Earnings Bytes

"Firstly, we secured underwriting commitments for $3.6 billion of GPU financing at an interest rate of less than 6%. Together with customer prepayments, this provides funding coverage for approximately 95% of the GPU-related CapEx, supporting our $9.7 billion AI contract with Microsoft. Importantly, this financing package provides greater clarity to also advance a broader set of customer discussions."

"Operationally, execution is tracking well across the portfolio, and we expect to deliver 140,000 GPUs by the end of 2026, positioning us to deliver $3.4 billion in annualized run rate revenue. Based on capacity already contracted and the strong customer engagement for new deployments in Mackenzie and Canal Flats, we're on track to reach our targeted $3.4 billion ARR by the end of 2026."

"But to, to be clear on this, guys, like, crystal clear, the 2,000 MW is secure. Like, none of this batch stuff, none of the market chatter is influencing whether or not this 2,000 MW is available. We've got the signed interconnection agreement. It was signed in 2023. It's been there for years."

"When you've got scarcity around how many data centers you can physically bring online, every incremental 200 MW can deliver either $300 million-ish through a colocation or multiples of that in the $ billions under a cloud contract. So when we look at the monetization opportunity for our platform and growth for shareholders in creating value, the cloud opportunity creates a lot more upside, as we see it."

"Our $3.4 billion ARR target for the end of calendar 2026 reflects utilization of only around 10% of our 4.5 GW of secured grid-connected power capacity. That means the vast majority of our portfolio remains available to support additional deployments. With demand continuing to build, that secured capacity gives us the ability to keep engaging customers on new large-scale opportunities and to extend growth well beyond the 2026 target."

"As Dan mentioned, we've secured a new 1.6 GW data center campus in Oklahoma, further strengthening what is already one of the most differentiated power portfolios in the sector. The 2,000-acre Oklahoma site is a strong addition, with low latency connectivity to major network exchanges and ramp schedule commencing in 2028. As with Sweetwater, the MW for this new site in Oklahoma have been secured, which enables commercial discussions to progress meaningfully, anchored on firm, deliverable capacity."

"But, you know, one of the knocks on GPU cloud was the capital intensity of GPUs. So with the announcement today of the GPU financing, we've now secured 95% of the cost of the GPUs at an average interest rate of around 3% when you factor into the prepayment. So we essentially got the GPUs for next to nothing."

"If you think of A100s, H100s, you know, those are more than 5 years old and more than 3 years old, respectively now. Now, those chips are still effectively 100% utilized across the industry, and still earning very good rates of return against their original capital costs. So we continue to believe that these chips will have a long, economically useful lifetime, you know, in excess of the contract lengths that we're signing, even the Microsoft one at five years."

"Financial year to date, we have now secured $9.2 billion from customer prepayments, convertible notes, including the $2.3 billion issued in December, GPU leasing arrangements, and the dedicated GPU financing for the Microsoft contract. This diversity of capital sources allows us to scale with confidence."

"Vertical integration is one of IREN's most important competitive advantages. We design, build, and operate our own data centers, supported by in-house engineering, procurement, construction, technology, and operations teams. This structure gives us direct end-to-end control of our cloud offering and the ability to manage cost, timelines, and service quality."

"Sales of our glasses more than tripled last year, and we think that they're some of the fastest growing consumer electronics in history. Billions of people wear glasses or contacts for vision correction. I think that we're at a moment similar to when smartphones arrived, and it was clearly only a matter of time until all those flip phones became smartphones. It's hard to imagine a world in several years where most glasses that people wear aren't AI glasses."

"Since the beginning of 2025, we've seen a 30% increase in output per engineer, with the majority of that growth coming from the adoption of agentic coding, which saw a big jump in Q4. We’re seeing even stronger gains with power users of AI coding tools, whose output has increased 80% year-over-year. We expect this growth to accelerate through the next half."

"We anticipate 2026 capital expenditures, including principal payments on finance leases, to be in the range of $115-135 billion, with year-over-year growth driven by increased investment to support our Meta Superintelligence Labs efforts and core business. Despite the meaningful step up in infrastructure investment, in 2026 we expect to deliver operating income that is above 2025 operating income."

"For Reality Labs, we're directing most of our investment towards glasses and wearables going forward, while focusing on making Horizon a massive success on mobile and making VR a profitable ecosystem over the coming years. I expect Reality Labs losses this year to be similar to last year, and this will likely be the peak as we start to gradually reduce our losses going forward while continuing to execute on our vision."

"In the second half of 2025, our initiatives on Facebook to redistribute ads across users and sessions delivered a nearly 4x larger revenue impact than Facebook ad load increases. In Q4, we launched a new run-time model across Instagram Feed, Stories, and Reels, resulting in a 3% increase in conversion rates in Q4."

"We are now seeing a major AI acceleration. I expect 2026 to be a year where this wave accelerates even further on several fronts. We're starting to see agents really work. This will unlock the ability to build completely new products and transform how we work."

"Q4 total revenue was $59.9 billion, up 24% or 23% on a constant currency basis. Q4 Family of Apps ad revenue was $58.1 billion, up 24% or 23% on a constant currency basis. In Q4, the total number of ad impressions served across our services increased 18%. The average price per ad increased 6% year-over-year, benefiting from increased advertiser demand, largely driven by improved ad performance."

"I guess it’s probably also worth flagging because I don’t think either of us mentioned the Manus acquisition in the upfront comments, I mean that is going to -- is a good example of -- you have a significant number of businesses that already pay a subscription to basically use their tool to accelerate their business results and integrating that kind of thing into our ads and business manager, so that way we can just offer more integrated solutions for the many, many millions of businesses that use and rely on our platforms is going to be really powerful."

"One area we’re already seeing promise is with AI dubbing of videos into local languages. We are now supporting nine different languages, with hundreds of millions of people watching AI translated videos every day. This is already driving incremental time spent on Instagram and we plan to launch support for more languages over the course of this year."

"We do continue to be capacity constrained. Our teams have done a great job ramping up our infrastructure through the course of 2025. But demands for compute resources across the company have increased even faster than our supply. So we expect over the course of 2026 to have significantly more capacity this year as we add cloud. But we’ll likely still be constrained through much of 2026 until additional capacity from our own facilities comes online later in the year."

"We aligned in December 2025 with the European Commission on further changes to our consent model for personalized ads in Europe. So, in the coming days, users in Europe will see the changes to the less personalized ads user flow. We continue to think that our aligned solution goes far above and beyond what’s required by the DMA, and our appeal of the Commission’s decision will continue in the courts. And with this said, we can’t rule out that regulatory authorities or courts could seek further modifications to our less personalized ads offering. So, if that were to be the case, it’s possible that those changes could result in a materially worse user experience in the European Economic Area in Switzerland."

"We don’t manage to a target margin. We believe that we are in a very fortunate position as a business to both have very strong revenue growth and just healthy business overall coming into 2026, seeing strong revenue growth. And also, fortunate to have a lot of very compelling opportunities to both build what we believe is going to be transformative technology, but also user products and experiences that we believe over the long run will be not only very cool technological experiences, but also good business opportunities. So, we’re reinvesting a lot of the revenue into these opportunities now. Again, I think I mentioned this on the call, but they’re primarily in the form of either AI infrastructure or talent."

"Having said that, we have come into 2026 to date against a very healthy macro backdrop. I alluded to this on the first call, talking about how strong the holiday marketing season was. And we’ve seen the continued macro strength continue into the first weeks of 2026. We’ve also seen good results from the set of investments that we made in 2025, specifically to fund work to drive ad performance improvements and organic engagement initiatives."

"On engagement, video was the largest driver of engagement gains in Q4, with particular strength on Instagram, where Reels time grew more than 30% year-over-year globally. I’d also note that Facebook saw healthy double-digit growth in video time in Q4 as well. On ad load, the tailwinds that we had in Q4 were driven by the higher levels of ad load on both feed and video surfaces on Facebook and Instagram."

"In terms of where we are focused right now on driving down the cost of scaling compute, on silicon, that’s obviously one of the big cost drivers. We’re working to do that today through a variety of means, including diversifying our chip strategy so we can get the greatest cost efficiency for the workloads that we need to support. For example, we run a number of workloads with different requirements for compute, memory, and networking. And we’re focused on deploying the optimal chips for each of those workloads to deliver the best performance per watt and total cost of ownership. And we’re also continuing to expand our MTIA custom silicon program to support our core ranking and recommendation inference and training workloads."

"I'm pleased to report that Cadence delivered excellent results for the fourth quarter, closing an outstanding 2025 with 14% revenue growth and 45% operating margin for the year. We finished 2025 with a record backlog of $7.8 billion, well ahead of plan, reflecting broad-based portfolio strength and increasing contributions from our AI solutions."

"Last week, we launched ChipStack AI Super Agent, the world's first agentic AI solution for automating chip design and verification. It's built upon our proven, physically accurate product and provides up to 10x productivity improvement for various tasks, including design coding, generating test benches, and debugging. ChipStack has received compelling endorsements from Qualcomm, NVIDIA, Altera, and Tenstorrent, among others."

"So what we are saying instead is that, and you can see that in our results, we can see this in our discussion with customers, is that as we move to these agentic flows, it uses more of our software to get the job done rather than the other way around. Overall, to answer your question, we have seen absolutely no discussion with customers of reducing the usage. On the contrary, you know, all these AI tools are increasing the usage of our tools."

"Broad proliferation of Cadence Cerebrus continues, and adoption of our Cadence Cerebrus AI Studio is accelerating. Recently, Samsung US used it to tape out a SF2 design, achieving 4x productivity improvement. In custom and analog, our Spectre circuit simulator saw significant growth at leading AI and memory companies."

"We finished the year with very strong momentum on backlog, and we saw that strength right across the board, across all lines of business. And just a key transparency metric, you'll see in the CFO commentary that around 67% of 2026 revenue is coming from beginning backlog, and that gives us strong visibility into the multi-year recurring base."

"Our IP business saw strong momentum, with revenue growing nearly 25% in 2025, reflecting both the strength of our expanding IP portfolio and the critical role our star IP solutions play in the AI, HPC, and automotive verticals. We are seeing particularly strong adoption of our industry-leading memory IP solutions, including our groundbreaking LPDDR6 memory IP, which is enabling customers to achieve the memory performance and efficiency required for next generation AI workloads."

"The way we go to market with agentic AI will be different because this is a new tool category of something that EDA never automated. We will price it as like a virtual engineer or agent. So that would be, you know, extra business, and our customers are willing to spend on that because it is a, it is productivity improvement for them."

"And, and I've said before, like, what we are seeing at our customers, you know, they want to use more AI, and, and I think they will all, they will invest more in R&D. I think they will also hire more engineers, but as a percentage of spend, the more spend will go to automation and compute because the other thing which is unique to our end market is that the workload is exponential. If the chip goes from 100 billion now to 1 trillion in a few years, they need to do a lot more work, and then some of the work will be done by AI agents, you know, calling our base tool."

"I think, if you have a look at what we achieved in 2025, we achieved incremental margin of 59%, I think. And I think that points to the fact that there's no near-term ceiling on operating leverage for the company. Now, generally, you know, we're more prudent with our guide at the start of the year, and we try to build from there. But, so I think if you, if you compare the... The right compare for the 51% that's in the current guide is probably against what we would guide for incremental margin at the start of each year."

"We delivered a strong Q2, fueled by robust demand for cybersecurity and continued execution against our platformization strategy. This led to strong organic results in Q2, with NGSRR up 28% and revenue growth of 15%, excluding the impact of recently closed Chronosphere."

"In Q2, we delivered approximately 110 net new Platformizations, a quarterly record outside of our seasonally strong Q4. This brings our total Platformization count to approximately 1,550, up 35%. The success of this strategy is also reflected in our best-in-class net retention rate amongst platformized customers, which stands at 119% with low single-digit churn."

"We launched this platform just a few quarters ago, and its adoption has been remarkably strong. From Q1 to Q2, we more than tripled our customer count to over 100. While bookings also doubled during the same period, with a nine-figure pipeline already materializing, it's clear the market has been waiting for a comprehensive platform to secure AI."

"In Q2, XSIAM surpassed the $500 million ARR milestone. We welcomed almost 150 new customers, bringing our total base to over 600, paying an average of nearly $1 million in ARR. But the key story here remains not just the growth, it's the outcomes. Over 60% of our deployed customers are now achieving mean time remediation of less than 10 minutes, a profound shift from the days or weeks they measured before."

"I'm still, you know, confused why the market is treating AI as a threat to at least cybersecurity, and I can't speak for all the software. Because one thing we're definitely seeing, that customers have figured out, that they need to drive more consistency in their security stack to be able to respond faster using AI. You cannot respond fast if you've got seven different vendors who have different data, different logs, different APIs running."

"Koi will enhance our endpoint capabilities within XDR 2.0, while also becoming an integrated part of our universal AI security platform, extending security and governance to autonomous agents at the device layer. We are witnessing a dramatic shift in how software lives on the endpoint. Traditional security tools are often blind to the new AI layer of software."

"During Q2, and after we closed the Chronosphere acquisition, we signed a multi-year, nine-figure expansion deal with a leading AI model provider, a testament to Chronosphere's ability to scale in the largest and most complex environments. The momentum is clear in the numbers, with the company generating approximately $200 million in ARR as of Q2, well above our expectations."

"We delivered our third consecutive quarter of 30%+ operating margins, with Q2 operating margin of 30.3%, a 190 basis point expansion versus Q2 of last year. This strong expansion reflects our ability to drive consistent scale and efficiency across all OPEX line items. Our diluted non-GAAP EPS reached $1.03, which once again came in above the high end of our guidance."

"Despite the current sentiment about AI and software, we firmly believe that security is an enabling layer that allows innovation to move forward safely and at scale. As the AI agents become autonomous employees, the old security playbook is not just slow, it's obsolete. Security must operate in real time at the critical control points where decisions are made across network, endpoint, cloud, browser, and identity."

"Finally, we remain focused on where the market is going, and that includes preparing our customers for the post-quantum era. The threat is already here. Adversaries are using a harvest now, decrypt later strategy, stealing encrypted data today to break in the future. We're seeing this become a C-level priority in our early customer conversations, and the broad interest in this topic was confirmed by nearly 5,000 attendees at our Quantum Summit last month."

"Purple AI growth continues to exceed our expectations and achieve the record attach rate that surpassed 40% of licenses sold in Q3. Purple's growth is being driven by strong adoption from both new customers and existing customers. It's becoming a cornerstone of modern security operations, enabling analysts to automate investigations, accelerate detection, and strengthen response."

"Q3 was also a standout quarter for data solutions. Bookings growth accelerated to triple digits year over year, and we're seeing growing demand for our AI SIEM solution. We're delivering an industry-leading AI-native security data analytics offering that delivers deeper visibility, real-time detection, faster investigations, and autonomous response, all with more efficient economics and lower costs for customers."

"Observo delivers an AI-native real-time telemetry pipeline that ingests, enriches, summarizes, and routes data across the enterprise before it ever reaches a SIEM or a security data lake. Importantly, Observo gives us ownership of the data pipeline that powers modern security operations. This lets us manage the entire flow of security data, from ingestion and retention to analytics and response, all within a single unified platform."

"I'm excited to share that Q3 also marks an inflection point for sustainable quarterly free cash flow margin. We achieved a free cash flow margin of 6% in Q3 and remain firmly on track to deliver our second consecutive full year of positive free cash flow margin, another key milestone that underscores our path toward profitable growth."

"For Fiscal Year 2026, we expect revenue to be approximately $1 billion and $1 million, representing 22% year-over-year growth and increasing the midpoint of our prior guidance range by $1 million. As always, we continue to monitor the macro environment, which can influence deal timing and sales cycles."

"I think you're going to have to talk to them. I mean, we still have quite a lot of licenses going with all of our partners. And at the same time, this quarter specifically, we doubled down in a very significant way with two of our biggest partners with multi-year commitments. So we have not seen any meaningful disruption from whatever competitor that is. Our partner ecosystem is incredibly robust."

"SentinelOne Flex, there's just a lot of momentum as customers adopt the Singularity Platform in a more dynamic fashion. And it's still early for us, but Flex is already helping us secure larger multi-solution deals and longer-term customer commitments. I think you see some of that true acceleration of RPO, as an example."

"You're absolutely reading too much into it. I don't think there was any intent to signal anything. And we'll continue down the same path that we've been executing towards in the past couple of years. I mean, you're seeing us consistently expand operating margin year over year. And that's going to continue into next year as well."

"Agentic AI is something where to do it effectively, the same things are happening, the same trends are happening. You have agents that are within the application stack. You have agents that are now orchestrating across multiple stacks. You have agents that are going to be independent of a given stack. And with that principle, it's the same thing that happened, you know, a decade ago with identity with users and the best of breed happening."

"The first thing is keeping in mind that 98% of our revenue is recurring. So revenue for us is largely a backward-looking metric, while RPO and CRPO are forward-looking. So ultimately we continue to guide, you know, you and our investors, to CRPO because that's the best metric we can provide to give you a window into what our future subscription revenue will look like."

"Our IGA product has done exceptionally well through the market for a couple of years. It's been a material part of our new product contribution as a company. We're very pleased with that. That's been a really good cross-sell opportunity for us into our installed base of 20,000 customers. Right behind that would be privileged access."

"You need to have a neutral and independent identity vendor positioned to support the agents so they can actually, you know, deliver on the promise they have of providing that value beyond just like a given application stack. So we see that playing out over again. We've seen this before. We feel we're well positioned for the adoption and securing agents."

"One of the things we have introduced recently that I, you know, I think hits on your point here is something that we're calling workforce product suites. So that's kind of a, you know, what's the right word, like a bundling essentially of different tools at different levels for companies based where they, for them based on where they are in their identity journey. So kind of you can think of it as a good, better, best."

"Right behind that would be privileged access. Privileged access is probably, you know, in terms of maturity, in terms of nuance and deployment, it's behind the governance one, but we're very excited about how those two are now, you know, have gone from development to actually being, having meaningful contribution to our business going forward."

"Many people ask why our valuation has not kept pace with our results. The short answer is that we have been viewed as a feature-oriented SaaS company. We are not living in a SaaS neighborhood. We are a platform company executing a long-term platform strategy where AI agents and workflows are harmonious and synonymous, creating sustained advantage, not short-term wins."

"Now Assist NNA CV outperformed expectations in Q4 and surpassed $600 million in ACV. In Q4, Now Assist NNA CV more than doubled year-over-year. We had 35 deals over $1 million in Q4 alone. Our AI Control Tower deal volume nearly tripled quarter-over-quarter in Q4."

"The speculation of AI will eat software companies is out there. Let's clear it up with the facts. Enterprise AI will be the largest driver of return on the multi-trillion-dollar super cycle of investment in AI infrastructure. The real payoff comes when trillions of tokens move beyond pilots to be embedded directly into the workflows where business decisions are made. ServiceNow is the gateway to this shift, serving as the semantic layer that makes AI ubiquitous in the enterprise."

"We expect an operating margin of 32%, up 100 basis points year-over-year, driven by OpEx savings enabled by AI efficiencies. We expect free cash flow margin of 36%, up 100 basis points year-over-year, and 350 basis points ahead of our target that we gave at Financial Analyst Day in May. This is driven by significant operational leverage and further opportunities to reduce CapEx."

"Post-Moveworks, we do not see any other large white spaces that are necessary to complete our platform vision to security. ServiceNow's organic growth strategy with opportunistic tuck-ins for tech and talent remains unchanged. AI, data, workflows, security. We are one of the few companies totally in control of our own destiny."

"That's why we're announcing an incremental $5 billion share repurchase authorization with an immediate ASR of $2 billion. Here's another fact. ServiceNow has one unifying objective, which is simply to be the AI-defining enterprise software company of the 21st century."

"We closed a $1 million+ Assist Pack deal with a leading U.S. consumer services company after customer service agents generated a 400% ROI. After a year of deployment, the customer needed 8 times more assists as they transitioned customer support operations to predominantly automated interactions. They are flipping the support model from 80% human-led, 20% automated, to 80% automated and 20% human-led."

"ServiceNow and Microsoft have announced a deep AI integration, connecting copilots, agents, and data across Microsoft 365 and the ServiceNow AI platform to deliver seamless orchestration, governance, and enterprise-wide automation. ServiceNow and Anthropic have announced an expanded partnership to integrate Claude models more deeply into the ServiceNow AI platform."

"We accelerated net new customer adds in 2025 to end the year with over 8,800 customers, including 603, generating over $5 million in ACV. Even more impressive, the number of customers contributing $20 million or more rose over 30% year-over-year. These trends reflect the resilient strength in our core, accompanied by increasing momentum in our emerging growth sectors."

"Twilio had a great Q4 as we reached record heights with $1.4 billion in revenue, $256 million of non-GAAP income from operations, and $256 million in free cash flow. For the full year, we generated $5.1 billion in revenue, $924 million of non-GAAP income from operations, and $945 million of free cash flow. Our strong fourth quarter capped off what I believe is one of the most balanced and successful years of execution in our company's history."

"Voice finished the year strong as revenue growth accelerated to the high teens in Q4, its best growth rate since 2022. This was aided by strong growth from voice AI customers, as voice AI revenue growth accelerated above 60% year-over-year. Messaging revenue growth was also solid, driven in part by strong volumes during cyber week and the holiday season."

"Our go-to-market motion is firing on all cylinders. In Q4, we saw particular strength in self-serve as revenue grew 28% year-over-year, led by accelerating voice revenue growth. ISVs were also a bright spot, with revenue growing 26% year-over-year. In Q4, the number of large deals closed of $500,000 or more increased 36% year-over-year."

"Our full-year revenue guidance assumes approximately $190 million in incremental pass-through revenue from these fees. While the pass-through fees have no impact on our ability to generate gross profit, income from operations, or free cash flow dollars, they do impact our margin rates. For modeling purposes, we would expect the incremental fees to reduce our full year 2026 non-GAAP gross margin by roughly 170 basis points, all else equal."

"Thomas alluded to the growth that we've seen in ISVs, Aidan did too. You know, so you have kind of two ends of the spectrum that are experiencing really rapid growth, and that is almost entirely, I would say, a technology story. Like, customers would not buy the higher priced product, which we are in almost all cases, unless they were getting superior ROI."

"While still early days, during Q4, Twilio's Branded Calling revenue grew roughly 6x year-over-year. RCS continued to gain traction as volume grew roughly 5x quarter-over-quarter. Ramp, a leading financial operations company, signed a deal to leverage RCS as the branded messaging experience to power account notifications and two-way capabilities, such as adding a purchase reason or sending a receipt."

"For the full year, we generated revenue of $5.1 billion, representing 14% reported growth and 13% organic growth. We also delivered strong profitability, with non-GAAP income from operations increasing 29% year-over-year to $924 million. Free cash flow was up 44% year-over-year to $945 million. And finally, we generated $158 million in GAAP income from operations, marking our first full year of GAAP profitability."

"While our 2027 non-GAAP operating margin target did not account for the recent fee increases initiated by all major U.S. carriers, absent fees, we are on track to meet or exceed the financial framework we provided last year. As an alternative, we are providing a 2027 non-GAAP operating income target of at least $1.23 billion, which is unaffected by carrier fees and aligns with the high end of our Investor Day framework."

"We generated free cash flow of $256 million in the quarter. Additionally, we completed $198 million in share repurchases in Q4. For the full year, we completed $855 million in share repurchases, representing 90% of 2025 free cash flow, well above the 50% target established at our 2025 Investor Day."

"Our innovation strategy and execution continued to be validated by industry analysts. Throughout the year, we were recognized as a leader in major evaluations by Gartner, IDC, and Omdia, and ended the year by being named the company to beat in CPaaS AI by Gartner. They noted, 'Twilio's combination of omni-channel communications, contextual data, AI frameworks, developer base, and technology partnerships makes it the company to beat in CPaaS AI.'"