Enterprise Software

Security Software
Vertical Software

Dilli Dilli 1/11/2025 - These Violent "Dilli"-ites Have January 12, 2025
Violent Ends

The Wolfe Byte

Our "Dilli Dilli" note details the most salient takeaways from our conversations
across the Software ecosystem. This week we recap checks on TEAM, NOW,
HUBS, DDOG, DAY, PCTY, PANW, CYBR, CRWD, and VRNS, in addition to some
CIO, VC, and private market commentary.
This report is intended for Sudesh Vasudevan. Unauthorized redistribution of this report is prohibited.

Key Thoughts. While the calendar has flipped from 2024 to 2025, we aren't quite
done with 2024! In our 4Q Dilli Delight, we spent the opening few weeks of the year
connecting with contacts across our ecosystem to get a feel for how 2024 closed
Alex Zukin
and for expectations on how 2025 will go. Broadly speaking, 4Q sounded strong
[email protected]
for our space with checks specifically calling out a post-election spending spree (415) 878-6420
and a December budget flush as catalysts. Not only did 2024 end strong, we got a View Alex’s Research
View Comp Table
feeling of incremental optimism around budgets and spending for 2025 driven by a
potentially better macro environment and AI spending. Before diving into the names, Joshua Tilton, CFA
[email protected]
we would note that consumption trends sound solid, private company's saw notably (415) 878-6430
better 4Qs and CIOs are meaningfully more optimistic around budget trends. Kicking View Joshua’s Research
things off with TEAM, checks sounded great, with partners noting a "surprisingly
Ryan Krieger
good" 4Q with mega-deals, premium to enterprise expansions, impending DC price [email protected]
(646) 582-9307
increases and Rovo traction. NOW checks weren't far behind, as partners called out
a $50m upsell and $200m fed deal as fins spending appears extremely healthy, Arsenije Matovic
[email protected]
linearity was better, NOW Assist is seeing adoption and a new flatter sales re-org (646) 582-9334
has the partners excited! On HUBS, 4Q sounded not just better, but notably so,
and the common theme was more large deals with general enthusiasm heading into
2025. Shifting to consumption, our DDOG checks noted positive momentum with a
number of 8-figure deals and some interesting OpenAI commentary. On payroll,
DAY sounded best with strength driven by their differentiated and robust global
functionality and a renewed focus upmarket. Alongside DAY, PCTY and Rippling
contributed the most deals for one partner (by a long shot) and the expectation is
that Paychex's acquisition of Paycor should positively impact PCTY. Turning to
Security Software, the Flush is strong (stronger than last 4Q with one check indicating
it was the best since 4Q22), with strong, broad-based demand across sub-sectors
and geographies. On PANW, the quarter was driven by SASE and firewall, as deals
that were paused last quarter have closed. We run through CYBR checks where EPM
helped drive a solid quarter and Venafi engagements increase, while CRWD checks
suggest the outage noise is dying down and VRNS continues to see friction moving
to SaaS. Don't sleep on the CIO, VC and Private Market commentary which can
sometimes be more impactful than actual company checks (but probably not this
time :))

This report is limited solely for Wolfe Research’s clients. Please see analyst certifications and important disclosures
beginning on page 11.
Please help us protect your advantage...
www.wolferesearch.com DO NOT FORWARD Page 1 of 13
 January 12, 2025

Investment Conclusion
This report is intended for Sudesh Vasudevan. Unauthorized redistribution of this report is prohibited.

Currently, our Wolfe All-SaaS, All-Security, and All-Vertical indexes trading at 6.8x, 6.8x, and 9.6x FY+2 EV/Sales,
respectively. The IGV has returned +1.3% YTD, outperforming the S&P 500 which is +1.0% YTD. From a multiple
perspective, the All-SaaS, All-Security, and All-Vertical saw week-over-week multiple compression of 1.16%, 0.26%,
and 1.00%, respectively. Note: returns and multiples are priced as of the end of the prior week.
While investors are concerned about rates and high consensus estimates, we see stabilizing rates, improving
fundamentals juiced with AI budgets, and increased M&A driving multiple expansion across the space. We expect
investors to turn their eye toward accelerating growth in 2025, upward estimate revisions for 2026, and identifying
the biggest secular winners from Generative AI.

Please help us protect your advantage...

www.wolferesearch.com DO NOT FORWARD Page 2 of 13
 January 12, 2025

Atlassian (TEAM)
Summary. Overall checks suggest TEAM had a solid quarter with particular strength in cloud momentum. Cloud
migrations continue to be driven by stable seat expansions with JSM remaining a bright spot, while partners are being
pushed more aggressively to focus on cloud, and Rovo is helping!

● Tale of the Quarter. The channel saw steady demand signals across regions with particular strength in premium
to enterprise expansions. While some service partners (especially larger US ones) continue to see headcount
reductions, the core licensing business remains strong with our checks beating internal targets. Cross-sell of JSM
This report is intended for Sudesh Vasudevan. Unauthorized redistribution of this report is prohibited.

continues to drive growth, and TEAM is increasingly focused on moving Align into the channel to drive expansion.
We heard of a megadeal renewal (multi-8 figure) where the TCV was increased by 2.5-3x. We also heard of
another (larger) megadeal in the pipeline.

● Cloud vs Datacenter. TEAM is more aggressively incentivizing cloud deals. Partner conversations indicate channel
partners may not receive discounts on datacenter deals/renewals, with Account Executives needing to provide
explanations on why datacenter renewals should not be moved to cloud. In the channel, partners note that getting
any datacenter deal approved requires significant justification, and in some cases AEs are being asked to provide
migration roadmaps for customers wanting datacenter deals. Notably, TEAM isn't allowing customers to re-
buy or renew early anymore - a notable shift from historical practices where customers could pull forward
renewals.

● Rovo / AI. Conversations around Rovo are heating up! We heard the team is delivering a better product and
iterating quickly. The go-to-market strategy is interesting – using Rovo capabilities as a lever to drive cloud sales.
When pitching to customers, the approach ties Rovo capabilities directly to cloud migration benefits. JSM appears
to be seeing the most immediate impact from Rovo integration. Notably, customers adopting Rovo can receive
significant discounts in their first year if purchased before 2025, suggesting a strong push to drive adoption.

● Price Increases. Recent price increases have not driven increased churn based on channel conversations. For data
center, TEAM is essentially forcing customers to make a choice within 3-5 years to either migrate to cloud or
face continuously escalating costs. Price increases are being structured so the cloud vs. data center comparison
becomes increasingly compelling. Reach out for details of impending pricing changes for DC.

● Management Changes. We heard of a significant hire from a security company that should be a meaningful
positive for the channel team.

Please help us protect your advantage...

www.wolferesearch.com DO NOT FORWARD Page 3 of 13
 January 12, 2025

ServiceNow (NOW)
Summary. Our NOW checks were once again very strong diven by large deal momentum, strong last ten days in
Americas, strength in the Middle East, finserv, manufacturing and AI SKUs. One partner put it best: "while cycles look
similar, deal sizes have notably increased while pipeline growth remains healthy". Partners are seeing customers getting
more comfortable with spending and AI initiatives are becoming board-level priorities.
● Tale of the Quarter. Checks described 4Q as a "great quarter" with meaningful large deal activity. Partners noted
a familiar pattern of starting slower but finishing strong compared to 3Q ("last days are really intense, but hey we
crush it"). Pipelines continue to be healthy and partners noted significant momentum heading into the new year.
This report is intended for Sudesh Vasudevan. Unauthorized redistribution of this report is prohibited.

From a demand perspective, there is a common theme of larger deals but similar sales cycles. We heard of mega-
deal expansions within telco, tech & gov. Large expansion activity was notably strong in finserv, manufacturing
and healthcare. Partners highlighted meaningful strength in Americas and Middle East. Commentary around Paul
Smith continues to be positive, with partners describing him as a strong relationship-seller who understands
the platform and keeps all teams aligned.

● Products. Multiple partners noted that as the gravity shifts towards the Workflow, NOW is extremely well
positioned to have strategic broad-based conversations. Multiple folks expressed VERY positive comments on the
new CPO Amit noting him as a true technologist with a deep product focus. Product strength was felt across the
board with CSM continuing to drive some of the largest deals and traction in SPM and Verticalized workflows.
NOW Assist adoption continues to build, with multiple partners noting better momentum and evidence of
utilization. We believe that similar to CRM and Data Cloud, for NOW, the RaptorDB upgrade-cycle will be pulled
by increasing sophistication of AI deployments. As one partner remarked "everyone will migrate to RaptorDB
over time, then you have RaptorDB pro and then pro plus, which is Workflow Data Fabric". Partners note
that platforms with structured data will win in AI, emphasizing NOW's advantage with their enterprise blueprint
positioning. Workflow Data Fabric, while early, could end the year being a key growth driver. Partners describe it
as a super SKU that combines analytics, integration hub, and advanced data capabilities. Notably, when some of
the Agentic functionality launches in March this SKU combination could lead to 40-60% ACV uplifts.

● Verticals. From a vertical perspective, finserv, TMT and healthcare were noted as consistently strong performers.
Manufacturing was mentioned as an area seeing increased conversations this year, particularly around ITSM
offerings. Partners highlighted that NOW's increased focus on manufacturing may be starting to pay off, as
this has been historically under-invested technology sector.

● Federal. On Fed, partners described the quarter as "firing on all cylinders" with significant momentum coming
from expansions and new logos. We asked questions about DOGE impacts in every check and the answer was
"folks don't seem to be worried about it internally". Employee Workflows was highlighted as a key driver behind
the strong quarter. Partners expect attach rates to grow meaningfully over the next 12 months as customers
recognize the value of GenAI capabilities and necessary workflows. Multiple checks said that govt. agencies are
increasingly recognizing that NOW's platform can scale to meet their requirements.

● Reorg. Partners view the January 8th reorganization as well-structured and thoughtfully executed. The
elevation of Erica to EVP of GTM received positive feedback, with partners noting her strong track record
running Global Alliances. The flattening of the sales org and more focused named account coverage appear
designed to drive deeper penetration while maintaining sales velocity. Commentary suggests minimal
disruption to the sales motion while potentially improving organizational agility.

Please help us protect your advantage...

www.wolferesearch.com DO NOT FORWARD Page 4 of 13
 January 12, 2025

HubSpot (HUBS)
Summary. Our checks were uniformally positive with a better quarter, with larger deals, a post election bump that led
to a very strong December, strong pipelines, and more enthusiasm heading into 2025.

● Tale of the Quarter. Across the board, checks pointed to a more positive 4Q when compared to 3Q, and a better
outlook/more enthusiasm going into 2025. Our check who is tilted toward upmarket customers indicated that
there was very little pressure in 4Q, and that very little discounting was required to get deals done. Specifically
our checks noted lots of big software deals, including multiple seven figure deals over 3 years. They noted seeing
This report is intended for Sudesh Vasudevan. Unauthorized redistribution of this report is prohibited.

lots of 100+ seat deals with Sales Hub being mentioned as a key driver. The notable comment was that this
partner was used to seeing 10k MRR deals but now 30k MRR deals are very common and many larger than that.
Partners also noted that while EMEA seemed slower, the "US was an absolute beast this year". Another partner
we spoke to noted a post-election bump with a number of quarter million ARR deals closing right after election
time and a very strong last week in December. "Deals weren't pushing into January, they were closing at the end
of December".

● Pricing Model Insights. Our international check who operates in the region where the pricing model changes were
tested said there was a lot of stress and anxiety early on in the process, but in general the migrations have gone
incredibly smoothly. The 5% pricing increase cap on the 1st renewal for those customers that hit it was largely no
big deal, and our check is seeing/estimating a 5%-10% price increase on applicable 2nd renewals (HUBS applying
some discounting to avoid large price spike and being flexible to maintain customer relationships). Another check
said the max point of friction for customers on a 2nd renewal was a ~15% price increase as this starts to get into
switching cost territory.

● Products. In terms of product, Sales Hub was called out as seeing the most positive momentum, followed by
Service Hub, which is constantly getting better. Content Hub also received some love, with one check indicating
that they build a record number of websites for customers in 2024. It is still early on AI with only the most
sophisticated customers leaning into using Agents, though there continues to be a lot of conversations around AI/
Breeze with customers. The expectation is that AI and Argentic usage/activity will pick up in 2H25.

● Verticals. One of our checks said healthcare was seeing positive momentum, that they are seeing strength in
Logistics, while Finance and Manufacturing (and most other industries) are relatively stable. Our main international
check said they were seeing a big push in Manufacturing as customers are moving sales functionality out of ERP
systems into sales specific tools. They also did some deals with government entities, which was a newer initiative.

Please help us protect your advantage...

www.wolferesearch.com DO NOT FORWARD Page 5 of 13
 January 12, 2025

Datadog (DDOG)
Summary. Overall, our checks on DDOG were positive in the quarter with strength in the quarter being widespread
across both size and quantity of deals in the quarter as well as broad strength across geographies. We specifically heard
of budget flush momentum and believe that DDOG is a primary beneficiary of a healthier Hypserscaler consumption
backdrop.
● Demand Environment. We heard from our checks that consumption in 4Q seemed to be solid and there was no
outsized impacts related to the holidays at the end of December. Additionally, broader deal activity was strong
and was driven by a lot of transactions rather than just a few large deals (as we were told last quarter). On the
This report is intended for Sudesh Vasudevan. Unauthorized redistribution of this report is prohibited.

large deal front though, we were told that DDOG closed a number of deals over $10M in TCV. Also, we were
told that reps did not need to lean on discounting to hit their numbers and that a lot of the sales rep leaders hit
numbers comfortably.
● Pricing. Based on our conversations, DDOG has developed a more flexible attitude on pricing that has enabled
some deals to get done that otherwise would not have in the past. One partner called out a large security deal
this quarter that would not have happened without additional flexibility for the customer. We would note the
commentary was not related to discounting to get deals done before the quarter closed, but rather a change in
broader deal flexibility within the company related to the departure of former President and CPO, Amit Agarwal.
● Geographies. From a geographic perspective, we were told that US, LatAm and even Europe were solid. Strength
in both Europe and LatAm was driven more by DDOG's core observability business while security seemed to
pickup domestically.
● Security. The security product suite continues to be an area of focus for DDOG according to our conversations with
one partner calling out "really solid" security cross-sells and upsells in the quarter, in addition to being involved in
DDOG's largest security deal to date in 4Q. However, the push into the enterprise for security remains slow and
likely below where DDOG hoped they would be at this stage.
● Budget Flush. We were told that DDOG did participate in the 4Q budget flush with one partner stating that
invoicing was through the roof but that it wasn't from new customers for the most part. Additionally, the election
and the two weeks following was a catalyst that still has not slowed down.
● OpenAI. Our conversations with our ecosystem indicated that OpenAI had built out their own internal observability
platform that was in use on part of their internal systems and that system specifically led to their largest and
longest lasting outage in December (reach out for details), with the implication being that this could lead to less
"normalization or optimization" of spend for the AI-Native cohort, which we interpret positively for DDOG.

Please help us protect your advantage...

www.wolferesearch.com DO NOT FORWARD Page 6 of 13
 January 12, 2025

Payroll Checks
Summary. We got the sense that the payroll environment remained somewhat challenged in 4Q, however, Paylocity,
Dayforce, and Rippling were said to be winning the most deals in our check's practice "by a long shot". Our check pointed
to a saturation of solutions in the market, indicating that it is increasingly getting harder and harder to break ground
with new customers.

● PCTY continues to be really solid within our check's practice, and was once again one of the top-selling solutions
this quarter. PCTY was praised for having the strategic foresight to get ahead of industry trends with smart
This report is intended for Sudesh Vasudevan. Unauthorized redistribution of this report is prohibited.

acquisitions, acquiring Blue Marble for global functionality, and most recently Airbase to expand their finance,
spend management, and reporting suite. PCTY is also the most common solution contending with Rippling, where
PCTY has stayed competitive and differentiated through its robust solution set and trusted services.

● DAY. Our check said they "had a ton of DAY projects close in 4Q" including their biggest enterprise deal in practice
history. DAY's success was attributed to their strong solution set, as well as their robust global functionality, which
continues to be a big differentiator. Our check also indicated that DAY is putting less focus on SMB customers and
more focus on customers with at least 500 employees. DAY is also seeing incremental success in the mid-market.

● Paychex Acquisition of Paycor. Our check indicated that the acquisition of Paycor should be a tailwind for vendors
like PCTY, PAYC, and ADP, as it is one less competitor in an already saturated market. Following this acquisition,
there should be some low-hanging fruit from Paycor's pipeline to go after, and the thinking is that PCTY is best
positioned to get the lion's share (maybe ~40%), with ADP, PAYC, and Rippling splitting the rest.

● Rippling, HiBob, and Darwinbox. Well capitalized startups such as Rippling, HiBob, and Darwinbox, continue
to emerge as serious contenders in the space. Rippling was said to be "cooking" in the market, and a lot of
functionality that was lacking (time and attendance, scheduling) and held them back in certain markets (ex: blue
collar workforces) a few years ago, have now been implemented. As the embedded payroll capabilities of these
solutions progress, our check sees them as being even bigger contenders in the space.

● Broker / Partner Strategy. Companies in the space are turning up their partner/broker strategies as there are
notable shifts in buying patterns from customers choosing to use brokers. In addition, direct sales forces can be
difficult to work with and relatively costly.

● AI Strategy. According to our check, customers have been impressed with DAY's AI roadmap, however,
Darwinbox was called out as probably having the best and most well articulated AI strategy in the space.

Please help us protect your advantage...

www.wolferesearch.com DO NOT FORWARD Page 7 of 13
 January 12, 2025

Security Software - PANW, CYBR, CRWD, VRNS

Summary. Broadly speaking, our conversations with our Security ecosystem this quarter leaned positive in terms of
4Q demand trends and budget flush dynamics, with strength being relatively broad-based across both geographies,
verticals and security sub-sectors.
● Demand Environment. Overall, we picked up that 4Q was solid for security across the board with one large
partner calling out robust tech sales as organizations were going out and buying software in 4Q. We were told
demand was good in October, not great in November, but then December came really strong, with those we spoke
with suggesting November weakness was likely due to the election. The feeling we got from partners is that they
feel pretty good about 2025 budgets and that the preliminary spending environment appears to be improving.
This report is intended for Sudesh Vasudevan. Unauthorized redistribution of this report is prohibited.

● Budget Flush. Additionally, we continue to hear that a budget flush did exist and that it was definitely larger than
last 4Q. Further, a large security-focused partner said that the last time there was this good of a budget flush for
his company was probably back in 2022. In terms of sub-sectors that benefited, our checks indicated that it was
broad-based but also highlighted Identity, firewall refresh, and threat protection.
● Palo Alto Networks (PANW). Our checks indicated that PANW had another solid quarter, mostly driven by SASE
and firewall especially as Firewall deals that were put on hold last quarter have been closed now that the election
is behind us. On the less positive side and not necessarily related to 2Q, we did pick up some friction with the
QRoC acquisition, with some existing customers not necessarily happy with being forced to move to XSIAM. We
also had one conversation with a contact at a large security reseller was not positive on the platformization/free
offering strategies long-term even if it does work in the short-term, as they felt that platforms simply can't keep
up with the constant changes in the cybersecurity environment.
● CyberArk (CYBR). The vibe we got from checks around CYBR was that the company continues to chug along
and benefit from broader strength in Identity. We did not pick up any rep weakness that we heard of last quarter.
On Venafi, partners continue to get ramped on the solution and told us that engagements with both CYBR and
customers have increased since the acquisition closed and that broadly, customer inquiries around certificate
management continue to increase. Endpoint Privilege Management (EPM) was highlighted as a particular area of
strength in the quarter with partners highlighting the products strong upsell dynamics as customers find more
and more use cases after initial deployments.
● Dynatrace (DT). Our checks on DT this quarter leaned positively, suggesting that the company had a good quarter
and that reps remain "hungry". We were told that the company seems to be benefiting from leaning into partner
engagements and selling more through the channel in order to drive some of the larger deals that we have been
seeing. Additionally, one partner that we spoke with indicated that he had not seen massive discounting in the
past or now and even called out a very large deal with an airline from September that did not require outsized
levels fo discounting to get the deal done.
● CrowdStrike (CRWD). On CRWD, our early checks were somewhat positive on the impacts of the outage with
one partner stating that the "whole fiasco is already a thing of the past" and that no one in his circles is even talking
about it anymore. However, the same partner was skeptical on whether customers who received free modules as
a part of their outage-related concessions would be willing to pay full price for those modules whenever the free
period comes up, suggesting that they wouldn't go from paying $0 to $100 but maybe $15-20.
● Varonis (VRNS). Our checks this quarter indicated continued friction between VRNS and on-prem customers as
they push them to their SaaS solution as the lack of development for the on-prem product has created a lack of
trust from those customers. Cyera does continue to come up in conversations around competition, but we were
told that the feedback remains that the company falls short of VRNS on data labeling.

Please help us protect your advantage...

www.wolferesearch.com DO NOT FORWARD Page 8 of 13
 January 12, 2025

CIO Commentary
Summary. As usual, we caught up with our major enterprise CIOs checks. 2025 budget outlooks are very industry-
specific - some CIOs pointed to moderate increases, while others indicated that 2025 budgets are continuing to see
pressures, but that spend reductions are centered on labor rather than software. While AI adoption and experimentation
continues, the impact remains largely incremental rather than transformational for most users. MSFT Copilot continues
to receive mixed reviews depending on the use case and users' roles, but we have picked up on some incrementally
positive commentary (according to one CIO, up to 75% of users are getting value from the Copilot).
● Budgets. Budget outlooks for 2025 vary based on the company's industry, but our conversations suggest that in
This report is intended for Sudesh Vasudevan. Unauthorized redistribution of this report is prohibited.

general budgets are up, probably in the 0%-10% range, with some even saying 20%. Some of that depends on
how much is held in IT vs. how much is dispersed. In general there is optimism that this will be a better year for
budgets. However, we would also note that this is highly dependent on industry as some of our energy related
CIO conversations noted down budgets.

● GenAI Adoption. For the majority of users, AI remains primarily a convenience tool providing incremental
productivity gains rather than revolutionary workflow changes. Developer-focused AI tools, particularly GitHub
Copilot, continue to see very strong adoption, though one CIO noted that the efficiency gains are coming in a bit
below initial expectations (15% vs 40%). Copilot adoption continues to vary significantly by role and use case.
Users focused on document drafting and creation (e.g. communication specialists, lawyers) find substantial value,
while finance and Excel users still find it less helpful Additional use cases for Copilot that came up are translation,
document processing and data ingestion. CIOs also indicated they are unlikely to continue spending on areas like
RPA as these are likely to be replaced by AI solutions

● Agents. Unsurprisingly, CIOs expressed skepticism about Agentic applications replacing SaaS solutions and
suggested that Agents are not doing "decisioning work" and "solving complex issues" but are rather "fixing bad
UI".

Please help us protect your advantage...

www.wolferesearch.com DO NOT FORWARD Page 9 of 13
 January 12, 2025

VC & Private Market Commentary

Summary. We spoke with several VCs and private SaaS company executives who indicated that Q4 was notably
stronger than recent quarters, with multiple companies reporting significant growth and improved customer confidence.
Our checks recognize the complexity of Agentic implementations and suggest that ROI expectations may need to be
tempered, but there is cautious optimism around AI projects moving into production in later part of this year. Both M&A
and IPO activity are expected to pick up significantly, and we could see meaningful activity starting in Q2 2025.
● Demand Environment. The private market environment showed improvement in Q4, with multiple companies
reporting strong growth. One private company CFO indicated up to 50% Y/Y growth in 4Q, with improved
This report is intended for Sudesh Vasudevan. Unauthorized redistribution of this report is prohibited.

expansion activity and reduced churn. Our checks also report seeing less budget hesitancy from customers,
suggesting that the "overbuying hangover from 2021 has largely worked through the system". We have picked
up on increased demand in the Front Office space, as marketing budgets are expected to grow after two weak
years and sales hiring is expected to ramp up.

● Agents. Our VCs and private company execs expressed a cautious view around Agentic AI solutions.
Conversations suggest that Agentic solutions are very "complex" to implement and even VCs are skeptical
about Agentic applications replacing SaaS. Similar to our CIO conversations, one VCs suggested that "people
don't necessarily want different software, they just want different UI". The developer tools space appears most
promising for Agent adoption, with a clear ROI potential from automating coding tasks.

● M&A and IPO Markets. Both VCs and private company CFOs expect major reopening of M&A markets (in part
driven by desire to acquire M&A talent) and pointed to a notable number of deals and acquisition offers in the last
few weeks of December and signs of deals percolating in the first few weeks of January. In addition to traditional
buyers (e.g. MSFT, ORCL) who are expected to return to the M&A market, mid-sized software companies are
expected to do more deals (e.g. DDOG, TEAM) as are the companies that have gone public in the last few years
and haven't done a lot of M&A. The IPO market is expected to reopen, and one VC suggested it could be as early
as Q2 2025.

Please help us protect your advantage...

www.wolferesearch.com DO NOT FORWARD Page 10 of 13
 January 12, 2025

DISCLOSURE SECTION
Analyst Certification:
The various Wolfe Research, LLC analysts who are primarily responsible for this research report certify that (i) the
recommendations and opinions expressed in this research report accurately reflect the research analysts’ personal views
about the subject securities or issuers and (ii) no part of the research analysts’ compensation was, is or will be directly
or indirectly related to the specific recommendations or views contained in this report.

Other Disclosures:
Wolfe Research, LLC Fundamental Stock Ratings Key:
This report is intended for Sudesh Vasudevan. Unauthorized redistribution of this report is prohibited.

Outperform (OP): The security is projected to outperform analyst's industry coverage universe over
the next 12 months.
Peer Perform (PP): The security is projected to perform approximately in line with analyst's industry
coverage universe over the next 12 months.
Underperform (UP): The security is projected to underperform analyst's industry coverage universe over
the next 12 months.
Wolfe Research, LLC does not assign target prices for Peer Perform rated companies.
Wolfe Research, LLC uses a relative rating system using the terms Outperform, Peer Perform, and Underperform as per
the definitions above. Please carefully read these definitions used in Wolfe Research, LLC research. In addition, since
Wolfe Research, LLC research contains more complete information concerning the analyst’s views, please carefully read
Wolfe Research, LLC research in its entirety and do not infer the contents from the ratings alone. In all cases, ratings (or
research) should not be used or relied upon as investment advice and any investment decisions should be based upon
individual circumstances and other considerations.
Wolfe Research, LLC Industry Weighting System:
Market Overweight (MO): Expect the industry to outperform the primary market index for the region (S&P
500 in the U.S.) by at least 10% over the next 12 months.
Market Weight (MW): Expect the industry to perform approximately in line with the primary market index
for the region (S&P 500 in the U.S.) over the next 12 months.
Market Underweight (MU): Expect the industry to underperform the primary market index for the region (S&P
500 in the U.S.) by at least 10% over the next 12 months.

Wolfe Research, LLC Distribution of Fundamental Stock Ratings (As of January 12, 2025):
Outperform: 49% 4% Investment Banking Clients within the previous 12 months
Peer Perform: 44% 3% Investment Banking Clients within the previous 12 months
Underperform: 7% 2% Investment Banking Clients within the previous 12 months

Other Disclosures:
Wolfe Research, LLC does not assign ratings of Buy, Hold, or Sell to the stocks it covers. Outperform, Peer Perform, and
Underperform are not the respective equivalents of Buy, Hold, and Sell but represent relative weightings as defined
above. To satisfy regulatory requirements, Outperform has been designated to correspond with Buy, Peer Perform has
been designated to correspond with Hold, and Underperform has been designated to correspond with Sell.

Please help us protect your advantage...

www.wolferesearch.com DO NOT FORWARD Page 11 of 13
 January 12, 2025

Wolfe Research Securities and Wolfe Research, LLC have adopted the use of Wolfe Research and The Wolfe Daily Howl
as brand names. Wolfe Research Securities, a member of FINRA (www.finra.org) and the National Futures Association,
is the broker-dealer affiliate of Wolfe Research, LLC. Wolfe Research Advisors, LLC is an SEC registered Investment
Adviser affiliate of Wolfe Research, LLC. The Research Department of Wolfe Research, LLC produces and distributes
research to clients of Wolfe Research, LLC, Wolfe Research Advisors, LLC, and Wolfe Research Securities. Any analysts
publishing these reports are associated with Wolfe Research, LLC, Wolfe Research Advisors, LLC, and Wolfe Research
Securities.
The Wolfe Daily Howl, Monthly Controversies Report, and The Highlight Note are subscription-based products for
Institutional investor subscribers only and are products of Wolfe Research, LLC. The Wolfe Daily Howl may contain
This report is intended for Sudesh Vasudevan. Unauthorized redistribution of this report is prohibited.

previously published research which have been repackaged for Wolfe Daily Howl subscribers. Wolfe Research, LLC,
its affiliates, officers, directors, employees, and agents will not be liable for any investment decisions made or actions
taken by you or others based on any news, information, opinion, or any other material published through this service.
The content of this report is to be used solely for informational purposes and should not be regarded as an offer, or a
solicitation of an offer, to buy or sell a security, financial instrument or service discussed herein or to participate in any
particular trading strategy in any jurisdiction. Opinions and information in this communication constitutes the current
judgment of the authors as of the date and time of this report and are subject to change without notice. Information herein
is believed to be reliable based upon publicly available data but Wolfe Research, LLC, and its affiliates, including but
not limited to Wolfe Research Securities and Wolfe Research Advisors, LLC, make no representation that it is complete
or accurate. The information provided in this communication is not designed to replace a recipient's own decision-
making processes for assessing a proposed transaction or investment involving a financial instrument discussed herein.
Recipients are encouraged to seek financial advice from their financial advisor regarding the appropriateness of investing
in a security or financial instrument referred to in this report and should understand that statements regarding the future
performance of the financial instruments or the securities referenced herein may not be realized. Past performance is not
indicative of future results. This report is not intended for distribution to, or use by, any person or entity in any location
where such distribution or use would be contrary to applicable law, or which would subject Wolfe Research, LLC, or
any of its affiliates to any registration requirement within such location. For additional important disclosures, please see
https://www.WolfeResearch.com/Disclosures.
The views expressed in Wolfe Research, LLC research reports with regard to sectors and/or specific companies may
from time to time be inconsistent with the views implied by inclusion of those sectors and companies in other Wolfe
Research, LLC analysts’ research reports and modeling screens. Wolfe Research, LLC communicates with clients across
a variety of mediums of the clients’ choosing including emails, voice blasts, and electronic publication to our proprietary
website. Facts and views in Wolfe Research, LLC research reports and notes have not been reviewed by, and may
not reflect, information known to, professionals in other Wolfe Research, LLC affiliates or business areas, including
investment banking personnel.
Copyright © Wolfe Research, LLC 2025. All rights reserved. All material presented in this document, unless specifically
indicated otherwise, is under copyright to Wolfe Research, LLC. None of the material, nor its content, nor any copy
of it, may be altered in any way, or transmitted to or distributed to any other party, without the prior express written
permission of Wolfe Research, LLC.
This report is limited for the sole use of clients of Wolfe Research, LLC, Wolfe Research Securities and Wolfe Research
Advisors, LLC which have been given permission prior to such use. Any distribution of the content produced by Wolfe
Research, LLC will violate the understanding of the terms of our relationship.
You are permitted to store, display, analyze, evaluate, modify, reformat, print and retrieve the information only for your
internal business purposes, and only on your own private and secure system. You cannot resell or reverse engineer the

Please help us protect your advantage...

www.wolferesearch.com DO NOT FORWARD Page 12 of 13
 January 12, 2025

information, create derivative works or any data, commercial products or other offerings, or calculate or develop any
index for disclosure and/or marketing without the express prior written consent of Wolfe Research. You cannot publish,
transmit, alter, copy, forward, distribute, share, or reproduce the information in any format, or make the information
available in any form or by any means to any third parties, without the express prior written consent of Wolfe Research.
These restrictions include, without limitation: (i) using, extracting, downloading or retrieving this information, in whole
or in part, to train, develop or finetune any artificial intelligence (which includes predictive software or algorithms, neural
networks, machine learning models, large language models and similar technology), or to provide or reproduce this
information, in whole or in part, as a prompt or input to any such artificial intelligence; and (ii) content scraping, automated
processing, or any other means of disclosure or redistribution. Accessing or reviewing the information constitutes
This report is intended for Sudesh Vasudevan. Unauthorized redistribution of this report is prohibited.

your agreement to adhere to these terms and the stated permissions and restrictions. Electronic research reports are
distributed simultaneously to all clients. The licenses provided are revocable at the sole discretion of Wolfe Research
and the content providers.

Please help us protect your advantage...

www.wolferesearch.com DO NOT FORWARD Page 13 of 13