Sanjit Singh

Sanjay Singh, on behalf of Keith Weiss, inquired about the performance of ServiceNow's federal business in Q4, particularly in light of the government shutdown, and the outlook for the balance of 2026, including state, local, and global government segments.

Answer

Chairman and CEO Bill McDermott reported strong federal business performance despite the shutdown, with nice deals and a significant pipeline for 2026. He noted growing traction in state and local sectors, and highlighted that the global government business was up 80% year-over-year across Europe, the Middle East, and Asia.

Sanjit Singh, on behalf of Keith Weiss, asked about ServiceNow's AI agent strategy in a fragmented landscape and what go-to-market changes are being contemplated to support the move to a hybrid model.

Answer

CEO Bill McDermott positioned ServiceNow as the 'control tower' for business transformation, capable of orchestrating all AI agents due to its single platform, architecture, and data model. He highlighted the strategic advantage of RaptorDB and its data connectors, which offer customers flexibility. He stressed that when customers understand this architectural advantage, the choice becomes clear, making ServiceNow the only viable option for enterprise-wide AI orchestration.

Sanjit Singh inquired about the strong Q3 product revenue growth of 29% compared to the Q4 guidance, seeking clarification on the sequential guide. He also asked Sridhar Ramaswamy for details on the $100 million AI revenue run rate, the types of customers adopting Snowflake Intelligence, specific use cases, and the adoption of Cortex AI.

Answer

CFO Brian Robbins explained that Q3 performance was as expected, with a minor impact from a hyperscaler outage, and emphasized that the raised full-year guidance is the most meaningful signal of underlying business fundamentals. CEO Sridhar Ramaswamy detailed how Snowflake Intelligence amplifies data value, citing examples like USA Bobsled, Fanatics, ServiceNow, and TSImagine, and highlighted its ability to provide immediate, multi-dimensional insights to business users, driving adoption.

Sanjit Singh inquired about the Q3 product revenue growth and its relation to the Q4 guidance, seeking clarification on the sequential guide. He also asked about the types of customers adopting Snowflake's AI products, specific use cases for Snowflake Intelligence, and the adoption of Cortex AI, following the achievement of the $100 million AI revenue run rate.

Answer

Brian Robbins, CFO, explained that the Q3 performance was as expected, with a minor impact from a hyperscaler outage, emphasizing that the full-year guidance is the most meaningful signal of underlying business fundamentals. Sridhar Ramaswamy, CEO, highlighted how Snowflake Intelligence amplifies data investments, citing examples like internal sales data agents, USA Bobsled, Fanatics, and TS Imagine, and noted its appeal to CIOs and CEOs due to its ability to make data accessible to every business user.

Sanjit Singh from Morgan Stanley inquired about the durability of Snowflake's growth, questioning whether the current momentum is primarily from legacy data infrastructure modernization or if there are sustainable drivers beyond these initial migrations.

Answer

CEO Sridhar Ramaswamy explained that data modernization is merely the first step. He emphasized that customers are modernizing to make their data 'AI ready,' which is critical for future transformation. Ramaswamy sees Snowflake's platform, including Cortex and Snowflake Intelligence, as the foundation for a long-term journey where customers derive increasing value from their data through AI-powered applications, indicating durable growth potential.

Sanjit Singh of Morgan Stanley inquired about consumption trends exiting Q1 and into May, as well as the monetization trends and customer commitment levels associated with the Cortex AI platform.

Answer

CEO Sridhar Ramaswamy noted that while they don't comment on intra-quarter consumption, Q1 was strong, and their guidance reflects current trends. He explained that Cortex AI is not a separate SKU but is integrated into existing spend, making customers' data 'AI-ready' and unlocking value in their data strategy. CFO Michael Scarpelli added that the Q2 guidance is based on observed customer behavior through the current date.

Sanjit Singh inquired about the behavior of large customers who exhaust their capacity commitments and opt for on-demand consumption instead of early renewal. He also asked about adoption trends for the data engineering and AI/ML portfolios and when new products, like the integrated OpenAI and Anthropic models, are expected to contribute to revenue.

Answer

CFO Mike Scarpelli explained that it's common for large customers to consume on-demand after exhausting their capacity and that he fully expects them to sign new contracts later. CEO Sridhar Ramaswamy added this is a positive sign of high consumption. Regarding new products, Ramaswamy highlighted strong adoption of data engineering features like dynamic tables and broad adoption of AI primitives like Cortex Search. He stated that these new products are expected to become meaningful revenue contributors in the latter half of the year, emphasizing their synergistic nature.

Sanjit Singh questioned the divergence between GitLab's strong platform activity and usage metrics, which are growing faster than revenue, asking Bill Staples about the long-term strategy to align activity with revenue growth, particularly regarding the role of Duo agents and other monetization avenues.

Answer

Bill Staples, CEO, GitLab, indicated that the medium to long-term solution involves transitioning to a hybrid seat plus usage-based business model with the upcoming general availability and pricing introduction of the Duo Agent platform. He also mentioned exploring incremental innovation for premium and ultimate SKUs as part of the FY27 roadmap to drive new monetization.

Sanjit Singh asked about GitLab's long-term strategy to align the significant platform activity and usage growth, which currently outpaces revenue growth, with desired revenue expansion. He questioned whether Duo agents are the primary solution or if other medium-term monetization strategies are being considered.

Answer

Bill Staples, CEO, GitLab, stated that the medium to long-term solution lies in shifting to a hybrid seat-plus-usage-based business model with the introduction of Duo Agent Platform and its pricing. He also mentioned exploring incremental innovation on top of Premium and Ultimate SKUs, which would provide additive value and new monetization opportunities as part of the FY27 roadmap.

Sanjit Singh of Morgan Stanley asked about the apparent deceleration in net new customer additions for cohorts above $5k and $100k ARR, and whether pricing changes played a role.

Answer

CFO Brian Robbins clarified that new logo order volume in the enterprise and mid-market segments actually performed better than the previous year. He explained the change in the >$5k customer count was primarily due to fewer customers expanding into that bucket and more contracting below it, indicating some price sensitivity at the low end of the market (SMB) that does not materially impact overall financials.

Sanjit Singh inquired about the evolution of agentic AI, GitLab's strategic advantage in this area, and the commercial potential and availability of the new partnership with AWS.

Answer

Co-Founder Sytse Sijbrandij explained that GitLab's end-to-end platform provides the necessary context and action capabilities for agentic AI, creating a key advantage. He added that the AWS partnership is seeing incredible interest and is currently in a closed beta for self-managed customers, with plans to extend it to GitLab Dedicated.

Sanjit Singh of Morgan Stanley asked CJ Desai about his initial vision as CEO, focusing on quick wins and long-term strategies to position MongoDB as a foundational data platform for the AI era. He also inquired about the quality of calendar year 2025 workloads.

Answer

CJ Desai, President and CEO, emphasized MongoDB's strong position for AI workloads due to real-time operational data, context, and proprietary data integration. He noted early AI-native company adoption and the potential for embedding and vector database models as quick wins. Mike Berry, CFO, added that strength is seen in larger customers with growing and expanding workloads across the U.S. and EMEA, without bifurcating by calendar year.

Sanjit Singh asked CJ Desai about his initial focus and strategy for positioning MongoDB as a foundational data platform for the AI era, including potential 'quicker wins' and longer-term evolutionary changes. He also asked Mike Berry about the quality of calendar year 2025 workloads and their potential impact on next year's growth.

Answer

CJ Desai, President and CEO, emphasized MongoDB's strong position for AI workloads due to its real-time operational data capabilities and flexibility, noting early traction with AI-native companies and the potential for embedding and vector database models as immediate opportunities. Mike Berry, CFO, highlighted continued strength in larger customers, driven by both new and existing workloads, particularly in the US and EMEA, contributing to the increased net ARR expansion rate.

Sanjit Singh inquired about the specific drivers behind the significant sequential dollar additions for Atlas in Q2, which marked the second consecutive quarter of acceleration, and sought an update on the current state of the go-to-market sales organization.

Answer

President & CEO Dev Ittycheria attributed the strong Atlas growth to workloads acquired over the past year from the company's move upmarket, which are growing faster and larger than previous workloads. He also noted the increased uptake of capabilities like search and vector search and a large number of new customer additions. Regarding the go-to-market strategy, Ittycheria confirmed the company is doubling down on its focus on large enterprise customers with its direct sales force while effectively serving the SMB market through its self-serve channel.

Sanjit Singh of Morgan Stanley inquired about the specific types of applications driving Atlas's accelerated growth and asked new CFO Mike Berry about his approach to managing metrics for a consumption-based business.

Answer

CEO Dev Ittycheria explained that Atlas's growth is driven by a wide variety of use cases, from transactional to AI, all on a single, architecturally superior platform. CFO Mike Berry stated he finds the current metrics relevant and plans to increase focus on capital structure, cash flow, and operating margin improvements, promising more details at the September investor event.

Sanjit Singh inquired about the drivers behind Atlas consumption exceeding expectations for two consecutive quarters and asked about MongoDB's role as an operational data store for emerging 'Agentic' AI applications.

Answer

CFO Michael Gordon clarified that while Atlas consumption was better than internal expectations, its year-over-year growth rate remains lower than the prior year, driven by underlying application usage. CEO Dev Ittycheria explained that AI agents require real-time access to rich, complex data structures, positioning MongoDB's unified platform, which integrates Vector Search, as a key advantage.

Sanjit Singh asked for an update on the operational changes to sales incentives announced last quarter and inquired about any back-half revenue dynamics to consider, such as unused credits or holiday seasonality.

Answer

CEO Dev Ittycheria confirmed that slight incentive changes to balance workload size and volume were well-received, but it's too early to declare victory. CFO Michael Gordon noted that the back half of the year faces tough Atlas compares due to unused commitments, the compounding effect of a slower Q1 start, and headwinds in the EA business. He also mentioned expectations for a slower seasonal rebound in Q3 and a seasonally weaker Q4.

Sanjit Singh asked for an update on sales productivity following go-to-market changes made six quarters ago and whether the current momentum warrants increasing sales capacity. He also questioned the durability of the RAG opportunity given its challenges and explored other monetization avenues for Elastic's AI search capabilities beyond RAG.

Answer

CEO Ash Kulkarni confirmed that the go-to-market changes are yielding strong sales execution and commitments, and Elastic continues to invest in go-to-market capacity and AI engineering differentiation. Kulkarni clarified that monetization is 'and, not an or,' emphasizing Elastic's expertise in connecting private data to LLMs for relevance. He highlighted Agent Builder as a tool that simplifies agentic applications, leveraging Elastic's vector database, hybrid search, and tuned embedding models (including from the Jina AI acquisition) to monetize context engineering strength.

Sanjit Singh asked for an update on the productivity of Elastic's go-to-market changes implemented six quarters ago and whether the current momentum warrants increased sales capacity. He also inquired about the durability of the RAG opportunity and other monetization avenues for Elastic's AI search capabilities beyond RAG, such as Agent Builder.

Answer

CEO Ash Kulkarni confirmed the go-to-market changes are yielding strong results, with five consecutive quarters of robust sales execution and excellent commitments. He stated Elastic would continue investing in go-to-market capacity and AI engineering. Regarding RAG, Ash emphasized that it's about connecting private data to LLMs for relevance, a core Elastic strength. He highlighted Agent Builder as a tool that simplifies this process, leveraging Elastic's vector database, hybrid search, and Jina AI acquisition, serving as an additional monetization method.

Sanjit Singh from Morgan Stanley sought to compare the growth impact timing of the AI search opportunity versus the SIEM replacement opportunity and asked about assumptions for the federal business in Q2 ahead of its fiscal year-end.

Answer

CEO Ashutosh Kulkarni explained that while SIEM displacements involve a migration period, it is a well-understood process and part of a multi-year market shift. Regarding the federal business, he noted stabilization but clarified that Elastic does not typically see a large Q2 'federal flush.' CFO Navam Welihinda confirmed that the improved stability in the public sector is factored into the Q2 guidance.

Sanjit Singh inquired about the long-term durability of Retrieval-Augmented Generation (RAG) architecture and Elastic's positioning, and also asked if the lower sequential dollar adds in Cloud revenue were due to the leap year or consumption hesitation.

Answer

CEO Ashutosh Kulkarni stated that RAG is proving to be a durable and essential solution for grounding LLMs with real-time enterprise data, a trend benefiting Elastic. CFO Navam Welihinda clarified that the sequential cloud revenue was impacted by Q4 having three fewer days than other quarters. After normalizing for the number of days, cloud growth remains healthy in the mid-20s, and he noted an emerging seasonal pattern of slower sequential growth in Q1.

Sanjit Singh asked for clarification on whether strong cloud growth was driven more by platform consolidation or by new GenAI use cases, and questioned the potential size of the opportunity in supporting agentic AI architectures.

Answer

CEO Ash Kulkarni confirmed the strength was broad-based across search (GenAI), observability, and security (consolidation). He explained that agentic workflows increase the total addressable market for Elastic by creating more applications that require its retrieval engine, leading to greater utilization. Interim CFO Eric Prengel added that consumption was healthy across the board, with sequential acceleration from a different set of large customers than in Q2.

Sanjin Singh inquired about the drivers behind the improved performance and growth in Datadog's non-AI cohort enterprise trends, specifically asking about sales investments, cloud migration, and AI application builds. He also asked about Datadog's strategy to ensure it remains the go-to for agentic monitoring amidst independent software vendors bundling observability.

Answer

CEO Olivier Pomel attributed the non-AI cohort growth to a positive demand environment, increased sales capacity, new go-to-market motions, and successful new products like FlexLogs, Product Analytics, and Cloud SIEM. Regarding agentic solutions, Mr. Pomel emphasized the customer need for a unified observability platform, integrating both AI and non-AI components.

Sanjin Singh inquired about the improved performance and growth trends observed in Datadog's non-AI enterprise cohort, asking if it's due to sales productivity, cloud migration uplift, or increased AI application building. He also asked about Datadog's strategy to ensure it remains the go-to for agentic monitoring amidst independent software vendors bundling observability.

Answer

Olivier Pomel, Co-Founder and CEO, Datadog, attributed the non-AI growth to a positive demand environment, increased sales capacity and new go-to-market motions paying off, and the success of new products like Flex Logs, Product Analytics, and Cloud SIEM. Regarding AI observability, he emphasized the customer need for a unified platform, asserting that AI and non-AI parts of the business will ultimately converge on a central observability solution.

Sanjit Singh of Morgan Stanley asked to reconcile the strong guidance with warnings of potential AI-native cohort volatility and inquired about the growth prospects for the security business.

Answer

CFO David Obstler explained that while the AI cohort is growing rapidly, the guidance incorporates conservative assumptions about potential future volatility, which has not yet materialized. CEO Olivier Pomel stated that the security business, having crossed the $100M ARR milestone, is now focused on driving standardized, enterprise-wide deals through go-to-market adjustments.

Sanjit Singh inquired about the current trend lines for core cloud migration and asked for the company's vision on expanding into data observability, questioning how consequential that opportunity could be.

Answer

CEO Olivier Pomel stated that cloud migration trends are consistent with what hyperscalers have reported—steady and a prerequisite for AI adoption. Regarding data observability, he detailed how the acquisition of Metaplane completes their suite, enabling management of the entire data pipeline, which is critical for new enterprise AI workloads and represents a big opportunity.

Sanjit Singh asked about the key focus areas for sales and marketing investments in 2025 and the technological and market drivers behind the renewed customer interest in log management.

Answer

CEO Olivier Pomel highlighted plans to deliberately push products like Flex Logs and the new OnCall solution, capitalizing on market demand and competitive openings. He emphasized that the core strategy is growing sales capacity, an effort that accelerated in H2 2024. Pomel attributed the renewed interest in logs to new technologies enabling better economics, the appeal of a modern cloud-first stack, and the opportunity to unify security and operations.

Sanjit Singh inquired about sales momentum in the cloud security and service management pillars, and whether customer spending is still driven by consolidation or shifting more towards innovation.

Answer

CEO Olivier Pomel highlighted that Cloud SIEM is a key focus and mature enough to win best-of-breed deals. He also noted that the new Datadog OnCall product is seeing stronger-than-expected demand. Pomel stated that while consolidation remains a primary driver for large deals, innovation has been a constant factor, with AI-related innovation now starting to move into production.

Sanjit Singh asked about the commercial hopes for the strategic collaboration with ServiceNow over the next year and Dynatrace's strategy for DevOps platform partnerships or organic expansion to achieve proactive, self-healing systems.

Answer

CEO Rick McConnell expressed delight with the ServiceNow partnership, seeing it as an opportunity for Dynatrace to provide precise answers to inform ServiceNow's automated workflows, noting significant customer interest and overlap. He mentioned Dynatrace and ServiceNow are deploying each other's solutions as 'customer zero.' For DevOps, he cited integrations with GitHub and Atlassian, emphasizing Dynatrace's role in providing trustworthy answers via APIs for both Dynatrace and third-party agents to enable autonomous operations.

Sanjit Singh asked for details on the strategic collaboration with ServiceNow, including commercial hopes for the next year. He also sought a broader perspective on Dynatrace's evolution towards proactive, self-healing systems, specifically regarding partnerships for ITSM and DevOps platforms.

Answer

Rick McConnell, Chief Executive Officer, expressed enthusiasm for the ServiceNow partnership, viewing it as Dynatrace providing precise answers to inform ServiceNow's automated workflows, leveraging significant customer overlap. He noted that ServiceNow is deploying Dynatrace internally as 'customer zero' for these integrations. For proactive systems, Dynatrace's strategy involves exposing trustworthy answers via APIs to enable both Dynatrace and third-party agents (e.g., Atlassian, GitHub, hyperscalers, ServiceNow) to take autonomous actions, driving the evolution towards autonomous operations.

Sanjit Singh sought more detail on how go-to-market changes are manifesting, asking if the 50% strategic pipeline growth is an improvement from last year and if deal composition is changing towards larger, multi-year contracts.

Answer

CFO Jim Benson confirmed it's a significant improvement from last year when the changes were new, leading to larger deal sizes and pipeline growth. CEO Rick McConnell added that the sales motion has evolved from an APM focus to a comprehensive end-to-end platform sale, driving growth in logs, DPS, and partner-influenced deals.

Sanjit Singh asked a high-level question about the trend toward autonomous SRE agents, customer interest in this model, and its potential impact on observability demand and product design.

Answer

CEO Rick McConnell confirmed a strong and aggressive trend toward agentic AI, stating customers want answers and intelligent automation. He positioned Dynatrace as uniquely capable of delivering this via its integrated Grail data lakehouse, Davis AI engine, and automation capabilities, calling it a 'major, major thrust' for the company's future.

Sanjit Singh asked for more detail on the structure of multi-year DPS contracts and what serves as the triggering event for a customer to formally expand their commitment before the contract's end.

Answer

CFO Jim Benson explained that DPS contract structures vary, including ramped and flat commitments. The trigger for an early expansion is a customer decision, often driven by their consumption rate and the potential to secure better unit pricing with a new contract. He noted some customers prefer to budget for and use on-demand overages rather than renegotiating early. This variability means expansion timing will differ across the customer base.

Sanjit Singh asked about renewal trends for customers on the DPS model, specifically whether customers are showing an uplift in expansion after their first full year on the new pricing structure, given the higher underlying consumption.

Answer

CFO Jim Benson confirmed that DPS customers exhibit higher expansion rates than non-DPS customers. While acknowledging a potential sample bias as early adopters were likely strong customers already, he emphasized that the model's key benefit is encouraging customers to leverage more platform capabilities. This frictionless trial of new modules, like logs, has directly led to larger expansion deals.

Sanjit Singh asked Ashim Gupta about the Q4 guidance implying a return to positive net new ARR growth, inquiring about the confidence in the stability of the go-to-market organization and leadership to achieve this inflection. He then asked Daniel Dines about the initial processes UiPath is targeting for agentic strategies (e.g., quote-to-cash, inventory, supply chain) to build trust and early successes, and if the sales organization is prioritizing specific processes.

Answer

Ashim Gupta, Chief Operating and Financial Officer, confirmed that the guidance reflects a progression through the year, with the federal government stabilizing in Q3 and Q4, and momentum from go-to-market changes. He expressed confidence in the go-to-market organization, citing commercial activity in pilots and POCs that reinforce the platform's importance and create upsell opportunities. He highlighted improved execution, customer-centricity, reduced bureaucracy, and a closed feedback loop between field, product, and management. Daniel Dines, Founder and CEO, stated that UiPath is both strategic and opportunistic, prioritizing processes in healthcare (revenue cycle management), financial services (procure-to-pay, order-to-cash), and claims management. He emphasized learning from large-scale agentic deployments and leveraging UiPath's incumbent advantage in automating manual processes, where agentic initiatives naturally extend existing RPA and automation capabilities by adding orchestration and agents interacting with robots.

Speaking on behalf of Sanjit Singh, an analyst asked for additional details on the trends in dollar-based net retention rate, which saw continued pressure, and inquired about the expected trajectory for this metric going forward.

Answer

CFO & COO Ashim Gupta attributed the pressure on the expansion rate to the law of large numbers, the variable macro environment, and the transition in the federal government. He pointed to the 13% year-over-year growth in customers with over $100,000 in ARR as a positive indicator. Gupta noted that while they are hopeful for stabilization, the current guidance reflects a prudent approach.

Sanjit Singh asked for an update on the pricing and monetization strategy for the Agentic portfolio and questioned the company's long-term confidence in the federal business, seeking to understand the underlying growth excluding that vertical.

Answer

CEO Daniel Dines stated that agents and Agentic Orchestration will use a consumption-based model, with specific details to be announced soon. COO & CFO Ashim Gupta reaffirmed strong long-term confidence in federal customers, viewing the current situation as a short-term disruption, but did not provide a specific growth rate for the business ex-federal.

Sanjit Singh from Morgan Stanley requested clarification on the fiscal 2026 outlook, specifically the meaning of "stabilized" net new ARR on a dollar basis. He also asked how much of a tailwind a better spending environment could provide to ARR growth.

Answer

CFO & COO Ashim Gupta clarified that the comment on stabilization is a positive signal reflecting improved execution and strategic changes within the business. He noted that while guidance is based on the current environment, any positive market shifts could be an advantage, but also emphasized that product innovation and execution are key confidence drivers.

Sanjit Singh, on for Keith Weiss, asked where management sees the lowest-hanging fruit for improving growth trajectory and how pricing and packaging is evolving to make the broad product portfolio more digestible for enterprises.

Answer

CEO Daniel Dines identified improving teamwork and breaking down organizational silos as the primary goal, with low-hanging fruit found in simplifying structures and moving functions closer to the regions. He also mentioned a major initiative is underway to revise pricing and packaging to better tie it to customer value, though it's too early to share details.

Sanjit Singh asked about the customer shift from a 'cloud-first' to a 'fit-for-purpose' hybrid strategy due to AI cost uncertainty, and the impact of sunsetting JFrog Pipelines on partnerships and product focus.

Answer

CEO Shlomi Ben Haim explained that large enterprises are now favoring hybrid setups to ensure cost predictability for AI workloads, which can extend sales cycles but shows deeper commitment. He added that discontinuing Pipelines was a strategic move that sharpened their focus on core security and cloud offerings and improved partnerships with CI/CD players like GitHub by eliminating market confusion.

Sanjit Singh questioned the increased emphasis on the MLOps opportunity, asking why it's a focus now. He also asked about the expected behavior of cloud customers who are consuming services in excess of their contractual commitments.

Answer

CEO Shlomi Haim attributed the MLOps focus to the recent platform release post-Qwak AI acquisition, positioning JFrog as a unified DevOps, DevSecOps, and MLOps solution. CFO Ed Grabscheid noted that significant cloud overages are a new trend this quarter and it's too early to determine if it's sustainable, given the rigid purchasing environment.

Sanjit Singh asked about the cadence of customer spending, questioning if a pattern of H1 optimization followed by H2 investment seen in 2023 and 2024 is expected to repeat in 2025. He also inquired about potential changes to the sales motion or incentives to broaden the adoption of security solutions beyond the largest customers.

Answer

CFO Ed Grabscheid noted that unlike Q4 2023, Q4 2024's strength was not from a one-time benefit. He anticipates a similar cadence to 2024, with customers remaining cost-conscious and large projects likely closing in the second half of the year. CEO Shlomi Ben Haim stated the sales team is equipped to scale the security offering and is focused on securing AI models, but the company remains optimistic and will pursue the opportunity with its 7,000+ other customers methodically.

Sanjit Singh asked whether Q3's strong results were driven by the closing of previously delayed deals or more broad-based strength, and inquired about the proof points giving management confidence in a material security revenue contribution in 2025.

Answer

CFO Ed Grabscheid confirmed that the overperformance was largely due to the closing of significant, previously de-risked deals, including one pushed from Q2. CEO Shlomi Haim added that confidence for 2025 stems from security being a core component of all recent large platform wins, creating strong momentum.

Sanjit Singh of Morgan Stanley asked for an update on the move to compensate sales reps on incremental consumption and questioned why the rapidly growing Flink opportunity has a surprisingly even split between cloud and on-premise deployments.

Answer

CEO Jay Kreps stated that the sales compensation change has gone well overall and was critical for aligning the sales team with company goals, including driving DSP offerings. Regarding Flink, he explained its growth has been a steady ramp as more features were rolled out. The even split is due to different adoption models: Cloud is a serverless offering where consumption builds incrementally, while Confluent Platform (CP) deals tend to be larger, pre-deployed chunks, often for customers with existing data centers migrating workloads.

Sanjit Singh asked to compare the current optimization environment to the 2022-2023 cycle and questioned whether the strong Confluent Platform (CP) performance represents a structural shift in the business.

Answer

CEO Jay Kreps suggested the current environment is different from 2022-23, as much of the initial cloud optimization has already occurred, likely narrowing the range of outcomes. He stated it's too early to call the strong CP quarter a structural change, attributing it to strong execution. He emphasized Confluent's hybrid strategy provides resilience, which has become a key strategic asset for customers.

Sanjit Singh asked for a characterization of the Q4 spending environment, including consumption trends and pipeline execution, and inquired about any remaining go-to-market changes planned for 2025, especially regarding partnerships.

Answer

CEO Jay Kreps described the market environment as stable, with strong demand and increased certainty in customer budgets. He clarified that go-to-market changes for 2025 are minor tunings, with a heightened focus on enabling sales of the full DSP and supporting integrations with key partners like Databricks.

Sanjit Singh asked about the confidence level in digital native customers moving past optimization to new use cases, and inquired about the adoption stage of the Apache Flink product.

Answer

CEO Jay Kreps expressed confidence that the bulk of optimization work is complete for large digital native customers, leading to better growth. He confirmed that the Flink customer examples are representative of a broader ramp-up in production use cases for both Cloud and Platform customers, driven by recent product enhancements.

Sanjit Singh inquired about the strong Q1 federal government performance, asking about potential pull-forwards and the outlook for Q3 spending, and also questioned the cause of the dip in the cloud net retention rate.

Answer

Matthew Calkins, Chairman and CEO, stated that he does not believe Q1 results included any meaningful pull-forwards from future quarters and that the company remains "cautiously optimistic" about Q3 federal business. Mark Lynch, Interim CFO, attributed the dip in the net retention rate to the trailing 12-month calculation now including some unrelated downsells from Q1 2024 and a leveling off of growth rates in some customer accounts.

Sanjit Singh asked about the Q4 strength in the on-premise business, particularly in the public sector, and the underlying guidance assumptions for U.S. Federal spending in 2025 given market uncertainty. He also inquired about the 2025 product roadmap for Appian's AI agent strategy.

Answer

CEO Matt Calkins stated that Appian remains cautious regarding the U.S. Federal budget environment and cannot predict the outcome of DoD rearrangements. Interim CFO Mark Lynch clarified that the Q4 on-premise mix was an anomaly and is expected to return to a typical 80% cloud ratio. On AI, Calkins explained the strategy is to deliver practical, real value by embedding structured AI agents with guardrails directly into core work processes, aiming to be 'boring' but highly effective.

Sanjit Singh asked about the drivers behind the record sequential increase in Remaining Performance Obligations (RPO), questioning the influence of product packaging, sales incentives, and large contract commitments.

Answer

CEO Todd Nightingale attributed the strong RPO growth to three factors: strategic renewals with large accounts, a sales incentive program driving larger commitments, and the success of the packaging motion. CFO Ron Kisling added that improved senior-level engagement with key customers has also been instrumental in securing higher commitments during renewals.

Sanjit Singh asked about the dynamics driving the stabilization of the top 10 customer revenue mix in the low to mid-30% range. He also inquired about the sustainability of the security business's 17% growth rate and its key drivers for 2025.

Answer

CEO Todd Nightingale attributed the top 10 customer stabilization to a higher-touch engagement model, better analytics, and new workload adoption. On security, Nightingale stated that while 17% growth is 'okay,' he believes Fastly can do better in 2025. He cited the now-complete product portfolio and a renewed go-to-market focus with security specialization as the primary levers for accelerating this growth.

Sanjit Singh inquired about the potential revenue mix between top 10 and non-top 10 customers that would signal a return to sustainable growth, and asked for an update on the security sales motion and its growth outlook.

Answer

CEO Todd Nightingale suggested that reducing top 10 customer concentration to around 30% would be a significant milestone for more reliable growth. He emphasized that security will be a top priority for 2025, not just for cross-selling but as a primary vector for new logo acquisition, with the potential to land customers on security and then expand them into delivery services.

Sanjit Singh inquired about the strategic decision to embed the Rovo AI platform into core products, questioning the potential trade-off with near-term revenue and its effect on the company's mid-term 20% CAGR outlook, especially considering macroeconomic uncertainty.

Answer

CEO Mike Cannon-Brookes explained that embedding Rovo is a move from a position of strength, with over 1.5 million AI monthly active users, aimed at maximizing adoption to enhance platform stickiness and drive user expansion. CFO Joe Binz affirmed that the macro environment does not alter their confidence in achieving the 20% CAGR target through FY27, noting that Rovo is a net positive for this goal.

Sanjit Singh of Morgan Stanley inquired about which specific offerings are leading the growth in the 30% of ARR outside of Incident Management. He also asked about the deal size uplift from PagerDuty Advance and the strategic rationale behind the increasing number of multi-year agreements.

Answer

CEO Jennifer Tejada identified AIOps and Automation as key growth drivers, emphasizing their deep integration into the entire operational workflow. She described PagerDuty Advance as an efficiency builder with a consumption-based pricing model. Tejada also confirmed the shift to multi-year agreements is an intentional strategy to build more strategic, profitable, and predictable relationships, a sentiment echoed by CFO Howard Wilson.

Sanjit Singh asked why PagerDuty's growth is lagging adjacent markets like hyperscalers and observability, and inquired about the customer adoption and monetization strategy for the PagerDuty Advance AI offering.

Answer

CEO Jennifer Tejada attributed the performance to a handful of large deal deferrals, while highlighting stabilization in the Commercial segment and strong enterprise growth. She noted that PagerDuty Advance leverages a proprietary data model to reduce incident resolution time and that a key opportunity is managing the operational risk of customers' own AI deployments. CFO Howard Wilson added that the monetization model involves free credits to encourage trial, leading to paid contracts for ongoing use, which are priced independently of other products.

Sanjit Singh asked about the contrast between improving enterprise fundamentals and the lowered full-year revenue guidance, and how recent major industry outages translate into growth for PagerDuty.

Answer

CEO Jennifer Tejada explained the guidance reduction is a timing issue due to larger, multi-year enterprise deals creating more seasonality and less linearity, which also delays professional services revenue. She reaffirmed confidence in accelerating ARR growth. Regarding industry outages, Tejada noted they are driving CEO-level conversations and budget prioritization, increasing awareness of PagerDuty's value, though it is too early to model this into the pipeline.

Sanjit Singh asked for details on the drivers behind the strong Q4 performance and an explanation for the difference between the company's revenue and ARR growth guidance.

Answer

CEO Matthew Cain attributed the Q4 strength to balanced execution across the business, highlighting the successful closure of large strategic deals, robust Capella migrations, and strong new logo acquisition. CFO Gregory Henry explained that the spread between ARR and revenue guidance is primarily due to the ongoing transition to Capella, where revenue is recognized as consumed, and a contraction in the professional services business. He anticipates these growth rates will converge by fiscal 2027.

Sanjit Singh asked about the competitive dynamic with hyperscalers in the AI landscape and questioned the drivers behind the billings and free cash flow results, which seemed below expectations.

Answer

CEO Matthew Cain described the relationship with hyperscalers as a 'coopetition,' where Couchbase partners on cloud infrastructure but competes by offering a differentiated platform with hybrid and edge capabilities. CFO Gregory Henry advised against focusing on billings due to its lumpiness, especially with Capella, and highlighted that free cash flow improved year-over-year from negative $10 million to negative $5.9 million.

Asked about the new CRO's impact on the sales organization and priorities, and questioned the pricing strategy for Gen AI, including observed uplift and the potential for future consumption-based models.

Answer

The CEO stated the new CRO will extend the go-to-market model through partners and GSIs without major strategic shifts. Gen AI is monetized through premium packages that drive ASP uplift, rather than direct charges, and while consumption models are considered, they are not currently planned.

Sanjit Singh asked how Domo navigates the competitive dynamics with CDW partners like Databricks, who are increasingly building their own BI and analytics capabilities.

Answer

CEO Josh James explained that the relationship is highly complementary. While CDWs focus on driving consumption of their data warehouses, they do not specialize in the end-to-end data distribution, governance, app creation, and mobile delivery that Domo has perfected over a decade. He stated that Domo helps customers get value from their CDW data faster and at scale, citing a customer expanding to 50,000 users, which in turn drives significant consumption for the underlying CDW partner, making it a win-win scenario.

Sanjit Singh asked how Domo navigates the competitive landscape with CDW partners like Databricks, which are increasingly developing their own BI and dashboarding capabilities.

Answer

Founder and CEO Joshua James explained that Domo's value proposition is complementary to CDWs. While partners focus on warehouse consumption, Domo specializes in areas they do not, such as last-mile data distribution, governance for end-users, alerts, and building and deploying apps at enterprise scale. He emphasized that by helping customers build solutions on top of the CDW, Domo drives consumption for the partner, creating a mutually beneficial relationship.