Larry Dignan

Editor in Chief of Constellation Insights Constellation Research

About Larry Dignan: Dignan was most recently Celonis Media’s Editor-in-Chief, where he sat at the intersection of media and marketing. He is the former Editor-in-Chief of ZDNet and has covered the technology industry and transformation trends for more than two decades, publishing articles in CNET, Knowledge@Wharton, Wall Street Week, Interactive Week, The New York Times, and Financial Planning. He is also an Adjunct Professor at Temple University and a member of the Advisory Board for The Fox Business School's Institute of Business and Information Technology.&nbsp; <br>Constellation Insights does the following: Cover the buy side and sell side of enterprise tech with news, analysis, profiles, interviews, and event coverage of vendors, as well as Constellation Research's community and… Read more

Amazon will invest another $4 billion in Anthropic to bring its total investment to $8 billion. Anthropic will also use AWS as its primary training partner and use AWS Trainium and Inferentia processors to deploy its largest large language models.

The latest Amazon investment comes shortly after Anthropic landed a partnership with Snowflake.

Amazon's first investment in Anthropic made the company's Claude family of models a headliner on Amazon Bedrock. The latest Amazon investment makes Anthropic a closer partner.

In a statement, the companies said they will "will continue to work closely to keep advancing Trainium's hardware and software capabilities."

The companies added: "This next phase of the collaboration will even further enhance the already premium performance, security, and privacy Amazon Bedrock provides for customers running Claude models."

As previously noted, the Amazon-Anthropic partnership is notable since OpenAI is tightly aligned with Microsoft. Google also offers Anthropic models and many others in addition to its Gemini family of LLMs. What has emerged is spheres of LLM influence around hyperscale cloud providers. Meta has Llama and is focused on open source options with potential business applications in the future.

AWS ups its investment in Anthropic as giants form spheres of LLM influence

In addition, Anthropic has stood out for its Claude model performance, but also ability to add collaboration and enterprise tools to its LLMs.

• Anthropic's Claude 3.5 Sonnet model can use your computer
• Anthropic adds more collaboration features to Claude for Pro, Team customers
• Anthropic launches Claude 3.5 Sonnet, Artifacts as a way to collaborate
• Anthropic launches Claude Enterprise with 500K context window, GitHub integration, enterprise security

Larry Dignan

Editor in Chief of Constellation Insights Constellation Research

About Larry Dignan: Dignan was most recently Celonis Media’s Editor-in-Chief, where he sat at the intersection of media and marketing. He is the former Editor-in-Chief of ZDNet and has covered the technology industry and transformation trends for more than two decades, publishing articles in CNET, Knowledge@Wharton, Wall Street Week, Interactive Week, The New York Times, and Financial Planning. He is also an Adjunct Professor at Temple University and a member of the Advisory Board for The Fox Business School's Institute of Business and Information Technology.&nbsp; <br>Constellation Insights does the following: Cover the buy side and sell side of enterprise tech with news, analysis, profiles, interviews, and event coverage of vendors, as well as Constellation Research's community and… Read more

Elastic upped its outlook for the third quarter following better-than-expected second quarter results as its plan to extend from search into generative AI paid off.

The second quarter results were a reversal of the first quarter. In the first quarter, Elastic made sales changes that hurt revenue growth and the company cut guidance.

When Elastic reported its second quarter, however, it appears that the worries about customer commitments was overblown. The company reported a second quarter net loss of $25.45 million, or 25 cents a share, on revenue of $365.36 million, up 18% from a year ago. Non-GAAP earnings from Elastic in the second quarter were 59 cents a share, 21 cents a share better than estimates.

As for the outlook, Elastic projected third quarter non-GAAP earnings of 46 cents a share to 48 cents a share compared to estimates of 40 cents a share.

Fiscal 2025 earnings will be between $1.68 a share and $1.72 a share. Full year revenue is projected to be $1.45 billion to $1.46 billion compared to $1.44 billion.

CEO Ash Kulkarni said the company saw wins across Elastic Cloud, which saw second quarter sales growth of 25%. "In Q2 we saw strong customer commitments with key wins across all our solution areas, with continued momentum in GenAI and platform consolidation," said Kulkarni.

• Constellation ShortListâ„¢ Security Information and Event Management (SIEM)
• Constellation ShortListâ„¢ Observability

Elastic ended the quarter with 21,300 subscribed customers.

The lumpy progression of Elastic--first quarter miss and plunge and second quarter beat and raise--highlights how the company doesn't fit well into any one category. Elastic also said CFO Janesh Moorjani is leaving to pursue another opportunity. Eric Prengel, group vice president of finance, will become interim CFO Dec. 14.

Speaking on the earnings conference call, Kulkarni said the company saw solid sales execution and customer interest. He said:

"After some unexpected disruption in sales performance in Q1, we are now starting to see the benefits of the changes. Our performance in Q2 reaffirms our confidence in our strategy and shows that we are well on our way to returning to the strong pace of sales execution that we have demonstrated in the past."

Kulkarni said customers were consolidating security and observability products and migrating onto the Elastic's SearchAI platform. "We also saw strong demand for our vector database as customers increasingly adopted Elastic as a natural choice for building genAI applications across many different industries and use cases."

Key points from the conference call:

• Kulkarni said one big win in the company was a multi-year seven figure deal where a company standardized on Elastic's vector database to power more than 30 chatbot clusters.
• Another customer was a retailer using Elastic for its omnichannel experience.
• Elastic Express, a migration program for its AI platform, is seeing strong traction and helped the company win in more than 40 deals in the second quarter.
• The company will weight its investments in genAI features.
• Elastic saw strength across multiple geographies and the largest enterprises accelerated consumption.

Elastic isn't easily defined

The company's search business is a mainstay, but it also has a monitoring and management business dubbed AutoOps, a security business and is a retrieval augmented generation (RAG) play.

In a September briefing, Elastic executives noted the following about the company's strategy.

• Elastic's search AI architecture integrates vector embeddings, enabling generative AI use cases like semantic search and RAG.
• The company positions itself as a leader in AI search with its vector database for applications in security, observability and analytics.
• Generative AI is seen as a way to redefine Elastic's brand.
• Elastic is building managed serverless offerings to simplify deployment and scale for customers.
• And Elastic is betting on cross-cluster and federated search capabilities to handle distributed data environments.

Constellation Research's take

Constellation Research analyst Andy Thurai said:

"Elastic is well positioned in the areas of observability, security, and enterprise search with mature offerings. Especially with 480EB data expected to be produced in 2025 alone, search is a major issue for a lot of enterprises. Elastic has flexible offerings and is very appealing to enterprises that want to keep things local, combined with cloud hosted and serverless offerings.

The new addition of "Search AI Lake," with its millisecond response times, allows searching unstructured data which was almost impossible to search before. The addition of generative AI-powered security playbooks, runbooks, and AI assistants is also appealing to customers. Elastic has finally seemed to have figured out their licensing model, and the tighter relationships with all three hyper scalers - AWS, GCP,  Azure - Elastic seem to be poised for growth."

Larry Dignan

Editor in Chief of Constellation Insights Constellation Research

About Larry Dignan: Dignan was most recently Celonis Media’s Editor-in-Chief, where he sat at the intersection of media and marketing. He is the former Editor-in-Chief of ZDNet and has covered the technology industry and transformation trends for more than two decades, publishing articles in CNET, Knowledge@Wharton, Wall Street Week, Interactive Week, The New York Times, and Financial Planning. He is also an Adjunct Professor at Temple University and a member of the Advisory Board for The Fox Business School's Institute of Business and Information Technology.&nbsp; <br>Constellation Insights does the following: Cover the buy side and sell side of enterprise tech with news, analysis, profiles, interviews, and event coverage of vendors, as well as Constellation Research's community and… Read more

Laurie Wheeler, Chief Operating Officer, Information Services & Technology at MultiCare Health System, is a 25-year healthcare veteran who is all about optimizing processes and the change management needed for transformation.

At Constellation Research's Connected Enterprise, I caught up with Wheeler to talk about her role. Here are the takeaways.

Her role. Wheeler runs the business and operations of the IT organization at MultiCare Health System with a focus on process, finance, budgeting and contracts. "I'm an operator. I'm all about having a smooth machine running internally. I'm about the processes. That's my jam. We live in a world of technology but my big thing is optimizing it," said Wheeler. "I'm the 'now what' person. The CEO Council made a decision and I'll get it done."

At MultiCare Health System, Wheeler is a 25-year vet who has the relationships and the credibility to implement technology. She started as a front desk clerk.

Healthcare and new technologies. When it comes to AI, new platforms and technology Wheeler is happy to have the conversations. "But again, my passion is making these things reality. So, I'm really big on change management," she said. "At healthcare providers, the staff specialty is being at bedside. The last thing they want to think about is technology. Taking care of humans is just inherently different."

Finding project champions. "You need to find those champions in the operation because in healthcare technology is not the specialty. The specialty is taking care of patients so it's about finding a way to digest the technology and make it easy to adopt," said Wheeler. "I've worked in the organization a long time so I've developed a lot of relationships. We go out and meet with our hospital presidents, chief nurses and you find people that have a passion around technology while working in healthcare."

Building credibility with these technology champions is really about the follow through, said Wheeler. "You build relationships, build trust and people notice and call on you," she said.

2025 priorities. Wheeler said her focus going into the new year is optimizing a ServiceNow implementation. "ServiceNow is our employee resource center back end," she said. "We use it for our search, virtual agent and the goal is minimizing calls to the service desk. The problem is we don't have a lot of content. It goes back to making it easier for our healthcare workers to put in information."

ServiceNow is connected to Epic, an electronic health record system. Wheeler added that MultiCare also implemented a full ERP replacement with Workday covering HR, financials and supply chain. "It was quite an adventure," she said.

The healthcare technology dream. When asked what Wheeler would optimize if she had a magic wand, she said:

"It's the usability and functionality of Epic at the bedside. The last thing you want folks to do is messing around with your health record when they should be focusing on you."

In the last year, Wheeler piloted Nuance's Dax Copilot, which is ambient technology that aims to input information via voice and transcription. Nuance is now owned by Microsoft.

She said:

"I had an experience with my daughter, and we went to the doctor. He was a test subject, and he's like, let me put this on next to us, and it's going to record everything. It's going to put it in your record. They chat and things like that. When it's over I'm stoked because we're just piloting Dax and physicians like it. My daughter said it was very odd because the doctor looked at her the whole time. She has grown up only seeing a physician stare at a desktop to talk to her."

The future of ambient healthcare. Wheeler said AI will have a big role in healthcare to update records and handle various tasks. "The trick will be figuring out where to insert the human in quality control," she said. "We'll move that way because the experience is better and changes the workflow with the patient. The last thing a nurse wants to do on a break is spend five minutes on the service desk or record. The returns are time and customer experience."

More interviews:

• BT150 Spotlight: Jewelers Mutual John Kreul on Human-Centric AI, CX, Returns and Future-Proofing
• BT150 member Dr. Jonathan Reichental: How autonomous vehicles could change how cities are designed
• Peraton's Cari Bohley: Why internal talent recruiting and retention is critical
• SuperNova Award interview with Joe Prota: How IBM used Adobe Firefly to speed up ideation and iteration
• BT150's Ashwin Rangan on CIO evolution, technology curves and what it means for genAI deployments
• BT150 Spotlight: Sunitha Ray on the difference between enterprise AI and genAI

Larry Dignan

Editor in Chief of Constellation Insights Constellation Research

About Larry Dignan: Dignan was most recently Celonis Media’s Editor-in-Chief, where he sat at the intersection of media and marketing. He is the former Editor-in-Chief of ZDNet and has covered the technology industry and transformation trends for more than two decades, publishing articles in CNET, Knowledge@Wharton, Wall Street Week, Interactive Week, The New York Times, and Financial Planning. He is also an Adjunct Professor at Temple University and a member of the Advisory Board for The Fox Business School's Institute of Business and Information Technology.&nbsp; <br>Constellation Insights does the following: Cover the buy side and sell side of enterprise tech with news, analysis, profiles, interviews, and event coverage of vendors, as well as Constellation Research's community and… Read more

Palo Alto Networks reported better-than-expected first quarter results and said that it is benefiting from enterprises looking to consolidate cybersecurity vendors. Palo Alto Networks focused on a "platformization" strategy designed to land more wallet share on its platform.

The company reported earnings of $350.7 million, or 99 cents a share, on revenue of $2.1 billion, up 14% from a year ago. Non-GAAP earnings were $1.56 a share.

Wall Street was expecting Palo Alto Networks to report earnings of $1.47 a share in the October quarter on revenue of $2.12 billion.

Palo Alto Networks also announced a 2-for-1 stock split effective Dec. 12.

As for the outlook, Palo Alto Networks said its second quarter revenue will be between $2.22 billion to $2.25 billion, up 12% to 14% from a year ago. Non-GAAP earnings will bet $1.54 a share to $1.56 a share.

For fiscal 2025, Palo Alto Networks projected revenue of $9.12 billion to $9.17 billion, up 14% from the previous year. Non-GAAP earnings will be between $6.26 a share to $6.39 a share.

• Palo Alto Networks reports strong Q4, raises outlook on platformization play
• CrowdStrike outage likely to hit cybersecurity's platformization pitch
• Cybersecurity platformization: What you need to know

Speaking on a conference call, CEO Nikesh Arora made the following points:

• "The market for cybersecurity continues to be robust and continues to grow faster than the overall technology market. We saw particular strength in our next generation security offerings."
• "Our industry peers have been evangelizing platformization. Imitation is the highest form of flattery."
• "Our approach is to ingest all relevant security data, analyze this with precision AI technology and natively automate end-to-end workflows. It's a tall order to take data from many different security vendors, analyze it on the fly and make a decision to stop an attack faster, but we're encouraged with the early success of our cloud platform."
• "We feel the cybersecurity industry is embarking into its next phase, but the market will continue to converge towards a fewer set of platformization players over the next five to 10 years. Point solutions will continue to get subsumed in these platform plays."

Constellation Research's take

Constellation Research analyst Chirag Mehta said:

"Palo Alto Networks' Q1 FY25 results reflect their conviction and commitment to platformization, driving 40% YoY growth in NGS ARR. The inclusion of QRadar SaaS contracts, acquired from IBM, contributed to this ARR growth, though the company anticipates transitioning these customers to XSIAM solutions in the coming quarters.

This strategy signifies a broader market trend where enterprises are gravitating towards integrated platforms to streamline network security and security operations while reducing total cost of ownership. However, as evident from ongoing hesitations around vendor lock-in, this transition presents challenges for customers. Converting QRadar customers to XSIAM (~10% so far) underscores Palo Alto's potential to redefine security operations through telemetry-driven insights.

For customers, the focus on XSIAM as a replacement for traditional SIEM systems represents an opportunity to modernize their SecOps. As CISOs aim to balance risk reduction with operational efficiency, this quarter's results highlight Palo Alto Networks' ability to lead in a consolidating market while signaling the need for clarity and choice in platform commitments."
 

Larry Dignan

Editor in Chief of Constellation Insights Constellation Research

About Larry Dignan: Dignan was most recently Celonis Media’s Editor-in-Chief, where he sat at the intersection of media and marketing. He is the former Editor-in-Chief of ZDNet and has covered the technology industry and transformation trends for more than two decades, publishing articles in CNET, Knowledge@Wharton, Wall Street Week, Interactive Week, The New York Times, and Financial Planning. He is also an Adjunct Professor at Temple University and a member of the Advisory Board for The Fox Business School's Institute of Business and Information Technology.&nbsp; <br>Constellation Insights does the following: Cover the buy side and sell side of enterprise tech with news, analysis, profiles, interviews, and event coverage of vendors, as well as Constellation Research's community and… Read more

Nvidia reported a better-than-expected third quarter, raised its outlook and said that Blackwell shipments will begin in the fourth quarter. Data center revenue in the third quarter was up 112% from a year ago.

Collette Kress, CFO of Nvidia, said:

"We completed a successful mask change for Blackwell, our next Data Center architecture, that improved production yields. Blackwell production shipments are scheduled to begin in the fourth quarter of fiscal 2025 and will continue to ramp into fiscal 2026. We will be shipping both Hopper and Blackwell systems in the fourth quarter of fiscal 2025 and beyond. Both Hopper and Blackwell systems have certain supply constraints, and the demand for Blackwell is expected to exceed supply for several quarters in fiscal 2026."

The company reported third quarter earnings of $19.3 billion, or 78 cents a share, on revenue of $35.08 billion, up 94% from a year ago. Non-GAAP earnings in the quarter were 81 cents a share.

• Nvidia outlines Google Quantum AI partnership, Foxconn deal
• Softbank Corp. first to land Nvidia Blackwell systems in bid to be genAI provider in Japan
• Nvidia drops NVLM 1.0 LLM family, revving open-source AI

Wall Street was looking for third quarter earnings of 75 cents a share on revenue of $33.14 billion.

Jensen Huang, CEO of Nvidia, said "demand for Hopper and anticipation for Blackwell — in full production — are incredible as foundation model makers scale pretraining, post-training and inference."

As for the outlook, Nvidia said fourth quarter revenue will be about $37.5 billion, give or take 2%. Analysts were modeling fourth quarter earnings of 82 cents a share on revenue of $37.03 billion.

By the numbers for the third quarter:

• Nvidia data center revenue was $30.8 billion, up 112% from a year ago. The company gained as multiple cloud servers launched Nvidia Hopper H200 instances in the quarter.
• Cloud providers were 50% of data center revenue with the remainder being consumer Internet companies and enterprises.
• Networking revenue was $3.1 billion, up 20% from a year ago.
• Gaming and PC revenue was $3.33 billion, up 15% from a year ago.
• Visualization revenue was $486 million, up 17% from a year ago.
• Automotive and robotics revenue was $449 million, up 30% from a year ago.

More:

• Nvidia's uncanny knack for staying ahead
• Nvidia highlights algorithmic research as it moves to FP4
• Nvidia launches NIM Agent Blueprints aims for more turnkey genAI use cases
• Nvidia shows H200 systems generally available, highlights Blackwell MLPerf results
• Nvidia outlines roadmap including Rubin GPU platform, new Arm-based CPU Vera

Key points from the Nvidia conference call:

• "Blackwell is now in the hands of all of our major partners, and they are working to bring up their data centers. We are integrating Blackwell systems into the diverse data center configurations of our customers. Blackwell demand is staggering, and we are racing to scale supply to meet the incredible demand customers are placing on us. Customers are gearing up to deploy Blackwell at scale," said Kress. 
• Costs matter. "Nvidia Blackwell architecture with NVLink switch enables up to 30x faster inference performance and a new level of inference, scaling, throughput and response time that is excellent for running new reasoning inference," said Kress, who noted that it takes 64 Blackwell GPUs to deliver the compute of 250 H100s. 
• Nvidia AI Enterprise revenue is double what it was last year with a large pipeline. Kress put annual revenue at $1.5 billion. 
• China will "remain very competitive" as a market. 
• Foundation model scaling is intact. Huang said that "the evidence is that LLMs can continue to scale." However, the industry is learning that there are more efficient ways to scale such as post training, reinforcement learning, and synthetic data. OpenAI's Strawberry model is a version of test time scaling. "We now have three ways of scaling, and we're seeing all three ways of scaling. And as a result of that the demand for our infrastructures is really great," said Huang.
• Huang shot down concerns about Blackwell ramping or issues with overheating in data centers. He also said that concerns about industry indigestion are overblown. Huang said:

"I believe that there will be no digestion until we modernize a trillion dollars of data centers." 

Constellation Research analyst Holger Mueller said:

"Nvidia continues to let the good times roll, almost doubling its revenue compared a year ago. To show the scale of the financial acceleration – Nvidia quarterly net income of $19.3B is more than Nvidia nine month total earnings of the last fiscal year ($17.5 bilion). That is unheard of growth and acceleration. Questions were handled well by Jensen Huang and team – especially on the critical supply chain side. Should the company be able to deliver, the next quarter growth will be also an easy exercise. Speaking about the other division – the long announced and even longer expected growth spurt for automotive may have arrived, with 30% revenue growth. Automotive revenue isn't meaningful, but still a positive sign."

Larry Dignan

Editor in Chief of Constellation Insights Constellation Research

About Larry Dignan: Dignan was most recently Celonis Media’s Editor-in-Chief, where he sat at the intersection of media and marketing. He is the former Editor-in-Chief of ZDNet and has covered the technology industry and transformation trends for more than two decades, publishing articles in CNET, Knowledge@Wharton, Wall Street Week, Interactive Week, The New York Times, and Financial Planning. He is also an Adjunct Professor at Temple University and a member of the Advisory Board for The Fox Business School's Institute of Business and Information Technology.&nbsp; <br>Constellation Insights does the following: Cover the buy side and sell side of enterprise tech with news, analysis, profiles, interviews, and event coverage of vendors, as well as Constellation Research's community and… Read more

Snowflake said it has inked a multi-year deal to bring Anthropic's Claude models to Snowflake Cortex AI. Anthropic's Claude will be a part of Snowflake Intelligence and Cortex Analyst.

The partnership with Anthropic will be part of Snowflake's agentic AI strategy.

In a statement, Snowflake said Claude 3.5 models will be available with in Cortex AI, which is built on AWS. The news landed as Snowflake reported earnings. Snowflake has been building out its AI offerings.

• Snowflake bolsters Cortex, launches AI and ML Studio, Snowflake Trail
• Snowflake to support Polaris Catalog for Apache Iceberg
• Constellation ShortListâ„¢ Automated Cloud Data Warehouse Services

Key points of the Anthropic partnership include:

• Anthropic's Claude language models will be used to enhance data agents within Snowflake.
• Snowflake's Horizon Catalog, which is integrated into Cortex AI, will provide controls and guardrails to Claude 3.5 models.
• Snowflake is leveraging a special implementation of Amazon Bedrock to enable Anthropic's models to be used inside of Cortex AI. Anthropic's Claude 3.5 Sonnet will be available in AWS regions where Amazon Bedrock is available.
• Snowflake has committed to using Claude as one of the core models behind its agentic AI offerings. Snowflake's Cortex Playground has multiple models available in Cortex AI.
• Snowflake will optimize its offerings for Claude and the company will use Anthropic's flagship models internally.

For Anthropic, the Snowflake deal gives it more enterprise throughput. Anthropic has been building collaboration workflows to make Claude more of a digital coworker in enterprises.

• Anthropic's Claude 3.5 Sonnet model can use your computer
• Anthropic adds more collaboration features to Claude for Pro, Team customers
• Anthropic launches Claude 3.5 Sonnet, Artifacts as a way to collaborate

As for earnings, Snowflake reported better-than-expected third quarter earnings. The company reported a third quarter net loss of $324.3 million, or 98 cents a share, on revenue of $942.09 million. Non-GAAP earnings in the quarter were 20 cents a share. 

Wall Street was looking for a non-GAAP profit of 15 cents a share on revenue of $898.46 million. 

Snowflake said it had 542 customers in the quarter with trailing product revenue above than $1 million. 

Sridhar Ramaswamy, CEO of Snowflake, said the company is driven to "to produce product cohesion and ease of use." He added that Snowflake is winning new business and expanding wallet share with existing customers and displacing competitors. 

As for the outlook, Snowflake projected fourth quarter product revenue of $906 million to $911 million, up 23%. For fiscal 2025, Snowflake is projecting $3.43 billion in product revenue, up 29%. 

Separately, Snowflake said it acquired open data integration platform Datavolo. The move is designed to add creation, management and observability of multimodal data pipelines for enterprises. 

Ramaswamy said Datavolo will bring the ability to ingest both structured and unstructured dataflows. Datavolo's platform is built on Apache NiFi, a technology for secure data processing and distribution. Snowflake has made a series of recent moves in open source. 

Constellation Research's take

Constellation Research analyst Andy Thurai said the Anthropic partnership is the headliner and a notable move for enterprises. For Snowflake, Anthropic gives it some LLM heft. 

"Based on my conversation with enterprises, Anthropic seems to be the best performing model among the LLMs to date. Anthropic, co-founded by OpenAI employees, seems to be more efficient than the parent at a much cheaper cost. As of now, Anthropic's Claude 3.5 Sonnet is one of the top performing model in the market."

Constellation Research analyst Holger Mueller said Snowflake is returned to growth mode.

"Snowflake has accelerated again, which is good news for investors, as the hunger for insights inside the enterprise is growing. But growth comes at a price. Snowflake's operating losses for the last nine months are surprisingly close to its Q3 revenue. The good news is R&D spending has overtaken sales and marketing. That investment is certainly warranted given the transformational nature of AI for analytics and insights. In the long run though, Sridhar Ramaswamy and team need to bring cost and revenue in synch. The fourth quarter would be a good start."

Snowflake focuses on cost, ease of use, time to value

Ramaswamy outlined how Snowflake is winning business. The plan revolves around Cortex AI and giving customers confidence in the technical direction. For instance, enterprises try Snowflake and find they don't need a large team to manage and deploy and consume more of the platform. 

With strong data warehousing and data engineering features, Snowflake can extend usage to Cortex AI. For Ramaswamy, the quarter was Snowflake's first big beat and raise of his short tenure.

• Snowflake CEO Ramaswamy on product cycles, AI, scaling
• Snowflake CFO Scarpelli: Don't pigeonhole new CEO Ramaswamy as technologist
• Snowflake's Slootman steps down as CEO, technologist Ramaswamy takes over

Speaking on an earnings conference call, Ramaswamy said:

"Our product development engine continues to accelerate, as we launched the same number of tier 1 features to general availability in Q3 as we did in all of fiscal 2024. Our AI feature family Snowflake Cortex is showing significant adoption and we improved our go-to-market motion across the board and it's having a huge impact on new product adoption. We are firing on all cylinders."

Ramaswamy added that the company has become more efficient and eliminated "efforts that were underperforming." 

Snowflake is also competing on ease-of-use, said Ramaswamy. "We also consistently hear a lot of feedback that some of our competitors' technology is highly complex and requires a ton of highly expensive engineering resources. And with complexity comes risk. What is one step in Snowflake is 10 on some other platforms, that's 10 times more chances to engineer a mistake," he said. 

Other items:

• Snowpark is roughly 3% of revenue now.
• "Our push into interoperability and transforming data that previously would not have been addressed by Snowflake is proving to be a key differentiator with our customers. These features are now north of a $200 million run rate as of the end of Q3."
• "We are seeing massive adoption of open data formats especially truly open formats like Apache Iceberg."
• CFO Mike Scarpelli said that about 500 accounts have adopted Iceberg and the company has seen little friction moving them over.
• "It is clear that AI is going to change how people consume data. Not only is AI going to make structured and unstructured data more interchangeable, it is also going to heavily influence areas like business intelligence."
• Snowflake is pitching itself as a way to lower costs by using AI to handle more of the data processing journey.

Larry Dignan

Editor in Chief of Constellation Insights Constellation Research

About Larry Dignan: Dignan was most recently Celonis Media’s Editor-in-Chief, where he sat at the intersection of media and marketing. He is the former Editor-in-Chief of ZDNet and has covered the technology industry and transformation trends for more than two decades, publishing articles in CNET, Knowledge@Wharton, Wall Street Week, Interactive Week, The New York Times, and Financial Planning. He is also an Adjunct Professor at Temple University and a member of the Advisory Board for The Fox Business School's Institute of Business and Information Technology.&nbsp; <br>Constellation Insights does the following: Cover the buy side and sell side of enterprise tech with news, analysis, profiles, interviews, and event coverage of vendors, as well as Constellation Research's community and… Read more

LogicMonitor raised $800 million in a move that's designed to accelerate its observability growth, fund mergers and acquisitions and expand into new markets and industries.

Under the terms of the deal, LogicMonitor controlling shareholder Vista Equity Partners sold a stake to a consortium of investors including PSG, Golub Capital and others. The investment values LogicMonitor at $2.4 billion including debt.

New Relic went private last year to accelerate its observability efforts in a deal valued at $6.5 billion. For reference, publicly traded observability players Datadog and Dynatrace have market caps at $45.3 billion and $15.4 billion, respectively. Splunk was acquired by Cisco for $28 billion last year.

The game plan for these observability vendors is to ride the AI wave. LogicMonitor CEO Christina Kosmowski said:

"We are a mission critical part of the AI race - in short, AI needs data centers. We are the connective tissue between AI and data center performance as we have the muscle, pedigree, and, most importantly, the data insights to advance the most important and life-altering AI initiatives."

In a blog post, Kosmowski said LogicMonitor is at an inflection point where it can scale. The investment “is a clear signal of the commitment to helping businesses unlock the full potential of AI and data center technologies—empowering them to work smarter, faster, and more responsibly,” she said.

LogicMonitor Adds AIOps Capabilities to Its Hybrid Observability Platform

The race

Observability is a hot space and LogicMonitor may need to bulk up with the additional funding to run with the larger players. LogicMonitor said that it has had a 36% compound annual growth rate in the last 5 years and has more than 2,400 customers.

For comparison, DataDog has more than 29,000 customers.

Constellation ShortListâ„¢ Observability 

Olivier Pomel, CEO of Datadog, said the company's third quarter highlighted how customers are looking to observability vendors to expand into next-gen AI. "We kept broadening our platform in observability and beyond, including in next gen AI where interest continues to rise. And we added new customers while expanding with existing ones as they grow into the cloud," said Pomel.

Pomel added:

"We are seeing initial signs of traction for our LLM observability product. Today, hundreds of customers are using LLM observability, with more exploring it every day. And some of our first paying customers have told us that they have cut the time spent investigating LLM latency errors and quality from days to hours to just minutes.

Our customers don't only want to understand the performance and cost of the LLM applications, they also want to understand LLM model performance within the context of their entire application."

Datadog reported third quarter revenue of $690 million, up 26% from a year ago, with earnings of 14 cents a share. Non-GAAP earnings of 46 cents a share topped estimates.

Cisco's Splunk purchase is transforming the company. Observability revenue in Cisco's first quarter was up 36% including Splunk.

Dynatrace CEO Rick McConnell said:

"We believe that AI-driven observability is no longer optional. Organizations are expected to find issues and resolve the incidents before they impact customers. This can't be done efficiently in complex environments through reactive dashboard monitor. Rather, organizations need to be able to trust answers from an end-to-end observability platform to action issues automatically."

Dynatrace reported earnings of 15 cents a share in its fiscal second quarter (37 cents non-GAAP) on revenue of $418 million, up 19%.

LogicMonitor's plan

With the $800 million investment, LogicMonitor outlined three goals.

• Accelerate and expand LogicMonitor's platform including mergers and acquisitions. The observability industry could use a bit of consolidation and LogicMonitor could pick up tuck-in players.
• Expand internationally. LogicMonitor said about 30% of its customers in 2023 were international.
• Diversify into new industries. LogicMonitor said it has the opportunity to focus its data center observability efforts on new verticals.

Vista first invested in LogicMonitor in 2018 and has seen the company organically scale more than 650% since. It's quite possible that LogicMonitor will now look to scale with mergers and acquisitions too.

Constellation Research analyst Andy Thurai said:

"LogicMonitor, which used to play mostly in the infrastructure and networking space, has leveled up its game to higher levels of observability. In addition, the company has also acquired and continued to invest in their Dexda platform which offers AIOps capabilities. With this investment, LogicMonitor get some flexibility to grow its platform by either acquiring some players in the open telemetry (OTEL) space or strengthening their existing observability platform."

Larry Dignan

Editor in Chief of Constellation Insights Constellation Research

About Larry Dignan: Dignan was most recently Celonis Media’s Editor-in-Chief, where he sat at the intersection of media and marketing. He is the former Editor-in-Chief of ZDNet and has covered the technology industry and transformation trends for more than two decades, publishing articles in CNET, Knowledge@Wharton, Wall Street Week, Interactive Week, The New York Times, and Financial Planning. He is also an Adjunct Professor at Temple University and a member of the Advisory Board for The Fox Business School's Institute of Business and Information Technology.&nbsp; <br>Constellation Insights does the following: Cover the buy side and sell side of enterprise tech with news, analysis, profiles, interviews, and event coverage of vendors, as well as Constellation Research's community and… Read more

Walmart's ongoing bets in technology, AI, automation and omnichannel customer experiences are paying off as the retailer lands more share among higher-income shoppers.

The company's third quarter earnings report illustrated the art of delivering results today while transforming the company. Walmart delivered third quarter earnings of 57 cents a share, 58 cents adjusted, on revenue of $169.6 billion, up 5.5% from a year ago.

Walmart also raised its sales growth outlook for fiscal 2025 to 4.8% to 5.1%. In February, Walmart was projecting fiscal 2025 sales growth between 3% and 4%. The retailer also raised its non-GAAP earnings target to $2.42 a share to $2.47 a share.

By revamping its sales mix and squeezing costs while keeping prices low, Walmart has been able to grab wallet share. In the third quarter, Walmart's e-commerce revenue was up 27%, advertising sales were up 28% and membership income gained 22%.

"The rapid growth from newer businesses is helping us strengthen our business model," said Walmart CEO Doug McMillon. "Households earning more than $100,000 made up 75% of our share gains. In the U.S., in-store volumes grew, curbside pickup grew faster, and delivery sales grew even faster than that."

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Walmart's performance comes as the company is seeing margin pressure from GLP-1 drugs and weathered a US port strike, two hurricanes and flooding. Inventory is in good shape, said McMillon.

Here's a look at some the technology investments that are paying off for Walmart.

Tech talent. "We build tech more effectively than we used to, and we're doing it with more speed," said McMillon.

Scan & Go and computer vision checkouts. Sam's Club's Scan & Go app is driving throughput at Sam's Club. Walmart is likely utilizing Scan & Go at Sam's Club locations before expanding.

CFO John David Rainey said:

"Scan & Go penetration of sales increased more than 250 basis points and the nearly completed rollout of our Just Go exit technology across all 600 clubs is enabling about 70% of members to exit without a check. Members love it with member satisfaction scores on exit now close to 90."

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International best practices. Half of Walmart's sales in China are digital and it can provide 1 hour delivery service. McMillon also said that the company has learned from social commerce in China as well as India, which has disruptive fintech at scale.

Generative AI. Walmart continues to advance its genAI efforts to deliver what McMillon called "practical opportunities right in front of us." He said:

"Our datasets are valuable and we're learning to put them to work to improve the customer member experience and assist our associates as they do their daily work. I'm excited about how (generative AI) will improve the customer experience in the months and years to come, enabling us to provide a better experience than the one that starts by typing into a search bar and getting a list of results to choose from. We're racing to improve all the things that people love about shopping and remove or diminish all the things they don't."

GenAI is also removing friction for employees, said McMillon.

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Automation. Rainey said that more than half of Walmart's fulfillment center volume is automated, twice as much as last year. "This has the obvious benefit of lowering the per unit cost of delivery. These factors contributed to the third consecutive quarter of approximately 40% reduction in U.S. net delivery cost per order," he said.

Omnichannel experiences. Rainey noted that Walmart is gaining higher-income shoppers in part because of the company's focus on omnichannel retailing. Rainey said:

"We talk about the different ways that we can serve consumers and how that's different from say, a decade ago or even five years ago. As we've become omni, we have the ability to sell customers in the store or at the curb, deliver to their home and we can do that whenever and however they want. We want it to be a great price and we want it to be convenient and we can do both at the same time."

From here, McMillon said Walmart will continue to balance growth, profit and investments in people and technology as well as automation, but it's real time conversation.

Rainey added:

"We feel like we're striking the right balance between profit expansion and investment in the business. We're all very focused on making sure that we are healthy for the next generation. We certainly provide an outlook over the next three to five years, but we want to continue to have the same type of financial performance after that and that requires a level of investment in the business."