Bhavin Shah

Bhavin Shah asked about operational measures Autodesk is taking to mitigate disruption from sales organization optimization and partner incentive changes, particularly ensuring healthy renewal activity while incentivizing new business. He also inquired about evolving customer demands from large EBA clients and how these inform the product roadmap.

Answer

EVP and CFO Janesh Moorjani explained that partner compensation changes for FY27 increased new business incentives and reduced renewal incentives, with operational guardrails in place to prevent significant early renewals. President and CEO Andrew Anagnost noted that large EBA customers are increasingly asking for 'convergence' – seamless integration between design and make, fast feedback loops, and an agentic layer to manage complexity and reduce downstream risk, which directly informs Autodesk's product roadmap.

Bhavin Shah asked about the operational strategies Autodesk is employing to mitigate potential disruption from sales organization optimization, particularly ensuring healthy renewal activity while incentivizing new business. He also inquired about the evolving demands from larger EBA customers and how these inform the product roadmap.

Answer

Janesh Moorjani, EVP and CFO, explained that partner compensation changes for FY2027 focused on new business incentives with guardrails to prevent timing manipulation, and no significant impact from early renewals in Q4. Andrew Anagnost, President and CEO, stated that EBA customers are increasingly seeking 'convergence' to connect design and make, fast feedback loops, and an agentic layer to reduce downstream risk, which directly influences product development.

Bhavin Shah asked about the current state of channel productivity, specifically the time spent on operational elements, the timeline for channels to return to full productivity, and any impact from M&A activity among resellers. He also inquired about Autodesk's evolving product capabilities and role as Agentic and Copilot AI advance in turning 2D sketches into 3D models.

Answer

CFO Janesh Moorjani stated that significant progress has been made in addressing operational friction from the new transaction model, with much of it now behind them. He noted that the strategy is working well, particularly at the low end with direct store sales, and larger partners are building value-added services. CEO Andrew Anagnost indicated that Autodesk's extensive data and focused innovation in AI will lead to superior capabilities in areas like turning sketches into 3D models, prioritizing developments with the biggest returns.

Bhavin Shah asked about the current state of channel productivity, the time spent on operational elements, the expected return to full productivity, and any impact from M&A activity among resellers. He also inquired about Autodesk's evolving product capabilities for Agentic and Copilot tools that convert 2D sketches into 3D models.

Answer

CFO Janesh Moorjani stated that significant progress has been made in addressing operational friction for partners on the new transaction model, with much of it now behind them. He noted that EMEA partners' first renewals went as expected and that the strategy is working well, particularly at the low end with direct sales via the Autodesk Store, while larger partners focus on value-added services. CEO Andrew Anagnost asserted that Autodesk's extensive data and focused approach will ensure its capabilities in converting 2D sketches to 3D models will excel, focusing on areas with the biggest returns.

Bhavin Shah sought clarification on whether the increased prudence in guidance was due to observed business changes or external factors, and asked about the persistence of labor constraints in the industry.

Answer

CFO Janesh Moorjani confirmed the guidance reflects prudence based on external macroeconomic uncertainty, not any observed slowdown in business momentum. CEO Andrew Anagnost added that persistent labor constraints are a positive tailwind for Autodesk, as they drive customers to adopt technology for digital efficiency.

Bhavin Shah asked about the timeline for realizing benefits from the sales and marketing adjustments and how the company's focus on efficiency and shareholder returns might change its M&A strategy.

Answer

CFO Janesh Moorjani stated that significant margin benefits are already factored into the FY26 guidance. He noted that investments are being made this year to build capabilities for future efficiencies, with more details on the long-term plan to be shared at the Investor Day. CEO Andrew Anagnost added that the company's view on M&A is unchanged; they remain an acquisitive company and will act on opportunities that accelerate their strategy.

Bhavin Shah inquired about the growing focus on owners and operators at Autodesk University and asked for clarity on the future impact of FX and the new transaction model on operating margins.

Answer

CEO Andrew Anagnost attributed the increased interest from owners to the company's Tandem digital twin product and confirmed a continued strategic focus on this segment. Interim CFO Betsy Rafael deferred the question on future margin impacts, stating it would be addressed by the new CFO in February.

Bhavin Shah highlighted positive client growth and retention but sought to reconcile this with a 2026 recurring revenue guide implying the smallest dollar adds in several years. He asked if changes in sales training, increased client service emphasis, or IWant were impacting growth, especially given stable industry dynamics.

Answer

CEO and President Chad Richison explained that the current guide is not significantly dissimilar to last year's initial guide, despite the difference in where 2025 ultimately finished. He reiterated comfort with the current guidance approach and mentioned the presence of inflection opportunities throughout the year that would be reported if they materialize.

Bhavin Shah sought to reconcile the positive trends of improved client growth and retention with the 2026 recurring revenue guidance, which implies the smallest dollar adds in several years. He asked if changes in sales training, increased emphasis on client service, or IWant were impacting growth.

Answer

CEO Chad Richison advised comparing the sequential change in revenue from Q4 2025 into 2026 with the sequential change observed from Q4 2024 into 2025, after normalizing for relevant factors. He stated that the current guidance is not incredibly dissimilar to last year's initial guidance and that Paycom remains comfortable with it, anticipating potential inflection opportunities throughout the year.

Bhavin Shah asked about the implied Q4 recurring revenue guidance, comparing it to Q2 and Q3 growth rates, and whether it reflected conservatism or served as a good exit rate for next year. He also inquired about the timing of marketing investments for Iwant playing back from a top-of-funnel to conversion perspective.

Answer

Bob Foster, CFO of Paycom Software, clarified that the Q4 guidance for recurring revenue is above Q3's rate, not below, and stated there are no specific factors to consider for next year, noting that Q4 includes unknown bonus and unscheduled runs. He added that marketing spend is strategic, measured weekly, and expected to yield returns, with careful consideration of diminishing returns.

Bhavin Shah asked about the implied Q4 guidance for recurring revenue, noting it appeared slightly below Q2 and Q3 growth rates despite Q3 strength, and questioned if this was conservatism or if there were other factors. He also asked about the timing of returns from the IWant marketing investments, from top-of-funnel to conversion.

Answer

Bob Foster, CFO, clarified that the Q4 recurring revenue guidance is actually above the Q3 number and that there are no specific issues to consider for the quarter or going into next year, expressing satisfaction with the momentum. He reminded that Q4 includes unknown bonus and unscheduled payroll runs. Regarding marketing, Mr. Foster stated that Paycom's spend is strategic, measured weekly, and expected to yield returns, with careful consideration of diminishing returns.

Bhavin Shah of Deutsche Bank followed up on the 'transitory' CapEx comment, asking why spending wouldn't remain high with increasing usage of iWant. He also questioned the decision not to monetize iWant directly on a usage or per-seat basis.

Answer

CEO Chad Richison clarified that there is a large, front-loaded spend required to reach the 'starting line' for a massive rollout, with future spending becoming more incremental. He stated the company believes every client should have this new access method to unlock the system's full value. This indirect approach is expected to create more valuable opportunities through full-suite adoption and new prospect wins than direct monetization would.

Bhavin Shah asked for the next steps in Paycom's European expansion following the Ireland authorization and inquired about the international go-to-market strategy. He also asked for the number of rate cuts assumed in the interest on funds held for clients guidance.

Answer

CEO Chad Richison stated that the current international strategy focuses on serving U.S.-based companies with overseas employees, and the Ireland license is crucial for managing the "last yard" of payroll by moving money within Europe. CFO Robert Foster confirmed that the guidance embeds assumptions for two rate cuts, one in June and one in December.

Bhavin Shah attempted to clarify the implied Q1 recurring revenue growth rate based on the full-year guidance and asked about the key drivers of the strong adjusted EBITDA guidance for 2025, questioning where the main efficiencies are being realized.

Answer

An executive declined to comment on quarterly specifics but noted Q1 faces headwinds from slower-growing year-end forms filings and a significant decline in interest income growth. CEO Chad Richison attributed the strong EBITDA outlook to benefits from product automation, successful sales of high-value deals, and back-end operational efficiencies, underscoring a focus on profitable, organic growth.

Bhavin Shah asked about the progress of the Client Relations Representative (CRR) team in optimizing client value and sought reasons for the recent gross margin compression, such as pricing dynamics or support hiring.

Answer

CEO Chad Richison explained that CRRs must ensure clients are utilizing current products effectively before upselling, a process supported by other service teams as well. CFO Craig Boelte attributed the gross margin pressure to costs from a new building brought online and increased headcount in client service to maintain appropriate staffing levels.

Bhavin Shah with Deutsche Bank inquired about Cellebrite's strategy for executing on recent acquisitions, Corellium and SCG Canada, while maintaining focus on the core business, including internal changes and resource allocation. He also asked about the drivers behind the drone opportunity and its budget sources.

Answer

CEO Tom Hogan explained that the Corellium transaction's extended closing period allowed for better integration rhythm, and SCG Canada, while small in ARR, is highly complementary and strategically significant due to the exploding drone market. CRO Marcus Jewell added that customer demand for drone forensics is already present, especially in defense and intelligence, and aligns with Cellebrite's data collection from sensors.

Bhavin Shah asked about Cellebrite's strategy for integrating recent acquisitions like Corellium and SCG Canada, ensuring execution while maintaining focus on core business, and the rationale behind the drone opportunity.

Answer

CEO Tom Hogan explained that the Corellium acquisition's extended closing period allowed for better integration rhythm. He described SCG Canada as a small (low single-digit millions ARR, $15M-$20M acquisition price) but market-leading solution in the rapidly growing drone forensics space, highly complementary to Cellebrite's core. CRO Marcus Jewell added that customer demand for drone forensics is already strong, particularly in defense, intelligence, and border security.

Bhavin Shah from Deutsche Bank sought clarification on the revised full-year guidance, asking what factors contributed to the reduction beyond the stated four-point impact from delayed U.S. Federal spending.

Answer

CEO Thomas Hogan acknowledged a modest quarter in the private sector but noted future growth potential from Keryllium. CFO David Barter clarified that the U.S. Federal timing issue was the primary driver for the guidance change, and that the company had also conservatively tightened its forecast across all sales regions based on a detailed assessment.

Bhavin Shah asked about the key customer pain points identified at the new Executive Advisory Board and their impact on the product roadmap. He also requested quantification of the Q1 impact from exiting certain countries and inquired about strategies to increase the unlock capability's attach rate.

Answer

Chief Revenue Officer Marcus Jewell outlined customer priorities as managing the explosion of digital evidence, speeding up prosecution times, and needing lightweight field tools. CFO Dana Gerner stated that exiting countries had a sub-2% impact in 2024 and will improve gross retention by 0.5-1% in 2025. She added that the varied packaging of the Inseyets suite is successfully driving higher adoption of unlock capabilities across agencies of all sizes.

Bhavin Shah of Deutsche Bank inquired about the progress of EverCommerce's transformation initiatives and questioned why the full-year revenue guidance was not raised despite a strong Q2 performance that exceeded expectations.

Answer

Founder, Chairman & CEO Eric Remer explained that transformation is ongoing, with a focus on empowering the EverHealth and EverPro verticals, which is already showing positive results. CFO Ryan Siurek added that while they have confidence in the back half of the year, they are being prudent with revenue guidance and reallocating some Q2 expense favorability to future growth investments, leading to the raised EBITDA guidance.

Bhavin S. Shah inquired about the current macroeconomic impact on customer health and whether the company is seeing any hesitancy related to tariffs or a new administration. He also asked for an expansion on the strategy to augment go-to-market motions with partnerships and channel optimization.

Answer

President Matt Feierstein responded that there are currently no discernible macro impacts on customer acquisition, utilization, or churn, citing real-time digital funnel indicators. CEO Eric Remer added that the core home services and health services verticals are resilient. Regarding partnerships, an executive noted that while digital acquisition is the primary channel (80-85%), partnerships are a growing focus. EverHealth CEO Evan Berlin confirmed they are seeing double-digit growth in their partnership channel and are investing to diversify acquisition and lower costs.

Bhavin Shah of Deutsche Bank inquired about Dayforce's sales strategy in light of the sustained 40% bookings growth, asking if the company is leaning into hiring more sales personnel to capitalize on the momentum.

Answer

Chairman & CEO David Ossip confirmed that the company is 'leaning in' and actively hiring additional sellers. He specified that the hiring focus is particularly on the major markets and client-base sales teams, where the company is seeing 'tremendous growth' and opportunity to both build the top of the funnel and penetrate its existing 7,000 customers.

Bhavin Shah asked about the progress of migrating customers from the legacy APJ business to the modern Dayforce platform and the typical revenue uplift seen from these migrations.

Answer

CFO Jeremy Johnson stated the migration is progressing well and is the primary reason for the decline in the 'other recurring' revenue line. He noted the company is aggressively moving these customers to drive efficiency, and the decline in that revenue line could accelerate. When customers migrate, Dayforce sees a 'pretty decent uplift' in revenue, averaging around 50%.

Bhavin Shah asked about the drivers for the 37% add-on bookings rate and sought high-level thoughts on the 2025 float revenue outlook, considering potential interest rate changes.

Answer

CEO David Ossip stated the 37% add-on rate was a positive result, aligning with the 35-40% annual target, noting the prior quarter was elevated by a large government deal. CFO Jeremy Johnson projected that for 2025, float balances will grow but yields will likely decline with rate cuts, though the company's laddering strategy provides some durability.

Bhavin Shah from Deutsche Bank asked how the internal use of AI is affecting expense outlooks and free cash flow margins, and about the company's willingness to adjust marketing spend in response to market changes.

Answer

President Harley Finkelstein noted AI is becoming part of Shopify's DNA, driving efficiency. CFO Jeff Hoffmeister stated that their view on free cash flow margins remains unchanged, balancing profitability with investment. He emphasized their discipline allows them to flexibly increase or decrease marketing spend based on real-time return metrics, with Harley adding that they can assess changes to customer acquisition costs within a week.

Asked if go-to-market issues are resolved given improving seller tenure, and inquired about the drivers of the quarter's outperformance, specifically PEPM, pricing, and employment trends.

Answer

Raul Villar confirmed that go-to-market challenges are behind them after two quarters of improvement, with no major strategy changes planned. Adam Ante attributed the outperformance to better-than-guided employment trends, strong cross-sales, and successful pricing initiatives.

Sought clarification on sales capacity, asking if being 'fully staffed' means no net new hires, and requested more insight into the demographics and profile of new partners in the embedded channel pipeline.

Answer

Management clarified that they will continue to hire and increase sales capacity in FY '25 through both hiring and productivity gains, while being flexible based on market conditions. The embedded partner pipeline includes a mix of payroll service bureaus and vertical software companies (ERPs, POS), with some being smaller than initial partners, which may lead to a choppy ramp.

Questioned the moderated sales headcount growth target and its impact on long-term growth goals, as well as the ERTC headwind and float revenue assumptions for Q4.

Answer

The company explained the sales hiring moderation was due to fixing an internal structural issue causing churn and that they can still achieve growth goals with improved productivity. They also clarified that the ERTC headwind for the full year is now larger, and float revenue rates are stable for Q4.

Asked for clarification on the assumptions in the back-half guidance, noting a potential deceleration and conservatism. Also inquired about the factors driving the increased traction with broker channels.

Answer

The Q3 guidance reflects a tougher comp due to the nature of form filings, which grow at a slower rate, and some form filing revenue was pulled into Q2. The guidance maintains a consistent level of conservatism. Increased broker traction is attributed to a focused sales strategy on key national partnerships and expanded sales headcount increasing reach into the broker network.

Inquired about the customer ROI from Property Intelligence across different verticals, the company's strategy for product promotions in 2024, and the expected timing for new solutions to accelerate subscriber growth.

Answer

Property Intelligence delivers significant ROI by automating manual tasks, saving customers time and money, with benefits that multiply with increased usage. Product promotions will be used opportunistically (like on Black Friday or Prime Day) to attract high-value subscribers. The acceleration in subscriber growth and ARPA is already underway and is expected to continue throughout 2024, with the middle quarters typically being the strongest.