Financial Data and Key Metrics Changes - CleanSpark achieved record revenues of $766 million for fiscal year 2025, representing over 100% year-over-year growth [19] - Gross margin was 55%, a slight decrease of 1% year-over-year, which is notable given it was the first full year post-Bitcoin halving [8][19] - Adjusted EBITDA for the year exceeded $800 million, with a normalized adjusted EBITDA from operations of approximately $305 million, translating to a net margin of about 40% [20] - The company reported a significant positive net income of about $365 million [20] Business Line Data and Key Metrics Changes - CleanSpark produced nearly 8,000 Bitcoin during the fiscal year, with an average marginal cost per Bitcoin slightly below $43,000 and average revenue per Bitcoin around $98,000 [19] - The operational hash rate reached 50 exahash per second, with 100% U.S.-based infrastructure [8] Market Data and Key Metrics Changes - The company has a Bitcoin treasury that grew by nearly 62% to over 13,000 Bitcoin, generated entirely from its own mining operations [9] - The average spot Bitcoin sales price for the fourth quarter was $111,721, with additional premiums generated per Bitcoin of $4,184, leading to an effective cash generated per Bitcoin of almost $116,000 [26] Company Strategy and Development Direction - CleanSpark is evolving into a digital infrastructure platform, focusing on opportunities in generative AI, grid balancing through Bitcoin mining, and high-performance computing [5][6] - The company is prioritizing a blended approach to grow and monetize its portfolio, aiming to diversify revenue and enhance margins [8] - A significant focus is on securing tenants for AI-ready locations while expanding land and power footprints to meet market demand [36] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about demand in the HPC AI space, citing strong inquiries for their facilities [42] - The company is well-prepared for future growth, leveraging its strong balance sheet and operational excellence [6][36] - Management acknowledged the challenges in the market but emphasized their competitive position due to their efficient operations and strategic planning [43] Other Important Information - CleanSpark completed its largest financing ever with a $1.15 billion upsized 0% convertible note, which included a stock buyback of $460 million, reducing outstanding shares by over 10% [17][33] - The company has secured a 285-megawatt site in Texas for AI factory development, with plans for further expansion [12][34] Q&A Session Summary Question: Can you provide insight into client conversations and demand outlook for HPC AI? - Management reported extensive discussions with potential clients, indicating strong demand for their facilities, particularly in Texas and Georgia [42] Question: How do you view the pairing of Bitcoin mining with HPC campuses? - Management sees potential in blending AI, HPC, and Bitcoin mining to provide versatile power usage, which could benefit both operations [47] Question: What key milestones should investors look for in 2026 regarding HPC strategy? - Management highlighted the importance of speed to market and modular approaches in their development strategy, particularly at the Sandersville and Sealy sites [52][53] Question: What are the near-term expansion plans for Bitcoin mining? - Management indicated a shift of Bitcoin mining operations to more remote locations with favorable utility rates, while continuing to grow their operational capacity [56][58] Question: How should we think about the economic impact of the MoU with Submer? - Management emphasized the cost savings and speed to market advantages of their partnership with Submer, which is expected to enhance their competitive position [70]

Ambarella (NasdaqGS:AMBA) Q3 2026 Earnings Call November 25, 2025 04:30 PM ET Company ParticipantsJohn Young - CFOLouis Gerhardy - Vice President of Corporate Development and Investor RelationsFermi Wang - CEO and Co-founderQuinn Bolton - Managing Director of Equity ResearchConference Call ParticipantsChristopher Rolland - Managing Director and Senior Equity AnalystJoe Moore - Research AnalystTore Svanberg - Managing Director and Senior Semiconductor AnalystMartin Yang - Research AnalystRoss Seymore - Manag ...

Financial Data and Key Metrics Changes - Workday reported Q3 subscription revenue of $2.244 billion, reflecting a 15% increase year-over-year. Total revenue reached $2.432 billion, up 13% [19] - Non-GAAP operating margin for Q3 was 28.5%, with non-GAAP operating income of $692 million [20] - The 12-month subscription revenue backlog (CRPO) was $8.21 billion, increasing by 17.6% [19] - Total subscription revenue backlog at the end of the quarter was $25.96 billion, up 17% [20] - Operating cash flow for Q3 was $588 million, representing a growth of 45% [20] Business Line Data and Key Metrics Changes - In Human Capital Management (HCM), Workday added new customers including Sunnybrook Health Sciences Center and Fuji Electric, with strong full-suite adoption [8] - AI products contributed over 1.5 points of Annual Recurring Revenue (ARR) growth this quarter, with more than 75% of core customers using Workday Illuminate AI [9] - Workday Go is driving strong new customer growth, particularly in the medium enterprise segment, with a major expansion announced [8] Market Data and Key Metrics Changes - U.S. revenue in Q3 totaled $1.825 billion, up 12%, while international revenue was $607 million, up 13% [19] - Healthcare became the sixth industry to exceed $1 billion in ARR, with significant wins in the sector [10] - The company saw strong performance across EMEA, APAC, and Japan, with notable wins in these regions [16] Company Strategy and Development Direction - Workday aims to unify HR and Finance on one intelligent platform, leveraging AI to help organizations adapt quickly and make better decisions [7] - The company is focused on increasing AI talent and entering new markets, including the Middle East and India [20] - Workday is committed to driving efficiencies while scaling the business globally, with a focus on targeted investments for long-term growth [20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the momentum of the business heading into Q4 and FY27, citing strong customer engagement and ROI from Workday solutions [30] - The company is optimistic about AI-driven growth investments and expects to achieve a subscription revenue CAGR of 12%-15% through FY28 [24] - Management acknowledged some impacts from fiscal funding in certain sectors but emphasized strong execution across the portfolio [23] Other Important Information - Workday closed the acquisition of Paradox, which contributed to CRPO growth and was not included in backlog guidance [20] - The company plans to repurchase an additional $3.6 billion in shares through the end of FY27, leading to a total of $5 billion in repurchases [21] Q&A Session Summary Question: Feedback on venture-backed vibe-coding startups - Management noted that while there is interest in point solutions, customers are returning to trusted vendors like Workday due to data quality and security concerns [31] Question: Mechanisms to maintain ACV growth amid layoffs - Management highlighted that they are focused on selling back into their customer base with new solutions, which helps offset any potential impacts from headcount reductions [36] Question: Early success with AI solutions - Management reported that AI solutions are adding significant growth to ARR, with 75% of new sales including an AI solution [43] Question: Feedback on Paradox and Sana acquisitions - Early feedback from customers has been very positive, with strong demand for both acquisitions and their integration into Workday's offerings [51] Question: Go-to-market strategy for Paradox - Workday plans to sell Paradox not only to existing customers but also to competitors' environments, expanding its market reach [59] Question: Confidence in DIA go-live milestones - Management expressed high confidence in meeting DIA contract requirements, which are expected to contribute significantly to Q4 revenue [68]

Financial Data and Key Metrics Changes - The net loss for fiscal year 2025 was $2 million, a significant improvement from a net loss of approximately $599 million in fiscal year 2024, resulting in a loss of $0.01 per share compared to a loss of $5 per share [32] - Revenue for fiscal year 2025 totaled $829 million, driven primarily by licensing and collaboration agreements, with $697 million from Sarepta Therapeutics [32][33] - Total operating expenses increased to approximately $731 million in fiscal year 2025 from $605 million in fiscal 2024, primarily due to higher R&D and SG&A costs [35] Business Line Data and Key Metrics Changes - The FDA approval of Redemplo marked a major milestone, being the first FDA-approved siRNA medicine for familial chylomicronemia syndrome (FCS) [7][8] - Redemplo achieved an unprecedented reduction in triglycerides by approximately 80% from baseline as early as one month, with 50% of patients at the 25-mg dose achieving triglyceride levels below 500 mg per deciliter [24] - The company has made progress with Zodasiran, initiating the Yosemite phase III clinical trial for homozygous familial hypercholesterolemia (HoFH) [11][12] Market Data and Key Metrics Changes - There are an estimated 6,500 people in the U.S. living with genetic or clinical FCS, and approximately 750,000 patients with persistent chylomicronemia at high risk for acute pancreatitis [10][25] - The One Redemplo pricing model is set at $60,000 annually, aimed at providing consistent pricing across current and future indications [25] Company Strategy and Development Direction - The company is focusing on the cardiometabolic space, with ongoing development programs for Zodasiran and ArrowDiamond PA, targeting large populations without proper treatment options [14][15] - Arrowhead aims to have 20 individual drug candidates in clinical trials by the end of 2025, with a balanced pipeline of wholly owned and partnered programs [41] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the commercial launch of Redemplo and the positive feedback received from healthcare professionals and patient societies [24][25] - The company anticipates that the commercial sales of Redemplo will not have a substantial impact on financial statements in fiscal year 2026, but believes its cash runway is sufficient to extend into fiscal year 2028 [39] Other Important Information - Arrowhead received a $200 million upfront payment from Novartis for a licensing agreement and is eligible for up to $2 billion in future milestone payments [18][37] - The company has expanded its clinical pipeline in CNS with AROMAPT, targeting tauopathies including Alzheimer's disease [15] Q&A Session Summary Question: Can you discuss the plan to show benefit in terms of acute pancreatitis for Plozasiran? - Management indicated that shots at three and four were powered for triglyceride reduction, with a reasonable chance to show a difference in acute pancreatitis, but emphasized that shots at five are specifically designed to demonstrate benefit in acute pancreatitis [45][46] Question: Can you provide more details on the upcoming data for obesity programs? - Management confirmed that initial data from the AROINHBE program will be shared in early January, with a focus on safety and biomarker data, while ARO-ALK7 will provide limited data focused on monotherapy safety [50][52] Question: What are the estimates on acute pancreatitis events accrual based on patient baseline characteristics? - Management noted that it is difficult to estimate the number of events due to the new criteria being used, but they expect to have a sufficient number of events based on the percentage of patients with a history of pancreatitis enrolled in the study [56] Question: Can you discuss the differentiation of the ArrowMapT program from J&J's failed anti-tau antibody? - Management highlighted that ArrowMapT targets intracellular tau, potentially reducing both intracellular and extracellular tau levels, unlike J&J's approach which primarily targets extracellular tau [62] Question: What is the visibility on launching a CBOT study? - Management indicated that they expect to have a clearer idea by summer regarding the data from ongoing studies, which will inform the timeline for launching pivotal studies [65]

Financial Data and Key Metrics Changes - Total revenue reached $27 billion, up 11% year-over-year, with year-to-date revenue up 12% [5][12] - Earnings per share (EPS) increased 17% to $2.59, driven by improved profitability in AI and storage [5][12] - Gross margin was up 4% to $5.7 billion, or 21.1% of revenue, primarily due to a mix shift to AI servers [12][14] - Operating income grew 11% to $2.5 billion, or 9.3% of revenue, supported by higher revenue and lower operating expenses [12][14] Business Line Data and Key Metrics Changes - ISG revenue was a record $14.1 billion, up 24%, marking seven consecutive quarters of double-digit growth [14] - AI server orders reached a record $12.3 billion in the quarter, with shipments of $5.6 billion, totaling $15.6 billion year-to-date [7][14] - CSG revenue increased 3% to $12.5 billion, with commercial revenue up 5% and consumer revenue down 7% [9][15] Market Data and Key Metrics Changes - Demand for traditional servers grew double digits, particularly in EMEA and North America [8] - International growth in CSG accelerated sequentially, up double digits year-over-year [9] - The PC refresh cycle remains durable, supported by an aging installed base and a significant portion of systems not yet upgraded to Windows 11 [9] Company Strategy and Development Direction - The company aims to capitalize on AI infrastructure buildouts and ongoing PC refresh cycles [10][11] - Competitive edge in AI is attributed to the ability to engineer bespoke, high-performance solutions and rapid deployment capabilities [11] - The focus remains on driving shareholder value through strong cash generation and capital returns [19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the current commodity supply environment and securing supply [10] - The outlook for Q4 includes expected revenue between $31 billion and $32 billion, with ISG and CSG combined expected to grow 34% at the midpoint [17] - Management remains optimistic about AI demand, with a strong backlog and pipeline supporting future growth [18][19] Other Important Information - The company returned $1.6 billion of capital to shareholders, including share repurchases and dividends [15] - The five-quarter pipeline continues to grow, indicating robust demand across various customer segments [7][19] Q&A Session Summary Question: Customer reaction to pricing discussions across product categories - Management acknowledged the unprecedented cost movements and emphasized their experience in navigating supply chain challenges [24][25] Question: Impact of NVIDIA's vertical integration on Dell's strategy - Management remains confident in their ability to differentiate and deliver complex solutions at scale, despite potential changes in the supply chain [36][37] Question: AI server margins and future expectations - AI server margins improved sequentially, with expectations for continued strength in Q4 driven by a broader customer mix [42][44] Question: Outlook on the PC refresh cycle - Management highlighted that the Windows 11 transition is not yet complete, indicating further opportunities for growth in the PC market [51][52] Question: AI business conviction and financing issues - Management expressed strong conviction in AI demand, supported by a robust backlog and pipeline across various customer types [58][60] Question: ISG margins and future guidance - ISG margins improved significantly, driven by strong demand for Dell's IP storage portfolio and pricing discipline [67][70] Question: Traditional server demand and upgrade cycle - Management noted that a significant portion of the install base consists of older generation servers, presenting opportunities for modernization [76][77]

Financial Data and Key Metrics Changes - Petco reported a net sales decline of 3.1% with comparable sales down 2.2% due to the closure of 25 stores in 2024 and an additional 9 closures year-to-date, ending the quarter with 1,389 stores in the U.S. [17][18] - Gross margin expanded by approximately 75 basis points to 38.9%, driven by a disciplined approach to average unit retail and cost management [18][19] - Adjusted EBITDA increased by 21% or $17 million to $99 million, with an adjusted EBITDA margin expansion of nearly 140 basis points to 6.7% of sales [19] - Free cash flow for the quarter was $61 million, significantly above the prior year, with year-to-date cash flow from operations nearly doubling to $161 million [20][21] Business Line Data and Key Metrics Changes - The services segment continues to be the fastest-growing category, with improvements in staffing and appointment availability contributing to growth [10][11] - The company is focusing on enhancing the integration of services and store operations, which has historically been siloed, to improve customer experience and operational efficiency [13][14] Market Data and Key Metrics Changes - The overall pet industry has remained stable with flattish growth, while Petco's services business is already experiencing growth [71] - Consumer behavior has shown caution due to external economic factors such as tariffs and interest rates, impacting overall market sentiment [71] Company Strategy and Development Direction - Petco is in phase II of its transformation, focusing on improving profitability and preparing for a return to growth in phase III [7][15] - The company outlined four pillars to support its return to growth: product differentiation, trusted store experience, integrated services, and seamless omni-channel experience [8][15] - The company is strategically shifting resources towards growth initiatives while maintaining a disciplined approach to expense management [22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the progress made towards strengthening the economic model and improving profitability, with expectations for adjusted EBITDA to increase by approximately 18% year-over-year [21] - The impact of tariffs is expected to be more significant in Q4, but the company has managed to revise guidance upward despite these challenges [58] Other Important Information - The company is on track with its new membership program, which is expected to contribute to growth in 2026 [64] - Petco's cash balance at the end of the quarter was $237 million, with total liquidity of $733 million [21] Q&A Session Summary Question: Can you frame the mix of the business between wants and needs? - Management indicated that consumables are traditionally a needs business, but there are opportunities to create a perception of wants through new product offerings and merchandising strategies [26][27] Question: What is the realistic timeline for comparable sales stabilization? - Management refrained from providing specific timelines but indicated that all four pillars discussed are expected to contribute to comparable sales in 2026 [36][37] Question: How much of the Q3 working capital improvement is sustainable? - Management emphasized continuous improvement in cash flow generation, focusing on net earnings and inventory discipline as key levers [39] Question: Can you size the magnitude of potential investments necessary for top-line growth? - Management stated that while investments will be necessary, they do not anticipate substantial changes from current operational expenditures [45][46] Question: What impact did tariffs have during the quarter? - Management noted that Q3 was the first quarter where tariff impacts were felt in a meaningful way, primarily affecting private label supplies [58][59] Question: How do you see the integration of services and stores evolving? - Management highlighted that services are a key differentiator for Petco, and better integration with product offerings is expected to enhance customer engagement and sales [87][88]

Financial Data and Key Metrics Changes - The company reported a net sales decrease of 3.1% with comparable sales down 2.2% due to the closure of 25 stores in 2024 and an additional 9 closures year to date [16][17] - Gross margin expanded approximately 75 basis points to 38.9%, driven by a disciplined approach to pricing and promotional strategies [17][18] - Adjusted EBITDA increased by 21% or $17 million to $99 million, with an adjusted EBITDA margin expansion of nearly 140 basis points to 6.7% of sales [18] - Free cash flow for the quarter was $61 million, significantly above the prior year, with year-to-date cash flow from operations nearly doubling to $161 million [18][19] Business Line Data and Key Metrics Changes - The services business continues to be the fastest-growing category, with improvements in staffing and appointment availability [10][11] - The company is focusing on enhancing the integration of services and store operations, which has historically been siloed [12] - The new MyHuman product line was successfully expanded into over 200 stores, indicating a shift towards a wants-based business model [8][10] Market Data and Key Metrics Changes - The overall pet industry has been stable with flattish growth, while the company's services segment is already experiencing growth [41] - Consumer behavior has become more cautious due to external economic factors such as tariffs and interest rates [41] Company Strategy and Development Direction - The company is in phase two of its transformation, focusing on improving profitability and preparing for a return to growth [5][14] - Four pillars supporting the return to growth include product differentiation, trusted store experience, integrated services, and seamless omni-channel integration [6][14] - The company plans to invest selectively in areas that can drive improvements while maintaining a focus on margin expansion [20][32] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to return to sales growth in 2026, emphasizing the importance of the four pillars [14][55] - The impact of tariffs is expected to be more significant in Q4, but the company has managed to revise guidance upward despite these challenges [20][37] - The management team is focused on building a strong foundation for future growth while continuing to improve cash flow and profitability [21][32] Other Important Information - The company ended the quarter with a cash balance of $237 million and total liquidity of $733 million [19] - The Petco Love Foundation has committed to improving animal welfare, having found homes for over 7 million pets [15] Q&A Session Summary Question: Can you frame the mix of the business as wants versus needs today? - The majority of the business is traditionally needs-based, but there are opportunities to create a more wants-based perception through new product offerings [23][24] Question: What is the realistic timeline for comp stabilization? - Management expects all four pillars to contribute towards comp stabilization in 2026, with more details to be provided in March [27][28] Question: How do you think about prioritizing the usage of cash? - The first priority is to invest in the business for sustained growth, followed by reducing leverage on an absolute basis [42][44] Question: Can you quantify the impact of moving away from less profitable sales? - The focus has been on expanding margins and building a strong foundation for future sales growth, with EBITDA market share growing despite sales declines [51][52] Question: What is the expected impact of tariffs on COGS? - The third quarter saw the first meaningful impact of tariffs on COGS, with expectations for a more significant impact in Q4 [36][37]

Financial Data and Key Metrics Changes - The company reported record quarterly revenue of $108.5 million, exceeding the high end of the guidance range and representing a 31.2% year-over-year increase [6][16] - Non-GAAP gross margin for Q3 was 60.9%, slightly above the midpoint of the prior guidance range [16] - Non-GAAP net profit was $11.9 million, or $0.27 per diluted share [17] Business Line Data and Key Metrics Changes - Edge AI revenue constituted about 80% of total revenue, marking the sixth consecutive quarter of record edge AI revenue [6] - Automotive revenue increased in the low single digits, while IoT revenue grew in the mid-teens, driven by the adoption of edge AI in enterprise security and portable video applications [16] Market Data and Key Metrics Changes - The company anticipates a large edge serviceable available market of $12.9 billion by fiscal year 2031, indicating significant growth potential in the edge AI market [15] - The portable video market is experiencing a resurgence, contributing significantly to growth, with new product launches from customers like Insta360 [12][23] Company Strategy and Development Direction - The company is committed to expanding its edge AI technology and product offerings, focusing on applications in enterprise security, automotive safety, smart home, and portable video markets [7][8] - The strategy includes increasing average selling prices (ASP) through advanced technology and product differentiation, with a blended ASP increase of about 20% year-over-year [10] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the edge AI opportunity, citing increasing demand across various applications and a strong product roadmap [6][7] - The company is focused on maintaining R&D investments to solidify its leadership position in the edge AI market [15] Other Important Information - The company announced that co-founder and CEO Les Kohn will step down from the board to become chief technology advisor, continuing to oversee technology direction [5] - Cash and marketable securities reached $295.3 million, reflecting strong operating cash flow associated with increased revenue [17] Q&A Session Summary Question: What is the contribution of unit growth versus ASP in the projected 36-38% growth for fiscal 2026? - Management indicated that both unit growth and ASP growth contribute equally to the overall growth [21][22] Question: Can you provide more details on the portable video market? - The company highlighted various product lines within the portable video market, including action cameras and drones, indicating strong growth momentum [23] Question: How is the consumer versus enterprise split in the edge AI market? - The split is roughly 50/50 between enterprise CapEx-driven and consumer markets, with different types of consumer spending impacting volatility [25] Question: What are the expectations for gross margin in the upcoming quarters? - Management noted that gross margin will depend on the contribution from high-volume customers, with a long-term target of 59-62% [26][43] Question: What is the outlook for the automotive market? - The company remains committed to the automotive market, engaging with multiple OEMs for autonomous driving applications [41]

Financial Data and Key Metrics Changes - Workday reported a 15% growth in subscription revenue, totaling $2.244 billion for Q3 2026, with total revenue reaching $2.432 billion, reflecting a 13% increase [17] - Non-GAAP operating margin stood at 28.5%, with non-GAAP operating income of $692 million [18] - The 12-month subscription revenue backlog (CRPO) increased by 17.6% to $8.21 billion, while total subscription revenue backlog rose 17% to $25.96 billion [18] Business Line Data and Key Metrics Changes - The Human Capital Management (HCM) segment saw new customer additions, including Sunnybrook Health Sciences Center and Fuji Electric, contributing to strong full-suite adoption [6] - More than 75% of core customers are utilizing Workday Illuminate AI, with over 1 billion AI actions executed on the platform this year [7] - AI products contributed over 1.5 points to Annual Recurring Revenue (ARR) growth in Q3 [8] Market Data and Key Metrics Changes - Healthcare became the sixth industry to exceed $1 billion in ARR, with significant wins including Arden Health and Northeast Georgia Medical Center [9] - International revenue totaled $607 million, up 13%, with strong performances across EMEA, APAC, and Japan [17][15] - The U.S. revenue for Q3 was $1.825 billion, reflecting a 12% increase [17] Company Strategy and Development Direction - Workday aims to enhance its AI capabilities through strategic acquisitions, including the recent acquisition of Sana, which will improve user experience and AI integration [12] - The company is focused on expanding into new markets, including the Middle East and India, while also investing in medium enterprises [18] - Workday's vision is to unify HR and finance processes on a single platform, leveraging AI to drive better decision-making and operational efficiency [5] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the business momentum and the ability to achieve financial targets, with a subscription revenue growth forecast of approximately 14% for FY26 [20] - The company anticipates continued growth in AI-driven solutions, with expectations for a subscription revenue CAGR of 12%-15% through FY28 [22] - Management acknowledged some impacts from fiscal funding in the public sector but emphasized strong execution across the portfolio [20] Other Important Information - Workday's operating cash flow for Q3 was $588 million, a 45% increase, and the company ended the quarter with $6.8 billion in cash and marketable securities [18] - The company plans to repurchase an additional $3.6 billion in shares, totaling $5 billion in buybacks [19] Q&A Session Summary Question: Feedback on venture-backed vibe-coding startups - Management noted that while there are challenges with operationalizing these solutions, customers are returning to trusted vendors like Workday for reliable data and security [27][28] Question: Mechanisms to maintain ACV with customers facing layoffs - Management highlighted that customer headcount is still growing year-over-year, and they are focused on selling additional solutions to existing customers to offset any potential impacts from layoffs [30] Question: Early success with AI solutions - Management reported that AI solutions are contributing significantly to ARR growth, with 75% of new sales including AI products [32][33] Question: Feedback on Paradox and Sana acquisitions - Early feedback from customers has been very positive, indicating strong demand for both AI solutions and the integration of these acquisitions into the Workday ecosystem [36][38] Question: International growth performance - Management expressed satisfaction with international performance across EMEA, APAC, and Japan, attributing success to product localization and strong partner networks [60][61]

Financial Data and Key Metrics Changes - In Q1, annual recurring revenue (ARR) growth accelerated to 26% year over year, with ARR reaching over $3.2 billion [5][18] - Remaining performance obligation (RPO) grew approximately 35% year over year to $5.9 billion [19] - Q1 revenue was $788 million, growing 26% year over year and exceeding guidance [18] - Gross margin was 79.9%, slightly down from 80.6% in the previous year [19] - Operating margin was 21.8%, with a free cash flow margin of 52% [20] Business Line Data and Key Metrics Changes - AI Security pillar grew over 80% year over year, exceeding the FY26 target of $400 million ARR three quarters early [6][12] - Data Security Everywhere ARR accelerated to approximately $450 million [16] - Zero Trust Everywhere achieved over 450 enterprise customers, surpassing the goal set three quarters ahead of schedule [13] Market Data and Key Metrics Changes - The Americas accounted for 58% of revenue, EMEA for 27%, and APJ for 15% [18] - The company is one of only five enterprise SaaS companies with over $3 billion in ARR growing at over 25% [5] Company Strategy and Development Direction - The company focuses on three growth pillars: AI Security, Zero Trust Everywhere, and Data Security Everywhere, which are driving strong top-line performance [5][12] - The introduction of the Zflex program is aimed at providing customers with flexibility and driving upsells [16][53] - The company is positioned to exceed $10 billion in ARR by leveraging its leadership in Zero Trust security and comprehensive AI security offerings [18] Management's Comments on Operating Environment and Future Outlook - Management noted that while IT budgets remain tight, there is less pressure on cybersecurity spending, with strong interest in Zero Trust and AI Security solutions [32][34] - The company expects to continue investing aggressively to position itself for long-term growth and profitability [21] Other Important Information - The company announced a leadership transition in Investor Relations, with Kim Watkins joining to lead the team [3] - The acquisition of Red Canary is expected to enhance the company's threat intelligence capabilities [39] Q&A Session Summary Question: About Zero Trust Branch and its adoption - Management indicated that Zero Trust Branch technology is in great shape, with significant demand and a growing customer base [23][24] Question: Growth of the $2 billion ARR segment - Management confirmed that a significant portion of the $2 billion ARR comes from ZIA and ZPA, with a focus on transitioning customers to Zero Trust Everywhere [25][26] Question: Performance of Red Canary - Integration of Red Canary is progressing well, with contributions trending slightly better than previous guidance, though not material to overall business [27][28] Question: Drivers of revenue strength - Management highlighted that all three growth pillars are accelerating, contributing to strong overall performance [29][30] Question: Competitive landscape - The competitive landscape remains stable, with the company's brand recognition growing among large enterprises [31] Question: Customer spending priorities for 2026 - Customers are prioritizing Zero Trust Security and AI Security, with a focus on cost savings and improved cybersecurity [32][34] Question: Demand for Zero Trust Gateway - Management noted that Zero Trust Cloud simplifies deployments and reduces the need for traditional firewalls, enhancing customer buy-in [44][45] Question: SAP RISE migration opportunity - The migration to SAP RISE is expected to provide significant opportunities for the company, similar to past migrations like Microsoft Exchange to Office 365 [50][51] Question: Zflex program impact - Zflex is gaining traction, providing customers with flexibility and longer-term visibility on future ARR [52][53]