Will Power

Josh Isner explained the metric normalizes for variable contract durations (enterprise three-year, large international deals) to give a clearer read on demand.

CEO gave detailed color on customer reception across personas (healthcare, enterprise, prosecutors, police chiefs). Described AI adoption mindset shift from skepticism to universal acceptance.

CFO clarified memory is included but not the sole driver. Without inventory investments, Q1 FCF would have been positive. Comfortable with $450M full-year FCF target.

Josh said the AI opportunity is in very early innings with a lot of pipeline ahead. Opportunity to deploy more AI products into the plan every year, increasing value and attracting more customers.

Josh highlighted multiple growth vectors across 4 markets and new products. Singled out Dedrone as especially exciting, opening doors into federal and international that become land-and-expand opportunities. Brittany added no major change needs to be assumed vs what was just delivered, just roll forward current trends.

Rick cited Ukraine and Middle East drone warfare as catalyzing global demand from stadiums to nuclear facilities. Dedrone positioned as market leader. Josh added Dedrone opens international market doors.

Josh confirmed the enterprise deal landed with body cameras, Fusus, and Evidence.com. Same customer also interested in Dedrone. Expects bigger product portfolio applicability in enterprise throughout 2025.

Josh Isner framed the price increase as ROI-positive, AI tools give departments 20% more officer capacity, offsetting understaffing. Rick added examples of potential new AI services that could offload over half of administrative work.

Ed confirmed all CapEx for the $1.8B deal is in guidance. Additional GPU purchases would be for the broader pipeline, with demand ranging from a few hundred to a thousand-plus GPUs per customer. On margins, largest cost for dedicated deals is depreciation. Cash gross margin scales well. GPU-as-a-service tends to run above company average margins. Near-term focus is capturing growth rather than margin expansion, but free cash flow margins should improve with scale over time.

Ed said strong Q4 bookings for both Guardicore and API Security. Guardicore majority of revenue from new customers. API Security has less than 10% penetration of existing customers, providing enormous runway. Broad adoption across many verticals. Expects 2026 to look similar to 2025 with API and Guardicore driving majority of security growth. Tom said AI is not creating risk to security via DIY/SaaS substitution because distributed platform is essential to handle attack volume. AI-induced SaaS risk would actually be a tailwind for compute as enterprises need inference for AI applications.

Ed deferred formal 2026 guidance to February. Attributed margin improvement to good execution: higher development productivity, better vendor pricing, back-office modernization with Oracle, and better co-location and bandwidth procurement.

Tom said the key is combining distributed platform with leading GPU capability. Blackwell 6000 supports models with hundreds of billions of variables. Good relationship with NVIDIA and working together to commercialize with customers.

Ed said Q2 will have higher costs from earlier merit cycle, hiring, and event spending. Over time margins will improve as business grows. Back half potential for margin expansion if revenue hits upside.

Tom cited scale, ease of use with new AI-enabled interface, and trust as key differentiators. Not the lowest cost but unique for protecting critical infrastructure. Guardicore is the flagship of the combined zero trust platform.

Tom listed various AI use cases already on the platform but characterized it as early days. The $100M deal and AI inferencing are more 2026+ upside than 2025 contributors.

Aidan saw no single surprise and described broad strength; Messaging grew about 18% ex-fees, with WhatsApp and RCS growing quickly.

Aidan said the 10% to 11% Q2 organic guide matches the Q1 guide and reflects prudent planning for a usage-based business.

Aidan said 16% organic growth reflected broad execution across Messaging, Voice, ISVs and self-serve, plus some higher seasonal volumes early in the quarter.

Aidan said reported gross margin fell 200 basis points, about 80 basis points from carrier fees and the rest from lower-margin messaging mix.

Thomas said voice infrastructure and AI orchestration software, including ConversationRelay, are growing very fast but gave no product-level figures.

CRO said 57% growth in customers spending over $500,000 reflects platform cross-selling, with Verify, Fraud Guard and voice add-ons lifting deal sizes.

CFO said the price increase will not have a material impact at the consolidated level this year because it is North America only and mostly self-serve.

Dev cited a confluence of drivers, rising legacy costs, regulatory pressure, vendor end-of-life, and GenAI's data needs, with GenAI cutting migration time.