Table of Contents
a. Demand
Beat revenue estimate by 2.3% & beat guidance by 2.5%.
For the full year, revenue rose by 25% Y/Y or 20% Y/Y organic growth (ex-Red Canary).
Beat ARR estimate by 0.7% & beat guidance by 0.8%.
Red Canary M&A contributed $141M in net new ARR compared to $137M expected. Without this small bit of unexpected inorganic help, ARR would have been 0.6% ahead.
Excluding Red Canary, net new ARR was around $232M, marking 17% Y/Y growth (24% growth including it). This compares to 10% during the first half of the year.
Excluding Red Canary, ARR rose by 20% Y/Y.
Beat remaining performance obligation (RPO) estimate by 2.2%.
Net revenue retention (NRR) remained around 115%.
b. Profits
GPM expansion was helped by lapping a large, one-time private cloud expense tied to a government deployment.
Beat EBIT estimate by 5.5% & beat guidance by 5.6%.
Beat FCF estimate by 20%.
Beat $1.09 EPS estimate by $0.10.
CapEx was 8% of annual revenue vs. 6% Y/Y. They accelerated some component purchases amid memory, chip and storage inflation. They think it will “remain elevated” throughout fiscal year 2027. To fund some of this and “provide additional capacity to support AI growth,” they’re laying off 3% of employees.
c. Balance Sheet
$3.5B cash & equivalents.
$1.7B convertible senior notes (a type of debt).
3.5% dilution.
d. New Annual Guidance & Valuation
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