Timothy Horan

Timothy Horan inquired about the implications of hyperscalers' strong capex guidance for Digital Realty's business model, potential bottlenecks impeding growth, and the outlook for pricing power in the coming years.

Answer

President and CEO Andy Power discussed the consistent and diverse demand from hyperscalers accelerating their buildouts. SVP of Public and Private Investor Relations Jordan Sadler highlighted strong Q4 performance, including a nearly 100 MW booking, and keen hyperscaler interest for 2026-2028 capacity. Andy acknowledged bottlenecks in labor and build costs but emphasized Digital Realty's track record and supply chain enable them to secure attractive rates.

Timothy Horan asked about the implications of hyperscalers' incredible CapEx guidance for Digital Realty's business model, potential bottlenecks impeding growth, and the outlook for pricing power in the coming years.

Answer

President and CEO Andy Power and Chief Revenue Officer Colin McLean discussed consistent and diverse hyperscaler demand, with keen interest in large capacity blocks across various global markets. Andy Power acknowledged bottlenecks in labor and build costs due to the race for scaling critical digital infrastructure, but emphasized Digital Realty's track record, supply chain, and runway for growth help garner significant interest and attractive rates.

Timothy Horan asked about other important productivity software apps Zoom integrates with as part of its strategy, and whether AI is making these integrations easier or harder.

Answer

Eric Yuan, Founder and CEO, stated that Zoom integrates well with Google, Microsoft, ServiceNow, Salesforce, and Atlassian ecosystems, maintaining an open approach based on customer needs. He noted AI makes execution easier but increases customer demands for timely and comprehensive integrations, making the requirements more challenging.

Timothy Horan inquired about Zoom's integration strategy with other critical productivity software applications, and whether AI is making these integration efforts easier or harder.

Answer

CEO Eric Yuan stated that Zoom integrates well with Google, Microsoft, ServiceNow, Salesforce, and Atlassian ecosystems, emphasizing an open ecosystem approach driven by customer needs. He noted that AI makes execution easier but also increases customer demands for timely and deeper integrations, posing a challenge for execution.

Timothy Kelly Horan asked about the global coverage of EchoStar's spectrum, the opportunity and revenue targets for NTN, and expectations for revenue growth in the next few years given the withdrawal of long-term guidance.

Answer

CEO Matthew J. Desch explained that spectrum coverage is complex, with Iridium having priority in many countries. He noted that EchoStar's spectrum is geostationary and requires reallocation, making its global reach uncertain. He expressed bullishness on PNT, despite lumpiness, and mentioned new announcements are coming. He declined to provide specific revenue growth numbers for the next few years, preferring to focus on cash flow projections and deferring detailed guidance to the next call.

Timothy Horan of Oppenheimer & Co. Inc. asked about the expected pace of revenue growth for the rest of 2025 and into 2026. He also questioned the maritime business dynamics, the nature of the next-generation constellation, and the competitive threat from T-Mobile's D2D service.

Answer

CEO Matthew Desch declined to give quarterly guidance but noted H2 growth is implied by the full-year forecast and that long-term growth is back-end weighted. He stated the maritime transition involves about 25% of the base converting to companion service. For the next-gen network, he said both replacement and overlay options are being considered. He positioned Iridium's global D2D service as a complement, not a direct competitor, to regional offerings like T-Mobile's.

Timothy Horan sought clarification on the amount of product revenue pulled forward into Q2 and the gross margin outlook. He also asked which AI products are seeing the most adoption and what the overall impact on ARPU has been.

Answer

CFO Beth Gaspich confirmed a pull-forward of $13-$14 million in product revenue from Q3 to Q2 and reiterated that cloud gross margin should stay in the 69-70% range near-term. CEO Scott Russell highlighted strong momentum across the AI portfolio, noting a six-fold year-over-year increase in Copilot deals. He stated that AI adoption is incremental and has not led to ARPU erosion, as the platform's overall value continues to increase.

Timothy Horan sought clarification on the size of the product revenue pull-forward, the outlook for gross margin stability, AI adoption trends, and the resulting impact on Average Revenue Per User (ARPU).

Answer

CFO Beth Gaspich quantified the product revenue pulled from Q3 into Q2 at $13-14 million and stated the cloud gross margin is expected to be stable around 69-70% in the near term. CEO Scott Russell noted strong AI adoption across the portfolio, highlighted by a six-fold increase in Copilot deals, and confirmed that AI capabilities are providing incremental revenue without eroding ARPU.

Timothy Horan of Oppenheimer & Co. Inc. asked for clarification on the amount of product revenue pulled forward, the outlook for gross margin, where AI adoption is highest, and the resulting impact on ARPU.

Answer

CFO Beth Gaspich confirmed that $13-14 million in product revenue was pulled from Q3 into Q2 and that cloud gross margin should remain around 69-70% in the near term. CEO Scott Russell noted that AI growth is strong across the portfolio, with a six-fold year-over-year increase in Copilot deals. He stated there has been no erosion of ARPU from AI adoption; rather, AI capabilities are monetized as an incremental and successful addition to the platform's value.

Timothy Horan sought clarification on the size of the product revenue pull-forward, the stability of gross margins, trends in AI adoption, and the resulting impact on Average Revenue Per User (ARPU).

Answer

CFO Beth Gaspich quantified the product revenue pulled from Q3 into Q2 at approximately $13-14 million and projected the cloud gross margin would remain in the 69-70% range in the near term. CEO Scott Russell highlighted strong AI adoption, including a six-fold increase in Copilot deals, and stated that there has been no negative impact on ARPU. He noted that AI capabilities are monetized as incremental, value-add solutions.

Timothy Horan of Oppenheimer & Co. Inc. asked about the growing momentum at Ondas Networks, the evolution of the OAS pipeline following recent geopolitical events, and for details on the company's unique platform strategy and how partners like Rift Dynamics fit in.

Answer

CEO Eric Brock and Ondas Networks CEO Markus Nottelmann addressed the questions. Nottelmann confirmed building momentum in the rail business through deeper field validation and new application development. Brock described the OAS pipeline as growing and advancing, driven by extensive demonstrations and integrations with major defense partners' systems. He elaborated on the dual-level platform strategy: creating modular technology platforms (Iron Drone, Optimus) and a broader operating platform to scale sales, support, and supply chain globally through localization and partnerships.

Timothy Horan requested an update on the railroad spending and timeline for the 900 MHz spectrum transition, the company's current liquidity position, and the status of its NASDAQ stock listing.

Answer

CEO Eric Brock noted that railroads publicly intend to meet the FCC deadlines. He explained the 900 MHz opportunity could expand as railroads plan to use the network for both primary and redundant applications. On liquidity, he referenced prepared remarks about ongoing support from investors like Charles & Potomac and a multi-stage capital plan for the OAS unit. Regarding the NASDAQ listing, he confirmed Ondas has applied for a 180-day extension and believes it meets the requirements.

Timothy Horan of Oppenheimer & Co. Inc. requested more color on the newly acquired S-band spectrum, including its current use and the company's confidence in utilizing it. He also asked for clarification on how the revenue share model works when partners bundle services for free, such as text messaging.

Answer

Founder, Chairman & CEO Abel Avellan expressed high confidence in using the S-band spectrum, noting the satellites can dynamically tune to it. President & Chief Strategy Officer Scott Wisniewski added that its limited use in many markets presents a significant opportunity. On the business model, Avellan clarified that ASTS's service is full broadband, distinguishing it from text-only services which they view as a commodity.

Timothy Horan from Oppenheimer & Company inquired about the timeline for a U.S. commercial launch, the status of wholesale agreements with carriers, and the rationale for acquiring Ligado's spectrum in addition to spectrum sharing.

Answer

CEO Abel Avellan stated that a beta service is planned for late 2024, with a full commercial launch in the U.S. in early 2026, offering a full suite of services including video. He confirmed a definitive agreement with AT&T is signed and work with Verizon is ongoing. He explained that the Ligado spectrum is needed to add network capacity and density for a robust 5G experience, complementing the broad coverage provided by partners' low-band spectrum.

Timothy Horan of Oppenheimer & Co. Inc. asked for an update on management's confidence in the long-term $500 million wavelength revenue run-rate target, inquired about the timing for a resolution on the data center sales, and requested a sense of the expected EBITDA performance for the second half of the year.

Answer

Dave Schaeffer, Founder & CEO, expressed increased confidence in reaching the $500 million wavelength revenue run-rate by mid-2028, citing positive customer reception and a strong sales funnel. He declined to provide a specific date for data center monetization due to a lack of binding deposits. For EBITDA, while not giving specific guidance, he stated an expectation for "meaningful sequential growth" each quarter, at or above the pace of recent quarters.

Timothy Horan of Oppenheimer requested an update on the timing and potential pricing for the planned data center sales. He also asked if Cogent has observed any competitive responses in the wavelength market.

Answer

CEO David Schaeffer responded that there has been no significant change in competitive behavior for delivered wavelength services, though one competitor began offering dark fiber. On the data center sales, he confirmed Cogent is moving from letters of intent to contract negotiations with several parties. However, he remained reluctant to provide a firm timeline, suggesting a longer view (more than 3 months) is prudent as the company vets the counterparties and finalizes terms to maximize value.

Timothy Horan asked about the strategic importance of route redundancy for wavelength customers, the outlook for achieving the long-term revenue target for waves, and for consolidated guidance.

Answer

CEO David Schaeffer identified route redundancy as the most critical factor for wavelength customers, ahead of price. He expressed high confidence in reaching the $500 million annual wavelength revenue run rate by mid-2028. He also projected that 2025 EBITDA would be roughly equivalent to 2024's level of approximately $350 million, with full-year revenue expected to be slightly up due to wavelength sales.

Timothy Horan asked about the timing of a data center sale announcement, whether any single party was interested in the whole portfolio, and if a deal could be accelerated. He also requested guidance on EBITDA margins for next year and details on the recent IPv4 pricing increase, including its timing and magnitude.

Answer

CEO David Schaeffer stated that while several parties are interested in the entire data center portfolio, a deal's timing depends on getting facilities ready and achieving a fair price, with hopes for an announcement in the 'next couple of quarters.' He declined to give specific margin guidance but said underlying EBITDA should continue improving by 200-300 basis points per quarter. For IPv4, he detailed a two-step price hike: on new sales in early summer, and on 25% of the installed base in September, with more increases planned.

Timothy Horan of Oppenheimer & Co. Inc. asked about the expected revenue impact from the general availability of Gen 3 satellites, the specific factors behind the U.S. government spending slowdown, the current pipeline for new contracts, and BlackSky's competitive differentiation in image quality and analytics.

Answer

CEO Brian O’Toole explained that Gen 3 revenue will begin to ramp incrementally in Q4 from both existing backlog and new agreements, emphasizing that the integrated Gen 2 and Gen 3 constellation is driving demand. He attributed the U.S. government spending uncertainty to the current budget process and the likelihood of a continuing resolution, which has been factored into guidance. O'Toole also noted a growing pipeline and strong interest following Gen 3's successful validation, highlighting that its 35cm imagery is comparable to systems five times the cost, creating a highly differentiated offering when combined with the Spectra AI platform.

Timothy Horan asked about the Gen-3 satellite's image quality versus expectations, the launch cadence through 2026, and the potential to license BlackSky's AI technology for analyzing third-party imagery.

Answer

CEO Brian O'Toole stated that achieving NIRs 6 quality exceeded their design expectations of NIRs 5+. He confirmed the plan for 8 satellites by early 2026 and a baseline of 12. Regarding AI licensing, he said that while they have the capability to analyze other data sources, they are still evaluating the business model for licensing it.

Timothy Horan asked about the potential for further imagery improvement, image delivery speed, and AI analysis advancements with Gen-3. He also inquired about plans beyond 12 satellites, work on Gen-4, the financial impact of LeoStella in 2025, and the expected revenue cadence throughout the year.

Answer

CEO Brian O'Toole stated that Gen-3's already exceptional imagery will improve further with tuning and that its seamless integration provides immediate speed benefits. He noted the company's model allows for constellation expansion based on demand and that they are always investing in future technology. CFO Henry Dubois explained the LeoStella impact is primarily a non-cash accounting shift from CapEx to OpEx and projected that imagery revenue would ramp more significantly in the second half of 2025 as a critical mass of Gen-3 satellites becomes operational.

Timothy Horan from Oppenheimer & Co. Inc. questioned if the pipeline improvement was due to the HPE-Juniper merger, if Extreme was gaining traction with large telecom carriers as MSPs, and what the margin advantage is for partners on Extreme's platform.

Answer

President & CEO Ed Meyercord stated that while they are targeting large telecom carriers for their MSP platform, they have not yet signed any, though it remains a key opportunity. He confirmed the HPE-Juniper deal is a 'net positive' creating opportunities, but the full impact is expected later. Regarding partner margins, Meyercord explained the primary benefit of Extreme's MSP platform is lower operational expense for partners due to its automation, rather than just higher solution margins.

Timothy Horan inquired about the current size and growth trend of Extreme's data center business and asked if the company is seeing improvements in bookings and productivity per salesperson.

Answer

President and CEO Ed Meyercord estimated the data center business, focused on on-prem enterprise, is 10-15% of total business, a range CFO Kevin Rhodes confirmed. Meyercord noted their fabric technology extends from the data center to the edge. Regarding productivity, he stated that the company expects gains as it moves upmarket to larger deals and drives more business through its channel partners.

Timothy Horan asked for a more detailed elaboration on the new Platform ONE, seeking to understand its market differentiation, its improvement over previous offerings, and its potential impact on the business model, including share gains, TAM, and margins.

Answer

CEO Ed Meyercord described Platform ONE as a major strategic initiative to unify all of Extreme's applications into a single interface with AI at its core, which will simplify management and enable automation. He expects all customers to migrate over the next three years, driving higher subscription revenue. CFO Kevin Rhodes added that the platform leapfrogs competitors by integrating networking, security, and AI. Meyercord also noted that while it's not a big step up in cost, they expect incremental revenue from the added value.

Timothy Horan inquired about when the industry might return to a normal run rate and what the key drivers are for enterprises to upgrade their networks now, rather than waiting for more mature AI platforms or Wi-Fi 7 technology.

Answer

CEO Ed Meyercord explained that the convergence of networking and security is a primary driver, making upgrades necessary now rather than optional. He stated that customers cannot afford to wait due to security imperatives. He also clarified that current network investments will be backward compatible and will naturally integrate into the future AI platforms the company is developing, so there is no benefit to delaying. He expects a healthier market recovery in the first half of calendar 2025.

Timothy Horan of Oppenheimer & Co. Inc. asked about the scale of the new North American win, the revenue significance of SaaS products like ConnectX, the current stage of customer cloud migrations, and the sustainability of the 60-70 basis points of organic margin expansion.

Answer

President and CEO Shuky Sheffer confirmed the North American win is with a large customer and described the SaaS business as a double-digit growth engine, highlighting ConnectX, MarketOne, and eSIM platforms. He noted most customers are still in the early stages of their multi-year cloud journeys. CFO and COO Tamar Rapaport-Dagim stated that while productivity gains are sustainable, the company is not committing to a specific margin target for FY26, as it balances efficiency with strategic investments.

Timothy Horan inquired about the materiality of AI's contribution to revenue growth, the specifics of the collaboration with NVIDIA, and whether the acceleration in cloud growth is being driven by AI initiatives.

Answer

President and CEO Joshua Sheffer explained that GenAI activities are strongly linked to data services, which contribute to revenue growth, and noted that many proofs-of-concept (POCs) are maturing into deals. He highlighted that the collaboration with NVIDIA has progressed into the network automation domain. Sheffer also confirmed that Amdocs is using GenAI internally to drive the next wave of operational efficiency and productivity improvements.

Timothy Horan of Oppenheimer & Co. Inc. inquired whether the strong deal pipeline is being driven by new initiatives like cloud or by a recovery in spending on legacy projects. He also asked for an update on the potential for AI to impact carriers and the key factors for its implementation.

Answer

CEO Joshua Sheffer clarified that the pipeline is predominantly for 'new stuff' such as cloud, BSS transformation, and digital modernization, not legacy systems. CFO & COO Tamar Rapaport-Dagim added that the focus is on future systems. Regarding AI, Sheffer noted an acceleration in foundational data preparation and active trials for use cases in customer care and commerce, with a growing maturity that should lead to more deal closures.

Timothy Horan of Oppenheimer & Co. Inc. asked about the integration level of the businesses being phased out, the difficulty of the carve-out, the reason for the gap between free cash flow and earnings growth guidance, and the current state of the demand environment and backlog.

Answer

CFO and COO Tamar Rapaport-Dagim explained that the phased-out activities were not highly integrated, making the process manageable. She noted that free cash flow growth doesn't track earnings growth perfectly year-to-year due to business specifics but affirmed the company's long-term health. Regarding demand, she described a mixed environment with strong cloud opportunities but slower overall deal conversion, similar to recent quarters.

Timothy Horan of Oppenheimer & Co. Inc. asked for more detail on the drivers of the substantial improvement in Verizon Business revenues and margins, and whether the margin gains are secular.

Answer

Chairman and CEO Hans Vestberg attributed the success to strong execution by a new management team across multiple growth areas like FWA, AI Connect, and convergence. EVP & CFO Tony Skiadas added that the segment's revenue mix is skewing more toward wireless, while margins are benefiting from cost discipline, the HCL managed services deal, and a focus on higher-margin products. He stated they are well-positioned to continue improving business EBITDA margins.

Timothy Horan of Oppenheimer & Co. Inc. asked which AI bots are performing best, why customers might be hesitant to adopt despite high ROI, and how working capital is expected to trend with the shift to bundled SaaS.

Answer

CEO Dan Bodner stated that while all bots receive positive feedback, some like the 'Jelly Bot' have shorter sales cycles. He explained that customer hesitancy is not due to the technology's ROI but the organizational and behavioral changes required for implementation. CFO Grant Highlander addressed working capital, explaining that as the cash generation model aligns with the P&L, significant working capital burn is not expected, and free cash flow growth will continue to be driven by ARR growth at a double-digit pace.

Timothy Horan inquired about Verint's channel mix, its expected trajectory, and whether channel partners validate Verint's claim of having the best AI products. He also asked about any macro-related concerns being expressed by customers.

Answer

CEO Dan Bodner stated that most channel partners currently operate in a cross-sell model, relying on Verint's direct sales force for AI expertise. He expects partners to become more self-sufficient as they gain confidence from Verint's customer-reported business outcomes. Regarding the macro environment, Bodner believes current economic scrutiny actually benefits Verint, as customers prefer its low-risk, high-ROI approach over large, disruptive infrastructure projects. The ability to start small and scale based on proven value resonates well in this climate.

Timothy Horan of Oppenheimer & Co. Inc. asked about the deployment cost for MNOs, why they don't use existing spectrum for PNT, the associated capacity impact, and NextNav's competitive position against satellite-based PNT solutions like Iridium.

Answer

Executive Mariam Sorond stated that deployment is a software layer, not a hardware modification, making it cost-effective for MNOs. She clarified that using their own spectrum would incur a ~5% capacity hit on revenue-generating services, which NextNav's model avoids. Sorond positioned satellite solutions as complementary, highlighting that all satellite systems share inherent vulnerabilities (weak signals, jamming) that NextNav's terrestrial network is designed to mitigate as part of a 'system of systems' approach.

Timothy Horan asked about the necessity of a terrestrial-based system for in-building penetration and backup, the relative difficulty of spoofing LEO versus GEO satellites, any public comments from Commissioner Brendan Carr on the proposal, and the highest and best use of the spectrum.

Answer

Executive Mariam Sorond explained that a terrestrial network is required to overcome satellite vulnerabilities, combat spoofing/jamming, and provide in-building and urban canyon coverage. She clarified that weaker satellite signals are easier to jam than stronger terrestrial signals. To her knowledge, Brendan Carr has not made public comments on their specific proposal. She reiterated that NextNav's focus remains on providing a GPS backup and freeing up spectrum for 5G broadband.

Timothy Horan asked if Equinix is, or may become, supply-constrained and whether it can raise prices to manage that demand.

Answer

CEO and President Adaire Fox-Martin confirmed that Equinix saw firm pricing in Q1 and is able to command premium pricing on renewals given supply dynamics. She explained that the 'Build Bolder' strategy is actively addressing capacity, with efforts to accelerate builds in key markets like New York and London. With 56 projects underway, the company is working to shape demand toward available capacity across its Tier 1 and non-Tier 1 metros.

Timothy Horan of Oppenheimer asked where Equinix currently stands relative to its long-term financial targets for the xScale program, the recent progression of pricing, and the amount of future capacity that has been presold.

Answer

CFO Keith Taylor stated that while xScale's recurring revenue and AFFO contribution are currently small, its financial impact will accelerate through 2025 and 2026 as sold capacity is deployed. CEO and President Adaire Fox-Martin confirmed that pricing remains robust across all regions. Keith Taylor revealed that presales for future capacity in the core retail business accounted for roughly 20-25% of the quarter's gross bookings activity, a significant indicator of future demand.

Timothy Horan from Oppenheimer asked if T-Mobile is observing a trend of subscribers replacing home broadband with mobile, potentially aided by new high-data plans, and inquired about the potential for other quad-play-like services.

Answer

CEO Mike Sievert acknowledged that mobile-only internet access has always been a dynamic, particularly in the prepaid segment where customers prioritize wireless. However, he stated that he has not seen evidence of a significant secular shift in this behavior recently, despite the economic pressures some consumers face.

Timothy Horan of Oppenheimer & Co. Inc. asked for a comparison of Crexendo's product suite to Alianza's, the market penetration of cloud communications, and trends in ARPU at both the retail and wholesale levels. He also questioned if Crexendo could raise prices.

Answer

CSO Anand Buch differentiated Crexendo by its focus on the business and enterprise UCaaS market, unlike Alianza's historical residential focus. President & COO Doug Gaylor estimated about 40% of businesses are not yet on the cloud and noted retail ARPU is stable around $20, while wholesale ARPU per licensee is nearly $6,000/month. He confirmed they have had price increases, which are reinvested into the platform.

Timothy Horan asked for more color on the real-world advantages of the cloud-native Open RAN network and inquired about the cost-effectiveness and broader strategy of the hyper-localized marketing campaign in New York City.

Answer

John Swieringa, President of Technology and COO, described the network as a flexible, AI-ready IT system that allows for advanced data analytics to guide investment, comparing it to 'money ball'. President and CEO Hamid Akhavan stated that while it's too early to judge the full cost-effectiveness of the NYC marketing, initial results are pleasing and local marketing is an important strategic angle.

Timothy Horan of Oppenheimer & Co. Inc. asked for more details on the sales pipeline and revenue conversion timeline following the new strategic partnerships with Microsoft, Amazon, and McKinsey. He also inquired about the recent trends in Remaining Performance Obligations (RPO).

Answer

CEO Thomas Siebel explained that revenue conversion is already happening, citing over 600 joint engagements and 28 deals closed with Microsoft since the partnership began. He emphasized these are deep co-selling arrangements that are a "genuine big deal" and a significant growth accelerator. CFO Hitesh Lath addressed the RPO question, stating the balance was approximately $208 million and reiterated that RPO is not a leading indicator for the business, advising to expect a decline in the near term.

Timothy Horan of Oppenheimer inquired about C3 AI's unique value proposition versus Microsoft, the competitive landscape, and the financial impact of the new Microsoft partnership, including its effect on enterprise agreements and revenue growth.

Answer

Chairman and CEO Thomas Siebel clarified that C3 AI offers complementary, turnkey applications built on Azure's platform services, and confirmed C3 AI sales will count toward customers' Microsoft Azure consumption commitments. Siebel noted the partnership has already contributed to revenue and that being designated Microsoft's 'preferred enterprise AI application provider' offers a substantial tailwind for accelerating growth beyond the current 29% rate.

Timothy Horan from Oppenheimer & Co. Inc. inquired about the lumpiness in subscription versus professional services revenue, expense trends for the upcoming quarters, and the current competitive landscape.

Answer

CEO Thomas Siebel noted that services revenue, which was 16% of total revenue, is expected to remain between 10-20% and carries a high margin of over 90%. CFO Hitesh Lath confirmed plans for continued investment in sales, R&D, and marketing. CTO Edward Abbo identified the primary competition as internal IT departments attempting to build their own solutions, viewing them as future prospects.

Timothy Horan asked about the market trend of bundling security with CDN and compute, as seen with competitors like Cloudflare and Akamai, and whether customers prefer integrated platforms or best-in-class solutions. He also requested more detail on Radware's go-to-market improvements.

Answer

President and CEO Roy Zisapel affirmed that Radware offers an integrated platform for application and data center protection, bundling WAF, DDoS, API, and bot protection in tiered packages. However, he clarified that Radware does not bundle compute, as its target enterprise customers prioritize best-in-class security. Regarding go-to-market, Zisapel highlighted a strengthened direct-touch sales motion in North America, complemented by a scaling strategy focused on channel partners, MSSPs, and OEMs.

Timothy Horan asked about the scale of CSG's cloud SaaS revenues relative to peers, the gross margin profile of this business, the company's view on industry consolidation, and whether CSG partners with or competes against Palantir.

Answer

CEO Brian Shepherd explained that CSG's true cloud-native SaaS solutions target gross margins above 70%, distinguishing them from competitors' managed services offerings. On consolidation, he noted that while strategic logic exists for industry mergers, CSG's focus is on performance, and the Board would consider any compelling offer. He also stated that CSG has not competed against Palantir, as CSG's solutions are focused on targeted, data-driven use cases rather than being a pure-play AI platform.

Timothy Horan asked for thoughts on using cloud and AI to improve customer relationships, enhance products, and lower expenses, citing new low-cost large language models. He also inquired about using AT&T's infrastructure to support AI.

Answer

CEO John Stankey stated that AT&T has already realized significant benefits from AI, citing a 30% year-over-year drop in call volumes and improved coding efficiency. He views AI as a transformative technology cycle and expects rapid innovation. A key goal for 2025 is to better use AT&T's unique data sets for pricing and market segmentation. He also noted AI is already being used to dynamically tune the wireless network.

Timothy Horan asked about the timing for revenue growth re-acceleration, whether the Q4 guide represents a bottom, and for an update on the $5 billion revenue target.

Answer

CFO Thomas Seifert explained that revenue is a lagging indicator and that the leading indicator, net sales capacity, has bottomed out. He pointed to strong growth in APAC and Europe as evidence the go-to-market transition is working. CEO Matthew Prince added that the product GA process is unchanged, focused on releasing early for feedback before signaling production-readiness.

Timothy Horan questioned the visibility into large customers' contract obligations and pricing, the reasons for broader CDN industry pressure, and asked for performance metrics on the new AI Accelerator product.

Answer

CFO Ron Kisling affirmed they have good visibility on contract renewal dates and pricing expectations due to senior-level engagement. CEO Todd Nightingale added that market consolidation could improve pricing in 2025. Regarding the AI Accelerator, Todd explained it can reduce LLM response times from several seconds to under one second by using Fastly's cache, thereby lowering total solution costs for developers.