchased as add-ons, with growth driven by more apps, media types (especially video), use cases (editing, ideation, bulk generation), and improved models (higher resolution/quality). He noted that major updates at MAX, including the Firefly app's attractive pricing, contributed to the 3x growth, leading to increased user upgrades and add-on purchases. Adobe aims to be the single destination for accessing all leading models, both internal and third-party.

Michael Turrin questioned why Adobe's margin profile remains strong (mid-40s, with gross margins up) despite increasing AI adoption, asking if degradation should be expected as AI numbers ramp.

Answer

Dan Durn, Executive Vice President and CFO, attributed the strong margin delivery to clear prioritization, focusing on growth vectors, and driving productivity. He cited two main vectors: optimizing GPU training fleets for efficient model construction and high utilization, and constantly tuning algorithms for cost per inference, balancing reserve instances with on-demand compute power. Internal adoption of AI for employee productivity also contributes.

Michael Turrin questioned Adobe's margin profile, noting it remains above the mid-40% target despite significant AI adoption. He asked why there hasn't been degradation from AI investments and if such degradation should be expected as AI numbers continue to ramp.

Answer

Dan Durn, Executive Vice President and CFO, attributed the strong margin delivery to the company's performance through its investment cycle, driven by innovation velocity and clear prioritization of growth vectors. He highlighted two key productivity drivers: optimizing GPU training fleets for efficient model construction and high utilization, and continuously tuning algorithms for inferencing to manage cost per inference. He also mentioned internal adoption of AI technologies to augment employee productivity, with a combination of these elements contributing to the strong margin profile and cash flow.

Michael Turrin from Wells Fargo Securities questioned why Adobe's margins are not degrading from increased AI adoption, despite previous discussions of a mid-40% margin profile, and what factors are contributing to the sustained strong margin performance.

Answer

Dan Durn, CFO & EVP, Finance, Technology, Security and Operations, attributed the strong margin delivery to clear prioritization, efficient management of GPU training fleets, optimization of inferencing algorithms and cost per inference, and internal productivity gains from AI adoption across the company.

Michael Turrin asked for details on the adoption curves for new, higher-priced Firefly offerings and how these new generative AI initiatives are being incorporated into the company's financial forecast.

Answer

David Wadhwani, President of Digital Media, highlighted that the new Firefly video model will create opportunities for higher-priced tiers in Creative Cloud, and noted strong initial uptake of Firefly Services by enterprise clients like Pepsi and Tapestry. Dan Durn, EVP and CFO, confirmed that the FY25 guidance already incorporates the momentum from these new AI products, including Express and AI Assistant, which are now meaningful financial contributors.

Michael Turrin inquired about the drivers behind Samsara's strong large customer momentum from a product perspective and its significance as a competitive advantage. He also asked for high-level commentary on fiscal year 2027 revenue guidance.

Answer

Sanjit Biswas, CEO and Co-founder, Samsara, attributed large customer success to investments in scalability, security, and infrastructure, along with a tailored go-to-market approach. Dominic Phillips, CFO, Samsara, stated that while formal FY27 guidance isn't ready, initial revenue guidance is expected to be higher than current consensus due to Q3 outperformance.

Michael Turrin asked about Samsara's role in the global AI infrastructure buildout, where its customers fit within those end markets, and how the company prioritizes this opportunity from a go-to-market perspective. He also requested commentary on the public sector's performance.

Answer

Sanjit Biswas (CEO) explained customers in physical operations (construction, field services, electric utilities) are driving demand for efficiency and safety in the AI infrastructure buildout, with construction leading net new ACV for eight consecutive quarters. He noted the public sector is digitizing to save money for citizens and meeting required security standards.

Michael Turrin of Wells Fargo asked about the key drivers behind the strong performance in the construction and public sector verticals. He also inquired about Samsara's approach to balancing growth and profitability, particularly concerning sales capacity investments in the current environment.

Answer

Co-Founder and CEO Sanjit Biswas explained that growth in construction and public sector is driven by a strong customer desire to increase operational efficiency and find savings, as these sectors have historically been less digitized. Chief Financial Officer Dominic Phillips added that the company manages sales capacity by monitoring rep productivity, which was strong in Q1, giving them confidence to continue hiring throughout the year.

Michael Turrin asked about the addressable market scale for the current product set and the potential contribution from new frontiers. He also inquired about preparations for potential impacts from the new U.S. administration, such as tariffs.

Answer

CFO Dominic Phillips emphasized the large remaining opportunity in core markets, noting that over 50% of U.S. commercial vehicles lack telematics and 90% lack video safety. On potential policy changes, he stated that while the situation is unclear, the company is developing strategies and leveraging its experienced supply chain team to navigate different scenarios.

Michael Turrin asked about the go-to-market strategy that allows Samsara to effectively address a diverse set of large customers, and requested clarification on the expected delta between operating margin and free cash flow margin going forward.

Answer

CEO and Co-Founder Sanjit Biswas explained that the platform addresses common use cases like safety and efficiency that are relevant across many industries, allowing a generalist sales team to be effective, with a specialized team for the public sector. CFO Dominic Phillips confirmed that the guided 200 basis points of operating leverage improvement for the year is expected to flow through to free cash flow, but reminded investors of the seasonality in free cash flow, with Q4 typically being the strongest.

Michael Turrin asked for key signals investors should monitor to understand ServiceTitan's performance, beyond general macro commentary, focusing on customer segments, product add-ons, or specific financial metrics.

Answer

CFO Dave Sherry advised investors to watch ServiceTitan's evolution in GTV and its earn rate against it. He emphasized that the company's strategy is to durably compound growth by delivering value to customers, leading to GTV expansion (driven by diverse trades, especially commercial) and increased earn rate (principally from Pro products).

Michael Turrin inquired about the duration of ServiceTitan's investment in large enterprise commercial, the current drivers of traction, and how this impacts the overall total addressable market (TAM) and long-term opportunity.

Answer

Co-Founder and President Vahe Kuzoyan stated that ServiceTitan has invested in the commercial side for about three years. Current traction is driven by delivering on the construction vision, specifically filling gaps in project management capabilities. He emphasized that it's still very early days in a gigantic total addressable market.

Michael Turrin of Wells Fargo Securities asked for a reminder on typical first-half seasonality and inquired about the adoption and growth contribution of Pro Products.

Answer

CFO Dave Sherry explained that Q2 is a seasonally strong period for GTV due to weather, making it sensitive to temperature changes, which is prudently factored into guidance. He confirmed that Pro Products are the fastest-growing part of the business and a key driver of subscription revenue growth, though the newest AI products are not yet significant revenue contributors.

Michael Turrin of Wells Fargo Securities asked for details on typical first-half seasonality and visibility, as well as trends in pro product attachment and contribution.

Answer

CFO Dave Sherry explained that Q2 is a seasonally strong period for GTV due to weather, making it sensitive to year-over-year comparisons, which is factored into guidance. He added that Pro Products are the fastest-growing part of the business and a key driver of subscription revenue growth.

Michael Turrin asked about the key factors and assumptions, such as weather and new products, incorporated into the fiscal 2026 forecast, and where the most immediate impacts from AI are likely to appear.

Answer

CFO Dave Sherry clarified that guidance assumes normal weather patterns and that new products are not yet material enough to be a major variable in the forecast. President Vahe Kuzoyan identified Dispatch Pro, Ads Optimizer, and Sales Pro as the 'pure-play' AI products driving near-term impact, with monetization occurring through the Pro products layer.

Inquired about the drivers of the company's consistent growth, the current priority between new logos and expansion, and expectations for the net retention rate going forward.

Answer

Consistent growth is driven by a balanced mix of new customer acquisition and expansion within the existing base. The net dollar retention rate of greater than 110% is considered a sustainable level, as it reflects the typical expansion rate of customer cohorts after their first two years on the platform. Gross retention remains high at over 95%.

Michael Turrin asked about the drivers of ServiceTitan's consistent growth, the priority between new logos and expansion, and whether the net retention rate of over 110% is a sustainable target.

Answer

CFO Dave Sherry attributed the durable 26-27% YoY subscription growth to a healthy mix of new and existing customers. CEO Ara Mahdessian confirmed growth is balanced between new business and upsells. Regarding net dollar retention (NDR), Sherry explained that while expansion is highest in a customer's first two years, cohorts beyond that period normalize around 110%, making it a solid long-term benchmark, supported by gross retention of over 95%.

Michael Turrin asked for a summary of what is driving the across-the-board increase in fiscal year 2026 guidance, beyond macroeconomic factors and business model changes. He also requested insights into the dynamics behind the AutoCAD segment's standout 15% growth this quarter.

Answer

CFO Janesh Moorjani summarized the Q3 performance as consistent momentum from sustained execution against a stable macro environment, which contrasted with earlier prudent guidance assumptions. CEO Andrew Anagnost added that the results reflect the successful execution of serious strategic decisions and investments made over the past three years. For AutoCAD's growth, CFO Janesh Moorjani attributed it partly to mechanical accounting from the new transaction model, as well as strength in the Autodesk Store and emerging countries like India, LATAM, and the Middle East.

Michael Turrin asked for a summary of what is driving Autodesk's across-the-board guidance raise for fiscal 2026, beyond macro and business model changes. He also requested insights into the standout 15% growth in the CAD segment and any specific dynamics to be mindful of there.

Answer

CFO Janesh Moorjani summarized Q3's performance as consistent momentum from sustained execution against a stable macro, which was more favorable than the prudent, severe scenario assumed in guidance. He attributed CAD growth partly to mechanical accounting from the new transaction model, as well as strength in the Autodesk Store and emerging countries like India, LATAM, and the Middle East. CEO Andrew Anagnost added that the results reflect serious and important strategic decisions and investments made over the last three years, which are now delivering the expected performance.

Michael Turrin of Wells Fargo Securities asked if the strength in AEC could be tied to a settling macro environment and questioned if the back-half free cash flow weighting to Q4 is more pronounced than previously expected.

Answer

President and CEO Andrew Anagnost attributed the AEC performance to the power of Autodesk's diversification, where money shifts between segments like data centers, industrial buildings, and infrastructure, offsetting softness elsewhere. EVP & CFO Janesh Moorjani confirmed that free cash flow will be a bit more weighted to Q4 than previously thought, reflecting the timing of large EBA and subscription renewal collections.

Michael Turrin asked for a comparison of business momentum across different geographies and for new CFO Janesh Moorjani's early observations and philosophy on framing financial targets.

Answer

CEO Andrew Anagnost noted that momentum was broadly as expected, with some relative softness in Asia Pacific due to the new transaction model rollout in Japan and macro exposure in China and Korea. CFO Janesh Moorjani reiterated his focus on capturing the large market opportunity while driving operating margin expansion, stating his core guidance philosophy has not changed.

Michael Turrin asked for CFO Janesh Moorjani's perspective on the decision to remove the long-term growth target, given his recent arrival. He also asked how the company balanced efficiency with preserving business momentum during the recent headcount reduction.

Answer

CFO Janesh Moorjani explained that since the company has been hovering at the low end of the 10-15% range for a few years, it felt 'inappropriate' to maintain a target they weren't hitting in the middle or high end of. CEO Andrew Anagnost added that the restructuring was a balanced, long-term decision, with some savings reinvested into future capabilities and the associated risk factored into the guidance.

Michael Turrin asked for an update on the macro spending environment and requested Interim CFO Betsy Rafael's perspective, as a board member, on the hiring of the new CFO and the transition plan.

Answer

CEO Andrew Anagnost and Interim CFO Betsy Rafael both characterized the macro environment as consistent with prior quarters. Rafael confirmed her involvement in the extensive search for the new CFO and stated she will remain with the company until the end of the fiscal year to ensure a smooth handover, leveraging her board and recent operational experience.

Michael Turrin inquired about early customer feedback on the Paradox and Sana acquisitions, their impact on Workday's business model, AI/agentic capabilities, the FlexCredit program, and Zane Rowe's updated thoughts on growth vs. margin trade-offs post-acquisitions.

Answer

Carl Eschenbach (CEO, Workday) highlighted strong demand and excitement for Paradox and Sana, noting Paradox was already selling well within two weeks of closing. Gerrit Katzmaier (President of Product and Technology, Workday) detailed Sana's impact on learning, UI/UX, and enterprise-wide AI transformation with Pipedream. Zane Rowe (CFO, Workday) stated no change to the financial framework, confirming continued investment in AI while driving efficiencies within the existing margin framework.

Michael Turrin inquired about early customer feedback on the Paradox and Sana acquisitions, their impact on Workday's business model, AI/agentic capabilities, the FlexCredit program, and CFO Zane Rowe's perspective on growth and margin trade-offs post-acquisitions.

Answer

CEO Carl Eschenbach reported strong demand for Paradox and Sana, noting Paradox was selling well within two weeks of closing and Sana's AI learning platform was highly anticipated. President of Product and Technology Gerrit Kazmaier detailed Sana's role as an AI learning platform, a future UI experience, and an enterprise-wide AI transformation tool with Pipedream. CFO Zane Rowe reiterated no change to the financial framework, balancing AI investments with efficiency.

Michael Turrin from Wells Fargo asked for an explanation of the delta between strong CRPO growth and lighter billings growth in Q1, and also inquired about the capital allocation strategy following the new $1 billion buyback announcement.

Answer

An executive, likely CFO Zane Rowe, stated that Q1 billings were in line with expectations and that billings growth can vary quarterly due to payment terms. He noted that growth in industries like education, which have longer deployment times and more flexible payments, can create a drag on billings growth. CFO Zane Rowe then clarified the capital allocation priorities: first, organic growth; second, strategic M&A; and third, returning capital to shareholders via buybacks.

Michael Turrin of Wells Fargo & Company asked for an explanation of the delta between the strong CRPO results and lighter billings growth in Q1, and also inquired about the capital allocation strategy, particularly the new $1 billion share buyback.

Answer

CFO Zane Rowe explained that Q1 billings were in line with expectations and that growth can vary quarterly due to payment terms. He noted that growth in verticals like education, which have longer deployment times and more flexible payments, can create a drag on billings growth. Regarding capital allocation, he prioritized organic growth investment first, followed by strategic M&A and returning capital to shareholders via buybacks.

Michael Turrin from Wells Fargo asked about Workday's margin potential, the trade-offs being made by reinvesting restructuring savings, and the long-term margin outlook.

Answer

CFO Zane Rowe reiterated the company's medium-term plan to achieve a 30%+ non-GAAP operating margin by FY27. He explained that the FY26 guidance of 28% reflects a deliberate balance between aggressively investing in the significant AI opportunity and simultaneously driving scale and efficiencies across the business to support long-term margin expansion.

Michael Turrin of Wells Fargo requested more context on the Q4 guidance, including any foreign exchange impacts, and how the quarter's performance informs the balance between growth and margin for the next fiscal year.

Answer

CEO Carl Eschenbach confirmed a solid Q4 pipeline driven by momentum in AI solutions with tangible ROI. CFO Zane Rowe stated that while FX is a factor, it is not significant. He reiterated the company's strategy of balancing top-line growth with margin expansion, expressing confidence in their path toward a 30%+ non-GAAP operating margin.

Michael Turrin asked about the rationale behind the shift in tone towards greater margin expansion and management's confidence in managing the trade-off without hindering a potential growth rebound.

Answer

CEO Carl Eschenbach explained the shift is based on viewing the current IT spending environment as the 'new norm' and having conviction in their growth initiatives. He noted higher margins also fund reinvestment. CFO Zane Rowe added that the company has a better understanding of investment returns and an increased focus on company-wide efficiencies.

Michael Turrin asked for clarification on the QBO strength, specifically how pricing contribution is expected to trend throughout the fiscal year. He also inquired about Q1's strong margin performance versus a slightly lower Q2 model, asking about expense timing and marketing-specific impacts.

Answer

Intuit CFO Sandeep Aujla stated that QBO's innovation continues to resonate, with customer attrition remaining below expectations even after recent price changes. He highlighted productivity gains from features like the accounting agent (12 hours saved monthly) and payments agent (5 days faster payments). Aujla confirmed that pricing contribution is expected to be relatively consistent across all four quarters. Regarding margins, he noted that Intuit is ahead of street expectations for the first half, attributing Q1's strength and Q2's timing to disciplined spend management and optimizing marketing ROI based on prior learnings, ensuring full-year commitments are met.

Michael Turrin posed a two-part question regarding the shape of pricing contribution to QuickBooks Online (QBO) strength for the rest of the fiscal year, and the factors influencing Q1's strong margin versus a slightly lower Q2, including expense timing and marketing impacts.

Answer

CFO Sandeep Aujla stated that QBO innovation continues to resonate, with customer attrition remaining below expectations after recent price changes. He indicated that pricing contribution is expected to be relatively consistent across the four quarters. Regarding margins, he explained that the Q1/Q2 timing shift was due to optimizing consumer marketing spend for maximum ROI, noting that the first half is ahead of consensus on both revenue and EBIT.

Michael Turrin asked about the drivers behind the high-teens EPS growth, the impact of any headcount optimization, and the outlook for margin progression.

Answer

CFO Sandeep Aujla attributed the margin strength to strong revenue performance across all businesses and the pervasive use of AI and automation for efficiency. He cited productivity gains in customer success, development (40% faster coding), finance, and marketing. This gives him confidence in their ability to continue investing in growth while expanding margins and growing operating income faster than revenue in the future.

Michael Turrin noted the high-teens EPS growth and asked for more detail on the drivers across segments and the extent to which headcount optimization is contributing to margin expansion.

Answer

CFO Sandeep Aujla attributed the margin strength to strong revenue performance across all businesses combined with widespread productivity gains from AI and automation. He specified these gains are occurring not just in customer success but also in development, finance, and marketing. This gives him confidence in the ability to invest in growth while continuing to expand margins and grow operating income faster than revenue.

Michael Turrin asked how Intuit plans to capture the value of Intuit Assist, whether through direct monetization or other benefits. He also inquired about the Credit Karma rebound, seeking to understand the split between macro improvements and product-specific drivers.

Answer

CEO Sasan Goodarzi explained that the primary value capture for Intuit Assist currently comes from improved customer conversion, retention, and higher adoption of paid services like payments. He noted that stand-alone priced SKUs are a possibility over time. Regarding Credit Karma, he attributed the strong performance to a '50-50 blend' of a more stable macro environment for personal loans and strong execution by the product and go-to-market teams, particularly in areas like insurance.

Michael Turrin asked about any impact from the central government shutdown on Via's business, and how the strong sequential customer additions relate to increasing referenceability, serving as a leading indicator for future revenue growth durability. He also questioned the evolution of the Waymo partnership and autonomous vehicle opportunity, and its potential to expand Via's total addressable market (TAM) over time.

Answer

Daniel Ramot, Co-Founder and CEO, confirmed no impact from the government shutdown and emphasized the critical role of referenceability, citing examples like Mobile and Sioux Falls, where peer conversations significantly influence customer decisions. Regarding the Waymo partnership, he described autonomous vehicles as a huge opportunity, with Via playing a key role in enabling customer adoption, noting different dynamics in the U.S. (robotaxis) versus Europe (government-driven public transit AVs), and highlighting potential for cost reduction and improved safety.

Michael Turrin asked about the drivers behind the significant sequential customer additions, specifically if increased referenceability is a leading indicator for future revenue growth durability. He also inquired about the Waymo partnership and autonomous vehicles, asking how this opportunity evolves and impacts Via's total addressable market (TAM).

Answer

Daniel Ramot, Co-Founder and CEO, affirmed that referenceability is key, with local success stories (e.g., Mobile seeing Sioux Falls) being incredibly impactful for customers. He expressed hope that this will drive rapid adoption. Regarding autonomous vehicles, Mr. Ramot described it as a huge opportunity, with Via playing a role in helping customers adopt the technology. He noted different dynamics in the U.S. (robotaxis) versus Europe (government-driven AV adoption) and highlighted that AVs can reduce costs and improve safety, leading to more investment.

Michael Turrin sought to understand if supply chain impacts affect CoreWeave's ability to sign new customers, or if it's more tied to post-ramp signing. He also asked for details on the NVIDIA deal, its presence in the backlog metric, and what it opens up for CoreWeave.

Answer

CEO Mike Intrator clarified that supply chain delays do not impact CoreWeave's ability to onboard new clients, as infrastructure builds are parallelized across multiple data centers. CFO Nitin Agrawal explained that the NVIDIA deal allows for contracted capacity to be interrupted and resold to different customers, eliminating utilization risks. Due to its flexible nature, the amount expected to be resold is excluded from RPO but is included in the revenue backlog. Mike Intrator emphasized this structure enables CoreWeave to provide infrastructure to emerging companies and startups.

Michael Turrin asked if the supply chain impacts affect the cadence of signing new customers or are more tied to post-ramp signing and specific customer environments. He also inquired if the NVIDIA deal shows up in the backlog metric and what opportunities it opens up.

Answer

CEO Mike Intrator clarified that there is no impact on signing new clients, as infrastructure builds are parallelized across CoreWeave's data center portfolio. CFO Nitin Agrawal explained that the NVIDIA contract allows for interruptible capacity to be resold to other customers, eliminating utilization risks, and is included in revenue backlog but largely excluded from RPO due to accounting rules. Mike Intrator added that this structure provides a disciplined way to finance compute for emerging companies.

Michael Turrin asked for help calibrating expectations for the revenue backlog metric, noting its relative stability in Q2, and questioned how the current backlog compares to the total addressable opportunity.

Answer

CEO Michael Intrator stated that demand from the largest clients is for massive, planetary-scale infrastructure, resulting in extremely large, heavily negotiated contracts. He advised that investors should expect to see 'step functions' in the backlog as these significant deals close, rather than smooth sequential growth. He affirmed that clients will continue to buy as long as CoreWeave can deliver.

Michael Turrin of Wells Fargo asked for more context on the revenue backlog metric, noting its relative stability quarter-over-quarter, and how the current backlog compares to the total addressable opportunity.

Answer

CEO Michael Intrator explained that the demand from major clients is for massive, planetary-scale infrastructure, leading to extremely large but complex, heavily negotiated contracts. He anticipates the backlog will grow in 'step functions' as these significant, long-term deals are finalized and signed.

Michael Turrin asked about the evolution of CoreWeave's go-to-market strategy as it targets the broader enterprise opportunity and requested clarification on the moving pieces within the revenue backlog, given the sequential decline in the core RPO metric.

Answer

CEO Michael Intrator explained the go-to-market strategy is expanding from a focus on a few massive clients to serving the 'long tail' of enterprise customers, with the Weights & Biases acquisition being a key enabler. Both executives clarified that total revenue backlog is growing substantially to $29 billion once the OpenAI contract and a new $4 billion deal signed in Q2 are accounted for.

Michael Turrin followed up on the bookings growth improvement in the second half of the year, asking if the previously indicated tailwinds from pricing are holding consistent since the July 1st price increase.

Answer

Jen Hsu, CFO of Clear Secure, confirmed that the pricing increases are indeed improving the pool equation and ultimately driving bookings growth in the second half of the year, indicating consistency with expectations.

Michael Turrin asked if the eGate rollout is happening faster than initially expected, given the incremental CapEx, and sought commentary on the incremental margin of eGates compared to the traditional Clear Plus business. He also followed up on whether the tailwinds from the July 1st price increase are consistently contributing to the improved bookings growth in the second half of the year.

Answer

Caryn Seidman-Becker, Co-Founder, Chair and CEO, Clear Secure, confirmed the eGate rollout is happening faster due to the administration's speed, leading to forward buying of units. She explained that eGates free up ambassadors for hospitality, creating opportunities for new, low-incremental-cost revenue streams and positively impacting gross adds, trial conversion, and retention. Jen Hsu, CFO, Clear Secure, reiterated consistent significant margin expansion, noting that innovation like eGates allows for capital reallocation or flow-through to the bottom line. Ms. Hsu confirmed that the pricing increases are indeed improving the pool equation and bookings growth in the second half.

Michael Turrin asked about booking seasonality, year-to-date trends, and planning for summer travel variability. He also sought more clarity on the gross dollar retention metric and the company's confidence in its expected stabilization after recent price impacts.

Answer

CFO Jennifer Hsu stated that booking seasonality is proceeding as expected, with Q2 and Q4 typically being the larger quarters for net adds. Regarding gross dollar retention, she explained the recent dip was a technical, mathematical factor resulting from large, step-function price increases over a 24-month look-back period. She reiterated that the goal is to align discounted member pricing with the growing value proposition, which has successfully grown members, bookings, and free cash flow. Executive Caryn Seidman-Becker added that the primary focus remains on driving member experience and value, with pricing following that value creation.

Michael Turrin of Wells Fargo asked for commentary on the stabilization of retention rates in Q4 and for a breakdown of the key drivers for the strong 2025 bookings growth forecast, including CLEAR Plus, pricing, and TSA PreCheck.

Answer

Executive Kenneth Cornick clarified that the stabilization in the 12-month trailing retention metric was not seasonal but a result of execution, improved lane experiences from EnVe pods, and an increase in member win-backs. For 2025 growth, he cited a combination of net member growth, the full-year impact of prior price increases, new pricing initiatives, and the continued ramp-up of CLEAR1 and PreCheck. CEO Caryn Seidman-Becker added that the combination of NextGen Identity and EnVe technology unlocks significant new growth opportunities.

Michael Turrin of Wells Fargo & Company asked for a framework to understand the contribution timeline from the various new partnerships and products, and sought to clarify the split between seasonality and price increases as drivers for recent active member and retention trends.

Answer

Executive Caryn Seidman-Becker explained that direct partnerships like Home Depot and LinkedIn are already contributing to revenue, while new channel partnerships like Okta will begin contributing next year. Executive Kenneth Cornick added that for 2025, growth will come from multiple sources: CLEAR Plus pricing and volume, TSA PreCheck, and new products like Perks. Regarding member metrics, he attributed the Q3 sequential dip to a higher number of members up for renewal combined with a modest impact from pricing on family plans.

Michael Turrin sought observations on why Figma Make is growing while 'vibe coders' are slowing, asking if it's due to different customer types or sequencing, and inquired about the specific drivers of Figma's Q4 strength and growth stabilization, including renewal dynamics and any impact from Weavy.

Answer

Praveer Melwani, CFO, explained Q4 strength is driven by new users expanding onto full seats and increased paid teams due to AI features, with Weavy being immaterial for Q4 guidance. Dylan Field, Co-founder and CEO, emphasized Figma Make's B2B focus, meeting team needs, and expanding design conversations to new participants.

Michael Turrin asked about the observations driving Figma Make's growth while 'vibe coders' are slowing, questioning if it's due to different customer types or sequencing. He also sought clarification on the drivers behind the stronger-than-expected Q4 guidance, given that Make or consumption revenue are not yet material contributors.

Answer

Praveer Melwani, CFO of Figma, clarified that the Q4 strength stems from new users expanding onto full seats and an increase in paid teams due to AI features, even without monetizing consumption. He added that Weavy is immaterial to the Q4 guide. Dylan Field, Co-founder and CEO of Figma, explained that Figma Make's growth is driven by a B2B focus, meeting the needs of existing teams (e.g., Okta's product and user research teams) and expanding the design conversation to new participants, while also enabling designers to deepen their craft.

Michael Turin asked for context on why the Q4 subscription revenue guide of 18% is lower than the cRPO growth rates, and if the public sector comment is specifically tied to the Q4 guide or other assumptions.

Answer

CFO and President Gina Mastantuono confirmed that the public sector will be a factor in the Q4 guide. She also noted that the full Q3 revenue beat was passed to the full year, and on-premise dynamics are a factor in Q4. She reiterated that demand trends remain healthy, and the pipeline for Q4 looks strong.

Michael Turin asked for context on why the Q4 subscription revenue guide of 18% is lower than the cRPO growth rates, and if the public sector comment is specifically tied to the Q4 guide or other assumptions.

Answer

CFO and President Gina Mastantuono confirmed that the public sector will be a factor in the Q4 guide. She also noted that the full Q3 revenue beat was passed to the full year, and on-premise dynamics are a factor in Q4. She reiterated that demand trends remain healthy, and the pipeline for Q4 looks strong.

Michael Turrin of Wells Fargo & Company asked for more detail on the meaningful OpEx efficiencies being driven by AI and whether this increases confidence in continued margin expansion, especially in an uncertain environment.

Answer

President and CFO Gina Mastantuono confirmed that AI is driving significant OpEx efficiencies, which are expected to grow over the long term. She expressed confidence in the ability to continue expanding margins, noting that the current operating margin guidance is being held despite expected M&A costs, underscoring the benefit of these AI-driven savings.

Michael Turrin highlighted that the customer and employee workflow segment reached a high of 31% of net new ACV. He asked for more detail on the demand drivers for disrupting the front office and how the Xanadu release and agent solutions could further this opportunity.

Answer

CEO Bill McDermott confirmed the strength in customer workflows, which were in 15 of the top 20 deals and saw over 50% net new ACV growth. He noted significant traction for industry SKUs in financial services and TMT, as well as the Sales and Order Management product. He attributed the success to a clear value proposition around sales productivity, reduced quote times, and higher deal sizes, stating his belief that this segment could become ServiceNow's largest business.

Michael Turrin highlighted that the customer and employee workflow segment reached a high of 31% of net new ACV. He asked for more detail on the demand for disrupting the front office and how the Xanadu release and new agent solutions could further this opportunity.

Answer

CEO Bill McDermott confirmed that Customer Workflows are performing exceptionally well, with net new ACV growing over 50% and appearing in 15 of the top 20 deals. He noted significant traction in sales and order management across many industries, driven by a value proposition of increased sales productivity and optimized customer lifetime value. He expressed his belief that this segment could eventually become the largest business in ServiceNow.

Michael Turrin from Wells Fargo asked about the potential swing factors and range of outcomes for Q4 current cloud backlog (CCB), especially considering Christian Klein's comments about AI pulling RISE deals forward.

Answer

Dominik Asam, CFO of SAP, explained that CCB is driven by net bookings and churn, and while there's always a bandwidth of outcomes, the trajectory from the first three quarters, adjusted for transactional business challenges, provides a reasonable estimate. Christian Klein, CEO of SAP, added that while 25% CCB growth would be the most likely scenario based on earlier stalled pipeline, the improved sentiment and pipeline maturity now make him more optimistic, and he would be disappointed with only 25% growth, aiming for 26%.

Michael Turrin from Wells Fargo asked about the potential swing factors for Q4 Current Cloud Backlog (CCB) and sought commentary to help size the range of potential outcomes, especially given that AI is reportedly pulling RISE deals forward.

Answer

CFO Dominik Asam explained that CCB is driven by net bookings and churn, with the lion's share impacting CCB upon closing. He reiterated the initial guidance of a slight decrease from 29% in 2024, factoring in M&A. CEO Christian Klein expressed optimism, stating that while 25% would be likely given H1 stalls, he would be disappointed with 25% and sees 26% as a great result due to improved pipeline sentiment and AI-driven deals.

Michael Turrin of Wells Fargo Securities asked about the business impact from the Sapphire conference on pipeline and product adoption, and sought confirmation that elongated deal cycles in the US public sector are factored into guidance.

Answer

CEO Christian Klein confirmed that Sapphire was a major success, generating 'a few billion' in new pipeline essential for meeting full-year targets. On the US public sector, he acknowledged that decision cycles have become more difficult but stated they are working closely with agencies to accelerate closings in H2, implying the uncertainty is a known factor in their outlook.

Michael Turin asked about the strength in Tier 1 deals, specifically whether it's tied to fiscal year-end or other factors, and if AI opportunities are more prevalent with larger insurers or smaller, more nimble tiers (3-5) for earlier adoption.

Answer

President John Mullen clarified that Tier 1 momentum is not tied to year-end but to the extensive work, proof-outs, and customer cadence involved in these large deals. CEO Mike Rosenbaum explained that AI opportunities are diverse; smaller insurers benefit from Guidewire's productized capabilities, while larger ones with significant IT resources may develop some AI solutions internally. He expects a mix of adoption across different tiers.

Michael Turrin inquired about the demand environment, cloud momentum, and competitive dynamics contributing to Guidewire's strong performance relative to the broader software market. He also asked about the increasing focus on cash flow.

Answer

CEO Mike Rosenbaum attributed the momentum to the durable P&C industry, rising premiums, and Guidewire's growing track record of success, which is distancing it from competitors. President & CRO John Mullen highlighted the power of customer referenceability. CFO Jeff Cooper explained that the strong cash flow is the result of a long-term strategic focus and the power of the SaaS model, with more details to be shared at the upcoming Analyst Day.

Michael Turrin from Wells Fargo asked about the improvement in the net revenue retention rate (NRR), questioning if the metric is turning a corner as optimizations fade and whether the improvement is durable.

Answer

CFO Mike Scarpelli explained that the NRR uptick was a direct result of strong revenue growth. He attributed the improvement to several large, existing customers migrating new workloads, which temporarily boosts consumption. He clarified that customer optimizations are a continuous, healthy activity and not a factor in the recent change, stating no customers are in an 'unhealthy place' with their consumption.

Michael Turrin of Wells Fargo asked about the stability of expansion rates amid the shift to a consumption-focused go-to-market model and inquired about the timing sequence of Iceberg-related storage headwinds versus offsetting revenue from new features.

Answer

CFO Mike Scarpelli stated that while he does not guide to Net Revenue Retention, the metric feels "pretty stable," driven by the core business and new feature adoption. Regarding Iceberg, he reiterated that he is not seeing a significant storage headwind and that any potential impact will be more than offset by growth in new data engineering features. CEO Sridhar Ramaswamy emphasized the larger opportunity is accessing the vast data estates outside Snowflake, not a tactical data shift.

Michael Turrin asked which new product areas, besides Snowpark, are showing the most significant early demand signals from customers.

Answer

CEO Sridhar Ramaswamy identified three key areas with strong early signals: data engineering workloads, including Iceberg and streaming; a comprehensive, top-to-bottom go-to-market motion for AI products; and Notebooks for data scientists, which are expected to reach general availability soon.

Michael Turrin requested an updated view on the durability of Twilio's growth profile and the expected timeline for actions aimed at stabilizing gross margins to take effect.

Answer

CEO Khozema Shipchandler described growth as durable across industries and geographies, though acknowledging tougher back-half comparisons. He stated that actions like pricing adjustments and platform cost optimizations are expected to stabilize gross margins in the near term, with potential for future improvement.

Michael Turrin asked about the specific drivers behind the Q1 revenue growth upside in the Communications segment and questioned if the conservative guidance for the second half of the year was due to tough comparisons or embedded macro concerns.

Answer

CFO Aidan Viggiano explained that the Q1 strength was broad-based, similar to Q3 and Q4, with strong performance in Messaging across both U.S. and international markets. She noted that all top five industry verticals grew. Viggiano clarified that while customer engagement remains healthy, the conservative second-half outlook is a prudent measure against potential macro risks, not a signal of a known slowdown.

Michael Turrin asked how Twilio plans to ensure its recent return to double-digit growth is durable and what swing factors could drive that aspirational growth rate. He also questioned the drivers of the Q4 gross margin dip.

Answer

CFO Aidan Viggiano explained that recent growth was broad-based across products and industries, not driven by one-off factors. She noted the Q4 gross margin decline was expected, caused by higher seasonal hosting costs and a greater revenue mix from lower-margin messaging. She clarified that the company's long-term financial framework assumes constant, not expanding, gross margins. CEO Khozema Shipchandler added that the company is internally oriented to achieve double-digit growth.

Michael Turrin from Wells Fargo requested more detail on the fiscal 2026 guidance framework, particularly concerning the enterprise go-to-market evolution, and how FY25 results compared to the initial risk assessment.

Answer

CFO Joe Binz stated that strong Q4 sales execution led to record large deals and a 38% YoY increase in RPO. He confirmed that the execution risks from macro uncertainty and go-to-market changes, which were factored into guidance, did not fully materialize. The outperformance was driven by better-than-expected paid seat expansion, cross-sell, and migrations, with stable business trends.

Michael Turrin from Wells Fargo requested more detail on the fiscal 2026 guidance framework, particularly the embedded risk from the enterprise go-to-market evolution, and how FY25 results compared to similar forecasts.

Answer

CFO Joe Binz confirmed that strong Q4 execution from sales and partners drove bookings and a 38% YoY increase in RPO. He noted that the risks embedded in the Q4 guidance, such as macro uncertainty and GTM disruption, did not fully materialize. The outperformance was primarily driven by better-than-expected paid seat expansion, cross-sell, and migrations, with stable trends across customer segments.

Michael Turrin highlighted the strong gross and free cash flow margins, asking about the underlying efficiency gains, the ability to sustain margin improvement in a shifting growth environment, and the current assessment of investment trade-offs.

Answer

CFO Joe Binz attributed the strong 86% gross margin to price increases, premium upsells, and significant engineering-driven optimizations in cloud infrastructure, which he views as structural and sustainable. CEO Mike Cannon-Brookes added that these efficiencies enable strategic decisions like including Rovo in subscriptions, demonstrating their balanced approach to growth and profitability.

Michael Turrin requested an update on the company's 'risk-adjusted' guidance framework, asking how business trends like seat expansion are tracking against expectations and how to interpret the second-half forecast.

Answer

CFO Joe Binz confirmed that Q2 business trends were stable and consistent with Q1. He stated that the conservative, risk-adjusted guidance approach for the second half of FY25 remains in place. This prudence accounts for ongoing macroeconomic uncertainty and potential execution risks related to the company's evolving enterprise go-to-market strategy.

Michael Turrin asked for an elaboration on Atlassian's key points of differentiation for its AI product, Rovo, compared to other tools in the market, and the potential long-term addressable user base.

Answer

CEO Mike Cannon-Brookes detailed that Rovo's differentiation stems from years of investment in the underlying cloud platform, particularly the 'Teamwork Graph' which organizes teamwork data. He emphasized that Atlassian's strengths in enterprise search, the Forge extensibility platform, and the ability to connect data from Atlassian and third-party tools give Rovo a significant head start and enable its agents to take meaningful, autonomous action for customers.

Representing Michael Turrin of Wells Fargo, Ronit Shah asked for the rationale behind the 10% workforce reduction and the reason for the sequential step-down in the Q3 adjusted EBITDA guidance.

Answer

CEO Ron Yekutiel positioned the workforce reduction as a strategic reorganization to boost productivity, driven by AI efficiencies and a goal to streamline operations. He specified cuts were in engineering, professional services, and G&A, not sales and marketing. CFO John Doherty added that the Q3 EBITDA guide appears lower because Q2 results were boosted by one-time benefits, and that Q4 is expected to be the strongest quarter for profitability.

Michael Turrin from Wells Fargo & Company asked if the outperformance of acquired businesses changes the guidance philosophy and what lessons from Clearwater's prior pricing model transition could be applied to Infusion.

Answer

CFO Jim Cox explained the Q2 beat was due to initial conservatism and the guidance philosophy remains consistent. CEO Sandeep Sahai clarified the focus is on a holistic 'commercial model change,' not just pricing. He emphasized that, like before, the plan is to design it deliberately over several months and roll it out on the back of delivering superior client service and platform performance, with impacts expected in 2026 and beyond.

Michael Turrin asked how Clearwater will ensure continued execution on its core business while integrating the large Enfusion acquisition. He also asked for the key assumptions behind the initial 2025 revenue growth guidance of 19-20%.

Answer

CEO Sandeep Sahai stated that the acquisition was pursued only because the core business is performing exceptionally well. He outlined a plan that includes a strong PMO, joint workstreams, and dedicating specific leaders to the integration to allow the rest of the organization to focus on the core Clearwater platform. CFO James Cox clarified that the initial 2025 guidance is built with high confidence around an NRR target of 115% but notably assumes no tailwind from AUM growth.

Michael Turrin asked for a review of the 'base plus' business model, how it functions in an improving AUM environment, and whether the upside is as robust as the prior model.

Answer

CFO Jim Cox explained that the model successfully stabilized the business and still captures AUM upside. He emphasized that a key strategic benefit was enabling a multi-product upsell program by discretely defining what was sold. This allows Clearwater to commercialize new solutions, like its NAIC reporting service, creating new revenue streams.

Michael Turrin from Wells Fargo Securities asked if HubSpot's patient monetization strategy for seats is a competitive advantage and how the company weighs monetizing AI now versus waiting.

Answer

CEO Yamini Rangan affirmed that their disciplined, value-first approach to pricing is a key advantage that is paying off, as seen in strong seat upgrade momentum across Core, Sales, and Service hubs. She explained that last year's pricing changes, which lowered entry barriers, are now driving this growth. Regarding AI, Rangan described a hybrid strategy: seats will monetize core productivity value, while credits will monetize autonomous work done by agents. This dual approach allows them to capture value as it's created, ensuring durable growth.

Michael Turrin from Wells Fargo Securities asked if HubSpot's patient monetization strategy for seats is a competitive advantage and how that philosophy applies to monetizing new AI capabilities.

Answer

CEO Yamini Rangan affirmed that their disciplined, value-first approach is paying off, as seen in strong seat upgrade momentum across core, sales, and service hubs. She explained this strategy is now being applied to AI, where a hybrid model of seats (for user productivity) and credits (for work done by AI) will be used. Rangan noted that value must be proven before monetization, ensuring durable growth.

Michael Turrin asked for a comparison of end-of-year customer decision-making in Q4 2024 versus Q4 2023, and whether the Q1 2025 guidance includes extra conservatism given the slowdown seen in the prior year.

Answer

CFO Kathryn Bueker noted that Q4 2024 buying behavior was a continuation of Q3 trends, unlike the significant negative shift seen in Q4 2023. Regarding guidance, she explained that revenue is a lagging indicator of buying behavior. She guided for Q1 constant currency revenue growth to be the low point for the year, with an expected acceleration throughout 2025 as the business stabilizes.

Michael Turrin asked what could catalyze a return to a broader upgrade motion and improve Net Revenue Retention, wondering which new features or hubs post-INBOUND are generating the most customer interest for future upsells.

Answer

CFO Kathryn Bueker reiterated that a change in the value-conscious buying environment is the key ingredient required for NRR to expand. She pointed to foundational strengths like high customer dollar retention and stabilizing downgrades. She also highlighted the new seat-based pricing model as a future tailwind that should help drive higher NRR over time as the installed base transitions.

Michael Turrin of Wells Fargo asked for help bridging the gap between strong bookings commentary and the net go-live metric, which has trended in the 50s. He questioned if the metric is becoming less useful as customer sizes increase.

Answer

Chairman & CEO David Ossip confirmed the net go-live number has less meaning now, as the company focuses on the 500+ employee market. He explained that a single large enterprise go-live, like the recent 300,000-employee customer, is counted the same as a smaller customer that might be a less strategic fit. He emphasized that the strategy is focused on driving free cash flow, pointing to the 57% incremental free cash flow margin on new revenue year-to-date as proof of its success.

Michael Turrin requested perspective on the competitive landscape, asking for a comparison between the mid-market and enterprise segments and commentary on the system consolidation opportunities Dayforce is seeing.

Answer

CEO David Ossip reported that Dayforce's win rates have nearly doubled year-over-year, indicating market share gains. He stressed that the company's unique single database and native codebase are powerful differentiators, enabling the '12-to-1' system consolidation that resonates with customers. The competitive set remains stable, and Dayforce is seeing tremendous success with full-suite sales across all segments up to large enterprise.

Michael Turrin of Wells Fargo sought clarification on how the 4% upmarket growth and -11% downmarket decline reconcile to the reported revenue growth, and asked about investment plans given the guidance update.

Answer

CFO Graham O'Brien clarified that the reported 5% YoY revenue growth was a 'noisy' comparison due to a change in estimates in the prior year's Q2. He explained that the slower margin expansion relative to revenue upside is a matter of timing, not reinvestment, with fixed costs expected to provide leverage as they flatten out in 2026.

Michael Turrin of Wells Fargo sought clarification on how the 4% upmarket growth and 11% downmarket decline reconcile to the reported revenue growth. He also asked if the updated guidance implies reinvestment of revenue upside.

Answer

CFO Graham O'Brien clarified that the reported revenue growth was affected by a noisy year-over-year comparison due to a change in estimates in Q2 of the prior year. He stated that margin expansion is expected to be non-linear and is a matter of timing with the upmarket mix shift, not a signal of reinvestment.

Michael Turrin of Wells Fargo Securities requested more detail on the free cash flow performance, asking if transaction outperformance affected seasonality and seeking clarification on the 200 basis point guidance uplift from the recent tax bill.

Answer

EVP & CFO Brian Miller clarified that the 200 basis point impact on the free cash flow margin was for the full year, driven by a $55 million reduction in expected cash tax payments. He confirmed Q2 was an especially strong quarter for transaction revenues and related cash flow, but Q3 remains their largest free cash flow quarter due to maintenance renewals. He added that they expect to pay minimal federal cash taxes for the next 18 months.

Michael Turrin from Wells Fargo Securities sought to clarify whether Q1 bookings weakness was driven more by Q4 deal pull-forwards than consultant-led delays, and asked what internal strategies Tyler can employ to mitigate such delays.

Answer

President and CEO Lynn Moore reiterated that the consultant impact was anecdotal and that deal timing, including some Q4 pull-forward, was the primary factor, expressing confidence that delayed deals would close in Q2. CFO Brian Miller clarified that 'consultant-driven' refers to clients using third parties to manage procurement.

Michael Turrin observed that the initial 2025 total revenue growth guidance of 8.5% seems conservative given the strong SaaS momentum, and asked for more color on the segment mix and guidance philosophy.

Answer

CFO Brian Miller stated the guidance approach is unchanged and that strong growth in high-value SaaS (21-24%) and transactions is being offset by planned declines in lower-margin revenues like maintenance and professional services. CEO H. Moore added that the Texas payments contract wind-down also creates a headwind on total growth, but the underlying 'quality revenue lines' are performing at or above Investor Day targets.

Michael Turrin asked for details on the drivers behind the strong transaction revenue performance, which grew sequentially in a typically slower quarter, and requested clarification on any one-time items affecting the strong free cash flow.

Answer

CFO Brian Miller attributed the transaction revenue strength to several factors, including new go-lives like the California State Parks contract, faster onboarding of new payments clients, and increased transaction volumes. For free cash flow, he identified a $29 million prepayment from the Kentucky courts contract, expected in Q4, as the most significant one-time item impacting the full-year outlook.

Michael Turrin of Wells Fargo asked about Microsoft's ability to maintain flat operating margins in the upcoming year given the mix shift towards Azure and AI, and inquired about any internal productivity gains from using its own AI tools.

Answer

CFO Amy Hood explained that the primary driver of margin stability is strong revenue growth fueled by product innovation and market share gains. She also highlighted the importance of applying their skill set to deliver efficiencies across the tech stack and focusing talent on the largest opportunities. She stressed that the focus begins and ends with delivering great products to customers.

Michael Turrin from Wells Fargo asked how Microsoft expects to maintain flat operating margins in the coming year given the mix shift towards Azure and AI, and whether internal AI productivity gains are a factor.

Answer

CFO Amy Hood clarified that the primary driver for margin stability is strong revenue growth from innovative, share-gaining products. She also highlighted the company's focus on delivering efficiencies at every layer of the tech stack. She emphasized that sustainable margin improvement is driven more by product-led revenue growth than by cost control alone.

Michael Turrin of Wells Fargo asked how Microsoft expects to maintain flat operating margins in the upcoming year given the mix shift towards Azure and AI, and whether internal AI-driven productivity gains are a contributing factor.

Answer

CFO Amy Hood explained that the primary driver of margin stability is strong revenue growth fueled by product innovation and market share gains. She emphasized that revenue growth is the most durable path to margin improvement. Additionally, she highlighted the company's focus on delivering efficiencies at every layer of the tech stack as a key lever.

Michael Turrin of Wells Fargo asked for more detail on the comment that the 'health of early renewals' improved in Q1. He also questioned if management has considered using ARR as a primary metric instead of billings, given the latter's volatility.

Answer

CFO Blake Grayson clarified that the 'health' improved because the mix of early renewals that were flat or included partial churn dropped significantly year-over-year, shifting focus to renewals with expansion. Regarding metrics, he acknowledged that billings is not ideal due to timing volatility and said the company is actively thinking about better ways to communicate business trends, especially with the evolution to IAM.

Michael Turrin from Wells Fargo Securities inquired about any potential impacts from the public sector and asked for a walkthrough of the seasonal components affecting the Q1 revenue guidance.

Answer

CEO Allan Thygesen sees the public sector, particularly the federal government, as 'mostly upside' since the company's business there is currently modest, and they are investing in leadership to pursue the opportunity. CFO Blake Grayson explained the larger-than-normal seasonal drop in the Q1 revenue guide was due to three factors: a one-point headwind from the leap year, the non-recurring impact of unique early renewals in Q4, and a hard comparison against strong digital usage growth in the prior year.

Representing Aaron Rakers, Michael Turrin of Wells Fargo Securities asked about the new FlashBlade Exa offering, including the size of its market opportunity and the economic implications of its disaggregated architecture.

Answer

CEO Charles Giancarlo described the opportunity as targeting substantial niche markets like government, sovereign clouds, and large-scale GPU clusters. He detailed a business model where margins are expected to be at or above company standards. CTO Rob Lee added that FlashBlade Exa builds on the success of FlashBlade S to address the next level of scale for GPU clouds and tech titans.

An analyst on behalf of Michael Turrin asked about customer feedback on RingCentral Air, its contribution to the $100 million new product ARR target, and whether competitor discounting has increased.

Answer

President and COO Kira Makagon reported very positive feedback for Air, citing productivity gains up to 50%. She clarified that while individual product contributions to the ARR target are not disclosed, RingCX is the primary driver. She added that market pricing has stabilized and they are not seeing increased discounting, as RingCentral maintains its position as a premium product.

Michael Turrin asked about the primary drivers of ARPU expansion, questioning if it was from cross-selling new products or base price increases, and whether the company could maintain sales and marketing leverage while focusing on these new products.

Answer

Founder, Chairman and CEO Vlad Shmunis attributed ARPU strength to the cross-sell of new, higher-value products like RingCX and AI-based upsells like RingSense, emphasizing the strong value proposition of the core ~$30 ARPU bundle. SVP and Chief Accounting Officer Vaibhav Agarwal added that sales and marketing leverage continues to improve, with expenses as a percentage of revenue declining due to higher sales productivity, cost discipline, and a strategic shift to more efficient routes to market.

Michael Turrin inquired about the nature of AI-related demand and use cases, key milestones for new products, and the expected impact of the new Chief Revenue Officer on go-to-market productivity.

Answer

CEO Jay Kreps detailed two AI demand drivers: selling to AI-native companies and enabling enterprise AI with data pipelines for context and real-time agents. He expressed high confidence in new CRO Ryan Mac Ban, noting his internal promotion minimizes disruption. Key product milestones include scaling the Connect business, winning large Flink migrations, and expanding Tableflow across all clouds with Databricks integration.

Michael Turrin inquired about the common GenAI-related use cases Confluent is seeing and how they might evolve, and also asked for more context on the assumptions underpinning the fiscal 2025 revenue guidance.

Answer

CEO Jay Kreps identified two primary GenAI patterns: real-time ETL for RAG applications and applying language models directly to data streams for tasks like claims processing. CFO Rohan Sivaram added that the 2025 guidance is supported by expectations of over 30% cloud growth, momentum from new products like Tableflow and WarpStream, and strategic partnerships with Jio and Databricks.

Michael Turrin asked about the role of 'Agentic solutions' within AI use cases and how the significant 2025 product cycle might impact margin progression and the company's efficient growth.

Answer

CEO Jay Kreps identified agentic AI as a key Flink use case for operationalizing background tasks, calling it a nascent but potentially massive opportunity. CFO Rohan Sivaram and Kreps both affirmed their commitment to efficient growth, noting that the investment costs for new products are already being incurred, and their scaling should positively impact margins over time.

Michael Turrin asked if the change from last quarter's 'stable net new ARR' commentary was due to the recent uncertainty, how UiPath is staying engaged with federal clients, and if new AI products could offset these headwinds.

Answer

COO & CFO Ashim Gupta confirmed the shift in outlook is due to the macro environment and public sector issues. He mentioned that executive sponsorship and frequent engagement in Washington are key to maintaining federal relationships. Gupta noted that while Agentic momentum is positive, it is not expected to be a material revenue contributor in fiscal 2026.

Michael Turrin asked for an update on the progress of strategic initiatives since Daniel Dines returned as CEO and questioned if the recent uptick in customer count was a reflection of these new efforts.

Answer

CFO & COO Ashim Gupta responded that a better connected and more streamlined team is expected to execute better across all metrics. However, he clarified that the company's philosophy has not changed, as it still prioritizes quality over quantity of new logos. He views the uptick as a result of better overall execution rather than a strategic shift, an area they will continue to monitor.

Michael Turrin asked about Q4 seasonality and enterprise deal cadence, and also inquired if the 2025 guidance includes extra prudence due to the CFO transition.

Answer

CFO Barry Zwarenstein noted that Q4 seasonality was stronger than expected, particularly in consumer and healthcare, which led to higher usage revenue. He confirmed the 2025 guidance is prudent due to macro uncertainty and includes an extra layer of caution for the second half of the year. COO Andy Dignan added that installed base bookings were the highest in eight quarters, driven by 50% year-over-year growth in AI.

Michael Turrin from Wells Fargo & Company inquired about the long-term subscription revenue growth target of 20-30%, noting the current 20% growth is at the low end of the range and asking if this represents a trough.

Answer

Executive Michael Burkland affirmed the company's confidence in the 20-30% long-term target, highlighting the acceleration in subscription revenue growth from 17% last quarter to 20% in Q3. He emphasized that subscription revenue is the most important indicator of business health and pointed to the massive, AI-expanded market opportunity as a key driver for future growth.

Richard Poland on behalf of Michael Turrin from Wells Fargo asked for the reasons behind pushback from the remaining Fuze customers on migration. He also inquired about the specific growth opportunities being targeted by the planned investments for the next fiscal year.

Answer

CEO Samuel Wilson explained that the remaining Fuze customers, representing only 5% of revenue, are the 'dogs and cats' who are simply reluctant to make the effort, possibly holding out for discounts. He reiterated the commitment to migrating all of them. Regarding investments, he clarified that they are not generalized but are targeted at specific projects with defined outcomes and compelling ROI, which he sees as clear opportunities for the company.

Michael Turrin asked Co-Founder Sytse Sijbrandij to elaborate on why incoming CEO Bill Staples is the right fit for GitLab at its current stage of maturity and innovation.

Answer

Co-Founder Sytse Sijbrandij called Bill Staples a "perfect fit," praising his leadership qualities and deep domain expertise in software development. He emphasized that Staples' combination of operational skill and genuine care for the software process makes him the ideal person to lead GitLab's next chapter.

Michael Turrin from Wells Fargo asked for more detail on the strength of leading indicators like CRPO and billings, and inquired about the key assumptions embedded in the forecast for the rest of the year.

Answer

CFO Brian Robins stated there were no one-time factors driving the strong metrics, attributing the performance to growing deal sizes and increased adoption of the Ultimate tier, which now represents 47% of total ARR. He noted that the sales transition has been smooth with minimal disruption. The strength was broad-based, with cRPO up 42%, strong billings, and GitLab Dedicated growing roughly 150% year-over-year, reflecting widespread platform adoption.

Michael Turrin asked about the difference between implied operating and free cash flow margins in the FY26 guide and the company's philosophy on balancing investment against profitability.

Answer

CFO Michelle Chang explained the free cash flow forecast is affected by timing differences and varying interest and tax conditions compared to FY25. She reiterated that the company's strategy is to balance revenue growth with profitability, investing where growth is visible while maintaining a strong focus on efficiency.