Billy Fitzsimmons

Billy Fitzsimmons inquired about the implications of the 2026 guidance from an SAP contribution perspective, asking if there were any notable upticks or volatility in the SAP pipeline.

Answer

CEO Owen Ryan stated that SAP customers consistently represent about 25-26% of BlackLine's revenue, and this mix is not expected to materially change in the upcoming year. He noted strong progress and pipeline with SAP, but also significant success with non-SAP customers, balancing the overall revenue mix.

Billy Fitzsimmons asked for color on the implied SAP contribution within BlackLine's 2026 guidance and any notable upticks or volatility observed in the SAP pipeline.

Answer

Owen Ryan, CEO, stated that SAP customers have consistently accounted for approximately 25-26% of BlackLine's revenue, and he does not anticipate a material change in this mix for 2026. He noted a strong pipeline and good progress with SAP, but also significant success with non-SAP customers, suggesting the overall mix will remain stable.

Billy Fitzsimmons asked about the health of Freshworks' mid-market (sub-enterprise) customers, given broader industry narratives about weakening macro conditions and higher customer acquisition costs, and how this is reflected in the 2026 guidance.

Answer

CEO Dennis Woodside stated that Freshworks defines mid-market as companies around 5,000 people or $1-3 billion in revenue, and they are not observing any negative trends; in fact, they have their best pipeline ever from this segment. He explained that mid-market customers, if squeezed for cost or efficiency, are more likely to turn to Freshworks over more expensive legacy platforms, driving growth in customer counts over $50,000 and $1 million ARR, and leading to higher expansion and retention rates.

Billy Fitzsimmons asked for comments on the health of Freshworks' mid-market (sub-enterprise) customers, given narratives around weakening macro conditions and higher customer acquisition costs in the software space, and how this is factored into the 2026 guidance.

Answer

Dennis Woodside, CEO and President, defined the mid-market as companies around 5,000 people or $1 billion-$3 billion in revenue, stating that Freshworks is not seeing any negative trends in this segment. He highlighted a strong pipeline, Freshworks' competitive advantage in offering cost-effective and efficient solutions compared to legacy platforms, and the segment's contribution to higher expansion and retention rates, which is central to the company's growth strategy.

Billy Fitzsimmons asked for a deeper dive into the dynamics impacting the subchannel, seeking to differentiate between macro-related factors and potential headwinds from AI experimentation. He also inquired if SMB customers are showing increased willingness to experiment with plugins/Vibe coding or heightened sensitivity to pricing.

Answer

Eran Zinman, monday.com Co-CEO, stated that there's no observed change in competitive dynamics or new impacts from AI companies in the top-of-funnel activity. He reiterated that the choppiness seen is the primary impact. He also mentioned that monday.com is actively shifting its messaging and product development to be more AI-oriented and AI-native.

Billy Fitzsimmons asked for a deeper dive into the dynamics impacting the SMB subchannel, seeking to differentiate between macro factors and potential headwinds from AI experimentation. He also inquired if SMB customers are more willing to experiment with plugins/Vibe coding or are more sensitive to pricing.

Answer

Eran Zinman, Co-CEO, stated that there's no change in competitive dynamics regarding top-of-funnel activity, with choppiness impacting performance marketing. He noted no material impact from AI companies or new trends in sales calls. He added that monday.com is actively shifting its product and messaging to be more AI-oriented, offering new AI capabilities to both existing and new users.

Billy Fitzsimmons from Jefferies asked for anecdotes on the paid Custom AI Companion add-on, its prominent use cases, and whether its financial impact is included in the back-half guidance for the year.

Answer

Founder & CEO Eric Yuan explained that customers purchase the add-on to connect AI Companion with third-party applications like Salesforce and their own internal knowledge bases. CFO Michelle Chang clarified that while AI in Contact Center is already contributing to FY26 revenue, the newer AI products like Custom AI Companion are expected to be a more meaningful revenue driver in fiscal 2027.

Billy Fitzsimmons, on behalf of Samad Samana at Jefferies, requested a deeper analysis of the new cloud disclosures, asking which business units are growing due to on-premise to cloud migrations versus new product demand, and which areas require more focus.

Answer

CEO Mark J. Barrenechea provided a breakdown of cloud revenue performance, noting that Content, OSM, and DevOps each grew over 10%, while Business Network was constant and Cybersecurity declined by 4%. He stated that Cybersecurity is expected to return to growth in fiscal 2026, driven by the Microsoft partnership and new product offerings, without specifically separating migration-driven growth from new demand.

Billy Fitzsimmons of Jefferies, on behalf of Samad Samana, asked about the assumptions and considerations embedded in the second-half guidance, particularly regarding the macroeconomic environment, deal volume, and renewals.

Answer

CEO Steve Trundle responded that the company is not modeling a significant change in the macro environment for the second half of the year. He highlighted that security is a 'must-have' service, which provides resilience against economic volatility. While the weak new home sales market is a factor they monitor, the overall outlook from their service provider partners remains stable and consistent with the first half of the year.

Billy Fitzsimmons of Jefferies, on for Samad Samana, asked about the internal changes driving the reduction in stock-based compensation (SBC) and the rationale for maintaining the full-year revenue guide despite a Q2 beat.

Answer

CFO Vaibhav Agarwal explained that reducing SBC is a key priority, achieved through disciplined new grants which are lower than expiring older grants. He stated the SBC as a percentage of revenue is expected to trend down towards the new grant level of ~6%. Regarding guidance, Agarwal noted the unchanged full-year revenue forecast reflects a consistent, prudent approach, despite strong underlying business fundamentals and double-digit growth in the SMB and GSP segments.

Billy Fitzsimmons, on for Samad Samana at Jefferies, asked about vertical-specific strengths or weaknesses, which industries are adopting AI fastest, and the reasons for the decline in the commercial business.

Answer

CFO Bryan Lee noted no significant shifts in vertical performance. President Andy Dignan identified financial services, healthcare, and retail as the fastest AI adopters due to better data readiness. CEO Mike Burkland explained the commercial business decline is by design, as it's not a strategic focus, and noted some customers 'graduate' to the enterprise segment, which reclassifies their revenue.

Billy Fitzsimmons of Jefferies asked for an update on the large deals that were cited as stalled last quarter due to constrained CIO budgets and how they progressed in Q3.

Answer

Executive Barry Zwarenstein confirmed that Q3 performance was strong despite a couple of medium-large deals pushing into Q4. He provided the positive update that those two specific deals that pushed from Q3 had already closed in October. He also emphasized the consistent execution on mid-sized 'dolphin' deals, which are the 'bread and butter' of their business.

Billy Fitzsimmons, on behalf of Samad Samana at Jefferies, asked for the specific Q2 growth rate for the conversational AI segment, its expected ramp-up in the second half of the year, and AudioCodes' key technological differentiators in the competitive voice AI market.

Answer

Shabtai Adlersberg, President & CEO, did not disclose a specific Q2 growth figure for conversational AI but reiterated the full-year growth outlook of 40% to 50%, expecting a 'hyperbolic' rather than linear growth curve in the second half as new products mature. He differentiated AudioCodes by its focus on complete, end-to-end applications rather than just underlying cognitive technologies. Adlersberg highlighted the company's 'special sauce' as its ownership of the entire technology stack, enabling rapid deployment in days versus months for competitors and the ability to fine-tune solutions for specific industries.

Billy Fitzsimmons of Jefferies, on for Samad Samana, asked about Verint's differentiation against large software players and startups in the AI space and requested a detailed explanation of the new AI ARR metric, including whether it captures overages.

Answer

CEO Dan Bodner outlined three key differentiators: deep partnerships with leading brands that drive innovation, a comprehensive platform approach that orchestrates both bots and humans, and an open AI architecture that future-proofs customer investments. CFO Grant Highlander clarified that the AI ARR metric represents the annualized run-rate value of all solutions with AI functionality and includes both fixed contract amounts and any usage-based overages incurred during the quarter.

Billy Fitzsimmons, on for Samad Samana, asked about the performance of Twilio Flex, the integration of AI solutions, and the company's pricing and differentiation strategy in the increasingly competitive contact center market.

Answer

CEO Khozema Shipchandler positioned Twilio's key differentiator not as a single product like Flex, but as its ability to drive outcomes by combining communications with contextual data. He argued that generic AI agents are limited without customer data, which he believes clients will not share with large LLMs. Twilio's advantage lies in using Segment data to power personalized AI interactions across any channel, positioning it well against competitors.