Allan Verkhovski

Allan Verkhovski inquired about the impact of larger competitive takeouts on the Q1 deferred revenue growth guidance and the assumptions for enterprise and online revenue growth for fiscal year 2027.

Answer

Michelle Chang (CFO, Zoom) clarified that the deferred revenue guidance reflects a billing dynamic due to grace periods for large competitive wins, which is positive for Zoom and visible in the long-term RPO growth. For FY27, she expects slight online growth and enterprise to be the primary driver, fueled by AI monetization, product diversification, and channel expansion, while also noting a 40 basis point headwind from a single large competitor's white-label churn.

Allan Verkhovski inquired about the impact of larger competitive takeouts on the Q1 deferred revenue growth guidance and sought color on the assumptions for enterprise and online revenue growth within the fiscal year 2027 revenue guidance.

Answer

Michelle Chang, CFO, Zoom, clarified that the deferred revenue guidance reflects a billing dynamic from large competitive wins, where grace periods are provided, and is not a revenue recognition issue. For FY 2027, she noted a 40 basis point headwind from a white-label churn, expecting slight online growth and enterprise to be the primary growth driver through AI monetization, product diversification, and channel expansion.

Allan Verkhovski requested clarification on the revised enterprise revenue outlook, asking if it implies a wider range of outcomes. He also asked for an updated timeline on when the net retention rate (NRR) might return to 100%.

Answer

CFO Michelle Chang clarified that the current outlook assumes a macro environment consistent with what was observed in Q1. Regarding the net dollar expansion rate, she highlighted its stability over the past four quarters but did not provide a specific timeline for it to reach 100%, stating that current performance is in line with guidance.

Allan Verkhovski from Scotiabank asked about the dynamics of deferred revenue, which met expectations despite large deal announcements, and the conservatism in the Q4 guidance.

Answer

CFO Michelle Chang explained that deferred revenue growth was driven by tightening discount practices and lengthening billing terms, trends she expects to continue. She affirmed that her guidance philosophy is consistent with Zoom's historical approach and reiterated that total revenue is a more reliable indicator of business performance than deferred revenue, which can fluctuate quarterly.

Allan Verkhovski asked about the decision behind raising the price on 'service' and monday.com's strategy for potentially raising prices on other products within its portfolio.

Answer

Eran Zinman, monday.com Co-CEO, initially clarified that there hadn't been a recent general price increase, only one about a year and a half prior. He later corrected himself, stating that there was an 18% price increase applied to a small subset of core Monday Service customers.

Allan Verkhovski asked about the decision to raise prices on monday Service and the company's strategy for potentially raising prices on other products in its portfolio.

Answer

Eran Zinman, Co-CEO, clarified that there hasn't been a recent company-wide price increase on products, with the last one occurring about a year and a half ago. He later specified that an 18% price increase was applied to a small subset of core Monday Service customers, but not a significant amount of customers overall.

Allan Verkhovski asked for details on which types of customers are using AI credits the most. He also asked how the current macro environment compares to the 'base case' scenario laid out at the last Analyst Day.

Answer

Co-CEO Roy Mann explained that AI adoption is currently led by tech-oriented 'champions' who experiment with AI blocks, and the company is now working to productize these use cases for broader adoption. CFO Eliran Glazer stated that based on core performance, the company remains in its 'base case' from the Investor Day model, though it is taking a more conservative approach to guidance.

Allan Verkhovski asked for a long-term view on AI monetization, inquiring what an average customer might be spending on AI credits relative to their seat license costs a few years from now.

Answer

co-CEO Roy Mann stated that it was too early to predict future spending patterns, describing it as a 'predicting the future' question. He explained that since the AI pricing model was just released, the company needs to gather more customer usage data before it can provide a reliable forecast on relative spending.

Allan Verkhovski inquired about the customer reception of AI capabilities across the platform, any shifts in competition due to AI, and its impact on sales cycles. He also asked for clarification on the implied Q4 subscription revenue growth deceleration and the outlook for next year, excluding Marriott contributions.

Answer

Ramesh Srinivasan (President and CEO, Agilysys) explained that AI is integrated throughout the business, enhancing products (e.g., natural language processing, voice recognition) and strengthening competitive advantage, with no significant competitive AI activity observed. Dave Wood (CFO, Agilysys) clarified that Q4's implied deceleration is due to Book4Time acquisition comps, with the core business still growing at 25%, and expects next year's growth to remain in the 20% range.

Allan Verkhovski of BTIG asked about the resonance of AI capabilities with customers, any shifts in competition due to AI, and its impact on sales cycles. He also inquired about the implied deceleration in Q4 subscription revenue growth and what to highlight for next year's growth, excluding Marriott.

Answer

President and CEO Ramesh Srinivasan explained that AI is permeating all business areas, with no significant competitive AI offerings observed. He detailed various AI applications in products, enhancing competitive advantage. CFO Dave Wood attributed the implied Q4 subscription growth deceleration to Book4Time acquisition comps, noting the core business still grows around 25%, with next year's growth expected in the 20%+ range, plus larger projects.

Allan Verkhovski from Scotiabank asked about the ROI of AI Studio in a competitive market, key learnings from selling it, and the likelihood of securing a seven-figure AI Studio deal by year-end. He also inquired about the outlook for tech customer revenue within the updated guidance and the impact of FX.

Answer

Co-Founder and CEO Dustin Moskovitz stated that AI Studio's value lies in its native integration within Asana workflows, which leads to higher success rates. He noted that while it will take time for Studio revenue to eclipse large seat-based contracts, compounding usage and new features are positive catalysts. CFO Sonalee Parekh clarified that the Q1 FX impact was minimal. She stated that while the large renewal will impact the tech vertical, the non-tech business, representing over 70% of revenue, continues to grow healthily in the mid-teens.

Allan Verkhovski of Scotiabank requested more color on the 'general unease' mentioned by management, asking how it developed during the quarter and which types of customers were expressing it most.

Answer

CEO Peter Gassner clarified that the unease is based on personal conversations, not financial results. He explained it's multifaceted: large pharma is concerned about drug approval timelines and potential impacts on M&A from policy changes, while smaller biotechs are worried about the future funding environment and interest rates, leading them to consider being more conservative.

Allan Verkhovski asked about key learnings from recent conversations with top-20 CRM customers and the importance of Veeva's AI roadmap in their decision to migrate to Vault CRM.

Answer

CEO Peter Gassner shared that customers are moving from broad AI experimentation to focused, ROI-driven projects. He emphasized that for large customers, AI is a significant part of the Vault CRM decision, as Veeva offers the fastest path to implementing useful, in-workflow AI capabilities compared to a custom build on another platform.

Allan Verkhovski asked about the strategy for general pricing increases amid the current macro environment and the drivers supporting confidence in sustained GBSG revenue growth above 15%.

Answer

CEO Sasan Goodarzi explained that pricing power comes from delivering value, noting that as customers adopt more of the Intuit platform, they often save money by eliminating other applications. This value exchange, where customers get more benefit for less total spend, provides significant pricing opportunity. He stated that confidence in GBSG growth stems from winning in small business and mid-market, expanding services, and getting Mailchimp to be accretive to growth.

Allan Verkhovski asked about the company's approach to general pricing increases in the current macro environment and sought an update on the confidence in sustaining over 15% revenue growth for the Global Business Solutions Group (GBSG).

Answer

CEO Sasan Goodarzi explained that pricing power comes from delivering value, noting that customers often save money by consolidating other applications onto Intuit's platform. This makes Intuit a price disruptor for larger customers. He expressed confidence in long-term GBSG growth driven by winning in small business and mid-market, expanding services, and eventually having Mailchimp become accretive to growth.

Allan Verkhovski asked about the puts and takes for the Q2 revenue guidance and the reason for the first-ever sequential decline in current deferred revenue.

Answer

CFO Joe Del Preto explained that the guidance reflects a measured approach assuming a stable macro environment. He clarified that the sequential decline in deferred revenue was due to the burn-off from an unusually large volume of annual and multi-year deals signed in Q4, which created a larger-than-normal sequential impact.

Allan Verkhovski asked for a deeper dive into the trend of system integrators (SIs) priming implementations, comparing the business trends over the past three months to the year-ago period.

Answer

CEO David Ossip emphasized that the SI ecosystem is a crucial part of their strategy, with specific targets for SI involvement in sales and projects. He explained that Dayforce uses a tiered approach, engaging large Tier 1 partners like E&Y for enterprise deals and other specialized SIs for mid-market accounts. This strategy allows Dayforce to scale its services organization efficiently and helps build the sales pipeline, with management encouraged by current trends.

Allan Verkhovski asked how the cloud revenue outlook has changed given the back-end weighted enterprise deals. He also sought clarification on why performance was described as 'in line' with expectations this quarter, compared to 'in line to slightly ahead' in the previous quarter.

Answer

CFO Joe Binz clarified that Q3 cloud revenue growth of 25% was better than expected, driven by paid seat expansion and migrations. He explained the smaller beat compared to H1 was due to Q3 being a seasonally slower quarter, contrasting with exceptionally strong execution in Q1 and Q2, along with some negative mechanical impacts from Data Center and Marketplace revenue.

Allan Verkhovski inquired about the potential for a similar beat-and-raise cadence in fiscal '26 and sought to confirm the expected revenue contribution from Airbase for the current year.

Answer

CFO Ryan Glenn stated that while the guidance philosophy will remain consistent (with more prudence for the full year), the magnitude of FY25's overperformance shouldn't be the baseline expectation. He also reiterated that Airbase's contribution is expected to be roughly 1% of total revenue for the fiscal year.