Tomer Zilberman

Tomer Zilberman asked whether competitive displacements typically involve replacing both Wi-Fi and switching infrastructure simultaneously or in phases. He also questioned customer reactions to the recent mid-single-digit price increase, the potential for further price adjustments, and any supplier decommitments, particularly concerning memory components.

Answer

President and CEO Ed Meyercord clarified that competitive projects vary, citing examples like cloud choice in Germany and fabric over SD-WAN in Japan. He highlighted the Campus Fabric's differentiation, noting a Fortune 100 customer's quote: 'What takes Cisco six hours, takes Extreme six seconds.' Regarding pricing, Meyercord stated the 7% price increase was a 'non-issue' due to networking's price inelasticity. He also detailed Extreme's strong supply chain team, vendor relationships, and size as advantages in mitigating component shortages, such as sourcing DDR4 memory chips.

Tomer Zilberman asked whether competitive displacements typically involve replacing both Wi-Fi and switching infrastructure simultaneously or in phases, and how customers reacted to the recent mid-single-digit price increase, also inquiring about potential future price increases and supplier decommitments.

Answer

President and CEO Ed Meyercord clarified that competitive displacements vary by project, citing examples where cloud choice (data sovereignty) or Fabric over SD-WAN technology drove wins. He noted that the 7% price increase was a 'non-issue' due to the price inelasticity of networking infrastructure. Mr. Meyercord also discussed Extreme's proactive supply chain management, including finding alternative DDR4 memory sources, and stated that future price increases would be evaluated as needed.

Tomer Zilberman asked about balancing the implied second-half deceleration in growth (4-5%) with more difficult systems comparisons and large enterprises refreshing ahead of 2027. He also inquired if the software renewal cohort is equally balanced throughout the remainder of the year or clustered in the second half.

Answer

Cooper Werner, EVP and CFO, clarified that the implied deceleration is not due to the refresh cadence, which is still early and driven by expansion. Instead, it reflects a pragmatic approach given the new calendar year, budget cementing, and macro fluidity. He confirmed that the software renewal cohort is more balanced than in prior years, with expectations for strong Q2 growth and healthy growth in the second half.

Tomer Zilberman asked about the implied second-half deceleration in growth, balancing it against more difficult systems comparisons and large enterprises refreshing ahead of the 2027 end-of-service date. He also inquired if the software renewal cohort is equally balanced throughout the remainder of the year or clustered in the second half.

Answer

Cooper Werner, EVP and CFO of F5, clarified that the implied deceleration is a pragmatic approach due to being early in the calendar year, not a reflection of the refresh cadence, which is still early and showing strong expansion. He reiterated that underlying pipeline and momentum are very strong. For software, he stated the renewal cohort is more balanced than in prior years, with expectations for strong Q2 growth and healthy growth in the second half.

Tomer Zilberman, for Tal Liani, asked what drove the acceleration in hardware growth after previous guidance suggested moderation. He also asked about the timeline for AI adoption and whether AI delivery or AI security represents a larger opportunity for F5.

Answer

CEO François Locoh-Donou attributed the hardware acceleration to strengthening secular trends, including hybrid cloud builds, resiliency needs, and AI readiness, which led to a positive surprise. He identified AI data delivery as the more immediate opportunity for F5, while viewing AI runtime security as a very substantial, albeit longer-term, market that the company is well-positioned to capture.

Tomer Zilberman asked about pricing agentic solutions as an extension of per-seat licenses, concerns about customer seat count reductions, and how potential headcount reductions might be offset by agentic upsell opportunities.

Answer

CEO Todd McKinnon explained that agentic products are priced per agent, similar to current per-user pricing, offering flexibility for various human-to-agent relationships. President and COO Eric Kelleher stated that while they are monitoring global workforce changes, they are not currently experiencing a material headwind from seat reductions. He expressed confidence that the customer identity and agentic identity businesses would offset any potential impact, viewing the industry shift as a net upside for Okta by addressing the urgent need for securing agentic identity.

Tomer Zilberman asked why MoneyLion's elevated growth rates (45-50%) are not expected to sustain into the back half of the year, despite previous guidance of 30%, and how this relates to the business model transition. He also inquired about the slight divergence in core cybersafety business growth trends (revenue 3%, bookings 5%) and whether the 400K customer adds will translate into better revenue growth.

Answer

Vincent Pilette, CEO, clarified that MoneyLion's elevated growth was an initial boost from integration, with a more prudent forecast of 30% growth at a 20% margin, aiming to transition transactional customers to membership. Natalie Derse, CFO, explained that cybersafety revenue reflects trailing bookings, and the slight delta between revenue and bookings is minimal. She emphasized that future revenue growth will be driven by customer acquisition, innovation, AI, personalization, cross-sell/upsell, and partner channels, targeting high single-digit pro forma growth for the full year.

Tomer Zilberman questioned why MoneyLion's elevated growth levels (45-50%) would not sustain into the back half of the year, given previous guidance of 30% growth, and asked for commentary on the expected business model transition. He also inquired about the slight divergence in cybersafety business growth trends (revenue 3%, bookings 5% vs. 4% last quarter) and whether the 400K customer adds and better bookings growth could translate into improved revenue growth.

Answer

Vincent Pilette (CEO) acknowledged MoneyLion's elevated performance post-acquisition but maintained a prudent forecast of around 30% growth with 20% margin, noting potential for converting transactional customers to membership without implying significant macro-level effects. Natalie Derse (CFO) clarified that the slight delta in cybersafety revenue vs. bookings is due to rounding and that future growth will be driven by customer acquisition, innovation, AI, personalization, cross-sell/upsell, and partner mix, pointing to a high single-digit pro forma growth for the full year.

Tomer Zilberman asked about the durability of the business amid macro uncertainty, whether MoneyLion could be more macro-sensitive, and what go-to-market adjustments are being made to preempt a weaker economy.

Answer

CEO Vincent Pilette affirmed the business's resilience, citing its high-subscription model and strong demand for cybersecurity. He argued that MoneyLion's financial wellness tools become more critical in a tense economy. CFO Natalie Derse added that the company's customer-centric approach and broad portfolio allow it to adapt to any economic climate.

Tomer Zilberman of Bank of America requested more detail on the drivers of the sequential ARPU improvement, asking if the growth was broad-based or attributable to specific factors.

Answer

CFO Natalie Derse encouraged looking at the stronger year-over-year ARPU growth of $0.09, which reflects the full performance of customer cohorts. She confirmed the growth drivers are consistent, with cross-sell and upsell momentum in the Norton base being a primary factor. She described a 'flywheel effect' where new, relevant offerings drive upsell, ARPU expansion, and higher retention, while new mobile and international customers provide a large base for future monetization.

Tomer Zilberman sought to understand the breakdown of customer net adds between international/mobile expansion and identity-related sales, asking for the normalized growth outlook. He also questioned how much of the full-year guidance raise was driven by favorable currency movements.

Answer

CFO Natalie Derse reiterated that the majority of net adds consistently comes from mobile and international expansion, with recent identity demand providing an additional boost. She emphasized a continued focus on healthy global acquisition. Regarding guidance, she stated that the impact from currency was immaterial and the revised forecast uses current rates.

Tomer Zilberman of Bank of America asked if the U.S. Federal spending environment had degraded further since Q1 or if the revised outlook was primarily due to ongoing constrained visibility.

Answer

CRO Marcus Jewell stated there was "zero indication of weakness" in underlying demand and that the company's competitive position remains strong. CEO Thomas Hogan supported this by highlighting that renewal rates in the federal segment remain solid. They reiterated the issue is purely a timing delay related to financial budget releases, not a degradation of demand.

Tomer Zilberman inquired about the U.S. Federal demand environment, asking if there has been any deterioration in the last 90 days and seeking clarity on pipeline visibility to determine if deal delays are a timing issue or a sign of broader spending weakness.

Answer

Interim CEO Thomas Hogan and CRO Marcus Jewell responded that there is no fundamental deterioration. Hogan highlighted a growing pipeline aligned with new administration priorities and emphasized the mission-critical nature of Cellebrite's software. Jewell added that while some government programs have ended, larger ones are replacing them, and new projects are accelerating. They expressed confidence that the delays are a timing issue, with more clarity expected after the Memorial Day budget passes, citing growing use cases and favorable macro trends in crime.

Tomer Zilberman noted that the Q4 EBITDA beat was smaller than in previous quarters and that Q1 guidance was in line with consensus, asking for the puts and takes. He also asked if the expected improvement in the 92% gross retention rate was driven by more than just the reduced impact of exiting certain countries.

Answer

CFO Dana Gerner attributed the Q4 EBITDA result to higher year-end spending on marketing and IT, and explained that Q1 is seasonally the lowest quarter for top-line revenue, impacting margins. On retention, she confirmed most of the near-term improvement will come from the reduced churn of exiting markets. Interim CEO Thomas Hogan added that while guidance is prudent, the company sees a clear opportunity to improve retention further over the next 1-3 years via customer experience initiatives.

Tomer Zilberman from Bank of America asked for commentary on the performance of government budgets at both the federal and state/local levels, and how that related to the company's quarterly outperformance.

Answer

CEO Yossi Carmil confirmed a 'very strong' performance in the U.S. federal sector, which concluded its fiscal year in Q3, noting that budget expectations were fully met. He stated that this positive trend extends to state and local governments, emphasizing that law enforcement budgets are generally predictable and stable, providing good visibility for the company.

Tomer Zilberman of Bank of America Securities questioned if the core LMR business can sustain its recent above-market growth rate, driven by the APEX NEXT and SVX ecosystem, or if it's more exposed to cyclical fluctuations. He also asked for a breakdown of the Q3 and Q4 revenue contribution from the Silvis acquisition.

Answer

Chairman & CEO Greg Brown stated that with Silvis, the newly named Mission Critical Networks (MCN) segment is expected to grow mid-single digits for the year. He emphasized the strategy of driving recurring revenue and building backlog. EVP & CFO Jason Winkler clarified that the $185 million stub period revenue from Silvis can be approximated across Q3 and Q4 based on the number of weeks remaining in the year.

Tomer Zilberman questioned the Q2 revenue guidance of 4% growth, which was below consensus, asking about the puts and takes and if it reflected conservatism. He also asked for indicators that provide confidence in the full-year guidance.

Answer

EVP and CFO Jason Winkler explained the Q2 guidance is consistent with their internal plan and faces tough comparisons from prior years' supply chain normalization. Chairman and CEO Gregory Brown added that maintaining the full-year guide was a prudent decision in the current volatile environment. For full-year confidence, Brown cited record Q1 orders, a strong pipeline, and the growing mix of recurring revenue from software and services.

Tomer Zilberman pointed out the Q4 uptick in the product portion of the video security business and asked about the underlying trends. He also asked for a long-term perspective on the product backlog level, given the increasing mix of quick-turn video business.

Answer

CFO Jason Winkler acknowledged the Q4 product growth in video but clarified that for the full year, the software component grew faster. He explained that the video business, now over $2 billion, is largely a quick-turn business and does not contribute to backlog in the same way as LMR systems. He emphasized that strong demand is reflected in both the backlog and a growing pipeline, with in-year orders being critical to achieving the outlook.

Tomer Zilberman of Bank of America asked how the product backlog contributes to the 2025 growth guidance and about the progress of the company's push towards subscription-based sales.

Answer

Gregory Brown, Chairman and CEO, reiterated that the total backlog is expected to be up year-over-year and product backlog remains healthy, but declined to give more specific details for 2025. He clarified that the company is not forcing a subscription model on all products but is meeting customers where they are, highlighting strong voluntary adoption of cloud in video and command center, as well as recurring revenue from broadband applications on APX NEXT radios.

Tomer Zilberman, on for Tal Liani, questioned the weakness in the Q4 organic billings guidance relative to expectations and how it aligns with comments on stable firewall demand. He also asked about the competitive landscape regarding discounting.

Answer

CFO Keith Jensen explained the cautious Q4 guidance is due to several 'chunky' 7- and 8-figure deals that need more time to mature before being factored into the forecast. Regarding competition, Jensen stated that discounting was 'very similar to what it's been in prior periods' and that the company has ample margin to invest. An unnamed executive added that discounting is expected to be stable and that they use incentives for channel partners and customers.