Brian Peterson

Brian Peterson inquired about the specific nature of budget uncertainties, asking if they relate to the year-end budget flush or future calendar year budgets, and for qualitative details on client caution. He also asked Jeff Tangney about the long-term vision for Doximity's AI strategy, specifically how far the company plans to expand its AI capabilities and the potential for significant growth over the next 5-10 years.

Answer

Anna Bryson, CFO of Doximity, clarified that the uncertainty primarily concerns calendar 2026 budgets, noting a general slowdown in major decisions and potential caution in the upfront cycle, while emphasizing continued high client engagement. Jeff Tangney, Co-founder and CEO, stated Doximity plans to fully leverage AI, highlighting 50% quarterly growth in AI QA users and a tripling of Scribe users. He emphasized the power of DocsGPT, the Research Solutions partnership for journal access, and the focus on physician experience.

Brian Peterson inquired about the uncertainty surrounding budget discussions, specifically whether it relates to year-end budget flush or next year's budgets, and asked for qualitative insights into the areas of uncertainty. He also followed up on Doximity's AI strategy, asking about the long-term opportunity and how far Doximity plans to take AI applications over the next 5-10 years compared to current offerings.

Answer

CFO Anna Bryson clarified that the uncertainty primarily concerns calendar 2026 budgets, noting a general slowdown in big decisions and potential caution in the upfront cycle due to policy changes. CEO Jeff Tangney stated Doximity plans to take AI "all the way," highlighting the 50% quarter-on-quarter growth in AI QA use and tripled Scribe users. He emphasized the power of their integrated drug reference and full-text access to over 2,000 medical journals through Research Solutions, positioning Doximity as a leader in real-world AI medical reference.

Brian Peterson of Raymond James asked about the long-term opportunity for Doximity's new AI products like Scribe and Pathway, and sought clarification on the implied revenue deceleration in the second-half guidance.

Answer

Co-Founder and CEO Jeff Tangney positioned the AI suite as Doximity's "third act," with potential as large as their newsfeed and workflow tools by addressing core clinical questions at the point of care. CFO Anna Bryson explained the cautious second-half outlook is due to not extrapolating Q1's outperformance, their smallest bookings quarter, amid ongoing policy uncertainty, despite not yet seeing any business slowdown.

Brian Peterson asked about the impact of the current macroeconomic environment and policy uncertainty on pharmaceutical client spending, and inquired about the expected payback period and monetization strategy for the company's increased investments in AI for fiscal year 2026.

Answer

CEO Jeff Tangney stated that while Doximity has not yet seen a slowdown, the company is prudently assuming one due to policy uncertainty. He noted that clients are 'AI cheery,' with those using AI optimization growing at double the rate of other clients. CFO Anna Bryson added that while it's early to define long-term AI margin impact, investments are already paying off by enabling business scaling without significant headcount growth, contributing to the strong adjusted EBITDA margin guidance.

Brian Peterson inquired about the difference in buying patterns between clients using the new portal versus those who are not, and also asked for clarification on the sustainability of the quarter's high EBITDA margins.

Answer

CEO Jeff Tangney confirmed that portal clients exhibit higher growth, as the tool allows them to see their return on investment monthly and make strategic adjustments. CFO Anna Bryson clarified that the 61% EBITDA margin was an anomaly due to strong Q3 upsells and that the full-year margin of 54% is a more accurate representation of the business's profitability.

Brian Peterson inquired about customer feedback following BBcon, the anticipated adoption rate of agentic AI in the nonprofit sector, and its potential impact on Blackbaud's revenue growth and monetization over the next few years.

Answer

Mike Gianoni, Blackbaud's CEO, President, and Vice Chairman, highlighted significant excitement around AI capabilities, with over 70 products announced. He noted early adoption for solutions like Prospect Insights (around 40%) and confirmed plans to cross-sell new agentic AI products, such as the development agent, this quarter. He expects a catalog of monetized agentic AI solutions to drive revenue from existing and new customers.

Brian Peterson (Raymond James) inquired about customer feedback on agentic AI post-bbcon, its adoption in the nonprofit sector, and the potential impact on Blackbaud's revenue growth and monetization over the next few years.

Answer

Mike Gianoni, Blackbaud's CEO, President, and Vice Chairman, highlighted significant excitement for AI at bbcon, with over 70 capabilities announced. He noted that while some solutions are released but not yet monetized, new products like the development agent are being cross-sold this quarter. Gianoni mentioned a 40% adoption rate for Prospect Insights on that platform and detailed plans for a 'Agents for Good' catalog, with the development agent being the first of many monetized agentic AI solutions for existing and new customers.

Brian Peterson of Raymond James Financial inquired about Blackbaud's AI strategy, specifically its prevalence in customer discussions and the outlook for budget allocation towards new AI tools. He also asked for clarification on the company's long-term growth targets, contrasting the recent high single-digit growth with the mid-single-digit plus goal, and the role of transactional revenue in this dynamic.

Answer

President, CEO & Vice Chairman Mike Gianoni explained that AI is a frequent customer topic and Blackbaud aims for industry leadership with both embedded AI and new, monetized 'AgenTeq AI' solutions launching soon. EVP & CFO Chad Anderson clarified that the strong first-half transactional revenue is volatile and not expected to recur at the same level, while contractual revenue remains on plan. He noted that the guidance does not assume any upside from potential viral giving events.

Brian Peterson from Raymond James inquired about the tangible impacts of federal grant funding uncertainty on Blackbaud's gross retention and bookings, and also asked about the performance of the transactional revenue stream in Q1.

Answer

CEO Michael Gianoni stated there has been no negative impact on bookings, pipeline, or retention, emphasizing that their software becomes more critical for individual donor fundraising in such environments. Outgoing CFO Tony Boor added that the transactional business was the primary driver of Q1 outperformance, growing over 9%, and noted that the annual guidance does not assume further viral giving events, which could provide upside.

Brian Peterson asked about Blackbaud's go-to-market pivot from customer migrations to net new logos, inquiring about the most promising end markets for 2025 and the total addressable market beyond its current customer base. He also asked about the historical impact of 'viral giving' and why it was excluded from the 2025 guidance.

Answer

CEO Mike Gianoni explained that the shift to acquiring new logos is ramping up, with bookings expected to increase in 2025, highlighting K-12, arts and cultural, and the YourCause business as key opportunity areas. CFO Tony Boor addressed viral giving, noting its volatility can range from zero to $15 million annually. He confirmed it was minimal in 2024, creating a tough comparison with a strong 2023, and is therefore excluded from the 2025 forecast for conservatism.

Brian Peterson of Raymond James asked about the long-term growth trajectory for the transactional business absent unpredictable viral events, and also inquired about the margin profile of the EVERFI business following recent cost reductions.

Answer

EVP and CFO Anthony Boor suggested a 6-7% growth rate is a reasonable long-term assumption for the transactional business. CEO Mike Gianoni added that new products like Payment Assist offer potential upside. Regarding EVERFI, Boor confirmed that even with cost rightsizing, the business remains dilutive to overall company margins and cash flow, though Gianoni noted some recent positive customer wins.

Brian Peterson asked for additional color on Manhattan Associates' Q4 start for RPO and bookings compared to the previous year. He also inquired about the anticipated impact of Greg Betts, the newly appointed COO, on the company's growth story.

Answer

President and CEO Eric Clark explained that linearity typically leans towards the third month of a quarter, and a strong Q4 is expected, similar to the previous year, following a lower Q3. Regarding Greg Betts, Mr. Clark stated that the COO will focus on conversions, renewals, maturing the partner ecosystem, and accelerating pipeline generation from both existing and new customers.

Brian Peterson asked for additional color on Manhattan Associates' strong Q4 start in terms of RPO or bookings, comparing it to the previous year's Q4. He also inquired about the expected impact of the newly appointed Chief Operating Officer, Greg Betts, on the company's growth story.

Answer

President and CEO Eric Clark explained that Q4's quick start was partly due to deals pushing from Q3, similar to the previous year, and anticipated a strong Q4 performance. Regarding Greg Betts, Mr. Clark stated that the COO would focus on scaling operational frameworks around conversions and renewals, and maturing the partner ecosystem to build pipeline faster from both existing and new customers.

Brian Peterson of Raymond James questioned the higher-than-expected maintenance revenue, asking for an update on the on-premise to cloud migration status, and inquired if ERP migrations are a key driver for net new customer wins.

Answer

President & CEO Eric Clark stated that while on-prem customers convert when ready, the company sees an opportunity to be more aggressive in driving conversions. He confirmed about 20% of on-prem customers have begun migrating. Clark also affirmed that ERP migrations continue to be a consistent tailwind, creating opportunities for customers to re-evaluate their supply chain solutions and driving pipeline for Manhattan.

Brian Peterson inquired about the linearity of bookings and RPO throughout Q1 and the start of Q2. He also asked for the rationale behind maintaining the operating margin guidance despite the Q1 outperformance.

Answer

Executive Vice Chairman Eddie Capel described Q1 bookings as strong and balanced across products, verticals, and geographies. President and CEO Eric Clark added that 50% of Q1 cloud bookings came from net new logos, indicating strong demand. Regarding margins, Dennis Story confirmed the decision to maintain guidance was driven by planned incremental investments, primarily in sales and marketing.

Brian Peterson of Raymond James asked for more specific metrics on the on-premise to cloud transition, such as the number of active WM customers signed or live. He also sought perspective on customer optimism and momentum for the cloud-based Point-of-Sale refresh cycle.

Answer

CEO Eddie Capel reported that there are a little more than 150 live Manhattan Active WM customers across over 600 facilities, with just under 80% of the on-premise customer base yet to migrate. Regarding Point-of-Sale, he noted significant enthusiasm at the NRF conference, driven by hardware aging out and retailers' desire for a true omnichannel strategy, leading to unsolicited inbound interest.

Brian Peterson sought to understand if there was any commonality, such as specific end markets, driving the delayed large deals. He also asked about the underlying demand assumptions underpinning the preliminary 2025 financial outlook.

Answer

CEO Eddie Capel responded that there was no single commonality for the deal delays, though he noted a few customers mentioned waiting for the election outcome. He stressed that win rates remain high and many pushed deals have already selected Manhattan. Both Capel and CFO Dennis Story stated that the demand environment assumption for 2025 is 'no change,' with stable diversification across verticals, geographies, and product mix.

Brian Peterson asked Bill Magnuson to elaborate on any changes observed in the demand environment from a net new perspective across different geographies and end markets over the course of the fiscal year.

Answer

Co-founder and CEO Bill Magnuson stated that while there are quarter-by-quarter differences, performance has been strong globally, with major contributions from all regions, including newer markets. He highlighted positive momentum from investments like the Australia data center and improved alignment of regional support, partners, and vertical-specific investments.

Speaking for Brian Peterson, Johnathan McCary asked about the macro environment's impact on the systems integrator (SI) channel and requested a breakdown of OfferFit's operating expense impact.

Answer

CEO Bill Magnuson noted strong momentum with the partner ecosystem, with record event attendance. While the macro can affect one-time implementation projects, partners are finding opportunities in ongoing services. CFO Isabelle Winkels provided a breakdown of OfferFit's cost structure, estimating it to be roughly 75% sales and marketing, 25% R&D, and a de minimis amount in G&A.

Brian Peterson from Raymond James asked if the expected deviation from the long-term financial framework in fiscal 2026 is solely due to the OfferFit acquisition or if it includes other organic investments. He also sought clarity on whether the revenue contribution from OfferFit assumes its current run rate or includes cross-sell synergies.

Answer

CFO Isabelle Winkles clarified that the organic outlook for fiscal 2026 remains consistent with the company's long-term framework. The deviation is expected only after the OfferFit transaction closes and its costs are incorporated. She added that the initial revenue contribution from the acquisition is a risk-adjusted figure that should be viewed as its current run rate for now.

Brian Peterson asked about the drivers behind increased activity in in-app and content card messaging, questioning the balance between upsells from higher volumes versus cross-sells of new channels.

Answer

CEO Bill Magnuson explained that the flexible credits model strongly supports cross-selling, making it commercially flexible for customers to experiment with and expand to new channels like WhatsApp, LINE, and RCS. While this may slightly alter the mechanics of net-new bookings for a channel, he believes it will ultimately drive more revenue through better long-term customer expansion.

Brian Peterson asked about the common drivers behind the recent expansion of customers to the 8-figure contract level, questioning if it was due to volume, channels, or new geographies.

Answer

CEO Bill Magnuson stated that across the three 8-figure customers, the drivers were actually different in each case. One was driven primarily by geographic expansion, another by expansion into new business units, and the third by channel expansion and growth of existing projects. He noted this diversification shows Braze's multiple growth opportunities and that all three still have significant room to grow.

Brian Peterson of Raymond James Financial sought to understand the potential size and early use cases for the AgenTeq (AI) opportunity, comparing the R&D and commercial portfolios. He also requested an update on Veeva's horizontal software ambitions.

Answer

CEO Peter Gassner detailed that AI use cases will differ by area: boosting productivity in commercial versus potentially reducing outsourced labor in R&D processes like clinical trial master file management. Regarding horizontal software, he confirmed a platform-first approach is progressing well, with CRM as the first application. The team is engaging early customers, and a more detailed update is planned for the upcoming analyst day.

Brian Peterson of Raymond James Financial asked about the relative prioritization of IT spending across sales, marketing, and service in the context of generative AI. He also questioned whether any incremental caution was factored into the full-year guidance due to macro unease.

Answer

EVP, Strategy, Paul Shawah noted that AI investment is prioritized for sales due to the significant potential for productivity and effectiveness gains for large field teams. CFO Brian Van Wagener stated that despite macro uncertainty, Veeva has not seen a material impact and the guidance assumes conditions continue as they are, with customers navigating the environment effectively.

Brian Peterson asked about the decision timelines for top-20 customers committing to Vault CRM and whether 2025 or 2026 would be a bigger year for these decisions.

Answer

EVP, Strategy Paul Shawah stated that progress is as expected, with more announcements anticipated in 2025 and the vast majority of decisions expected by the end of 2026. CEO Peter Gassner added that customers are becoming aware of a 'red zone' for making a decision, as delaying past early 2027 could create implementation risks.

Brian Peterson asked about customer feedback regarding the potential regulatory changes from a new political administration and its implications for Veeva. He also inquired about the drivers of the significant operating margin upside in the quarter.

Answer

EVP of Strategy Paul Shawah stated that customers are accustomed to administration changes and are proceeding with their mission-critical projects as planned, with no discernible impact on decision-making. CFO Brian Van Wagener explained the margin beat was driven by the revenue outperformance (about 50%), timing of expenses (25%), and ongoing expense discipline (25%).

Brian Peterson inquired about how Veeva defines success for the newly launched Service Center and how its potential revenue contribution compares to other new products in the portfolio.

Answer

EVP of Strategy Paul Shawah stated that the combined market opportunity for the three new products—Service Center, Campaign Manager, and Patient CRM—is 'roughly the same size as core CRM.' He noted that adoption requires customers to be on Vault CRM, and the opportunity will materialize over time as customers migrate.

Brian Peterson sought clarification on the sequential doubling of deals, confirming it was specific to Enterprise Advanced, and asked about the company's appetite for M&A given the rapid AI platform development.

Answer

CEO Aaron Levie confirmed the sequential doubling was for Enterprise Advanced deals, noting the company is pleased with the compounding growth. Regarding M&A, he stated there is no change in strategy. The company remains focused on organic development, confident in its modern AI architecture, and would only consider acquisitions for specific time-to-market needs, which is not currently the case.

Brian Peterson of Raymond James inquired about customer trends and pipeline development within the federal vertical, noting recent debate and uncertainty in that specific market.

Answer

CEO Aaron Levie characterized the federal environment as 'dynamic' and acknowledged a degree of caution, stating that Box has increased its focus on state and local government in the meantime. However, he expressed optimism that the company's recent FedRAMP High authorization will be a 'net helper,' positioning Box to better capture business from the Department of Defense and other agencies with highly sensitive data.

Brian Peterson asked about the early sales momentum for the new Enterprise Advanced plan and its pipeline for fiscal 2026, as well as how the mix of direct versus partner-led sales is expected to evolve.

Answer

CEO Aaron Levie stated that Box was 'very happy' with the dozens of Enterprise Advanced deals closed in Q4, noting that momentum is building but it will be a ramp-up process. Levie also explained that partners and system integrators are becoming an increasingly critical part of the go-to-market strategy to help customers with transformational workflows, a trend they expect to accelerate.

Brian Peterson of Raymond James questioned how the timing of new product launches in January might impact Q4 renewal and purchasing behavior. He also asked for confirmation on whether the net retention rate has reached its lowest point.

Answer

CEO Aaron Levie explained that Q4 will primarily focus on existing Enterprise Plus momentum, with the new Enterprise Advanced suite being a key driver for the next fiscal year. CFO Dylan Smith confirmed that the net retention rate of 102% is expected to have bottomed out and should gradually increase over time.

Brian Peterson asked about how the demand environment and deal linearity evolved throughout the quarter and into August. He also sought to understand the specific drivers behind the strength in the public sector and whether it was correlated with AI adoption.

Answer

CEO Aaron Levie described the quarter's linearity as 'pretty healthy' and noted that current trends are embedded in the Q3 and full-year guidance. Regarding the public sector, he explained that momentum is driven by the entire platform story, as government agencies at the federal, state, and local levels modernize legacy systems. While AI is a component, the broader move to a modern, intelligent content management platform is the key driver. He also highlighted future upside from the ongoing FedRAMP High certification process.

Brian Peterson from Raymond James Financial inquired about changes in lead generation for the enterprise segment and how the partner channel's influence has trended.

Answer

CEO Yamini Rangan stated that the lead source diversification strategy is working across all segments, including upmarket. Regarding the channel, she confirmed that partners continue to influence about 40% of ARR. She highlighted a positive trend of partners increasingly co-selling with HubSpot's direct sales team, which helps drive higher win rates and average selling prices in upmarket deals. This collaboration ensures customers see value faster and have higher lifetime value.

Brian Peterson from Raymond James Financial inquired about the diversification of lead sources for the enterprise segment specifically, and how the partner channel's influence has trended versus expectations.

Answer

CEO Yamini Rangan stated that the lead source diversification strategy is working across all segments, including upmarket. She confirmed the partner channel remains a key moat, influencing about 40% of ARR. Rangan highlighted that partners are increasingly co-selling with HubSpot's reps, which leads to higher win rates, larger ASPs, and better long-term customer value, reinforcing their importance in the upmarket motion.

Brian Peterson asked for more detail on the impressive 68% growth in partner co-selling, including any changes in the mix of channel-touched business and the common factors driving that strength.

Answer

CEO Yamini Rangan attributed the growth to a multi-year strategy of evolving partners into upmarket CRM implementers. She cited improved joint customer pursuits, a better product, and enhanced partner enablement around multi-hub adoption as key drivers in 2024. She also noted that partners are embracing the opportunity to be part of an AI-first ecosystem.

Brian Peterson asked about HubSpot's appetite for M&A, the balance between organic and inorganic investment, and whether any specific hub adjacencies look particularly interesting.

Answer

CEO Yamini Rangan described HubSpot's M&A approach as 'Apple-esque,' focusing on acquiring great technology and talent to accelerate the customer platform vision without disrupting the user experience. She emphasized looking for culture ads and natively building acquired tech into a crafted platform. This playbook, used for Clearbit and now Cash flow, will continue for acquisitions that accelerate the company's vision.

Brian Peterson from Raymond James Financial inquired about the accelerated growth in the U.S., asking if it was driven by a pull-forward in consumer demand ahead of potential tariffs.

Answer

CFO Jeff Hoffmeister stated that the company has not observed any pull-forward of demand. He attributed the strong Q2 performance and continued momentum in July to the business performing at a very high level, highlighting consistent strength across North America, Europe, and all merchant GMV bands, rather than any tariff-related shifts in buyer behavior.

Brian Peterson of Raymond James inquired about Shopify's Q3 GMV performance relative to expectations, trends in linearity through the quarter, and the outlook for Q4.

Answer

CFO Jeff Hoffmeister attributed the GMV outperformance to broad-based strength in Europe, particularly noting momentum in the Netherlands. He explained that while the back half of the quarter was strong, there were no other specific linearity trends to call out, expressing overall confidence in the company's current merchant momentum.

Brian Peterson asked how the company's pipeline growth looks relative to its strong billings and revenue growth, and inquired about the mix of that growth between greenfield opportunities and competitive displacements.

Answer

President Jim Pursley confirmed that pipeline growth remains incredibly strong and is a good leading indicator for future bookings and revenue. He stated that while the company is seeing an encouraging number of competitive displacements, the total addressable market is so large that the bulk of growth will continue to come from greenfield opportunities. Co-Founder & CEO Daniel Perez added that future growth levers also include increasing enrollment yields and average selling price, in addition to adding new lives.

Brian Peterson of Raymond James asked about the performance of net new business versus expectations and whether upmarket customers are now making larger, more standardized data investments.

Answer

CFO Graham O'Brien noted that upmarket new customer ACV continues to grow year-over-year. CEO Henry Schuck added that having a clean data foundation for AI is now a 'first-order problem' for enterprises, driving larger deals. He also highlighted Go-to-Market Studio as a key tool to sell these data solutions to a broader upmarket audience.

Brian Peterson of Raymond James inquired about net new business performance versus expectations and whether upmarket customers are now making larger, more standardized data investments.

Answer

CFO Graham O'Brien noted that upmarket new customer ACV continues to grow year-over-year. CEO Henry Schuck added that enterprises now view high-quality data as a 'first order problem' for their AI initiatives, leading to larger deals. He also highlighted Go-to-Market Studio as a key software layer to sell these data solutions more broadly across the upmarket.

Asked about the assumptions in the 2025 guidance regarding NRR drivers and the penetration rate of Copilot in new customer deals.

Answer

The upmarket segment (enterprise + mid-market) is on a path to mid-single-digit growth, with enterprise accelerating and mid-market recovering from previous headwinds. For new business, the vast majority of new customer ACV (around 90%+) is now landing on the Copilot platform.

Asked about the real-world impact of AI on customer decisions and sales cycles, and how competitors are innovating in response to these trends.

Answer

Customers are feeling a 'Y2K type urgency' to address discoverability issues caused by AI and answer engines, which is driving demand. The company feels its Feedonomics product is naturally suited to solve this problem. The current focus is on discoverability, which will evolve into more complex orchestration and shopping challenges.

Asked for details on the B2B market dynamics, including what systems are being displaced and the ramp-up speed for new B2B investments, given it represents half of new bookings.

Answer

The B2B market includes both greenfield opportunities for smaller businesses and displacement of legacy systems like Magento and SAP for larger enterprises. The company's composable approach facilitates a 'land-and-expand' strategy in large accounts. B2B is a major area of focus and differentiation.

Brian Peterson asked for a deeper dive into the mid-cycle RCM segment, its market penetration, and whether it represents the primary opportunity for AI's impact in healthcare payments.

Answer

CEO Matt Hawkins described the mid-cycle as a significant source of provider pain and an area ripe for AI innovation. He positioned the iodine acquisition as a key strategic move to address this, expanding Waystar's TAM and creating a large bidirectional cross-sell opportunity. He reiterated the ultimate goal is to use AI to create the 'perfect undeniable claim.'

Brian Peterson asked about the impact of security and rapid implementation times on sales cycles, particularly how conversations with customers have evolved in the last 30 days following the Change Healthcare disruption.

Answer

CEO Matt Hawkins described a multi-phase market response, moving from an initial rush to a more intentional decision-making process. He stated that in recent conversations, providers are prioritizing cybersecurity, trust, rapid deployment, and tangible ROI. Hawkins noted that Waystar is seeing continued strong demand and robust RFP activity, with providers focused on mission-critical solutions like cash flow optimization, positioning Waystar favorably.

On behalf of Brian Peterson, Jonathan McCary asked about the durability of the recent acceleration in Net Revenue Retention (NRR) and how Waystar is performing against other modern competitors, not just legacy systems.

Answer

CEO Matthew Hawkins noted NRR has been highly consistent for 13 quarters and that Waystar is well-positioned against all competitors due to its scaled, modern, cloud-based platform approach, which clients increasingly prefer over point solutions. CFO Steven Oreskovich added that higher volume-based revenue also contributed to the recent NRR strength.

Brian Peterson asked if the trend of AI moving beyond experimentation is being driven more by new customers or existing customer expansions, and how the size of initial AI deals compares to expectations.

Answer

CEO Dennis Woodside stated that AI adoption is broad-based, occurring across both new business and expansion motions, and is prevalent in both SMB and large accounts. He explained that AI is now a standard part of the evaluation process for IT and customer support solutions, rather than being driven by a specific customer segment or industry.

Brian Peterson of Raymond James Financial, Inc. asked about the linearity of top-of-funnel growth during the quarter, the potential for further conversion gains, and the expected trajectory for the enterprise Net Retention Rate (NRR).

Answer

CFO Ken Hahn reported steady linearity and confirmed there is more room for conversion improvement, but stated the company is not yet forecasting an improvement in NRR due to limited visibility. CEO Greg Hart added that the company is newly focused on systematically improving the conversion and retention funnel through faster, data-driven product development.

Brian Peterson asked if the company has observed any specific instances of customers pulling orders forward ahead of tariffs or any notable trends in specific geographies, and questioned the influence of other major e-commerce platform partners on new enterprise customer acquisition.

Answer

CFO Ofer Koren noted that while there's no clear directional trend, they have seen some softness since early May with merchants trading goods from China or Hong Kong into the U.S. President Nir Debbi stated they don't expect a major shift in competitive dynamics, emphasizing that Global-e is the market leader across all major e-commerce platforms, not just Shopify, and competes effectively on a level playing field.

Brian Peterson asked for commentary on GMV trends at the start of 2025, including any regional variations. He also followed up on take rates, asking how newer merchants are approaching the multi-local strategy.

Answer

Executive Nir Debbi noted a normalization of consumer demand in early 2025 after a very strong holiday period, with a slight weakening observed in the U.K. He explained that the multi-local offering has opened a new total addressable market, citing the recent Logitech win as a key example. CFO Ofer Koren added that they expect a gradual increase in the share of multi-local business over time, which naturally carries a lower take rate but expands their market opportunity.

Brian Peterson inquired about GMV trends observed in early 2025, including any regional variations, and asked about new merchants' adoption of multi-local strategies and the long-term impact on take rates.

Answer

President Nir Debbi described a normalization in consumer demand early in 2025 after a strong Q4, with slight weakness in the U.K. but otherwise stable trends. He explained that the multi-local offering has opened a new total addressable market, such as consumer electronics, which inherently has a lower take rate. CFO Ofer Koren added that he expects a gradual increase in the multi-local share of the business over time.

An analyst on behalf of Brian Peterson asked about the embedded expansion opportunity for new products within the installed base and the geographic opportunities factored into the outlook.

Answer

CEO Vlad Shmunis confirmed a significant expansion opportunity, noting that new products like Air and RingSense are primarily being upsold into their 400,000+ existing accounts. He stated that 90% of business is in the U.S. and Canada, with the international strategy heavily reliant on the GSP channel for efficient market access.

Brian Peterson of Raymond James sought clarification on the sequential change in ARR, asking for the impact of foreign exchange, and inquired about the strategic importance of the Global Service Provider (GSP) channel for future go-to-market motions.

Answer

CFO Abhey Lamba confirmed that currency had a negative impact of approximately $30 million on sequential ARR. CEO Vlad Shmunis described the GSP practice as a unique and pivotal channel, not just for core UCaaS but increasingly for the entire multiproduct portfolio, including RingCX, as evidenced by the recent partnership expansion with British Telecom.

Brian Peterson from Raymond James asked about the role of the Solution Exchange in the customer journey, questioning if it serves more as a differentiator for new logos or as an expansion driver.

Answer

CEO Tom Shea explained that the Solution Exchange is synonymous with the platform's 'infinite extensibility' and is a foundational part of every sales pitch. He emphasized that it represents crucial leverage for customers, ensuring they will never 'run out of software' because they can rapidly innovate or self-serve to meet new business challenges.

Brian Peterson of Raymond James requested an update on the progress of converting the customer base from term-based licenses to the SaaS model.

Answer

CFO Bill Koefoed directed the question to a slide in the earnings presentation, which breaks down ARR by contract type. He specified that 80% of ARR is now from SaaS contracts, with 15% remaining on term-based licenses and 5% on perpetual licenses. He stated that while the company is pleased with the progress, there is still work to do over the next few years to reach 100% SaaS.

Brian Peterson of Raymond James inquired about the impact of increased marketing investments this year, specifically asking about any measurable success at the top of the funnel or in the early-stage pipeline.

Answer

CFO Bill Koefoed stated that it is 'still early days' for their new marketing initiatives, like the 'Take Finance Further' brand campaign. He noted that given the company's long sales cycle, the pipeline is performing as hoped, but the full impact will manifest over time. He also mentioned that new pricing and packaging initiatives are in early stages but represent a significant opportunity.

Brian Peterson sought more color on whether macro-driven customer caution was concentrated in specific customer sizes and asked about the long-term cadence for operating margin expansion, excluding interest income.

Answer

President and CEO Toby Williams stated the caution was broad and in early stages. CFO Ryan Glenn added that the existing client base remains stable with slight workforce growth. Regarding margins, Glenn highlighted significant recent leverage but guided toward a more normalized, multiyear expansion cadence going forward, expressing confidence in long-term margin growth as the business scales.

Brian Peterson asked what solutions Paylocity's customers are currently using for spend management, assessing the greenfield opportunity, and questioned if AI features are now a key competitive differentiator or just table stakes.

Answer

Executive Chairman Steven Beauchamp explained that the customer base uses a mix of spreadsheets, manual processes, and some point solutions, creating a strong opportunity for an integrated platform. He positioned AI not as a separate product but as an embedded, evolutionary capability across the platform that drives tangible value and time savings, making it a key differentiator.

Inquired whether the encouraging top-of-funnel activity improved in Q4 compared to earlier in the year and asked about any changes in the competitive landscape or the mix of where new business is being won.

Answer

Management stated that top-of-funnel activity was slightly elevated in Q4 but has been fairly consistent throughout the year. The competitive win mix remains stable, with 75% of bookings coming from legacy providers like ADP and Paychex, though there was a slightly higher contribution from those two in Q4.

Asked for more detail on the sales hiring dynamics and for clarification on the Q4 outlook for the embedded channel.

Answer

The company clarified that the sales structure change is about improving seller success and retention, not candidate supply. They also confirmed that the Q4 guidance comment on embedded was about new partners not contributing yet, not a cessation of existing contributions.

Inquired about the concentration of the embedded channel, asking if the current contribution comes from a few partners or is more diverse. Also asked about the 'land and expand' model within this channel.

Answer

The current growth from the embedded channel is concentrated with just a few partners as it is still in its early stages. The 'land and expand' motion varies by agreement; some partners convert their existing customer base, while others also focus on selling to new clients on a go-forward basis, which has exceeded expectations.

Inquired about Parchment's product portfolio to understand which products are mature versus those with more whitespace, and followed up on the higher ed slowdown, asking if it's budget or priority-driven.

Answer

Parchment's 'Awards' product (transcripts, diplomas) is a stable, mature business, while its 'Pathways' product (dual enrollment, course sharing) and international expansion represent high-growth, whitespace opportunities. The higher ed slowdown is driven by both budget constraints and strategic reprioritization, as institutions figure out how to address new challenges and revenue streams.