Thomas Blakey

Thomas Blakey asked about DigitalOcean's visibility for calendar 2028, given demand outstripping supply, and inquired about pricing dynamics for the new AI natives, specifically if pricing has increased due to high demand and scarcity of supply. He also asked about the overlap between the 0% churn in $1M+ customers and AI-native exposure, and whether AI/ML revenue is finally included in the improving NDR metric.

Answer

CEO Paddy Srinivasan reiterated that 2027 guidance is based on current commitments, with demand exceeding supply. He noted that pricing is holding, and in some cases has gone up, calibrated with market dynamics and GPU generation. Pricing varies from dollars per GPU hour to dollars per token, with more flexibility at higher stack layers. CFO Matt Steinfort stated that about half of the million-dollar customers are AI customers (slightly more by ARR). He clarified that AI/ML revenue is not yet included in NDR, as AI customer revenue and RPO are used as leading indicators, and the AI customer base is still maturing to exhibit traditional SaaS NDR characteristics, with inclusion likely 12 months away.

Thomas Blakey with Cantor Fitzgerald asked about DigitalOcean's visibility beyond 2027, given strong demand outstripping supply, and inquired about pricing dynamics for new AI-native customers. He also asked about the overlap between the 0% churn $1M+ customer cohort and AI-native exposure, and whether AI/ML revenue is included in NDR calculations.

Answer

CEO Paddy Srinivasan reiterated confidence in 2027 guidance based on committed capacity and robust demand. He noted that pricing is holding or increasing due to supply scarcity, calibrated with market dynamics and GPU generation. Pricing varies from dollars per GPU hour for bare metal to dollars per token for higher-stack services, offering more flexibility. CFO Matt Steinfort stated that roughly half of the million-dollar customers are AI customers, and 48% of trailing 12-month incremental ARR comes from AI. AI/ML revenue is not yet included in NDR, as earlier AI customers were experimental, but newer, larger AI customers are expected to show traditional NDR characteristics, with inclusion potentially 12 months away.

Thomas Blakey of Cantor Fitzgerald asked for clarification on whether the core cloud business accelerated in Q2 and questioned what, if any, derivative impact AI customer growth had on the Net Dollar Retention (NDR) metric.

Answer

CFO Matt Steinfort confirmed that the year-over-year growth rate for the core cloud business continues to improve and accelerate. Regarding NDR, he explained that there is not much impact from AI yet because many AI customers are new to the platform and have not been in the cohort long enough (13+ months) to be included in the NDR calculation. This represents a future benefit.

Thomas Blakey asked what has changed in the market and timing since the recent Analyst Day, inquiring about the potential for accelerated growth in future years and the makeup of that growth (recurring vs. consumption).

Answer

CEO Padmanabhan Srinivasan highlighted the rapid market shift toward AI inferencing, which now constitutes the majority of DigitalOcean's AI revenue. He noted that the new Atlanta data center, which recently came online, enabled them to win a large deal they previously couldn't have. This success accelerated their strategic thinking about positioning for growth in 2026 and beyond, prompting the exploration of new financing structures.

Thomas Blakey inquired about the drivers behind increased win rates, particularly regarding pricing levers with Cognigy and consumption-based AI, and when consumption-based AI ARR expansion might lead to an increase in Net Revenue Retention (NRR).

Answer

CEO Scott Russell stated that increased win rates are driven by customers' demand for quantifiable ROI, informed by NICE's data-driven insights into automation benefits. He noted effective pricing and a focus on proven value. CFO Beth Gaspich explained that NICE's flexible pricing model increasingly leans towards interaction and consumption-based pricing, reflected in AI ARR growth. She added that the backlog only includes minimum contractual commitments, implying further upside from increasing interactions beyond what's currently captured, which will eventually impact NRR.

Thomas Blakey asked about NICE's increased win rates and any pricing levers available with Cognigy or consumption-based AI. He also requested an update on consumption-based AI ARR, whether consumption is driving the increase in backlog and total AI ARR, and when Net Revenue Retention (NRR) might start expanding.

Answer

Scott Russell, CEO, stated that customers are astute about ROI, leading to quantifiable outcomes, and NICE uses data to demonstrate AI automation benefits and measurable returns. He noted that pricing is effective and a differentiator, with flexibility. Beth Gaspich, CFO, confirmed flexible pricing, driving towards interaction/consumption-based models reflected in AI ARR growth. She added that the backlog only includes minimum contractual commitments, indicating further upside as interactions increase, and NRR expansion is expected as deployments mature.

Thomas Blakey asked for an analysis of the second-half growth assumptions for core CCaaS versus AI, noting a possible deceleration in the core business. He also questioned if the LiveVox issues could negatively impact NRR.

Answer

CFO Beth Gaspich clarified that AI remains the key growth engine, with ARR growth accelerating to 42%. She stated that the core organic CX and Financial Crime and Compliance businesses are healthy and performing as expected, with underperformance concentrated in the LiveVox business. Regarding NRR, she does not forecast the metric but expects it to remain healthy and at comparable levels without a material change.

Thomas Blakey asked for an analysis of the second-half outlook, questioning if a perceived deceleration in core CCaaS is solely due to LiveVox, and inquired if the LiveVox issues could negatively impact the 111% NRR.

Answer

CFO Beth Gaspich confirmed that AI remains the key cloud growth driver and that the core CX and FCC businesses are performing well. She attributed the pressure on overall cloud growth primarily to LiveVox and some immaterial legacy hosted services. Regarding NRR, she stated that while it can fluctuate, no material change from its current healthy level is expected.

Thomas Blakey of Cantor Fitzgerald asked to unpack the second-half growth assumptions for core CCaaS versus AI, questioning if LiveVox was the sole cause of any core deceleration, and if its churn impacted the NRR figure.

Answer

CFO Beth Gaspich reiterated that AI is the key growth driver, with ARR growth accelerating to 42%. She confirmed that the core organic CX and FCC businesses are healthy and performing to expectations, identifying LiveVox and some immaterial legacy hosted cloud services as the sources of underperformance. She stated that while the NRR could fluctuate, no material change is expected from its current healthy level.

Thomas Blakey asked for an analysis of second-half growth assumptions, questioning a potential deceleration in core CCaaS, and whether the LiveVox issues could negatively impact the 111% NRR.

Answer

CFO Beth Gaspich responded that AI is the key cloud growth driver and that the core organic CX and FCC businesses are performing as expected. She identified the underperformance as primarily related to the LiveVox business. Regarding NRR, she does not anticipate a material change due to LiveVox but noted the metric is not formally forecasted and can fluctuate.

Thomas Blakey of Cantor Fitzgerald asked for color on the sequential momentum in the CCaaS business and whether the combined strength of CCaaS and Zoom Phone could push the net dollar retention rate above 100% in the future.

Answer

CFO Michelle Chang reiterated high double-digit growth for Contact Center and mid-teens growth for Zoom Phone but did not provide forward-looking product guidance. She emphasized that Zoom Phone is increasingly a gateway to larger platform deals, especially for Contact Center, and noted that AI adoption within Phone is strong, with monthly active users up over 30% quarter-over-quarter.

Thomas Blakey asked about any trends in enterprise customer downsells during Q1 and requested an update on the timeline for the CCaaS business to reach 10% of total revenue.

Answer

CFO Michelle Chang stated that churn in the enterprise segment continued to see year-over-year improvement, suggesting downsells are not a worsening trend. Regarding the 10% revenue target for CCaaS, she did not provide a specific timeline but pointed to new disclosures on customer count, Elite SKU mix, and its triple-digit million ARR as signs of strong momentum.

Thomas Blakey asked about the timeline for CCaaS to become a larger part of the business and inquired about the growth runway for Workvivo, particularly from the Meta Workplace migration.

Answer

CEO Eric Yuan expressed confidence in Contact Center's momentum, driven by the on-prem to cloud migration trend. CFO Michelle Chang noted that Workvivo's strong growth is durable, coming from both Meta migrations and organic demand, and she expects the positive trends to continue into FY26.

Thomas Blakey inquired about the drivers of Monday CRM's ARR growth, specifically the mix of seat growth versus pricing. He also asked for the reason behind the significant jump in stock-based compensation in Q2.

Answer

Co-CEO Eran Zinman attributed the CRM's ACV growth of over 20% YoY primarily to seat expansion and larger initial customer lands. CFO Eliran Glazer explained that the increase in stock-based compensation was seasonal, driven by the company's annual equity refresh grants for existing employees which occurs in Q2, as well as grants for new strategic hires.

Thomas Blakey asked about the company's use of MCP (Multi-agent Collaboration Platform) and its potential to open up the Work OS platform. He also inquired about any recent changes in the competitive landscape as monday.com moves upmarket.

Answer

Co-CEO Roy Mann described MCP as a new and exciting way for LLMs to interact with the platform, enhancing its openness for developers and customers. Co-CEO Eran Zinman followed up by stating that the company has not seen any changes in the competitive environment or in its win rates across any market segment.

Thomas Blakey asked about the royalty and unit opportunity from the new China auto win and requested a detailed update on the Voice Commerce pillar, specifically its revenue timeline and whether it had been pulled forward.

Answer

CFO Nitesh Sharan detailed four auto revenue streams and noted that while tariffs have a secondary impact, AI investment remains high. CEO Keyvan Mohajer clarified that Voice Commerce currently has an indirect revenue impact by driving adoption in Pillars 1 and 2. He stated that direct revenue contribution will be reported once the solution goes live at scale, which he noted is expected "very soon."

Thomas Blakey asked about the typical time-to-revenue for Proofs of Concept (POCs) following CES and inquired about the economic impact and strategic significance of the new seven-figure deal in the energy vertical.

Answer

CEO Keyvan Mohajer explained that automotive POCs can be executed quickly, especially with existing partners, and that the new voice commerce vision is accelerating interest from new OEMs. CFO Nitesh Sharan added that ramp times vary by vertical. Regarding the energy deal, Nitesh noted it is a multi-year contract with accelerated cash collection, while Keyvan highlighted it as a key proof point of their strategy to expand into new repeatable verticals beyond restaurants.

Thomas Blakey requested an update on competitive displacements and workload consolidation trends. He also asked for clarification on the forward-looking SaaS net new ARR guidance, questioning if it reflected conservatism or competitive pressures.

Answer

CEO Sanjay Mirchandani stated that Commvault is taking market share due to its technology leadership, expanding partner ecosystem, and ability to solve complex hybrid and multi-cloud problems, which encourages customer consolidation. CFO Jen DiRico clarified that the SaaS outlook reflects the organic strength of the business and platform demand, not a change in the competitive environment.

Thomas Blakey from Cantor Fitzgerald asked about the dynamics of the cloud modernization uplift multiple, questioning why it was guided to a 1.5x-1.7x range and what drove the outperformance in Q1. He also inquired about the strength in the cohort of customers with over $1 million in ARR.

Answer

CFO Mike McLaughlin explained that the uplift multiple is being intentionally managed down to that range to address a larger portion of the installed base, as the lifetime value of these customers is highly attractive. He noted the Q1 outperformance was not significant and the full-year expectation remains in the guided range. The growth in $1M+ customers is a direct result of large enterprise customers expanding their usage, reflected in the 20% YoY growth in average cloud ARR per customer.

Thomas Blakey of Cantor Fitzgerald asked about the level of cushion in the 10-15% medium-term growth target, the expected evolution of the revenue mix, and the significance of the transcript stream API.

Answer

President Bryan Lee noted the 10-15% target reflects ongoing investments and that consumption-based AI pricing will become a larger part of the revenue mix. Executive Michael Burkland added that the transcript stream API is increasingly important for strategic partnerships, as it allows Five9 to monetize its data even when partners use their own AI, creating a distinct growth factor.

Thomas Blakey requested an update on elongated sales cycles and asked for color on how the growing partner ecosystem could provide leverage to the financial model.

Answer

COO Andy Dignan noted that sales cycles are improving as the 'AI fog' lifts and the team effectively demonstrates ROI. CEO Michael Burkland highlighted the new Google Cloud Marketplace partnership as a 'game changer' that simplifies procurement and provides significant leverage, stating the company will continue to utilize the ecosystem for growth.