Rob Owens is Managing Director and Senior Research Analyst at Piper Sandler, specializing in security and infrastructure software research, where he covers leading companies such as Atlassian, CrowdStrike, Palo Alto Networks, Zscaler, Okta, Fortinet, Datadog, and ServiceNow. He has a distinguished track record with multiple top 10 awards from TipRanks, The Wall Street Journal’s 'Best on the Street,' and Reuters for both stock picking and earnings forecasting. Beginning his analyst career in the mid-1990s, Owens spent 25 years at Pacific Crest Securities (later KeyBanc Capital Markets) before joining Piper Sandler in 2019, and he holds a cum laude bachelor's degree in mathematics and finance from Linfield College. His expertise and long-term performance have established him as a leader in technology sector equity research.
Rob Owens asked about modernization, where customers are, how much legacy remains, and if there's a tipping point in identity transformation.
President Matt Mills stated they are seeing an acceleration of migrations from the install base and movement in the legacy business.
Rob Owens asked Mark McClain to elaborate on modernization efforts, the amount of legacy solutions remaining in the installed base, and whether the record new logo ARR quarter indicates a tipping point in identity transformation within that legacy base.
President Matt Mills confirmed an acceleration of migrations from the installed base and within the legacy business. He attributed this urgency to the impending rise of AI agents, which legacy solutions are ill-equipped to handle. Mills noted an increase in opportunities across both legacy and IIQ installed bases.
Asked for a breakdown of the strong ARR growth, questioning the drivers for both new customer acquisition and existing customer expansion (e.g., more identities, new modules, or tier upgrades).
New customer growth is driven by the resilient market demand for identity security and displacing failed competitor deployments. Expansion with existing customers, which accounts for half of ARR growth, is evenly distributed across several vectors: on-prem to SaaS migrations, selling more identities, cross-selling new modules (like machine identity), and suite upgrades.
Rob Owens of Piper Sandler Companies requested a breakdown of the strong ARR growth, asking about the drivers for both new customer acquisition and existing customer expansion (e.g., more identities, modules, or tier upgrades).
CFO Brian Carolan attributed new customer growth to market resilience and displacing failed competitor deployments. For existing customers, he confirmed expansion is driven by an even mix of on-prem to SaaS migrations (with a 2-3x ARR uplift), identity quantity upsells, cross-sells of new modules, and SaaS suite upgrades.
Rob Owens inquired about the performance of different geographies, particularly North America, which appeared to lag in growth, asking if there were any unique callouts or share losses in that region during Q3.
Christiane Ohlgart, CFO, stated that North America/U.S. was very strong in Q2 and that performance can vary by quarter due to the timing of large deals. She confirmed there were no share losses in the region.
Rob Owens asked for a breakdown of performance across different geographies, particularly North America, which appeared to lag in growth. He questioned if there were any unique factors, such as share losses, contributing to weakness in that region.
Christiane Ohlgart, CFO, clarified that North America (U.S.) had been very strong in Q2, and regional performance can fluctuate quarter-to-quarter due to the timing of large deals. She confirmed that there were no share losses in the region.
Rob Owens from Piper Sandler & Co. asked for an update on the Operational Technology (OT) security opportunity, including its growth, competitive landscape, and geographic consistency.
CEO Ken Xie stated that OT security billings grew over 20% and remains a key growth area where Fortinet has a significant competitive advantage due to its decade-long investment. He noted the growth is consistent across geographies. CFO Christiane Ohlgart added that EMEA has historically been a strong region for OT and that some ruggedized devices are part of the 2026 refresh cycle, contributing to the opportunity.
Rob Owens inquired about the size and inflection points of the cloud service provider replacement opportunity. He also asked for more detail on 'healthy levels of optimization' in Q4 guidance, distinguishing between prior optimizers and net new, and its impact as a headwind.
CEO Jay Kreps stated the CSP replacement opportunity is sizable, driven by improved TCO from Enterprise Clusters and WarpStream, and the appeal of Confluent's Data Streaming Platform capabilities. CFO Rohan Sivaram clarified that optimization levels in Q3 were 'healthy' and 'normalized,' comparable to historical ranges, and are a standard part of cloud business management, not an outlier.
Rob Owens asked for more details on the cloud service provider (CSP) replacement opportunity, its market size, and the reasons for its recent inflection. He also requested clarification on the 'healthy levels of optimization' mentioned in the Q4 guidance, specifically whether they stem from prior optimizers or new ones, and if optimization remains a headwind.
CEO Jay Kreps stated the CSP replacement opportunity is sizable, driven by TCO improvements from Enterprise Clusters and Freight Clusters, offering better, faster, and cheaper solutions, along with the appeal of Confluent's Data Streaming Platform capabilities. CFO Rohan Sivaram explained that optimization is a normal part of cloud businesses, and the 'healthy levels' in Q3 were within historical ranges, not outliers, and are managed alongside new use cases and product adoption.
Rob Owens asked about the drivers behind the strong growth in $1 million+ ARR customers and questioned the sequential increase in long-term deferred revenue, especially given the company's shift to a consumption model.
CEO Jay Kreps attributed the success in growing large customers to the complete DSP offering, which accelerates their journey with easy-to-use connectors, Flink, and governance tools. CFO Rohan Sivaram clarified that fluctuations in long-term deferred revenue are not a primary business indicator and are mainly driven by the timing of large, multi-year Confluent Platform deals, not the core consumption business.
Rob Owens of Piper Sandler Companies drilled down on the recent success in the security business, asking what specifically drove the momentum in competitive displacements and what is needed to further unlock legacy customers.
CEO Ashutosh Kulkarni attributed the success to the market's growing realization that security is a data problem, where Elastic's data-first architecture and AI capabilities excel. He highlighted the new Elastic AI SOC Engine (EASE) as a key innovation that serves as an on-ramp for customers, allowing them to use Elastic's AI on top of their existing SIEM and facilitating a smoother path to full displacement.
Rob Owens of Piper Sandler Companies asked for any potential guardrails or context to shape expectations for net new ARR in Q3, given the variability seen in the first half of the year.
CFO Barbara Larson responded that while SentinelOne does not provide formal ARR guidance, the updated full-year revenue outlook implies a relatively improved view on net new ARR for the full year.
Rob Owens of Piper Sandler Companies asked about the impact of the 25% attach rate for Purple AI on new subscriptions, specifically how it is affecting overall deal sizes.
CEO Tomer Weingarten confirmed that the inclusion of AI provides approximately a 25% uplift to the average deal size. He described this as a starting point, with future agentic solutions expected to add more value, and noted that bundling AI with EDR is a key competitive differentiator.
Rob Owens from Piper Sandler Companies questioned the divergence between RPO acceleration and CRPO deceleration over the past few years, asking when these metrics might align more closely. He also asked for an update on Gross Retention Rate (GRR).
CFO Brett Tighe explained that the RPO acceleration in FY25 was driven by sales compensation changes that incentivized longer contract durations. While duration is still a factor, the effect has normalized, leading to the different growth dynamics between total RPO and current RPO. He confirmed that the Gross Retention Rate (GRR) remains a strong and healthy metric for the company.
Rob Owens of Piper Sandler Companies focused on the financials, noting that despite a 'blowout' Q4, the sequential dollar increase in Q1 subscription revenue was the lowest since Okta's IPO. He asked for an explanation of the puts and takes.
CFO Brett Tighe attributed this to two main factors. First, Q1 had fewer days compared to Q4 and the prior year's leap-year Q1, an effect that is more pronounced at lower growth rates. Second, the company's new guidance philosophy includes less conservatism, resulting in smaller revenue beats than in the past.
Rob Owens questioned why the market for identity isn't more dynamic with customers switching providers, given its role in breaches, and why new logo growth hasn't improved more.
CEO Todd McKinnon acknowledged that replacing identity infrastructure is inherently more complex and slower than changing other security tools. He believes this requires patience. He remains confident that Okta's superior product suite and unique position as a scaled, independent platform will ultimately win out as the company continues to execute its strategy.
Rob Owens of Piper Sandler Companies asked for a strategic view on the security consolidation trend and how the rise of agentic AI is acting as a catalyst.
CEO Nikesh Arora explained that consolidation is a long-term execution play, evidenced by landmark deals like a $50M ARR customer, which shows the art of the possible. He argued that agentic AI accelerates this trend because defending against rapid, AI-driven attacks requires an integrated platform for near real-time response. Arora connected this to the CyberArk acquisition, framing identity as the next frontier for real-time security, akin to an "identity firewall."
Rob Owens asked how the recent success in security is impacting pricing, particularly for customers adopting the full end-to-end JFrog platform.
CEO Shlomi Ben Haim indicated that the company is evaluating its pricing and subscription models, with potential new security packages to be announced at the upcoming SwampUp conference. However, he stressed that the current focus remains on driving broad adoption for the relatively new security offerings, making the entry point important.
Rob Owens of Piper Sandler Companies asked for a comparison of the business environment versus 90 days prior, focusing on improved visibility in the U.S. Federal sector and the drivers behind commercial strength and Tenable One consolidation.
CFO and Co-CEO Steve Vintz stated that the company beat its CCB expectations and raised guidance due to improving visibility, particularly in the U.S. Federal renewal base. He noted that while new federal deals may take longer, strong momentum with the Tenable One platform, which now constitutes 40% of new sales, is driving larger deals and higher renewal rates.
An analyst on behalf of Rob Owens asked about the potential implications for Tenable and the broader VM industry if the CVE program's funding were to end permanently.
Co-CEO Stephen Vintz stated that collaboration is crucial and that Tenable, as a contributor to the CVE database, recognizes its importance. He noted the program has limitations, such as the proliferation of vulnerabilities marked as critical, and suggested this situation presents an opportunity for better collaboration and a new approach to vulnerability management.
Rob Owens of Piper Sandler Companies asked for more details on the deals that slipped from Q2 into Q3, specifically seeking the reasons for the slippage and their geographic distribution.
CFO Roei Golan attributed the slips to a heavily back-end loaded quarter, noting it was more than usual but that the deals had already closed in July. CEO Nadav Zafrir added that there was no single common reason or geographic concentration for the slips, characterizing them as individual 'snowflakes'.
Rob Owens of Piper Sandler asked for insight into strategic customer conversations about AI's role in software development, given the rapid pace of innovation and market noise.
CEO Bill Staples explained that AI is a central topic in every customer conversation. He noted that enterprises are actively experimenting with and purchasing multiple AI coding tools side-by-side, including GitLab Duo and competitors. Staples views this trend as advantageous, as all AI code creation tools increase the volume of code that requires GitLab's platform for testing, security, packaging, and deployment.
Rob Owens of Piper Sandler Companies inquired if the lowered billings outlook due to the uncertain economy was a function of deal timing or also deal size. He also asked about the impact of increasing sales capacity without expanding the team and if that was factored into the financial calculus.
CEO Allan Thygesen confirmed the outlook adjustment was not related to deal size, noting that the number of customers spending over $300k was up year-over-year. He explained that sales capacity was increased by moving a substantial number of customers to a self-serve model, freeing up reps to focus on larger opportunities. While he hopes this will translate to more revenue, it is not explicitly counted on in the forecast.
Rob Owens asked for elaboration on the small asset purchase made during the quarter that was mentioned in the prepared remarks.
CEO Yaki Faitelson explained it was a small acquisition of a programming team to help accelerate the product roadmap and shorten time-to-market for new features. CFO & COO Guy Melamed added that it was a technological tuck-in totaling $6.7 million, which was fully expensed in the quarter as acquired in-process R&D. He clarified that it is not expected to contribute any material ARR or ongoing expense.
Rob Owens followed up on the financial impact, asking if the headwinds should be viewed on a 12-month basis and when business might normalize as the customer commitment packages anniversary.
CFO Burt Podbere described the incident's impact as having a 'half-life' with a diminishing effect over time, with Q3 being more impacted than Q4. He stated that the company expects to see an acceleration in the business beginning in the second half of the next fiscal year.
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