Blair Abernethy

Blair Abernethy asked for more color on Navan's approach to the payments market with its increased capital, including sales focus and ideal customer profiles. He also inquired whether Navan Edge represents an upsell opportunity, a revenue driver, or primarily a tool for increased platform stickiness.

Answer

Ariel Cohen (CEO) stated that payments are integrated across all segments (SMB, mid-market, enterprise) to streamline expense management and enhance the traveler experience, with increased capital enabling acceleration in meeting existing demand. He clarified that Navan Edge aims to unlock more of the total addressable market (TAM) by targeting non-managed travel, utilizing the same business model of booking fees and partner/supplier fees to expand market reach.

Blair Abernethy asked about the Nigeria market's progress towards profitability, specifically regarding the flywheel effect and the ability to reduce marketing incentives, and whether it would achieve cash flow break-even in H2 2025. He also sought clarification on the next most mature market after Argentina, the identity and network of the Turkey JV partner, the revenue model for the Turkey and Saudi JVs, RedCloud's cost burden for delivering technology to these JVs, the current shares outstanding, and the revised timeline for RedCloud to reach EBITDA break-even.

Answer

CSO Raju Datla confirmed Nigeria is performing well, with declining incentives supporting revenue growth, and projected cash flow break-even for Nigeria in H2 2025. CEO Justin Floyd added that marketing commissions were down year-over-year while transaction volume grew, viewing incentives as an investment in data assets. He identified Brazil and South Africa as the next markets progressing towards break-even. Justin Floyd disclosed the Turkey JV partner as Pro Raba Limited, led by Mehmet Bostan, with a vast network of FMCG manufacturers. Raju Datla explained the Turkey JV revenue model includes a $5 million annual minimum licensing fee plus a 50/50 revenue split on additional transaction volume, with the local partner absorbing all operational costs. Justin Floyd detailed the Saudi JV with Majid Alghaslan, following a similar infrastructure licensing and revenue share model, with RedCloud's costs primarily related to efficient AWS cloud hosting. Raju Datla confirmed 55.3 million shares outstanding and revised the company's EBITDA break-even target to Q2 2026, due to prioritizing JV technology investments.

Blair Abernethy asked about the progress of the Nigeria market towards profitability, specifically regarding the efficiency of marketing commission costs and the potential to reduce incentives. He also inquired about the maturity of other existing markets like Brazil and South Africa, and sought details on the Turkey JV partner, ProRaba Limited, including their network and RedCloud's revenue model (minimum annual license fee vs. transaction-driven). Additionally, he requested a comparison of the Saudi Arabia JV's revenue model and RedCloud's cost structure for delivering technology to these JV partners, and clarified the current shares outstanding and the revised EBITDA break-even timeline.

Answer

Chief Strategy Officer Raju Datla stated that Nigeria is a mature market where incentives are declining while maintaining decent revenue growth, and confirmed it is expected to be cash flow profitable in H2 2025. CEO Justin Floyd added that marketing commissions are down year-over-year while total transaction volume (TTV) grew 28%, viewing incentives as an investment in the data asset that enabled the $50 million Turkey deal. He identified South Africa and Brazil as the next most mature markets, with strong pipelines for hybrid models. For the Turkey JV, Mr. Floyd confirmed ProRaba Limited, led by Mehmet Bostan, has a vast network with FMCG manufacturers. Mr. Datla explained the Turkey JV revenue model includes a $5 million annual licensing fee plus a 50/50 revenue split on transaction volume. Mr. Floyd clarified that local partners absorb operational costs, making the model capital-efficient for RedCloud, which primarily bears the cost of technology delivery via AWS. For Saudi Arabia, a minimal infrastructure fee is being finalized, with similar revenue share rules. Mr. Datla confirmed shares outstanding at 55.3 million and revised the EBITDA break-even target to Q2 2026, due to prioritizing investments in JV technology.

Blair Abernethy asked about PTC's view on its CAM (computer-aided manufacturing) business following the divestiture of the factory-floor-focused IoT businesses, and then inquired about the confidence level for the Fiscal Year 2026 net new ARR growth guidance of $195 million (midpoint) compared to the previous year's $194 million.

Answer

Neil Barua, CEO of PTC, stated that he feels more confident about the addressable market for the intelligent product lifecycle vision, which includes CAD, ALM, PLM, and SLM, and the application of AI to product data. Regarding ARR guidance, he characterized it as a disciplined approach, highlighting strong deferred ARR, ongoing go-to-market transformation, and considering potential divestiture disruption and macro conditions for the range.

Blair Abernethy first asked Neil Barua how the divestiture of the IoT business, moving away from the factory floor, impacts PTC's view on its CAM (computer-aided manufacturing) business. He then asked Kristian Talvitie about the rationale behind the Fiscal 2026 net new ARR growth guidance, which is similar to Fiscal 2025, given the overall market environment.

Answer

CEO Neil Barua responded that he feels more confident about the addressable market for the intelligent product lifecycle vision, which focuses on CAD, ALM, PLM, and SLM to build product data foundations and apply AI. He expressed excitement about the sharpened focus post-divestiture. Regarding the ARR guidance, Barua explained it's a disciplined approach, benefiting from strong deferred ARR, acknowledging the ongoing go-to-market transformation, and factoring in potential divestiture disruption or macro worsening for the low end, while momentum drives the high end.

Blair Abernethy requested an update on the ServiceMax business, focusing on its progress with cross-selling into the PTC base and its overall importance to the go-to-market strategy.

Answer

President and CEO Neil Barua described a mixed performance. On the positive side, he noted that the strategic connection between ServiceMax and Windchill is strengthening, differentiating PTC's PLM offering and driving wins. However, he also acknowledged that the business was negatively impacted by 'one-time idiosyncratic' churn events this year. He concluded that while there is work to be done, the strategic importance of ServiceMax within the Product Data Foundation vision remains strong.

Blair Abernethy from Rosenblatt Securities asked for more details on the federal vertical, including claims volume, the cloud vs. on-premise mix, and any changes in Pega's go-to-market strategy given the current environment.

Answer

Alan Trefler, Founder and CEO, noted that while government shutdowns slow project progress, Pega's long-term agreements with federal agencies remain intact. He highlighted accelerated adoption of Pega Cloud for Government, designed for FedRAMP environments, and its interest from state governments. Ken Stillwell, COO and CFO, added that IT modernization is a bipartisan priority in government, aligning well with Pega's offerings.

Blair Abernethy requested more details on the federal vertical, including claims volume, the split between cloud and on-prem government clients, and any adjustments to Pega's go-to-market strategy in light of the government shutdown.

Answer

Alan Trefler, Founder and CEO of Pegasystems, acknowledged that while some heavily impacted agencies were not Pega's primary clients, the government shutdown slows project progress. He highlighted the accelerated adoption of Pega Cloud for Government, which is FedRAMP compliant, and noted strong bipartisan support for IT modernization within the government. Ken Stillwell, COO and CFO, reiterated that IT modernization is a key priority across various agencies.

Blair Abernethy inquired about the customer adoption and potential of Pega's other GenAI capabilities beyond Blueprint, such as GenAI Coach and KnowledgeBuddy.

Answer

Founder & CEO Alan Trefler responded that customers are receptive to features like Coach and that KnowledgeBuddy is a key vehicle for operationalizing both Pega's and its partners' intellectual property. He reiterated that while Pega has dozens of AI features, the design-centric approach of Blueprint is the most meaningful and differentiated part of its GenAI strategy.

Blair Abernethy questioned if the strong Q1 term license revenue was affected by contract duration changes and asked about plans for sales and marketing capacity, especially regarding new customer acquisition.

Answer

CFO Kenneth Stillwell confirmed that the term license strength was due to the timing of renewals, not changes in contract length. He also stated that the company has capacity for sales investments built into its plan and that Blueprint's effectiveness is increasing interest in finding efficient ways to acquire more new logos.

Blair Abernethy inquired about the product roadmap for Pega GenAI Blueprint, including the role of the Everflow process mining acquisition. He also asked if any industry verticals showed particular strength or weakness during the quarter.

Answer

CEO Alan Trefler outlined the Blueprint roadmap, which focuses on enhancing legacy system analysis, integrating process mining outputs (like BPMN from Everflow), and improving compatibility with cloud-native databases to support the legacy transformation strategy. Regarding verticals, both Trefler and CFO Kenneth Stillwell stated that growth was well-balanced across the board, describing the quarter as "unsexy" in that no single vertical was an outlier.

Blair Abernethy asked for updates on Sapiens traction, the SecureWise acquisition integration, CapEx spending rates, the sustainability of recent China revenue growth, the renewal landscape for the Exensio platform, and progress on MLOps.

Answer

CEO John Kibarian detailed a Sapiens win with an IDM's product side, driven by the need to connect supply chains to ERP systems for AI enablement, noting the deal originated from SAP discussions. He confirmed the SecureWise integration is on track for a September completion, with product integration with DEX underway to offer more secure data transmission. Kibarian explained the China revenue spike was due to volume shipments and CV/Exensio deployments as fabs ramp capacity, but expects it to moderate. He also anticipates strong Exensio renewals in H2, driven by AI modules like guide analytics and AI for test (MLOps). CFO Adnan Raza added that the elevated H1 CapEx was for eProbe demand and H2 levels would be similar or slightly lower.

Blair Abernethy of Rosenblatt Securities asked for details on the SecureWise integration plan and its financial profile, the pipeline for the Sapience business, and the company's capital allocation priorities following its recent acquisition.

Answer

Executive John Kibarian outlined the SecureWise integration, focusing on security standards and combining PDF's AI with SecureWise's collaboration tools for OSATs and advanced packaging. He also confirmed a growing pipeline for Sapience. Executive Adnan Raza added that SecureWise has a highly recurring revenue model and is accretive to gross margin. On capital allocation, Raza prioritized debt repayment while remaining opportunistic on share buybacks, reaffirming commitment to long-term margin targets.

Blair Abernethy inquired about the PDF Solutions eProbe pipeline, asking for details on whether expected deals are from new or existing customers, and also questioned the reason for the sequential decline in backlog.

Answer

Executive John Kibarian explained that the eProbe pipeline consists of a mix of new and repeat customers in both advanced logic and advanced DRAM. He noted that while they expect to ship over four machines in 2025, the timing of revenue conversion is uncertain due to a customer preference shift towards purchasing hardware upfront rather than subscribing. Kibarian clarified that this new sales model, which involves a one-time hardware sale and optional software subscriptions, is the primary reason for the change in backlog characteristics, as it shifts revenue recognition.

Blair Abernethy of Rosenblatt Securities inquired about the Design-for-Inspection (DFI) customer pipeline, future capital expenditure levels, the recent increase in SG&A expenses, the broader macroeconomic environment, particularly in China, progress on the SAP partnership, and an update on the Lantern Technology acquisition for the battery sector.

Answer

CEO John Kibarian and CFO Adnan Raza addressed the questions. Kibarian noted a growing DFI pipeline with a third customer, promising memory applications, and expanding use cases in 3D logic. Raza confirmed CapEx will increase to support DFI demand and clarified the SG&A rise was in sales and marketing, with future focus shifting to R&D. Kibarian described a mixed macro environment, with weakness in China-influenced IYR but an expected recovery. He also confirmed positive progress on both the SAP partnership, which is key for AI deployments, and the Lantern battery pilots.

Blair Abernethy of Rosenblatt Securities inquired about the breakdown of ACV growth between organic and acquired sources, the integration progress of the Cadence PPC acquisition, and the current macroeconomic environment, particularly regarding China.

Answer

Dan Shaw, Senior Director of FP&A, clarified that organic ACV growth contributed 1-2% of the 5% sequential increase. CEO Babak Taheri added that the Cadence PPC integration is operationally complete, with only financial and tax synergies pending. He also noted that delayed deals from Asia have closed and expects other pushed-out deals to close in Q3 and Q4, with no negative impact observed in the China market.

Blair Abernethy from Rosenblatt Securities inquired about the sales pipeline for the FTCO platform and sought more detail on the Q1 deal pushouts, including their geographic and product-line concentration.

Answer

CEO Babak Taheri reported a strong FTCO pipeline, with expected customer expansions in memory and production conversions in advanced CMOS and power semiconductors in the second half of 2025. He also highlighted a new R&D partnership for next-gen displays. Taheri specified that the Q1 deal delays were entirely in Asia, impacting TCAD and IP products due to customer uncertainty around tariffs, and expressed confidence these deals would close in coming quarters.

Blair Abernethy inquired about the Cadence OPC acquisition, asking about the number of customers acquired, the technical integration plan with products like FTCO, and the timeline for that integration. He also asked about the sales pipeline for FTCO and the drivers of recent success in the power market.

Answer

CEO Babak Taheri stated the acquisition brings a small number of top customers (fewer than 10), with some being existing Silvaco clients. He detailed that the OPC product will be integrated into the FTCO platform over the next 6-9 months to create a comprehensive solution. Taheri noted the FTCO pipeline has two customers in evaluation, with potential adoption in Q2 or Q3. He attributed the 43% year-over-year bookings growth in the power market to strong demand for TCAD and EDA tools for new technologies like SiC and GaN.

Blair Abernethy of Rosenblatt Securities asked about the drivers of the significant organic growth in the System Design & Analysis business.

Answer

President & CEO Anirudh Devgan attributed the strong growth to Cadence's focus on high-disruption areas: 3D-IC and data center simulation. He noted that the strength of the Allegro platform pulls through analysis tools, and the Beta CAE acquisition has helped expand the sales channel. He added that while he is 'super optimistic' about the new Millennium platform, it is still in its very early innings.

Blair Abernethy asked for management's high-level thoughts on the data center digital twin opportunity, the potential market size (TAM), and if there are expansion opportunities beyond data centers.

Answer

CEO Anirudh Devgan expressed great excitement for the business, which had a strong Q1 and benefits from a key partnership with NVIDIA. He sees a huge opportunity in applying analytical simulation to optimize data center design and operations, noting it improved power efficiency by 10% in Cadence's own facilities. He is very optimistic about the potential for both design and operational phases.

Blair Abernethy from Rosenblatt Securities asked about customer adoption of the Design.da and Fab.da AI products relative to the more established optimization tools. He also inquired about the expected timeline for rolling out the next-generation Agentik EDA technology.

Answer

CEO Sassine Ghazi positioned the .DA products as a foundational infrastructure layer that enhances the .ai optimization tools by providing data insights across the design flow. Regarding Agentik, he explained that Synopsys is currently in the L2 and L3 phases (task agents and orchestration) with select partners and will continue to communicate progress on what he described as a super exciting development.

Blair Abernethy from Rosenblatt Securities asked about customer adoption trends for the company's Design.da and Fab.da AI products compared to its more established optimization tools. He also inquired about a potential timeline for the broader rollout of AgenTeq EDA.

Answer

CEO Sassine Ghazi described the .DA products as a foundational data infrastructure that enhances the .ai optimization tools, with Fab.da adoption being naturally limited to customers with in-house manufacturing. Regarding AgenTeq, he stated they are currently in the L2 (task automation) and L3 (orchestration) phases with select partners and will continue to communicate progress on the exciting roadmap.

Blair Abernethy inquired about how Bentley is using AI to help customers drive productivity amid the chronic shortage of civil engineers, and how Bentley is using AI internally to boost its own productivity.

Answer

CEO Nicholas Cumins explained that AI is key to helping organizations do more with less, focusing first on automating mundane tasks like drawings production. He emphasized Bentley's unique position, using its software portfolio to train AI agents and leveraging customer data in ProjectWise only with explicit consent. Internally, he noted that AI is boosting developer productivity by 10-20% by automating tasks like code commenting and generating routine functions.

Blair Abernethy requested more detail on the data center opportunity, including international trends and how this business is reflected in Bentley's financial reporting segments.

Answer

CEO Nicholas Cumins described data centers as 'mini cities' that drive broad infrastructure needs, creating direct and indirect growth opportunities across power, water, and transportation. Executive Gregory Bentley clarified that revenue from these projects would be reported within the industrial, resources, and public works and utilities sectors, rather than in commercial facilities.

The analyst inquired about Altair's channel strategy, its increasing emphasis, and the nature of the new partnership with HP for material data solutions.

Answer

The executive confirmed a greater emphasis on the sales channel, particularly for data analytics products and reaching small-to-medium businesses. Systems integrators are crucial for data modernization and graph technology deals. The HP partnership is a product arrangement to include HP's data in Altair's Material Data Center, with no go-to-market component.

Asked about contract duration trends with seasoned customers and the progress of expanding the vertical-focused sales team.

Answer

Contract durations are getting 'somewhat longer' as a strategic choice, though most are still annual. The vertical sales team expansion is progressing well, with new verticals and leaders in place, leading to good traction and activity.

Inquired about the cross-selling of data science solutions into manufacturing, the size of the opportunity with RapidMiner, the role of the Altair Units model in this process, and the status of the company's business in China.

Answer

Executives described the data science cross-sell opportunity as 'huge' and in its early stages, with strong customer interest. The Altair Units model is a key enabler, offering a high-value proposition that encourages adoption. Regarding China, the business is relatively small, and Altair has been strictly adhering to U.S. regulations for years, so recent market developments affecting competitors do not significantly impact them.