Rudy Kessinger • D.A. Davidson & Co.

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Co-CEO and CFO Stephen Vintz explained that revenue is an output of sales, for which CCB is a proxy. He stated that the revenue forecast is influenced by factors like product mix but that the assumptions are appropriate given the sales outlook. He confirmed there is nothing discrete skewing the forecast higher and that it is an extrapolation of current trends.

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Co-CEO Stephen Vintz clarified that the commentary applies to both new and renewal business but more so to new deals. He noted that personnel disruptions, particularly on the civilian side of the federal government, have resulted in lower renewal dollars from some agencies. The primary issue remains longer lead times for closing opportunities.

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CEO Amit Yoran described the situation as 'more of the same,' with continued pressure from procurement. However, CFO Steve Vintz highlighted a key positive counter-trend: sales cycles for the integrated Tenable One platform are 'notably shorter' despite higher selling prices, which validates the platform's value proposition.

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CEO Corey Thomas clarified that the guidance adjustment reflects a change in deal profile for the exposure management business, not necessarily a worsening decline. The company is seeing fewer small, high-volume upgrades and more large, strategic, and 'chunkier' platform deals. While these larger wins are positive, their timing is less predictable, leading to a more prudent forecast. He stressed the primary focus remains on the large D&R market opportunity.

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CFO Ron Kisling attributed past volatility to dislocations with a few large customers in 2024, noting that the business outside the top 10 has been stable. He said the recent acceleration reflects recovery in the top 10 and strong new customer acquisition. CEO Kip Compton added that on competitive displacements, Fastly is seeing two patterns: customers consolidating standalone bot solutions onto Fastly's platform and the new bot capabilities unlocking broader platform deals with new customers.

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CEO Todd Nightingale stated that security growth does not yet reflect the impact of new bot and DDoS products and that the goal is to exceed the market's mid-teens growth rate. He confirmed the top 10 customer growth was from sustained share gains, not one-time events, driven by the Edgio situation and a high-touch success model, while reiterating the strategic focus on revenue diversification.

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CEO Todd Nightingale confirmed that as of the call, TikTok's U.S. traffic is still running normally but was prudently excluded from guidance beyond Q1 due to uncertainty. Regarding Edgio, he noted that Fastly won over 10 new logos, is working to onboard more shared-customer traffic, and sees a better pricing environment in 2025 as a result of reduced competition.

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CFO Ron Kisling indicated that headwinds with certain large customers will continue in Q4, likely bringing the top 10 concentration down slightly, but stated they believe they are nearing the end of major declines. He explained the sequential gross margin decline is driven by investments for increased international traffic, which currently has lower margins, and the absence of prior-year onetime benefits.

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CFO Joo Mi Kim attributed the revenue beats to strong execution against an initially conservative guidance set amidst macro uncertainty. She affirmed that TTM billings growth remains the best proxy for 2026 revenue and suggested that upside is more likely to come from existing customer expansion than from new business.

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CEO Sumedh Thakar stated there was nothing out of the ordinary, noting stable win rates and improved gross retention. He explained that the LTM metric can fluctuate due to the timing of downsells and upsells. CFO Joo Mi Kim confirmed the guidance assumes the net retention rate will hold at 103% for the year but anticipates continued headwinds in new bookings, which is reflected in the 7-8% full-year revenue growth forecast.

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CFO Joo Mi Kim attributed the 2H 2024 billings strength partly to invoicing cycles and the Q4 revenue beat to favorable deal linearity. She explained the 2025 guidance reflects a stable but lower net dollar expansion rate (103%), a potential short-term negative impact from the partner-first shift, and a disappointing new bookings performance in Q4, which is assumed to continue into 2025 with no expectation of meaningful growth.

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CFO Joo Mi Kim attributed the outperformance primarily to broad-based strength in upsells, which drove the net dollar expansion rate up to 103%. She noted the company had been conservative in its forecast due to underperformance in recent quarters. She also clarified that the Q4 guidance for current calculated billings (CCB) growth is expected to be in the 7% to 9% range, similar to revenue guidance, and this applies to the quarterly CCB, not the trailing twelve months.

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CFO Jorge Martell quantified the year-over-year ARR contraction from the two customers at approximately $3 million and suggested any further contraction would likely be more muted. CEO Victor Limongelli described the Knock Knock opportunity as a long-term strategic play to provide a complete FIDO hardware and software solution, ensuring OneSpan can grow with its customers as they adopt the new protocol, similar to the previous shift from hardware to mobile authentication.

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CFO Jorge Martell projected that Q2 ARR growth would be in the mid- to low-single digits due to a tough year-over-year comparison, with an expected re-acceleration in the second half. CEO Victor Limongelli stated that the Board will consider further shareholder returns like buybacks in addition to the dividend. Regarding M&A, he said the focus would be on modest, targeted acquisitions on the Security side to add capabilities for their extensive banking customer base.

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CFO Jorge Martell projected the 2025 NRR to remain within the historical band of 106% to 108%, despite some noise from end-of-life products. He also stated that while cash flow generation was remarkably strong in 2024, the company expects more 'modest increases' in 2025 as it invests in the Security software business, product development, and channel expansion.

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CFO Rohan Sivaram directly answered that the gross retention rate was 'marginally below 90%.' CEO Jay Kreps confirmed that the DSP portion of the business is outgrowing core streaming. He explained that the core streaming growth rate is a combination of new use cases and optimization headwinds, with the latter being more pronounced in recent quarters, particularly among large accounts. This optimization pressure does not affect the new, growing DSP workloads.

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CFO Rohan Sivaram noted that go-to-market efficiency improved significantly in 2024 and that this focus will continue. He stated that the company is confident in its current sales capacity to meet 2025 targets, following strong hiring in the latter half of 2024, without directly confirming an assumption of increased per-rep productivity.

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CFO Rohan Sivaram indicated the strong gross margin profile is sustainable, driven by scale and a shift to multi-tenancy, noting that DSP products are largely multi-tenant and will be a tailwind. CEO Jay Kreps confirmed that win rates do include renewals but would be equally high without them.

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CFO & COO Guy Melamed confirmed that Q2 saw a 'meaningful contribution' from additional cloud platforms and that the company was 'extremely happy' with the performance. While declining to provide a specific percentage, he noted the trend is improving quarterly and is a key focus for the sales force.

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CFO and COO Guy Melamed confirmed the year-end SaaS mix guidance was raised from 78% to 80% of total ARR. CEO Yaki Faitelson added that organizations understand the productivity gains from AI tools and that Varonis sees it as a clear driver, with demand for data security expected to increase as AI adoption grows.

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CFO and COO Guy Melamed emphasized that new business was the primary growth driver in 2024, even with an NRR of 105%, demonstrating the company's ability to grow without a strong upsell motion. He argued that completing the transition will put Varonis in a much better position for upsell by eliminating the current headwind from conversions. The focus is on getting customers onto the superior SaaS platform first, which will naturally open up a healthier base for future expansion.

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CFO & COO Guy Melamed reiterated that renewal rates are consistently over 90%. He clarified that the larger decline in the maintenance and services revenue line is because more perpetual maintenance customers are converting to SaaS, which doesn't create the same revenue headwind as a term-to-SaaS conversion. He stressed again that the quarter's momentum was driven by new customers and MDDR, not just conversions.

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CFO Jen DiRico explained that the SaaS business performed as expected, and the outperformance came from the software side, driven by higher close rates on a few large deals in the final week of the quarter. She guided for SaaS net new ARR to be north of $20 million and total net new ARR to be around $40 million quarterly for the rest of the fiscal year.

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CFO Jennifer DiRico advised that the seasonality for net new ARR in FY26 should be similar to FY25, with a quarterly baseline of $30 million to $35 million being a reasonable expectation. Regarding productivity, she clarified that the guidance is prudent and does not assume 'massive gains,' but reflects confidence in the long-term durability of the business model.

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CEO Sanjay Mirchandani described the cross-sell opportunity as 'massive,' driven by new offerings that seamlessly integrate into the Commvault Cloud platform for both software and SaaS customers. CFO Jennifer DiRico advised that the best way to understand constant currency growth is by looking at the organic net new ARR added quarterly, which was $38 million in Q3, and noted that formal guidance is based on current FX rates.

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CEO Sanjay Mirchandani attributed on-premise strength to their unified platform strategy, which allows customers to manage hybrid workloads seamlessly, enabling them to win against competitors. CFO Jen DiRico addressed the guidance, stating that while H1 was exceptionally strong, the H2 outlook is consistent with the average net new ARR of approximately $29 million seen over the prior four quarters, maintaining their responsible growth philosophy.

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CEO Matt Cain described growth in strategic accounts as Couchbase becoming a platform for tens or even hundreds of applications, driven by both developer adoption and top-down appreciation for TCO. He clarified that no deals were pulled forward and attributed the strong Q1 to solid execution and high Capella consumption. He stated the updated full-year guidance reflects a prudent and balanced approach in the current environment.

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CFO Gregory Henry confirmed the guidance philosophy remains consistent, factoring in the renewal pool, upsell potential, and migration conversions, with a slightly higher migration rate expected. Regarding linearity, he contrasted fiscal 2025's back-end loaded nature (approx. 30% first half, 70% second half) with the expectation that fiscal 2026 will be 'much more balanced,' similar to the 40/60 split seen in prior years.

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CFO Brett Tighe strongly cautioned against this approach, calling it a 'fool's errand to get into the growth conversation' using percentages. He emphatically reiterated his advice to model using the coverage ratio based on absolute dollars, stating, 'that's the mechanics of how the math work.'

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CFO Brett Tighe confirmed productivity was at a multi-year high but did not provide a specific comparison to past periods. Regarding Q1, he noted that February is typically a slow month due to sales kickoffs and territory assignments, so it's too early to draw conclusions about momentum for the full quarter. CEO Todd McKinnon added that the sales team was very excited at the recent kickoff meeting.

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CFO Brett Tighe explained that the conservatism was applied across revenue, cRPO, and operating margin but declined to provide a specific number. He reiterated that the large beat in FY'25 was an anomaly due to the unique uncertainty at the time and should not be the benchmark for future expectations, also citing the company's natural maturation.

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CFO Ed McGowan clarified that the slowdown from higher growth rates was entirely due to the legacy compute bucket, as expected, while the core Cloud Infrastructure Service continues to grow very fast. On delivery pricing, he described a mixed bag, with some encouraging moderation in price declines for large media customers, but noted the market remains competitive. He suggested it's possible to see continued moderation over time.

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CFO Ed McGowan attributed the steep delivery decline to a difficult year-over-year comparison from the Lumen and StackPath acquisitions and historically slow traffic growth. He explained that even with slightly better pricing, low single-digit traffic growth cannot offset price declines. Regarding CapEx, he noted the increase is for a combination of factors beyond just compute, including delivery build-outs and infrastructure, and includes timing shifts between quarters.

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Tomer Weingarten (CEO) responded that it's difficult to isolate that specific impact. He explained the primary shift was a structural increase in 'consideration' for SentinelOne, even among customers who didn't switch immediately. He characterized the benefit as a gradual, sustained improvement rather than a one-time spike, suggesting the trend is here to stay.

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CEO Tomer Weingarten declined to quantify the impact, stating it's still a work in progress with a significant existing book of business. He confirmed that some customers, including marquee names, have decided to switch but emphasized that the process takes time for testing and deployment planning. Weingarten stressed that SentinelOne is working at the customer's pace and is not 'ambulance chasing,' but supporting those who are re-evaluating their security posture.

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CFO Michael Gordon did not directly compare the Q3 and Q2 YoY growth rates but reiterated that Q3's YoY growth was lower than the prior year and the seasonal rebound was more muted. CEO Dev Ittycheria maintained that the industry is still in the very early days of AI, and while he cannot predict a specific timeline, he is confident that scaled AI apps will emerge over time.

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