Peter Weed

Peter Weed asked about the opportunity for Bits AI, how Datadog plans to capture fair value for the productivity it brings to SRE and operations teams, and how competition might play out in this space.

Answer

Olivier Pomel, Co-founder and CEO, Datadog, explained that value is sold by demonstrating reduced time spent on incident resolution, leading to lower costs and customer impact. He anticipates a shift from post-hoc analysis to proactive, in-stream issue detection and pre-remediation, where Datadog's ability to process orders of magnitude more real-time data will be a significant advantage over general-purpose AI platforms.

Peter Weed asked about the Bits AI opportunity, how Datadog plans to capture fair value for the productivity it brings to SRE and operations teams, and how the company sees competition evolving in the AI agent space.

Answer

Olivier Pomel, Co-founder and CEO of Datadog, explained that value is demonstrated by significant reductions in time spent on incident resolution, leading to lower costs and customer impact. He projected a future where systems proactively auto-diagnose and pre-remediate issues in-stream, processing orders of magnitude more data in real-time, which he believes will be Datadog's unique advantage against general-purpose AI platforms.

Peter Weed inquired about ServiceNow's partnerships with OpenAI and Anthropic, specifically how these partners are investing to help with customer traction and scaling, and how customers decide which LLM partner to focus on given multiple options.

Answer

President, Chief Product Officer, and COO Amit Zavery explained that ServiceNow maintains an open ecosystem, allowing customer choice for foundational models. He noted unique capabilities with each partner, such as voice AI with OpenAI for CRM and a coding agent with Anthropic for workflow building. Chairman and CEO Bill McDermott added that these partnerships demonstrate the complementary nature of LLMs with ServiceNow's platform, as models lean into ServiceNow for innovation and global go-to-market reach, driving business impact within workflows.

Peter Weed asked about ServiceNow's partnerships with OpenAI and Anthropic, inquiring how these collaborations help with customer traction and scaling, and how customers decide which partner to focus on given multiple options.

Answer

President, Chief Product Officer, and COO Amit Zavery explained ServiceNow's open ecosystem approach, allowing customer choice among foundational models while highlighting unique use cases for each partner (e.g., OpenAI for voice AI in CRM, Anthropic for coding agents). Chairman and CEO Bill McDermott emphasized the complementary nature of these partnerships, where models lean into ServiceNow's platform for innovation and global reach, integrating AI into workflows for business impact.

Peter Weed of Bernstein asked about the pace of sales and marketing hiring, questioning if the company might accelerate hiring if the Moveworks acquisition is delayed, in order to capture the current market opportunity.

Answer

President & CFO Gina Mastantuono clarified that the company is not slowing down hiring for critical quota-bearing and technical sales roles. She stated that the overall S&M headcount reflects significant AI-driven efficiencies in operational roles, not a lack of investment in growth. Chairman & CEO Bill McDermott added praise for the marketing team's brand-building success.

Peter Weed asked how to evaluate the BrightHire opportunity, specifically its potential as an upsell to existing customers versus expanding the total addressable market (TAM) to new customers, and how it adds to Zoom's stack and revenue upside.

Answer

Michelle Chang, CFO, explained BrightHire's value in critical hiring conversations, offering a tangible AI monetization scenario. She noted it addresses a large, growing, and unpenetrated market (roughly $3 billion TAM), allowing Zoom to scale and providing an upsell opportunity beyond its existing customer base.

Peter Weed inquired about the BrightHire opportunity, specifically its potential as an upsell to existing customers versus expanding the TAM to new customers, and how it contributes to Zoom's stack for revenue upside.

Answer

CFO Michelle Chang explained that BrightHire addresses critical conversations around hiring, offering a tangible value proposition for customers and representing a vertical AI monetization scenario. She noted it's a category leader in a large, growing $3 billion market, allowing Zoom to scale and providing an upsell opportunity beyond its initial offering.

Peter Weed of Bernstein followed up on the expansion rate, asking where the early signs of acceleration are coming from and how those drivers are expected to build in coming quarters.

Answer

CFO Kelly Steckelberg clarified that the reacceleration of the overall business revenue growth is starting in Q3, driven by strong contributions from Contact Center, Phone, and Workvivo. This is distinct from the trailing 12-month net dollar expansion metric, which will take longer to reflect the improvement. She noted that expansion is happening via a 'land and expand' motion for products like Phone and Contact Center, as new features like PCI compliance and social integrations make them suitable for broader, external-facing deployments.

Peter Weed from Bernstein pointed out the relative weakness in the growth of customers in the $20k to $100k ARR band and asked how to interpret this as a future signal. He also inquired about a potential increase in churn, noting a subtle change in commentary around gross revenue retention.

Answer

CEO Jay Kreps acknowledged that the 20k+ customer cohort is a key metric and a point of focus. He attributed some weakness to changes made heading into the year that lost focus on this segment. He highlighted the initiative to displace CSP streaming offerings as a key opportunity to drive new lands in this cohort, as Confluent can offer a better product at a better price point. He did not attribute the trend to a significant change in churn.

Peter Weed of Bernstein asked whether the quarter's deal slippage had a greater impact on existing customer expansions or on the acquisition of new customers.

Answer

CEO Tomer Weingarten responded that the dynamic of pausing deals was "almost all prevalent with new logos." He explained that new customers, who make up about half of their quarterly business, are more likely to wait and observe the macro environment before making a commitment.

Peter Weed of Bernstein Research asked about the increasing growth from new customers, questioning if it was due to decelerating net retention rates (NRR) and requesting color on the profile of these new customer wins.

Answer

CEO Tomer Weingarten clarified that the expansion motion with existing customers remains healthy and consistent. The focus on new accounts is a strategic choice to expand the customer base. He explained that new logo wins are occurring across endpoint, cloud, and AI-SIEM products, with emerging solutions landing net new customers, not just upselling existing ones. This balanced approach is by design to capture new market share while retaining future expansion opportunities.

Peter Weed observed that an expanding NRR could imply a declining contribution from net new customers and asked whether this represents a short-term trend or a new long-term expectation for the business.

Answer

CEO Jay Chaudhry and CFO Remo Canessa framed this as a natural and positive evolution for a maturing platform company. With high penetration in the Fortune 500, upsell now constitutes about two-thirds of new ACV. They emphasized that landing large customers is the difficult first step, and the 6x upsell opportunity within the existing base represents a massive and efficient growth engine for the future.

Peter Weed asked about the potential scale of the agentic identity opportunity, questioning how material it could become relative to the number of human workers Okta covers.

Answer

CEO Todd McKinnon stated the opportunity could be "massive." He explained that Okta is positioned to monetize this trend on both sides: for developers building the agents and for enterprises managing agent access to their systems. He reiterated that machine-to-machine interactions already outnumber human ones and that agents could increase that by two orders of magnitude. He emphasized Okta's neutral, independent approach as a key differentiator that customers want.

Peter Weed asked for help dimensionalizing the impact of the headwind from customer downgrades, which is expected to fade by mid-FY'26, questioning if it represents a 300-500 basis point drag on NRR.

Answer

CFO Brett Tighe confirmed the impact is a gradual fade rather than an abrupt stop. However, he deferred providing a specific quantification of the impact on the net retention rate (NRR) for FY'26, stating they will offer more detail after closing Q4 and finalizing the next fiscal year's plan.

Peter Weed asked about the recent strength in product revenue and whether it should be viewed as a sustainable trend supporting overall growth or a one-time occurrence.

Answer

CEO Nikesh Arora reiterated his view that the hardware appliance business has returned to a steady state of low to mid-single-digit growth. He emphasized that the more significant trend is the company's successful transition from hardware to software, with software firewall bookings growing 21%. This shift reduces reliance on hardware and is expected to drive higher growth for the overall network security category over time.

Peter Weed of Bernstein pointed out an implied acceleration in Q4 revenue growth within the annual guidance and asked for context on this dynamic compared to the guided Q3 deceleration.

Answer

CFO Brian Robins explained that the guided cadence is similar to the prior year and reflects the company's historical seasonality, where Q4 is always the strongest quarter. He expressed confidence in the guidance for Q3 and the full year, citing strong visibility from the ratable nature of the business and efficiencies gained at scale.