Adam Hotchkiss

Adam Hotchkiss asked about the strong remaining performance obligations (RPO) metric for the second consecutive quarter, inquiring about contract duration and the interplay between revenue growth and RPO growth. He also asked for comments on the sales and marketing (S&M) expense coming in lighter than expected and any changes in sales rep productivity.

Answer

Or Offer, Co-Founder and CEO, highlighted the success with multi-year commitments, with 58% of revenue now under such contracts, indicating the value of their data and contributing to RPO growth. He explained that the lighter S&M expense was a result of optimizing the go-to-market organization: an initial over-hiring phase in Q1 was followed by optimizing the team by retaining the most successful reps, leading to improved S&M efficiency and higher yield.

Adam Hotchkiss of Goldman Sachs inquired about the strong Remaining Performance Obligations (RPO) metric for the second consecutive quarter, asking about contract duration trends and the relationship between revenue growth and the higher RPO growth rate. He also questioned the lighter-than-expected sales and marketing expense, seeking insight into changes in sales rep productivity and any specific Q3 factors.

Answer

Or Offer, Co-Founder and CEO, attributed the strong RPO to successful multi-year commitments, with 58% of revenue now under such contracts, reflecting strong customer value and ROI. He explained that the optimized sales and marketing expense resulted from an initial overhire in Q1 to ramp sales personnel, followed by a strategic optimization process of retaining high-performing reps and letting go of less successful ones, thereby improving S&M yield and productivity.

Adam Hotchkiss asked CEO Or Offer to identify the single most important execution item for the year. He also requested an update on the progress of the Data as a Service (DaaS) and large language model (LLM) opportunities.

Answer

CEO Or Offer identified driving upsells within the enterprise customer base as the most impactful opportunity, given the large number of existing clients using only a fraction of Similarweb's seven-plus solutions. He stated that the DaaS motion is performing successfully, with strong demand from software vendors looking to integrate GenAI and chatbot insights into their own offerings.

Adam Hotchkiss asked for an update on monetizing solutions for brands affected by consumer shifts to Gen AI and the status of the large language model (LLM) data opportunity.

Answer

CEO Or Offer explained that brands increasingly need visibility into how consumers use chatbots, positioning Similarweb as a key data provider. Regarding LLMs, he described it as a niche market with a small number of high-value customers who recognize Similarweb as the leading source for digital market data, resulting in significant but infrequent engagements.

Adam R. Hotchkiss inquired about any updates to Guidewire's communication regarding end-of-support expectations for on-premise customers, given that approximately three-fourths of the business's ARR is now cloud-based.

Answer

CEO Mike Rosenbaum stated that end-of-support expectations remain unchanged and clear, ensuring no customer is surprised. He reiterated Guidewire's commitment to investing in mechanisms to make the migration process smoother, less risky, and less costly for all on-premise customers.

Adam Hotchkiss from Goldman Sachs asked whether the strong Q3 ARR performance was due to deals being pulled forward from Q4 or simply stronger underlying demand and execution.

Answer

CEO Mike Rosenbaum, President & CRO John Mullen, and CFO Jeff Cooper all confirmed the results were driven by strong execution and high close rates, not a pull-forward of deals. Mullen highlighted that the sales team successfully closed deals in Q3 that could have easily slipped into Q4, demonstrating exceptional execution.

Adam Hotchkiss of Goldman Sachs questioned whether the strong Q3 ARR result was due to deals being pulled forward from Q4 or simply stronger-than-expected quarterly performance.

Answer

CEO Mike Rosenbaum, President John Mullen, and CFO Jeff Cooper collectively stated the outperformance was driven by strong sales execution and high close rates, not a pull-forward of deals from Q4. They noted that deals they had modeled as potentially slipping into Q4 were successfully closed within Q3.

Adam Hotchkiss asked about the evolution of the cloud conversation across different geographies, particularly in Europe, and inquired about the adoption of non-core InsuranceSuite products among seasoned cloud customers.

Answer

CEO Mike Rosenbaum noted that while North America initially led the cloud charge, momentum has stepped up globally in recent quarters, including in Europe and Asia-Pacific, as the cloud architecture is now well-vetted worldwide. He added that while the non-core analytics products like HazardHub are healthy and doing well, the company's primary focus remains on the strategic success of its core systems business, which can sometimes usurp focus from the add-on business.

Adam Hotchkiss asked about the performance and pipeline for the recently acquired DocFox and Full Circle products. He also inquired if the strong results had changed the company's thinking on the mix between revenue growth and margin expansion to achieve its FY27 Rule of 40 target.

Answer

CEO Sean Desmond reported that Full Circle is on track with its revenue plan, while technical work on DocFox is setting up sales cycles for the second half of the year. CFO Greg Orenstein stated that while the company will always prioritize growth, the commitment to achieving the Rule of 40 by the end of FY27 remains firm, without specifying a change in the contribution mix.

Adam Hotchkiss from Goldman Sachs asked for more detail on the primary friction points in customer implementations and how improving them could impact pipeline conversion and sales cycle length. He also requested color on a revenue recognition adjustment that benefited professional services.

Answer

CEO Sean Desmond explained that historical friction came from long, highly configurable projects. The market appetite has shifted towards faster, more standardized deployments. nCino has evolved by reining in configurability to deliver more out-of-the-box functionality, which should shorten time-to-value. CFO Greg Orenstein clarified the services revenue adjustment was a standard reallocation of fees between subscription and services based on standalone selling price evaluation.

Adam Hotchkiss inquired about the performance of the business outside of mortgage, the Q4 deal pipeline, and customer feedback on the new Intelligent Solution Framework pricing model.

Answer

Chief Financial Officer Greg Orenstein highlighted strong international deal signings and a significant U.S. enterprise deal closing early in Q4, noting the remaining pipeline is composed of smaller deals. Chief Executive Officer Pierre Naude added that customer feedback on the new asset-based pricing model is highly positive, as it simplifies the buying process and aligns nCino's success with the bank's growth.

Adam Hotchkiss inquired about the general willingness of financial institutions to spend, how nCino is building trust for new products like Banking Advisor and DocFox, and the reasons for the sequential decrease in Remaining Performance Obligation (RPO) despite positive demand commentary.

Answer

CEO Pierre Naude described a return to normalcy in the U.S. with consistent innovation, while international markets are seeing larger transformation deals in the pipeline. He highlighted strong early adoption of the new Banking Advisor product. CFO Greg Orenstein explained that RPO can be lumpy, citing a large U.K. client's 3-year renewal (instead of a longer term) and shorter-duration mortgage renewals as factors impacting the metric this quarter.

Adam Hotchkiss asked for details on the CPM Express offering, including how reps are pitching it, its market resonance, and its potential financial contribution.

Answer

CEO & President Tom Shea positioned CPM Express as a key part of a broader productization strategy focused on delivering value more quickly. He emphasized that it offers the full power of the OneStream platform through a faster, pre-configured implementation, acting as a gateway for customers to get started without compromise. He noted that sales enablement for the product is deepening after a successful validation phase.

Adam Hotchkiss from Goldman Sachs asked about the market resonance of the CPM Express offering, particularly whether its faster time-to-value is proving effective in the current economic climate.

Answer

Co-Founder and CEO Tom Shea confirmed that CPM Express is seeing very exciting early feedback. He described it as a faster on-ramp to the OneStream platform for emerging customers, emphasizing its strong time-to-value and its strategic role in onboarding clients to additional capabilities like AI.

Adam Hotchkiss from Goldman Sachs asked for clarification on near-term headwinds, seeking to distinguish the impact of foreign exchange rates from other non-currency challenges like deal cycle elongations.

Answer

CFO Bill Koefoed quantified the currency impact, stating that with 32% of the business being international, the 6% strengthening of the U.S. dollar from September to December negatively impacted key financial metrics by approximately 2%. He did not elaborate further on the non-currency headwinds.

Adam Hotchkiss of Goldman Sachs asked if rising advertising costs are impacting customer conversations about social media's value and sought an explanation for the sequential decline in RPO and cRPO.

Answer

CEO Ryan Barretto confirmed that disruptions in traditional search are a significant topic in customer discussions, positioning Sprout's platform as a solution to reclaim lost traffic. CFO Joe DelPretto attributed the RPO and cRPO decline to typical business seasonality, noting that larger enterprise deals and renewals are historically concentrated in the second half of the year.

Adam Hotchkiss asked for an update on premium module attach rates, particularly for Tagger, in the context of ongoing pressure on discretionary budgets. He also requested more color on the types of roles eliminated and the specific reallocation priorities within the R&D reorganization.

Answer

CEO Ryan Barretto responded that the company is excited about the progress with Tagger, noting recent wins across diverse industries like airlines, sports, and financial services. Regarding the R&D reorg, he stated that the resources are being reallocated to support the key product themes and growth initiatives that were highlighted in his prepared remarks, such as enterprise features and listening analytics.

Adam Hotchkiss of Goldman Sachs asked for quantification of deals that were pushed from Q2 but have since closed, and inquired if the company's guidance philosophy for entitlements and true-ups has become more conservative.

Answer

President and CEO David DeStefano confirmed some delayed deals have closed but could not quantify the amount, emphasizing it's a timing issue, not an indefinite delay. CFO John Schwab noted that the guidance philosophy has not changed but now reflects the reduced visibility and lower activity for entitlements and true-ups observed in Q2.

Adam Hotchkiss asked for clarification on Vertex's tariff-related product offerings and inquired about the performance and technical differentiation of the newly GA'd consolidated ecosio e-invoicing product.

Answer

CEO David DeStefano clarified that tariffs are an income tax issue, so Vertex does not offer a direct solution. The indirect opportunity comes from supply chain shifts that create new VAT and e-invoicing needs. He added that the new e-invoicing solution, which went GA in March, differentiates by merging VAT compliance with e-invoicing into a single, reconciled process, reducing errors for customers.

Adam Hotchkiss asked about the adoption curve for dedicated tax systems, questioning whether it is linear or follows more of an S-curve, particularly in the context of new offerings like e-invoicing.

Answer

CEO David DeStefano characterized the core tax business as having a linear growth profile, but positioned the emerging e-invoicing opportunity as following an S-curve. He described 2025 as a 'proving year' to build out the product and customer references, which will position Vertex to capture a significant demand cycle he anticipates for 2026 and beyond.

Adam Hotchkiss asked about tax complexity catalysts beyond e-invoicing and ERP upgrades. He also inquired how much the e-invoicing offering is impacting traditional indirect tax RFPs and whether customers are seeking a unified platform.

Answer

CEO David DeStefano responded that the primary catalyst remains the steady drumbeat of complex rule changes from governments seeking revenue, which drives audit pressure. He confirmed that the unified platform value proposition is resonating, with customers seeing the benefit of connecting the tax determination engine, e-invoicing, and VAT compliance in a single solution.

Adam Hotchkiss from Goldman Sachs asked for more detail on the value added by new data connectors for platforms like Snowflake, Oracle Fusion, and Workday, and how this compares to previous data connectivity processes.

Answer

Co-CEO Therese Tucker explained that direct connectors provide a faster, smoother, and more reliable way for customers to get live compared to the previous method of using extract files and FTP sites. This enhancement improves the speed and reliability of data integration, sometimes enabling real-time data flow.

Adam Hotchkiss asked what best practices management is employing to navigate the current uncertain environment, drawing from the company's experience in past economic cycles.

Answer

Co-CEO Therese Tucker emphasized a relentless focus on 'time to value,' stating customers will invest if they see a quick and clear payback. Co-CEO Owen Ryan added the importance of discipline, patience, and focus on execution, drawing lessons from his past experiences. He stressed sticking to their playbook and not getting distracted by short-term market noise.

Adam Hotchkiss of Goldman Sachs asked how much of the pipeline growth is from partners outside of SAP and questioned the drivers behind the record quarter for strategic products.

Answer

Co-CEO Owen Ryan explained that pipeline growth is broad-based, stemming from self-generation, the SAP channel, and a notable upturn in opportunities with Workday. He attributed the success of strategic products to the focus brought by dedicated pillar leaders, which has increased comfort and confidence among the sales team and partners in promoting these solutions.

Adam Hotchkiss referenced the Analyst Day commentary and asked for the long-term outlook for the SMB and solopreneur segment. He also sought to clarify if the rising customer acquisition cost issue was confined to the lowest end or if it also affected the broader SMB and mid-market segments.

Answer

CFO Brian Mulroy clarified that the SMB, solopreneur, and freelancer segment is now about 40% of ARR and that the weakness is concentrated at the very low end (untrained marketers and freelancers), not the broader, healthier SMB business. CEO Bill Wagner added that the decision to reduce paid spend was specific to this cohort due to its unique combination of lower ARR and higher churn.

Adam Hotchkiss asked about the enterprise product pipeline beyond AI Optimization, the long-term potential for average ARR per customer (AARPC), and any early feedback from the AI Optimization beta.

Answer

CEO William Wagner noted a strong pipeline with 1,000 accounts on a watchlist for AI products and a large upsell opportunity within their 8,500 enterprise customers. CFO Brian Mulroy added that AARPC is expected to approach and exceed $100,000 over time. Wagner stated it was too early to share specific beta feedback but emphasized customers need to manage visibility in AI-driven results.

Adam Hotchkiss from Goldman Sachs asked if the goal of the enterprise platform is to consolidate all point solutions for a customer and how Semrush views organic versus inorganic growth to achieve this. He also inquired about the difference in monetization opportunities between agency and non-agency customers.

Answer

President Eugene Levin explained that for brands, the goal is to replace the 'patchwork' of disparate tools with Semrush's integrated platform. For agencies, the process is longer as they must support their clients' existing tools. He cited a recent acquisition as enhancing their ability to consolidate the stack. CFO Brian Mulroy added that monetization for both agencies and companies scales on the same factors: marketing disciplines covered, data volume needed, and number of users.

Adam Hotchkiss asked for help reconciling the commentary on moderating sustainability demand with the broad-based acceleration seen in subscription revenue and metrics like CRPO. He also questioned Workiva's competitive moat against emerging generative AI technologies and agents.

Answer

CEO Julie Iskow explained that while the guide is risk-adjusted for macro and sustainability factors, the strong revenue results are driven by the broad-based demand for their resilient, multi-solution platform, a strong partner ecosystem, and the nature of a subscription model reflecting prior bookings. Regarding AI, she emphasized Workiva's moat is built on a decade of trusted customer relationships, a secure and auditable platform environment where customer data is protected, and the ability to leverage that unique data to deliver differentiated AI capabilities.

Adam Hotchkiss asked for clarification on what a 'soft buying environment' entails and whether its impact could be quantified, and also inquired about the opportunity from the mandated financial consolidation for U.S. federal agencies.

Answer

CEO Julie Iskow explained the 'cautious' environment is relative to the stellar bookings of 2024 and reflects customers being more thoughtful with spending, which may lengthen some deal cycles. She reaffirmed the 20% subscription growth guide. Regarding the federal opportunity, she noted Workiva is on the approved marketplace and sees it as a promising multiyear effort.

Adam Hotchkiss asked if there is a risk of prospects delaying sustainability-related projects due to market uncertainty. He also questioned the profitability outlook, noting the Q1 margin dip and asking how the company is balancing investment cadence with its long-term margin targets.

Answer

CEO Julie Iskow stated that the company has not observed any trend of customers deferring sustainability projects. CFO Jill Klindt addressed profitability, explaining that Q1 margin seasonality is typical due to annual raises and taxes. She affirmed that the company maintains a balanced approach to investments to capitalize on market opportunities while remaining on track to meet its 2027 and 2030 margin goals.

Adam Hotchkiss of Goldman Sachs asked about the anticipated go-to-market mix between direct sales and partners for ESG in Europe. He also questioned how customer adoption timing for ESG solutions is aligning with the phased CSRD compliance deadlines.

Answer

CEO Julie Iskow described the European strategy as 'partner first' for ESG to accelerate growth, supplemented by direct sales. She explained that while adoption timing varies by customer maturity, there is a clear demand uptick driven by the 2025 deadline for the first cohort, reinforcing the view of a long, durable demand cycle over multiple years.

Adam Hotchkiss from Goldman Sachs asked for an updated view on how financial institution M&A impacts Alkami and requested a breakdown of Mantle's specific revenue contribution for the quarter.

Answer

CEO Alex Shootman noted that more M&A could occur if large pending deals are approved. CFO Bryan Hill reiterated that Alkami is a net beneficiary of M&A, having gained nearly 500,000 users over four years. Hill also disclosed that Mantle contributed just over $10 million in revenue for Q2, slightly ahead of plan, and is on track to meet its full-year targets for revenue and ARR under contract.

Adam Hotchkiss from Goldman Sachs inquired about the sustainability of high bank spending on digital account opening and the remaining integration work for the MANTL acquisition.

Answer

CEO Alex Shootman explained that the high spending is driven by an existential need for regional institutions to compete with the superior experiences offered by megabanks and fintechs. CFO Bryan Hill added that there are no major blockers to MANTL's integration, citing its strong existing core integrations and noting that operational and go-to-market integration is already progressing well.

Adam Hotchkiss questioned the potential to cross-sell the Alkami platform into MANTL's customer base and asked if the renewal pull-forwards in 2024 would affect 2025 expansion opportunities.

Answer

CFO W. Hill confirmed that MANTL's client base is in Alkami's sweet spot ($500M to $10B in assets), creating a strong, complementary cross-sell opportunity. He also clarified that the client sales team's success in cross-selling is not dependent on the renewal cycle, and he expects them to continue contributing significantly to new contract value regardless of the lower number of renewals in 2025.

Adam Hotchkiss inquired about the level of client education required for data-related sales and whether the data and AI offerings are helping to improve win rates specifically with banks.

Answer

CEO Alex Shootman noted the market has matured, with executives now understanding the need for data-driven strategies, shifting the conversation from evangelism to implementation. CFO Bryan Hill supported this by highlighting that the data product attachment rate on new deals has risen to nearly 75% and is now a leading cross-sell product. Regarding banks, Hill stated that the data product is a key differentiator across all institution types and that the company is gaining significant traction, now competing in as many bank deals as credit union deals.

Adam Hotchkiss asked for clarification on the rapid onboarding of large clients and why the associated volume-based revenue might not be fully recurring, noting the guidance implies a larger second-half revenue step-down than usual.

Answer

CEO Matt Hawkins highlighted the platform's agility in rapid client deployment. CFO Steve Orescovich explained the revenue is highly recurring but currently appears as volume-based because it exceeds contractual minimums; it will convert to subscription revenue over time. He attributed the second-half guidance shape to normal seasonality in patient payments and a prudent outlook on utilization.

Adam Hotchkiss asked for a breakdown of the drivers behind the first-quarter outperformance and what components are embedded in the updated full-year guidance, particularly concerning patient payment volumes.

Answer

Chief Financial Officer Steve Oreskovich explained that the Q1 outperformance was primarily driven by the continued strength in patient payment utilization, a trend that began in 2024. For the full-year guidance, Oreskovich noted that 98% of revenue is typically contracted at the start of the year. The high end of the guidance range assumes this strong patient utilization continues, while the low end accounts for a potential slowdown or a degradation in patients' ability to pay, though no such degradation was observed in Q1.

Adam Hotchkiss asked for more detail on the 30% of clients from the competitor cyber event who are pursuing cross-sell opportunities, including which platform modules are of most interest and how this is factored into guidance.

Answer

CEO Matt Hawkins explained that these clients are interested in modules consistent with the broader client base, focusing on automation, denial prevention, and patient payments. CFO Steve Oreskovich added that this potential is embedded in the overall revenue guidance and net revenue retention expectations, noting that Waystar began 2024 with about 95% of revenue under contract, a slight deviation from the typical 98% due to the rapid client influx.

Adam Hotchkiss asked about the sustainability of the elevated demand from new logos following the competitor cyber event, how this was factored into the initial 2025 outlook, and how Q3 patient payment volumes performed against expectations.

Answer

CEO Matthew Hawkins confirmed that demand remains robust, with clients conducting rigorous, complex evaluations for long-term partners. CFO Steven Oreskovich noted the 2025 outlook assumes a return to a more normal cadence for sales and implementations. Oreskovich also stated that Q3 patient payment volumes were slightly above expectations due to increased healthcare service utilization.

Adam Hotchkiss asked about common priorities among the top customers that renewed and the outlook for gross margin improvement over the next two years.

Answer

CEO Matt Flake stated the major renewals across different product lines validate Q2's best-in-class solutions. CFO Jonathan Price projected continued gross margin expansion, driven by pricing, efficiencies, and a significant benefit in 2026 from the completed public cloud migration, targeting 60% and higher.

Adam Hotchkiss of Goldman Sachs asked about 2025 bank IT spending priorities and how a potential pickup in commercial lending might impact Q2. He also inquired about the barriers to cross-selling commercial banking solutions and the source of Q2's confidence in its ability to continue executing.

Answer

CEO Matt Flake responded that the strategic need for banks to secure operating deposits drives demand for Q2's modern commercial platform, making a lending pickup a positive tailwind. He attributed Q2's cross-selling confidence to its proven track record, strong reputation, and operational discipline in handling complex system conversions, which de-risks the process for financial institutions.

Adam Hotchkiss asked about the drivers behind the significant growth in Innovation Studio bookings and inquired about the headwinds in services revenue and what might cause a turnaround.

Answer

CFO Jonathan Price explained that Innovation Studio growth is primarily driven by existing customers adopting more partner solutions. Regarding services, he stated that Q2 will remain disciplined on pricing and margins for that work, even if demand returns. President Kirk Coleman added that the company will be selective about which services projects it undertakes.

Asked about the progress in resolving legacy customer satisfaction issues to normalize churn and the company's revenue exposure to global trade volume volatility.

Answer

Andrew Appel estimated they are about two-thirds of the way through fixing legacy churn issues, expecting it to normalize in 4-5 quarters. Marje Armstrong stated that direct revenue exposure to trade volume volatility is minimal, at around 2-3% of total revenue.

Adam Hotchkiss asked about the progress in resolving legacy customer satisfaction issues, seeking to understand what 'inning' the company is in for normalizing churn. He also inquired about E2open's revenue exposure to volatility in global trade volumes.

Answer

CEO Andrew Appel estimated the company is in the 'fifth and sixth inning' of resolving legacy issues, with about 4-5 quarters remaining until past problems are fully worked through and gross retention can normalize to the 93-95% range. CFO Marje Armstrong clarified that direct revenue exposure to trade volume is minimal, at approximately 2% of total revenue, or around 3% when including tiered contracts, most of which have been converted to fixed price.

Adam Hotchkiss inquired about the renewed focus on the mid-market segment, asking what is required for success, and also asked about historical customer behavior during volatile trade policy environments.

Answer

CCO Greg Randolph outlined a three-pronged strategy for the mid-market: stabilizing retention, dedicating sales capacity to targeted products like global trade, and focusing on logistics. Both Randolph and CEO Andrew Appel noted that trade policy uncertainty, similar to past tariff announcements or COVID disruptions, creates significant demand and new professional services opportunities as clients prepare for potential impacts.

Asked about the strategy for the mid-market segment and how historical customer behavior during periods of trade policy uncertainty informs the company's current outlook.

Answer

The mid-market strategy involves stabilizing retention, dedicating sales capacity to specific products for volume, and refocusing on logistics. The company is seeing increased demand for its global trade platform as clients prepare for potential policy changes, similar to how they reacted to past tariff announcements and the supply chain disruptions caused by COVID.

Adam Hotchkiss inquired about the role of systems integrators (SIs) as a channel for demand and what E2open is doing to foster that relationship. He also asked for a deeper explanation of the significant reduction in the full-year professional services (PS) revenue guidance.

Answer

CEO Andrew Appel detailed a strategy of co-selling with SIs to jointly drive client transformations, moving beyond seeing them as just implementation support. He cited active partnerships with major SIs on large CPG and auto accounts. Regarding the PS revenue guidance, CFO Marje Armstrong attributed the reduction to the inherent volatility of services, the impact of delayed large subscription deals which carry more attached services, and a strategic focus on ensuring flawless implementations and customer satisfaction, which sometimes comes at the expense of short-term PS revenue.

Adam Hotchkiss asked about the drivers for the 2025 adjusted EBITDA margin guidance of around 19%, seeking details on investments and potential upside. He also requested an update on the expected 200 bps headwind from the ADT transition.

Answer

CEO Stephen Trundle explained that while R&D expenses will grow with revenue, the company is gaining operating leverage from G&A and maturing ventures, supporting the higher margin outlook of 19% to 19.5%. This is despite absorbing the dilutive impact of the early-stage CHeKT acquisition. On ADT, he confirmed there are no changes to the outlook; the company still models the corporate residential business moving off the platform, while other ADT segments are expected to remain partners.

Adam Hotchkiss asked about Alarm.com's pricing strategy for new AI-driven features, questioning how the company balances the ability to take price against using these features as a customer retention tool. He also inquired about the top-of-funnel demand opportunity in the commercial segment and how investments like OpenEye are improving customer conversion.

Answer

CEO Stephen Trundle explained that AI capabilities like AI-Deterrence reduce costs for service provider partners, which creates an opportunity for Alarm.com to price the feature beneficially. However, he emphasized that the primary goal is broad market adoption, which necessitates keeping the cost affordable for partners. Regarding the commercial segment, Trundle described demand as 'fairly constant' to 'slightly better,' with particular strength seen in access control hardware sales during the quarter, indicating a healthy market.

Asked about the drivers behind the strength in current RPO, particularly regarding cross-sell momentum, and inquired about the commonalities and visibility of large, million-dollar deals.

Answer

The RPO strength was attributed to customers making long-term commitments and expanding their usage, validating their belief in Zuora's technology. Examples included a 5-year renewal with a major auto manufacturer and expansions with Google Fiber and a large software company. For large deals, executives noted they have good visibility due to strong customer relationships, though timing can vary. The overall strategy is to land with large enterprises that have the potential to become multi-million dollar accounts.