Tim Long

Tim Long inquired about the health of channel inventory, particularly in the Fitness and Outdoor segments, and the relationship between Garmin's internal inventory (related to tariffs) and channel inventory. He also asked about the drivers behind a sequential downtick in the Americas business and whether it's a short-term blip.

Answer

President and CEO Cliff Pemble stated that channel inventory is healthy, lean, and well-positioned for Q4, clarifying that Garmin's internal inventory for tariff mitigation is a separate consideration. Regarding the Americas, he attributed the difference to FX benefits in other regions, product cycles, and currency movements, expressing overall satisfaction with all geographies' performance.

Tim Long inquired about the health of channel inventory, particularly in the fitness and outdoor segments. He also asked about a sequential downtick observed in the Americas business during the quarter, seeking drivers and whether it's a short-term blip.

Answer

Cliff Pemble, President and CEO, stated that channel inventory is healthy, lean, and ready for Q4, with sell-out stronger than sell-in. He clarified that company-held inventory for tariff mitigation is separate. Regarding the Americas, he suggested not to over-interpret the downtick, attributing it to product cycles and currency movements, and expressed satisfaction with all geographies' performance.

Tim Long asked for more color on the strength in the Fitness category, specifically regarding the mix of repeat versus new users. He also questioned what was driving the outperformance in Europe and whether that growth was sustainable.

Answer

President and CEO Clifton Pemble confirmed that all fitness categories were strong, led by advanced wearables like the Forerunner and Venu lines. He noted that growth from new users coming to the Garmin brand was particularly strong. Regarding Europe, he suggested that after normalizing for foreign exchange effects, the region's performance was largely in line with other geographies.

Tim Long inquired about the drivers behind the expected operating margin improvements in the second half of the fiscal year and how the economics of Flex's cloud and data center business are evolving, particularly regarding margin accretion from specialization.

Answer

CFO Kevin Krumm attributed second-half margin improvement to favorable mix, with products and services businesses growing and performing above the Flex average. CEO Revathi Advaithi highlighted the accretive nature of the cloud and power business, driven by integrated compute, power, and cooling solutions, including Flex's own IP products, expecting significant margin progression.

Tim Long asked about the drivers behind the expected margin improvements in the second half of the fiscal year compared to the first half. He also inquired about the evolving economics of Flex's cloud data center business, specifically if new, more specialized programs are leading to more margin-accretive opportunities and how Flex's value proposition in that ecosystem is changing.

Answer

CFO Kevin Kesse explained that continued margin improvement into Q3 and Q4 is primarily driven by mix, with the products and services businesses growing well and performing above the Flex average, thus becoming a larger portion of revenue and pulling margins up. CEO Revathi Advaithi stated that the cloud and power business is very accretive, highlighting Flex's unique integration of compute, power, and cooling. She noted that the compute business includes contract manufacturing, assembly, and vertical integration of racks and metal enclosures, while the power play involves Flex's own IP and design, operating more like an OEM. Ms. Advaithi anticipates significant margin progression as the mix shifts towards power, expecting it to behave like a products business.

Tim Long asked about the pipeline for other compute-related opportunities beyond the digital native win, specifically inquiring about the funnel for new HPS opportunities. He also asked about new customers outside the largest three, whether they are mostly Sonic-related, and the competitive differentiations for Celestica with Sonic versus other proprietary OSs.

Answer

Jason Phillips (President of Connectivity and Cloud Solutions) mentioned a large and growing funnel of AI/ML compute opportunities, focusing on strategic alignment and high adoption rates, citing POCs with silicon providers like AMD MI355. Mandeep Chawla (CFO) added that networking strengths are leveraged for compute wins. Steve Dorwart (SVP and GM of Hyperscalers) explained that most hyperscale customers drive their own OS but rely on Celestica for key layers and testing, with emerging comprehensive choices being evaluated. He also noted Celestica's support at the firmware level for networking and compute systems.

Tim Long asked about the pipeline for other compute-related opportunities beyond the digital native win, whether new opportunities are HPS or not, and the competitive differentiations for Celestica with Sonic versus other proprietary OSs, especially for new customers outside the large three.

Answer

Jason Phillips (President of Connectivity and Cloud Solutions) highlighted a large and growing funnel of AI/ML compute opportunities, focusing on strategic alignment and high adoption rates, referencing POCs like AMD MI355. Mandeep Chawla (CFO) added that networking strengths transfer to AI compute. Steve Dorwart (SVP and GM of Hyperscalers) explained that most hyperscale customers use proprietary OSs but rely on Celestica for key layers and testing, while Celestica also supports emerging comprehensive choices and firmware.

Tim Long asked about the economics of transitioning to F5 Distributed Cloud Services (DCS), including deal sizes, win rates, dollar retention, and add-ons. He also inquired about the performance of major verticals, specifically the strong enterprise bookings and weak service provider bookings in Q4, asking for drivers behind these trends.

Answer

François Locoh-Donou (President and CEO, F5) explained that DCS is a land-and-expand motion, with deals starting small (tens of K's) and expanding significantly; one-third of DCS customers expanded ARR by 90%. He noted that enterprise verticals (financial services, healthcare, manufacturing, retail, public sector) are embracing hybrid multi-cloud, creating strong cases for F5 and driving cross-sell. The service provider segment has been tepid due to 5G not taking off as expected, leading to pressure on CapEx spend, though F5 continues to find new use cases.

Tim Long asked about the economic aspects of transitioning to F5 Distributed Cloud Services, including deal sizes, win rates, dollar retention, and add-ons. He also inquired about the drivers behind the performance of F5's verticals, specifically the strong enterprise bookings and weak service provider bookings.

Answer

François Locoh-Donou, President and CEO, described F5 Distributed Cloud Services as a 'land and expand' motion, with initial small deals expanding significantly (one-third of customers expanded ARR by 90%). He noted that enterprise verticals are embracing hybrid multi-cloud, driving cross-sell and wallet share for F5. The service provider segment has been 'tepid' due to slower-than-expected 5G adoption and pressure on CapEx spend.

Tim Long inquired about the primary drivers behind F5's strong hardware revenue, its sustainability into the next year, and the impact of factors like tariffs or pull-ins. He also asked for an update on the software business pipeline, particularly regarding renewals and new deal activity.

Answer

CEO François Locoh-Donou attributed the 39% hardware growth not just to tech refreshes but more significantly to durable secular trends like data center modernization, hybrid cloud adoption, and AI readiness, stating no pull-in or tariff effects were observed. CFO Cooper Werner added that the software business saw healthy expansion from its large renewal base, though some new projects opted for hardware for performance reasons, and the Q4 software pipeline remains strong.

Tim Long of Barclays asked about NetApp's strategy to convert the remaining 55% of its installed base from hybrid to all-flash systems. He also inquired about the mid-to-long-term expectations for the rapidly growing Keystone storage-as-a-service offering.

Answer

CEO George Kurian explained that while NetApp has a high win rate in refreshing its installed base, a significant portion of its growth comes from winning new customers. He noted that hard-drive solutions remain relevant for backup and cold storage. Regarding Keystone, he highlighted its appeal to customers who prefer an as-a-service model, need a bridge for cloud transitions, or want to avoid upfront capital investment in competitive situations.

Tim Long of Barclays asked about NetApp's strategy to convert the remaining 55% of its installed base to all-flash and the long-term expectations for its Keystone storage-as-a-service offering.

Answer

CEO George Kurian explained that while NetApp has a high win rate on installed base refreshes, it also wins many new customers, and traditional hard drive solutions remain relevant for backup and cold storage. Regarding Keystone, he positioned it as a flexible option for customers preferring an as-a-service model, those in transition to the cloud, or for strategic competitive situations, emphasizing customer choice.

Tim Long of Barclays inquired about NetApp's guidance, noting the contrast between a lighter-than-expected Q1 forecast and an intact full-year outlook, and asked about the drivers for revenue acceleration. He also questioned the outlook for product gross margins amid changing NAND prices and macro conditions.

Answer

CEO George Kurian attributed the full-year confidence to strong momentum from being the fastest-growing all-flash player, market share gains, a pipeline of large deals, and increased sales capacity. He explained that Q1 caution stems from uncertainty in EMEA and the US public sector. CFO Wissam Jabre added that product gross margins are expected to be in line with Q4 in Q1 and then gradually improve quarterly, driven by a favorable mix of cloud and flash products.

Tim Long from Barclays inquired about the fiscal 2026 guidance, noting the contrast between a lighter Q1 and a solid full-year outlook, and asked about the drivers for the expected acceleration. He also sought clarity on the product gross margin outlook amidst fluctuating NAND prices and competition.

Answer

CEO George Kurian attributed the strong full-year outlook to momentum from being the fastest-growing all-flash player, share gains in block storage, and accelerating cloud business. He noted Q1 caution is due to uncertainty in EMEA and the US public sector, but expects growth from large deals and added sales capacity. CFO Wissam Jabre addressed product margins, stating that while Q1 would be similar to Q4, he anticipates gradual quarterly improvement throughout the fiscal year, driven by a favorable mix from cloud and flash growth.

Tim Long from Barclays inquired about NetApp's fiscal 2026 guidance, asking for clarity on the expected revenue and EPS acceleration throughout the year despite a lighter Q1 forecast, and questioned the outlook for product gross margins amid changing NAND prices and a competitive macro environment.

Answer

CEO George Kurian explained that strong momentum from all-flash and cloud, combined with large deals in the pipeline and added sales capacity, underpins the full-year forecast. He attributed Q1 caution to uncertainty in EMEA and the US public sector. CFO Wissam Jabre added that product gross margins are expected to be flat in Q1 compared to Q4 but will see gradual improvement through the rest of the fiscal year.

Elisa Shree, on behalf of Tim Long, asked about the drivers behind the strong growth in the Keystone Storage-as-a-Service offering and the current customer willingness to adopt as-a-service models over traditional purchases.

Answer

CEO George Kurian explained that strong cloud performance reflects broad customer enthusiasm for as-a-service models. He said Keystone appeals to two main groups: clients wanting to build a hybrid cloud architecture with on-prem infrastructure that mirrors the public cloud model, and clients deploying new applications like AI who prefer a flexible consumption model before committing to large capital expenditures.

Tim Long of Barclays asked for clarification on the wireless business, which was described as stable yet showed double-digit growth, and questioned the outlook for the company's 40% incremental margin target given recent pressures.

Answer

CEO Satish Dhanasekaran explained that the strong wireless revenue was due to recovering market conditions after a prolonged downturn, with drivers including 5G Advanced standards, non-terrestrial networks, and early 6G research. CFO Neil Dougherty reaffirmed the 40% incremental margin as the correct long-term model, stating that the impact from tariffs is a temporary disruption and that the underlying business is performing above that target.

Tim Long of Barclays PLC asked about the early momentum and potential revenue ramp for the new SVX speaker mic and its impact on the APEX NEXT upgrade cycle. He also questioned the performance of the video business, specifically what could reaccelerate growth on the hardware side, which has been relatively flat.

Answer

Chairman & CEO Greg Brown noted that SVX orders are outpacing expectations and that the device is driving an ecosystem sale anchored to the APEX NEXT radio. EVP & CTO Mahesh Saptharishi positioned SVX as a new 'body worn assistant' category. EVP & COO Jack Molloy added that fixed video growth is led by the Alta cloud platform and expanding go-to-market investments.

Tim Long of Barclays asked for details on the strong B2B performance beyond video collaboration, the financial impact of a growing B2B mix, and the sustainability of recent strength in the gaming category.

Answer

CEO Hanneke Faber confirmed that B2B demand outpaced consumer demand across the full portfolio, including personal workspace and headsets, highlighting double-digit growth in the education vertical. CFO Matteo Anversa added that the video conferencing business is accretive to the company's average margin. Faber also noted strong gaming share growth in North America and a return to share gains in China, driven by premium products and partnerships.

Tim Long requested more detail on the product and customer breadth driving the cloud and data center upside, and also asked for an update on the transceiver business, including customer activity and the outlook for 1.6T technology.

Answer

CEO Mike Dastoor attributed the upside to strong demand in automated testing and server rack integration, where Jabil is gaining market share through its design and engineering collaboration. On transceivers, he noted strong growth in 800G products, leveraging the Intel Photonics acquisition, and mentioned that Jabil's 1.6T capability has been well-received, with an expected market uptick in late 2025 or early 2026.

Tim Long inquired about the drivers behind the stronger sales pipeline exiting Q2 compared to Q1, asking for color across the AI, hybrid cloud, and networking businesses.

Answer

CEO Antonio Neri detailed broad pipeline strength. In AI, he noted strong enterprise and sovereign momentum, with a backlog of $3.2 billion. In Hybrid Cloud, he highlighted over 75% order growth for Alletra MP for four straight quarters and strong interest in virtualization solutions. For Networking, he pointed to three consecutive quarters of order growth, signaling a market recovery.

In a follow-up, Tim Long from BMO Capital Markets asked about the gross margin outlook, questioning the impact of new higher-margin products and cost reductions versus the temporary effect of expedited shipping costs, and which product areas were being targeted for these actions.

Answer

Robert Pera, Founder, CEO and Chairman, explained that while cost reductions on mature products are ongoing, an aggressive new product pipeline, such as in video security, could affect the product mix margin short-term. He projected that long-term peer margins would remain steady and identified improving shipping logistics efficiency as the primary driver for significant future margin improvement.

Tim Long asked about the strategy behind moving upmarket to larger accounts and requested an update on the company's distributed engineering model, including its effect on talent acquisition and the product pipeline.

Answer

Robert Pera (Chairman and CEO) explained that UniFi's success in moving upstream is due to product line expansion (switches, gateways), the hybrid cloud model via the Cloud Key, and improved wireless performance. He defended the distributed R&D model, stating that building teams outside of Silicon Valley fosters long-term commitment and avoids the 'bubble' mentality, which has led to incredible leverage.