William Kingsley Crane

Kingsley Crane of Canaccord Genuity inquired about the US government's stance on quantum annealing and potential opportunities within DARPA's quantum benchmarking initiatives.

Answer

CEO Alan Baratz expressed strong frustration, calling DARPA's gate-model-only QBI program a 'huge mistake' that overlooks annealing's unique ability to solve critical government optimization problems. He urged for a separate program for non-gate model approaches and characterized broader progress with the US government as slow but ongoing.

Kingsley Crane of Canaccord Genuity inquired about Qualys's prioritization of R&D spend across agentic AI within ROC, Total AI within VM, and the CNAPP suite, and the metrics used for resource allocation.

Answer

CEO Sumedh Thakar highlighted focused execution with current investments, noting significant efficiency gains (20-25%) from leveraging AI internally, particularly in QA, which allows for rapid innovation without a proportional increase in R&D expense. CFO Joo Mi Kim added that R&D hiring has shifted geographically to India, aiding expense management while maintaining investment in engineering teams across different product areas.

Kingsley Crane of Canaccord Genuity Group Inc. inquired about the new Qualys Flex pricing model's potential impact on deal sizes and module adoption, and also asked about the timing of increased marketing investments with the new CMO.

Answer

CEO Sumedh Thakar explained that the Flex pricing model is designed to drive larger lands and faster upsells by giving customers frictionless access to the entire platform. CFO Joo Mi Kim confirmed that increased investments in sales, marketing, and R&D are already underway and are fully factored into the current year's guidance.

William Kingsley Crane of Canaccord Genuity asked about the competitive landscape for Qualys' TotalAI solution and the expected development of security budgets for AI. He also questioned the significant upward revision of the full-year EPS guidance compared to the prior quarter's forecast.

Answer

CEO Sumedh Thakar described the AI security market as being in an early, educational phase, with customers exploring solutions like TotalAI to assess risk in their LLM deployments. He believes budgets will take a couple of years to materialize as companies first quantify potential losses. CFO Joo Mi Kim explained the EPS guidance increase was due to strong Q1 performance and a revised OpEx growth forecast of 15-17%, noting that successful partner leverage may not require as significant a sales and marketing spend as initially planned.

William Kingsley Crane asked about Qualys's plans for creative product packaging and consumption models, and how CEO Sumedh Thakar plans to manage his time and responsibilities after taking over the sales organization following the CRO's departure.

Answer

CEO Sumedh Thakar explained that Qualys is exploring new packaging models centered around its Enterprise TruRisk Management (ETM) platform, with a focus on helping customers quantify business risk reduction. He stated he is comfortable temporarily overseeing sales, noting the 2025 plan is already set and emphasizes a partner-first GTM strategy. Thakar affirmed that the existing sales leadership team is strong and that the product organization is well-led by the CTO and SVP of Product Management.

Kingsley Crane asked for more detail on the product drivers behind the quarter's strength and what CEO Sumedh Thakar has learned operationally since taking over product management responsibilities.

Answer

President and CEO Sumedh Thakar attributed the strength to momentum in federal, TotalCloud, and the bundling of Patch Management and CSAM with VMDR, which now accounts for 24% of new LTM bookings. He also noted strong interest in the new Total AI product. Regarding his operational role, he highlighted the success of bringing product management and marketing teams closer together, which led to the creation of the well-received 'Risk Operations Center' branding.

Kingsley Crane of Canaccord Genuity asked about the changing customer base and its potential to increase long-term customer value despite a lower NRR. He also inquired about the large strategic customer, asking if they were a long-standing client, their impact on Q2 results, the visibility into the projected $3 million Q3 revenue contribution, and the expected gross margin trajectory in subsequent quarters.

Answer

CEO Shachar Daniel clarified that the current NRR calculation is skewed by a strategic shift away from legacy verticals toward high-growth AI clients, and a quarter-over-quarter view would show significant growth. He confirmed the large deal is an upsell with an existing customer who was already ramping up in Q2. Daniel expressed high confidence in the $3 million Q3 revenue figure, as two-thirds of the quarter has passed, but noted future predictability is challenging in the dynamic AI market. He stated future gross margins will depend on the business mix, but the company is strategically investing in infrastructure to capture the massive opportunity, even at the cost of short-term margins.

Kingsley Crane questioned if AI-driven development speed makes JFrog more critical for smaller teams and asked about the drivers behind the strong free cash flow in the first half of the year.

Answer

CEO Shlomi Ben Haim confirmed that as AI tools accelerate development, the need for a fundamental model registry and unified security flow becomes more critical for all teams. CFO Ed Grabscheid attributed the strong free cash flow to multi-year deals closed in 2024 and 2025, while noting that the outlook derisks the largest deals, which are a key driver of cash flow.

William Kingsley Crane asked about the maturation of the ML model ecosystem and developer awareness of security risks. He also sought to reconcile the strong RPO growth with the stated challenges in securing new customer commitments.

Answer

CEO Shlomi Haim described the MLOps space as being in its 'very early stage,' with enterprises focused on security and cost. CFO Ed Grabscheid explained that Q1 performance exceeded expectations and the strong RPO reflects customers signing multiyear deals to lock in pricing and add security, with timing of large 2024 deals also boosting the YoY comparison.

William Kingsley Crane asked for details on the incremental benefits of the new strategic collaboration agreement (SCA) with AWS. He also questioned the new, more conservative guidance philosophy and the potential fundamental drivers for upside in the coming year.

Answer

CEO Shlomi Ben Haim explained the AWS agreement provides more cost-effective scale, allowing JFrog to offer more attractive pricing to customers on AWS. CFO Ed Grabscheid confirmed the guidance philosophy is factually more conservative, primarily by de-risking large deals and not including potential usage overages. He stated that committed opportunities are the foundation of the guidance.

William Kingsley Crane asked for a ranking of the drivers behind the implied Q4 cloud growth acceleration and questioned if a significant consumption true-up, similar to the previous year's Q4, is expected.

Answer

CFO Ed Grabscheid listed the drivers for Q4 cloud growth—a full quarter from Q3's large wins, annual commitments, and smaller migrations—but did not rank them. He explicitly stated that the company does not anticipate a one-time true-up benefit in Q4 2024 of the same magnitude as seen in Q4 2023.

Kingsley Crane asked about BlackBerry's strategy regarding integrated versus open systems in the software-defined vehicle space. He also inquired about the maturity of the General Embedded Market (JEM) pipeline for SDP 8.0 compared to the automotive pipeline.

Answer

CEO John Giamatteo described the move into middleware with partners like Vector as a natural extension to help customers with time-to-market. He characterized the JEM pipeline as newer and less mature than the automotive one but noted that the strong early demand as they increase their go-to-market focus is a very encouraging sign.

William Kingsley Crane asked about the market opportunity created by QNX containers and the HaleyTek integration, and also questioned the drivers behind the Cyber division's Q3 guidance, which implies a significant ramp-up in Q4.

Answer

CFO Tim Foote explained that QNX containers are a natural expansion of the Total Addressable Market (TAM) as QNX moves toward cloud environments. He highlighted the HaleyTek deal for QNX Sound as significant progress in adding middleware content to vehicles. Regarding Cyber guidance, Foote noted that Q4 is traditionally BlackBerry's strongest quarter for billings and that the guidance reflects continued sequential growth through Q3 and Q4.

William Kingsley Crane from Canaccord Genuity asked about endpoint expansion opportunities beyond endpoint count, specifically regarding CylanceMDR. He also inquired about which product initiatives within the cyber business BlackBerry is investing in to drive future growth.

Answer

CEO John Giamatteo outlined a three-pronged Cylance growth strategy: upselling existing customers to MDR services, targeting strong verticals like OT and healthcare, and penetrating the SMB market. For broader cyber investments, he highlighted the successful software-based pivot of the SecuSUITE portfolio and the new geo-fencing feature in the AtHoc platform, which are driving new use cases and demand from government and emergency services.

William Kingsley Crane asked about the named account engagement model, specifically how many accounts are currently targeted and how the company is evaluating the potential expansion of the program.

Answer

CEO Padmanabhan Srinivasan explained they are currently targeting their top 3,000 customers, an increase from 1,500 last year. He emphasized a 'nail before scaling' philosophy, focusing on refining the engagement model and sales productivity metrics. Additionally, a propensity-based model targets another 5,000 accounts. He expects to focus on these motions for the remainder of the year before considering further expansion.

Kingsley Crane inquired about the growth ramp of the Operational Technology (OT) security business and whether management's excitement for the opportunity has increased.

Answer

Co-CEO Mark Thurmond confirmed that Q1 was a strong quarter for OT with continued momentum and solid year-over-year growth. He attributed this to the ongoing trend of OT security being centralized under the CISO, who desires full visibility across the entire attack surface. He affirmed that OT remains a strong driver for Tenable One consolidation deals.

William Kingsley Crane of Canaccord Genuity asked how the addition of new asset types like OT to Tenable One would impact price-per-asset versus total asset count growth.

Answer

CEO Amit Yoran responded that he believes there is room to expand on both dimensions. He sees opportunities to add more analytics to justify a higher price-per-asset, while also noting that expanding asset types into the large customer base is a very natural path for growth.

Kingsley Crane from Canaccord Genuity asked about the market positioning of PagerDuty's new AI agents, questioning if they are compelling enough to replace human analysts. He also followed up on the customer response to incentives for using Generative AI features.

Answer

CEO Jennifer Tejada clarified that the new AI agents are positioned as complementary tools to enhance human responders, not replace them. They are designed to handle simpler tasks and support complex problem-solving. CFO Howard Wilson added that recent packaging changes provide all paid customers with a base level of usage for advanced features like PD Advance, which is intended to drive adoption and demonstrate value before requiring payment for incremental use.

William Kingsley Crane asked about the evolving competitive landscape and the potential for further expense efficiencies, given PagerDuty's strong gross margin profile.

Answer

CEO Jennifer Tejada asserted that most competition is in the mid-market and below, lacking the scale and AI capabilities of PagerDuty's Operations Cloud, and she is confident in their ability to out-innovate. CFO Howard Wilson stated they will continue their programmatic approach to efficiency, with G&A and Sales & Marketing presenting the most significant long-term opportunities for leverage, while maintaining high investment in R&D.

William Kingsley Crane asked about the role of features like Voyage AI in driving workload creation and if it helps reduce vector storage costs. He also inquired about the performance of deals influenced by the Google Cloud partnership during the quarter.

Answer

CEO Dev Ittycheria explained that Voyage AI addresses the 'trust gap' in AI by improving result quality, which is distinct from the 'quantization' feature that reduces storage costs. He also stated that the relationship with all hyperscalers, including Google Cloud, remains 'very constructive and productive,' and they work closely together to serve customers.

William Kingsley Crane of Canaccord Genuity followed up on customer success initiatives, asking about the current state of the organization and whether the focus is on transformation or scaling with more resources.

Answer

CEO William Staples clarified that the focus is on scaling the existing, high-performing organization rather than a major transformation. He expressed that he is impressed with the current go-to-market team's commitment and performance. The goal of hiring a new CRO is to bring in a leader with deep operational experience to help the company scale beyond the $1 billion revenue milestone.

Kingsley Crane from Canaccord Genuity inquired about the adoption pattern for GitLab Duo, asking whether to expect high penetration in a few customers or if there are signs of broader, bottoms-up adoption.

Answer

CEO Sid Sijbrandij stated that while there is some bottoms-up adoption, the more common scenario is for a customer to purchase Duo for only a portion of their users initially. He noted that while the company prefers a full rollout and can support it, customers are often not ready to deploy to all users at once. He believes full adoption will come over time as the returns become evident.

William Kingsley Crane asked if trends like data gravity and mobility increase confidence in the long-term size of the stream processing market and what inning of adoption we are in. He also inquired about vertical-specific strength in new AI projects.

Answer

CEO Jay Kreps asserted that the setup for streaming is 'phenomenal' and that the market is still in a 'very early inning,' with a vast amount of batch processing spend yet to transition. He highlighted that dedicated AI companies like OpenAI and Cursor are strong adopters, and AI projects are also emerging broadly across traditional industries.

William Kingsley Crane of Canaccord Genuity asked for comments on the mix between hybrid cloud and pure SaaS deployments. He also questioned how a customer's deployment model affects their ability to leverage new Agentic AI capabilities.

Answer

CFO & COO Ashim Gupta stated that while a specific mix is not disclosed, the majority of installations are hybrid, and cloud adoption is growing. CEO Daniel Dines added that the hybrid offering is a key differentiator, as on-premise robots can provide secure and precise data access to agents, which is crucial for customers with legacy systems.

William Kingsley Crane from Canaccord Genuity inquired about the partner ecosystem, particularly the 40 agreements with Google Cloud, efforts with other partners, and whether the numerous state and local government deals were primarily pilots.

Answer

CEO Thomas Siebel praised the strong relationships with Google Cloud, AWS, and Microsoft, noting C3.ai is an attractive partner because its applications drive cloud consumption. While he couldn't provide a specific bookings breakdown by partner, he confirmed that the state and local government agreements almost all begin as pilots before converting to production contracts.