Arsenije Matovic

Arsenije Matovic of Wolfe Research asked for the drivers behind record bookings in Transporeon and TC1, and also requested an update on the timing of the delayed financial audit completion.

Answer

Executive Robert Painter attributed Transporeon's record bookings to new logo wins and cross-selling of AI-powered capabilities. He noted TC1 growth is driven by both new logos and significant cross-sell/upsell to the existing base, enabled by a new named-account model. Regarding the audit, Executive Phil Sawarynski stated that while they underestimated the timeline previously, they are working diligently with EY and have seen nothing to indicate a restatement. Robert Painter added an expectation that it would be done before the Investor Day.

Arsenije Matovic, on behalf of Josh Tilton, asked about the drivers behind record bookings in Transporeon and strong growth in AECO's TC1, and also requested an update on the delayed audit review.

Answer

Executive Robert Painter attributed Transporeon's record bookings to new logo wins and cross-selling AI-driven products, while TC1's success comes from strong cross-selling and improved go-to-market execution. Executive Phil Sawarynski explained the audit delay was due to underestimating the scope of EY's procedures but expects completion before the December Investor Day.

Asked for the drivers behind record bookings in Transporeon and strong growth in AECO's TC1. Also requested an update on the delayed financial audit, asking what changed and if there was a new timeline.

Answer

Transporeon bookings were driven by new logos and cross-selling, including AI-powered products. TC1 growth comes from both cross-selling to the existing base and new logo wins, supported by product bundling and go-to-market improvements. Regarding the audit, the company underestimated the breadth and depth of E&Y's procedures but has seen nothing to indicate a restatement and anticipates completion before the Investor Day.

Arsenije Matovic from Wolfe Research asked about the roadmap for new AI capabilities to drive Teamwork Collection momentum and sought clarity on the conservatism in the cloud migration growth forecast for FY26.

Answer

CEO & Co-Founder Mike Cannon-Brookes confirmed a continuous pipeline of 'fantastic' new AI capabilities, citing strong adoption metrics like 2.3 million AI users and 5x quarter-over-quarter token usage growth. CFO Joe Binz added that while FY25 migration contribution was in the mid-to-high single digits, the FY26 guidance of mid-single digits is conservative due to the complexity of remaining large customer migrations. However, the 2-3 year outlook remains in the mid-to-high single-digit range.

Arsenije Matovic of Wolfe Research asked if new AI capabilities could be expected in the Teamwork Collection to drive momentum, and for clarity on the 'mid-single-digit' cloud migration growth contribution assumed in FY26 guidance.

Answer

CEO Mike Cannon-Brookes confirmed that new AI capabilities are continuously shipping, citing a 5x quarter-over-quarter increase in AI token usage as evidence of strong adoption. CFO Joe Binz clarified that the migration contribution to cloud revenue was in the 'mid-to-high single-digit' range in FY25. The 'mid-single-digit' guidance for FY26 is a conservative estimate due to the complexity of remaining migrations, but the 2-3 year outlook remains in the 'mid-to-high' range.

Arsenije Matovic of Wolfe Research, LLC asked if Meta's new measurement tools present an opportunity for Applovin, whether the 10% e-commerce revenue target for the year remains intact, and for clarification on the components of the Q3 growth guidance.

Answer

CEO Adam Foroughi stated that Meta's measurement integrations don't overlap with Applovin's business and that the opportunity in non-gaming is vastly larger than gaming, so its share of the business will grow significantly over time. CFO Matt Stumpf explained the Q3 guide reflects the typical 3-5% sequential growth from model learning, plus an incremental uplift from the apps business divestiture.

Arsenije Matovic asked if Meta's new measurement tools present an opportunity for Applovin and questioned the drivers behind the Q3 sequential growth guidance.

Answer

Co-Founder, CEO & Chairperson Adam Foroughi declined to comment on a competitor's integration but reiterated that their Adjust business is run separately. He emphasized the vast long-term opportunity in non-gaming. CFO Matt Stumpf clarified the Q3 guidance, stating that the baseline 3-5% sequential growth comes from the model's ongoing reinforcement learning, with the additional growth this quarter reflecting the incremental revenue uplift from the apps business divestiture.

Arsenije Matovic asked about the criteria for bringing the e-commerce solution out of pilot and into self-serve, and inquired about the mechanics and timing of the announced Apps business divestiture.

Answer

CEO Adam Foroughi explained that a self-serve launch will happen when they are ready, which requires building robust automation, AI-powered onboarding, and strong content moderation tools to prevent fraud. CFO Matt Stumpf clarified that the entire Apps business will be sold in a single transaction, which they are targeting to close in Q2 2025, pending regulatory approval.

Arsenije Matovic, on for Alex Zukin at Wolfe Research, LLC, asked why DocuSign doesn't exclude early renewals from guidance given the volatility, and questioned the recent increase in IAM pricing, suggesting it might indicate strong adoption.

Answer

CFO Blake Grayson explained that early renewals are a regular and recurring part of the business, often indicating positive expansion, so excluding them is not straightforward. CEO Allan Thygesen addressed pricing by stating that as DocuSign adds more value to its IAM packages, particularly with new features, it charges a premium that customers have been willing to pay across all segments.

Arsenije Matovic, on for Alex Zukin, asked about the number of reps eligible to sell IAM and for guardrails on IAM growth expectations. He also inquired about the drivers of early renewal tailwinds and the amount embedded in the Q4 billings guide.

Answer

CFO Blake Grayson declined to disclose the number of reps but expressed positive surprise at the rapid ramp in the North America commercial segment. He stated it's too early to provide FY26 guidance for IAM. Regarding billings, he noted that early renewals have been strong and are a timing issue, but did not break out the specific amount factored into the Q4 guidance, emphasizing the health of those renewals.

Arsenije Matovic, on for Alex Zukin at Wolfe Research, asked why dollar net retention (DNR) is expected to remain stable at 99% and not expand, given that the company should have lapped the pandemic renewal cohorts. He also asked for the DNR of customers outside that cohort and confirmed if Lexion was in the prior guidance.

Answer

CFO Blake Grayson explained that the impact from pandemic-era contracts has already largely flushed through the system, with those cohorts now representing a very low single-digit share of the business. He stated that future DNR improvement rests on enhancing core business retention and, more significantly, the long-term expansion opportunity with IAM. He also confirmed that the Lexion acquisition was included in the previous quarter's guidance.

Arsenije Matovic, on for Alex Zukin, questioned the decline in NRR for the over-$100k customer cohort, which fell below the core NRR. He also asked if the strong growth in new over-$100k customers could offset this NRR headwind in fiscal 2026.

Answer

CFO Sonalee Parekh attributed the NRR weakness in the >$100k cohort to several large tech customers downgrading their plans during the quarter, while reiterating that overall NRR has stabilized. COO Anne Raimondi confirmed that the strong additions to this cohort reflect new business strength and that future add-ons like AI Studio are expected to help improve NRR over time.

Sought clarification on the expected ACV growth for Q2 given the cadence of renewal bookings, and asked if any business segment performed significantly ahead of expectations in Q1.

Answer

ACV growth is expected to follow historical patterns and is not directly tied to the timing of renewals, as growth occurs throughout an agreement's life while attrition is tied to renewal events. No specific segment was highlighted as outperforming, but the overall demand environment across digitalization, sustainability, and energy transition was described as very strong and a 'perfect environment' for the company.

Asked about the drivers behind the Q4 bookings outperformance and whether the fiscal '25 bookings guidance contains conservatism, given the impact of the Russia exit and a higher renewal base.

Answer

The company clarified that the Q4 bookings outperformance was due to a large contract renewal being accelerated from fiscal '25 into Q4 as part of a larger growth transaction. The fiscal '25 bookings guidance accounts for the discontinuation of Russian operations and the natural, non-uniform timing of contract renewals year-over-year.

Asked if the delayed renewal was an isolated incident or a sign of market weakness, whether the DGM growth contribution target is conservative, and the free cash flow impact of the delay.

Answer

The renewal delay was an isolated customer-specific issue, not a market signal. The DGM growth target of 2.5 points remains the goal, though they hope to beat it. The free cash flow was impacted by the $5.4M deal value, which is expected to be collected in the second half.

Asked for a breakdown of the subscription revenue growth drivers (pricing vs. organic), the future monetization strategy for the Genesis AI initiative, and the reason for the recent decline in product inventory.

Answer

Subscription revenue growth is driven roughly equally by the existing customer base (split between price increases and organic expansion) and new customers. The Genesis AI initiative is expected to create future opportunities for premium pricing, new tiers, and add-ons, which will be rolled out carefully. The inventory decline is by design as the company transitions from the Pro2 to the Pro3 camera.

Speaking on behalf of Josh Tilton, he asked about the strength in channel sales and whether it reflects unchanged down-market sentiment or better cross-sell opportunities. He also inquired about the strong backlog and the sustainability of the renewal base given the macro outlook.

Answer

Executives attributed channel strength to sustained investment in the indirect channel over the past several years, which is now yielding results. They affirmed that renewals are 'rock solid' and growing, and that the combination of deferred revenue and backlog remains very strong, providing good visibility and confidence in their outlook.