William Power

William Power noted the encouraging progress of Zoom Phone, particularly Cisco displacements, and asked about the factors driving this success (e.g., sales cycle, quality comfort) and the sustainability of these large opportunities.

Answer

Eric Yuan (Founder and CEO, Zoom) attributed the Cisco displacements to the large on-prem phone system market, where over 50% of total deployments are still on-prem. He highlighted AI as a strong driver for large enterprises to migrate from on-prem to cloud, where Zoom is well-positioned. Michelle Chang (CFO, Zoom) added that deals increasingly reflect the desire for a full 'system of action,' leading to bundles of Phone with Contact Center.

William Power asked about the continued progress of Zoom Phone, particularly the Cisco displacements, seeking to understand the factors driving wins in large enterprises and the sustainability of these opportunities.

Answer

Eric Yuan, Founder and CEO, Zoom, explained that over 50% of phone deployments are still on-prem, and AI is now a strong driver for large enterprises to migrate from on-prem to cloud-based, AI-first phone systems. Michelle Chang, CFO, Zoom, added that deals increasingly reflect a desire for a full 'system of action,' with Phone and Contact Center often bundled, which legacy systems struggle to provide.

William Power asked Eric Yuan for an update on Zoom's Contact Center go-to-market strategy, including channel partner reach and international expansion opportunities.

Answer

CEO Eric Yuan highlighted channel partners as a crucial go-to-market strategy for Contact Center, with increased investment in both U.S. and international markets. He also mentioned exploring product-led growth for virtual agents, targeting developers through APIs. CFO Michelle Chang added that 9 out of 10 of Zoom's largest Contact Center deals were channel-driven, underscoring its importance.

William Power asked Eric Yuan for an update on Zoom Contact Center's go-to-market strategy, including channel partner reach and international expansion opportunities.

Answer

Eric Yuan, Founder and CEO, highlighted channel partners as a crucial go-to-market strategy for Contact Center, both domestically and internationally, due to diverse buyer needs. He also mentioned exploring product-led growth for Virtual Agent, targeting developers via API. Michelle Chang, CFO, added that 9 out of 10 largest Contact Center deals and over 50% of large Phone deals were channel-driven, indicating strong channel ecosystem performance.

William Power questioned the level of conservatism in the online business outlook, asking why churn wasn't expected to increase amid macro uncertainty. He also asked about the growth outlook for Zoom Phone and its potential to reaccelerate from mid-teens growth.

Answer

CFO Michelle Chang clarified that the online business has shown no signs of macro impact, hence the stable outlook, with prudence applied only to the enterprise segment. CEO Eric Yuan addressed Zoom Phone, highlighting the large remaining opportunity in migrating the 150 million on-premise phone seats to the cloud. Michelle Chang also cited partnerships like Bell Canada as a growth driver.

William Power of Baird asked for an update on the macroeconomic environment, focusing on the Online segment's consumer health and the Enterprise segment's sales cycles and down-sells.

Answer

CFO Kelly Steckelberg noted that while Enterprise growth continues with stable retention rates, some headwinds exist in the SMB space due to economic concerns. However, she highlighted that the Online segment's monthly churn rate has improved to a record low. Steckelberg confirmed that Q2 was forecasted to be the low point for year-over-year growth, with an expected reacceleration in Q3, as reflected in the updated guidance.

William Power asked about the expected impact of the U.S. messaging price increase on second-half guidance and the key factors driving the significant improvement in large deal traction.

Answer

CFO Aidan Viggiano stated the price increase is not expected to have a material impact on 2025 results. CRO Thomas Wyatt attributed the 57% growth in large deals (over $500k) to a successful platform selling motion, including cross-selling software add-ons and bundling voice with messaging.

William Power asked for an update on the go-to-market transformation journey, specifically regarding sales tenure and productivity, and how much more improvement is anticipated over the next year.

Answer

CFO Jim Benson noted that the changes are maturing but rep tenure is still weighted towards newer hires. He expects tenure and productivity to improve as the year progresses, stating that tenured reps produce more. The positive impact is already visible in the growing pipeline and recent deal closures.

William Power asked for more detail on the confidence behind the expected material growth from hyperscalers and what has changed to drive this trend.

Answer

CEO Rick McConnell explained that confidence stems from two factors: first, most observability market growth is in hyperscaler workloads, and customers prefer to contract through them; second, Dynatrace is entering deeper go-to-market programs, like with AWS, which are leading to very strong win rates when combined with other partners.

William Power asked for details on the market traction of Dynatrace's AI observability tools, specifically wondering where the company is seeing the most activity and if the revenue contribution could be quantified.

Answer

CEO Rick McConnell described AI as a significant tailwind, driving data complexity that benefits Dynatrace's platform. He noted that the company's AI strategy is evolving from providing analytics to enabling automation, mirroring market trends from GenAI to Agentic AI. McConnell confirmed that hundreds of customers are already using Dynatrace for AI observability but did not provide a specific revenue or ARR contribution figure.

William Power from Baird inquired about the drivers behind the strong growth in the platform solutions segment, specifically counter-drone success, and the pipeline for Drones as a First Responder (DFR).

Answer

Founder, CEO & Director Rick Smith attributed counter-drone demand to a heightened global threat awareness. President Josh Isner added that D-Drone serves as a key entry product in international markets. COO & CFO Brittany Bagley noted the entire segment is growing but can be lumpy. Regarding DFR, Isner highlighted the value of software integration and the strong partnership with Skydio.

William Power requested an update on the enterprise business segment, including the large logistics win from Q4, and asked for details on the market opportunity and sales strategy for the new fixed ALPR products.

Answer

CFO Brittany Bagley confirmed the large logistics deal is progressing well and serves as a blueprint for other enterprise customers. CEO Patrick Smith noted growing momentum in the retail security vertical. Regarding fixed ALPR, President Joshua Isner reported a 'thrilled' customer reaction at Axon Week. He stated that while the market is competitive, Axon can offer a complementary, reasonably priced solution, and a dedicated sales team is being established to pursue the opportunity.

William Power questioned the company's confidence in the rapid adoption of the higher-priced AI Era Plan given agency budget constraints and asked for more details on the products included in the largest-ever enterprise deal.

Answer

President Joshua Isner explained the AI Era Plan offers a strong ROI by increasing officer capacity and saving agencies money amid staffing shortages. CEO Patrick Smith added that the tools boost morale by removing administrative burdens. Isner confirmed the large enterprise deal included body cameras and Fusus, with the customer also interested in other products like Dedrone.

William Power questioned the company's confidence in the rapid adoption of the higher-priced AI Era Plan, given the significant cost increase for agencies. He also requested more detail on the specific products used in the largest-ever enterprise deal.

Answer

Joshua Isner, President, justified the AI Era Plan's price by emphasizing its strong ROI, noting that tools like Draft One can increase officer capacity by 20% and save agencies money. Patrick Smith, CEO, added that AI removes tedious administrative work. Isner also clarified the large enterprise deal primarily involved body cameras and Fusus, with strong interest in other products.

William Power pointed out a deceleration in the software ARR growth trend line and asked for color on the cause and how to model it going forward.

Answer

CFO Brittany Bagley advised looking at ARR growth on an average basis over several quarters rather than focusing on a single quarter's result. She explained that timing of bookings within a quarter creates lags, meaning Q3's reported ARR growth reflects Q2's bookings. She affirmed there is nothing underlying that would change the company's longer-term 4-6 quarter average growth outlook.

William Power from Baird asked for the drivers behind the strong consumption trends, which were noted as the strongest in years, and inquired about the outlook and confidence level for gross retention improvement.

Answer

CEO Allan Thygesen and CFO Blake Grayson noted that higher consumption is a positive indicator, with contract consumption hitting a four-year high, suggesting the post-COVID normalization cycle is complete. Regarding gross retention, Grayson confirmed it improved year-over-year in Q1 and the trend is expected to continue, driven by better customer engagement, proactive renewal discussions, and conversations around IAM.

William Power from Robert W. Baird & Co. asked why the trend of early renewal activity, which has been successful for several quarters, would not be expected to continue at the same pace in the coming year.

Answer

CEO Allan Thygesen explained that the company is making a strategic shift to better balance its resources. The go-to-market team is being directed to prioritize its capacity on renewals that have the best opportunities for expansion, rather than pulling forward flat, on-time renewals. This change, which was factored in as a headwind to the full-year guidance, is intended to maximize the focus on accelerating growth through upsells like IAM.

William Power inquired about the key competitive differentiators driving takeaways for Akamai's Guardicore segmentation product and asked about the sustainability of the strong Q1 operating margins.

Answer

CEO Dr. Tom Leighton attributed Guardicore's success to its ability to scale for large enterprises, its ease of use enhanced by an AI-enabled interface, and the trust customers place in Akamai for critical infrastructure protection. CFO Ed McGowan noted that while Q1 margins were strong, Q2 costs would increase due to the timing of events and merit cycles, but margins could expand in the back half of the year with revenue upside.

William Power asked for an update on Akamai's traction with AI inference at the edge, including the tone of customer conversations and pipeline activity. He also questioned how much of the projected cloud infrastructure growth is influenced by AI.

Answer

CEO F. Leighton cited numerous AI use cases already on the platform, such as image normalization, speech recognition, and text-to-image inferencing, stating it's early days but with many applications running. He clarified that the strong 40-45% ARR growth forecast for cloud infrastructure is driven by traditional compute use cases, not the new large deal or AI inferencing, which he considers future upside.

William Power requested a deeper analysis of Bandwidth's success in the healthcare vertical, asking what differentiates the company and how this success can be replicated in other verticals. He also asked for more color on the drivers behind the expected doubling of the global voice business growth rate.

Answer

CPO John Bell explained that the Maestro platform's ability to bring cloud innovation into complex, regulated healthcare environments without a full overhaul is a key differentiator. He noted similar success in hospitality, travel, and manufacturing. CFO Daryl Raiford attributed the expected acceleration in global voice growth to the onboarding of new customers over the past 12-18 months, expansion from existing customers' AI initiatives, and contributions from new channel partnerships.

William Power followed up on previous comments about 2025 growth drivers, asking for more specific details on the expected improvement in the global voice plan category. He questioned whether the growth would come from market share gains, better trends within UCaaS or CCaaS, or other factors.

Answer

CEO David Morken outlined three primary drivers for global voice plan growth. First, the global rollout and adoption of their new universal platform is expanding their footprint. Second, new U.S. enterprise customers almost always have global needs, which drives international plan adoption. Third, he cited the significant, emerging opportunity for enterprises to deploy voice AI agents globally, which will increase usage on their platform.

William Power from Robert W. Baird & Co. asked for customer feedback on the new Universal Platform and which of its features could be the biggest long-term growth drivers. He also requested more detail on the drivers of core messaging growth, excluding political campaign revenue.

Answer

Chief Product Officer John Bell highlighted the platform's open approach, extensive integrations, and global programmable voice API as key long-term drivers. CEO David Morken noted that the Universal Platform's API and deliverability insights are key differentiators. CFO Daryl Raiford added that commercial messaging, excluding surcharges and political revenue, grew 18% year-over-year, driven by the platform's appeal and strong customer service.

William Power asked for more detail on the drivers behind the growing interest in Relational Migrator and requested a framework for understanding the scale and timing of the related professional services investments.

Answer

CEO Dev Ittycheria cited a confluence of factors driving legacy modernization, including rising costs, regulatory risk, and the need to access proprietary data for GenAI, which can now automate the difficult code-rewriting process. CFO Michael Gordon explained the professional services investment is to meet this demand, noting it will impact gross margin but is aimed at driving long-term ARR growth.

William Power of Baird asked for the expected inorganic contribution to fiscal 2025 revenue growth and for perspective on generative AI momentum, including customer conversations and the potential revenue build-out over the year.

Answer

CEO Shuky Sheffer said he expects generative AI revenue to accelerate throughout the year as more proof-of-concepts convert to commercial projects, driven by both high-end AI capabilities and underlying data platform services. CFO Tamar Rapaport-Dagim stated that while the majority of FY2025 growth will be organic, the guidance does factor in some impact from future M&A.

William Power from Baird asked for an update on consumer retail headwinds and Q4 expectations, and also inquired about the drivers behind the 50% AI bookings growth within the existing customer base.

Answer

Executive Barry Zwarenstein noted that Q3 verticals performed slightly better than expected but that Q4 guidance is prudent due to declining credit card data, with no holiday 'hockey stick' surge anticipated. Executive Andy Dignan attributed the strong AI upsell growth to go-to-market changes, including splitting the account manager role, and the new AI Blueprint program which creates customized roadmaps for customers.

William Power asked for clarification on management's confidence that the worst of the large customer headwinds are over, given the cautious Q4 outlook. He also asked about common drivers for the accelerated growth outside the top 10 customers.

Answer

CEO Todd Nightingale stated that confidence comes from a new high-touch engagement model with large customers, providing better visibility and projections, and the strategic revenue diversification. He added that the primary trend for non-top 10 customers is their demand for a complete edge platform, with the recently enhanced security portfolio being a key driver for new logo wins.

William Power of Baird asked for details on the key drivers behind the CPaaS strength in the quarter and the sustainability of this performance, probing for any one-time factors. He also sought to understand the drivers behind the guidance for a slight sequential decline in service revenue.

Answer

CEO Samuel Wilson credited the strong CPaaS performance to investments in R&D, sales capacity, and platform features like intelligent routing, noting there were no one-time items. However, he urged caution on sustainability due to the non-contracted nature of usage revenue and potential seasonal factors. Regarding guidance, Wilson and CFO Kevin Kraus explained the conservatism is due to the lack of visibility in CPaaS and a potential reversal of the $1.5 million FX tailwind from Q2.

William Power asked why full-year guidance was only reaffirmed despite a Q3 beat, questioning if there was any caution for Q4. He also requested qualitative commentary on the growth trends within the cloud business, specifically between data integration and the MDM/governance/catalog segments.

Answer

CFO Mike McLaughlin confirmed the business tone feels consistent with last year and that the implied Q4 net new ARR is in line with historical linearity, providing comfort with the guidance. CEO Amit Walia added that the macro environment remains stable and that cloud growth is well-diversified across both defensive (productivity) and offensive (transformation) use cases, with many deals being multi-product in nature.

William Power of Baird asked about the current nature of customer conversations regarding data and AI spending priorities and inquired about business linearity trends within the second quarter.

Answer

CEO Amit Walia noted that data and AI remain a top-three spending priority for customers, who are funding these initiatives by re-prioritizing existing IT budgets. He emphasized IDMC's value in future-proofing investments. CFO Mike McLaughlin stated that Q2 linearity was very consistent with the prior year and that the overall macro environment feels stable.