Brian Schwartz

Brian Schwartz asked about the expected mix of AI inferencing and training workloads on the ServiceNow platform in 2026, specifically the breakdown between ServiceNow's own LLMs and third-party foundation models, given the complementary nature of partnerships.

Answer

President, Chief Product Officer, and COO Amit Zavery stated that ServiceNow aims to provide customer choice, with customers potentially using frontier models for certain use cases. He noted that inferencing is a small percentage of overall cost, with most value derived from context, data management, and workflow integration. He anticipates more frontier models for inferencing long-term, but ServiceNow's LLMs will still be used for sovereign requirements and on-prem deployments.

Brian Schwartz asked about ServiceNow's mega LLM provider partnerships, specifically how the company views them as complementary rather than competitive, and the anticipated mix of AI inferencing and training workloads running on ServiceNow's LLMs versus third-party foundation models in 2026.

Answer

President, Chief Product Officer, and COO Amit Zavery stated that ServiceNow ensures customer choice between foundational models and Now LLM. He noted that while frontier models might be used for inferencing in many cases, Now LLM would still be utilized for sovereign requirements or private data center deployments. He emphasized that the cost perspective doesn't significantly differ for ServiceNow, as the majority of value comes from context, data management, and workflow integration, not just inferencing.

Brian Schwartz of Oppenheimer & Co. Inc. asked how executive focus and priorities within different software markets are changing during the current macro disruption compared to past cycles.

Answer

Chairman and CEO Bill McDermott observed that the current disruption has elevated conversations to the CEO level, who now focuses on strategic platforms that can drive business transformation. He explained that CEOs are managing a 'two-sided coin': preparing for potential revenue reduction through cost take-out while simultaneously investing in AI and business model innovation for growth. This dynamic favors simple, fast-to-value platforms like ServiceNow that can address both needs.

Brian Schwartz of Oppenheimer & Co. Inc. asked about the improving POS business, specifically what factors are driving higher win rates, such as go-to-market strategies, product maturity, or referenceability. He also followed up on the gaming segment, asking if all postponed demand from October/November was caught up in December or if more catch-up is expected.

Answer

President and CEO Ramesh Srinivasan stated that the modernized POS solution, now in the field for nearly two years, has settled down and provides a significant technology advantage with its combined guest/staff-facing features and multi-OS support. He expects continued strong performance, expanding into new verticals. Regarding gaming, he clarified that December returned to normalcy, but not all postponed deals were caught up, indicating more catch-up is expected in coming months.

Brian Schwartz asked about the improving POS business, specifically the drivers behind increased win rates, such as go-to-market strategies, product maturity, or referenceability. He also followed up on the gaming segment, asking if all postponed demand from October/November was recovered in December or if further catch-up is expected.

Answer

Ramesh Srinivasan (President and CEO, Agilysys) attributed POS improvement to the modernized solution's maturity, offering a unique combined guest-facing and staff-facing system across multiple platforms, providing a significant technology advantage. He clarified that December saw a return to normalcy for gaming sales, but not all postponed deals were made up, indicating further catch-up opportunities.

Brian Schwartz asked about the efficiency curve of Agilysys's sales and service capacity initiatives, questioning if expected returns are being met and when bigger efficiency gains are anticipated.

Answer

Ramesh Srinivasan, President and CEO of Agilysys, detailed continuous efficiency improvements across the organization, driven by increased personnel strength and training in services, easier product implementations, and the use of AI tools for automation. He noted ongoing improvements in sales productivity and significant gains in product development efficiency thanks to AI. Dave Wood, CFO, addressed seasonality, explaining that this fiscal Q2 saw less seasonality due to increased sales capacity, record backlog, and improved deployment capabilities compared to the prior year.

Brian Schwartz asked about the efficiency curve of Agilysys's sales and service capacity initiatives, questioning if returns are meeting expectations and if larger efficiency gains are projected for the second half of the fiscal year or next. He also asked if the business experienced less seasonality in fiscal Q2 compared to the prior year.

Answer

Ramesh Srinivasan, President and CEO, detailed continuous efficiency improvements across the organization, driven by increased personnel strength, training, easier-to-install products, and AI tools. He noted that sales productivity still has room for improvement. Dave Wood, CFO, explained that fiscal Q2 experienced less seasonality impact due to increased sales capacity, record backlog levels, and improved deployment capabilities from the professional services team, enhancing visibility.

Brian Schwartz from Oppenheimer & Co. Inc. asked for a breakdown of the recent bookings success across core verticals like HRC and FSM, specifically regarding new logos versus expansion deals. He also inquired about the drivers behind the slight acceleration in subscription revenue growth during the quarter.

Answer

CEO Ramesh Srinivasan highlighted that Q1 saw the broadest-based sales success in the company's history, with a strong comeback in the Food Service Management (FSM) vertical and continued momentum in international, hotel resorts, and gaming. He noted that new customer wins were strong in hotels/resorts, while gaming success was skewed towards expansion with current customers. CFO Dave Wood attributed the subscription revenue acceleration to both exceptionally strong subscription bookings and increased implementation velocity from the professional services team, noting the services backlog remains at record levels.

Brian Schwartz from Oppenheimer questioned if Agilysys could accelerate the migration of legacy POS customers, sought a qualitative update on the Marriott PMS project's beta testing, and asked about the long-term growth outlook for the product revenue line.

Answer

President & CEO Ramesh Srinivasan responded that while the company encourages migration by limiting enhancements on older platforms, customer timelines ultimately control the pace. On the Marriott project, he confirmed testing is progressing well with positive feedback, though beta property installations have not yet begun. CFO Dave Wood added that the product revenue line has stabilized and is now viewed as a medium-term, single-digit grower.

Brian Schwartz asked if the point-of-sale (POS) bookings weakness was primarily contained to the Managed Food Services vertical, questioned the go-to-market strategy for new customer acquisition, and inquired about the methodology behind the revised revenue guidance.

Answer

President and CEO Ramesh Srinivasan confirmed the vast majority of POS challenges were in the Managed Food Services vertical due to the complexity of the technology transition for that segment. He added that the go-to-market focus is on achieving full territory coverage, with significant growth potential from the existing sales team. CFO Dave Wood explained the guidance methodology is consistent, but the revision reflects the inability to make up for onetime revenue shortfalls from product and services with only one quarter left in the fiscal year.

Brian Schwartz inquired about the go-to-market plan for the combined Agilysys and Book4Time sales teams, asking if they would be unified. He also questioned the company's services capacity to handle a near-record backlog in a timely manner and asked whether the Book4Time acquisition is accretive to EBITDA for the current fiscal year.

Answer

CEO Ramesh Srinivasan confirmed the plan is to unify the two sales forces over the next six months, ahead of fiscal 2026. Regarding services, he expressed confidence in their capacity, noting a 20% year-over-year increase in personnel and attributing the growing backlog to business growth and customer readiness. CFO Dave Wood stated that Book4Time is indeed EBITDA accretive, with a profitability profile similar to Agilysys, and affirmed that EBITDA guidance would have been raised even without the acquisition.

Brian Schwartz asked about Via's pricing strategy for new AI functionality, specifically if it will drive price increases or primarily enhance platform stickiness. He also inquired about additional drivers for gross margin efficiency beyond scale, over the next 12 months to medium term.

Answer

Daniel Ramot, Co-Founder and CEO, explained that Via's customer-centric philosophy means continuously upgrading existing functionality with AI to enhance stickiness and trust, rather than charging for incremental features. However, new AI-driven products can be sold separately as high-margin SKUs. Clara Fain, CFO, identified several gross margin drivers: mix shift towards higher-margin contracts (e.g., the customer example moving from 40% to 50% gross margin) and cost improvements in 'cost to serve' customers through AI tools in areas like customer support, success, and infrastructure.

Brian Schwartz asked about Via's strategy for pricing AI functionality, questioning whether it would primarily drive platform stickiness or enable price increases due to added value. He also sought insights into gross margin efficiency drivers beyond scale, looking at factors that could take hold over the next 12 months or medium term.

Answer

Daniel Ramot, Co-Founder and CEO, explained that Via's customer-centric philosophy focuses on continuously upgrading existing functionality with AI to enhance stickiness and trust, rather than charging for these upgrades. However, new AI-driven products can be sold as separate, high-margin SKUs. Clara Fain, CFO, highlighted several gross margin drivers: a mix shift towards higher-margin contracts, and cost improvements in customer service and infrastructure through the application of AI tools.

Brian Schwartz inquired if the improving sales productivity, record-level pipelines, and the new CRO's presence would alter the pace of sales rep hiring in the second half of the fiscal year. Schwartz also asked Isabelle Winkles if internal AI usage or low-cost labor arbitrage is currently impacting Braze's margin outperformance or if that benefit is still anticipated.

Answer

Co-founder and CEO Bill Magnuson confirmed that Braze is expanding sales capacity in the second half, noting that the smooth integration of OfferFit and the CRO's onboarding have set a strong foundation for executing the investment plan. CFO Isabelle Winkles clarified that operating leverage is primarily driven by cost-optimized locations, with internal AI tooling still in early stages and not yet materially impacting margins by replacing human capacity.

Brian Schwartz inquired about the pace of the OfferFit integration, the timeline for achieving synergies, and whether the annual revenue guidance assumes the majority of net new revenue will come from new customers or expansions.

Answer

CEO Bill Magnuson stated that the immediate priorities are integrating the go-to-market motions and technology to deliver quick time-to-value, with the combined sales team expected to sell the full suite next fiscal year. CFO Isabelle Winkels clarified that the mix of net new revenue is expected to remain consistent with historical trends, at a broad 50/50 split between new customers and expansions.

Brian Schwartz from Oppenheimer asked about the architectural integration plan for OfferFit, questioning whether the long-term strategy is to merge into a single tech stack or if scaling is faster by maintaining separate stacks.

Answer

CEO Bill Magnuson emphasized a strong commitment to a tightly integrated technology stack, stating it has been a key competitive advantage against legacy marketing clouds. He affirmed that the plan is to fully integrate OfferFit's technology to avoid the complexity of a fragmented, acquired portfolio. The goal is for the two platforms to be complementary, with OfferFit leveraging the Braze Data Platform and Braze benefiting from OfferFit's reinforcement learning engine within a unified architecture.

Brian Schwartz asked about the impact of recent AI and data product enhancements on sales cycles and deal sizes, and how the company is approaching the critical Q4 selling season.

Answer

CEO Bill Magnuson stated that the primary impact of Braze AI innovations has been stronger competitive differentiation, particularly against startup competitors. He noted it's difficult to isolate the effect on deal sizes from the macro environment. For Q4, he confirmed the company started with a solid pipeline and feels good about its ability to execute.

Brian Schwartz asked about Net Dollar Retention (NRR) trends, acknowledging it's a lagging indicator and probing for insights into what the company is seeing with in-period retention dynamics.

Answer

COO & CFO Tyler Sloat confirmed that NRR performed as expected, coming in at 104% on a constant currency basis. He noted a small, anticipated headwind from the Device 42 business but highlighted a strong expansion motion in Q2 and continued subtle improvements in churn, indicating no major surprises in retention trends.

Brian Schwartz asked about the state of the sales organization, questioning if increased investment meant adding capacity or replacing performers, and if the upmarket sales transition is complete.

Answer

CEO Ryan Barretto clarified that the company is increasing sales capacity, a typical move heading into the second half of the year. He described the sales organization as stable rather than in transition, highlighting that a key Q1 focus was a fast start with early finalization of territories and compensation plans.

Brian Schwartz asked if there have been any changes in the duration of deals filling the pipeline. He also inquired if the composition of bookings in the quarter, specifically the mix between new logos and expansion, was consistent with historical trends.

Answer

CEO Ryan Barretto confirmed that sales cycles are elongating in the current market, though he noted the quality of pipeline opportunities remains high. CFO Joe Del Preto added that there was no major change to the historical mix of new versus expansion business in the quarter's bookings.

Brian Schwartz asked about demand trends in April, given intensifying macroeconomic pressures, and questioned if the internal efficiencies gained from AI have altered the company's hiring plans for the year.

Answer

CEO Chad Richison responded that Paycom is not currently seeing any impact from macro pressures on demand, noting the business is not overexposed to any single industry or size segment. Regarding hiring, he explained that the company's AI and automation plans were already in place, so while hiring needs have changed (e.g., fewer administrative roles, more in sales/R&D), it was part of the existing strategy. He emphasized that Paycom remains a high-touch service model, and automation helps employees service clients more effectively.

Brian Schwartz inquired about the potential to productize the internally developed AI agent and asked for clarification on the quarter's significant EBITDA upside, specifically if any expenses shifted into Q4.

Answer

CEO Chad Richison stated that while AI is used in several products and offers monetization opportunities, the specific service agent is currently focused on driving internal and client-facing efficiencies. CFO Craig Boelte clarified the EBITDA beat was primarily due to revenue upside, with only minor timing benefits from some marketing and corporate expenses.

Brian Schwartz from Oppenheimer & Co. requested an update on the progress of the sales reorganization targeting large accounts. He also asked for the expected Q4 revenue contribution from TermSheet and guidance on how stock-based compensation should trend.

Answer

John Hall, Chairman and CEO, reported that the sales reorganization was well-executed and is building a strong pipeline in the enterprise segment, though these larger deals have longer sales cycles. CFO David Morton stated that TermSheet's Q4 revenue contribution would be immaterial and that stock-based compensation is expected to continue trending down as a percentage of revenue.

Brian Schwartz asked about deal linearity for the upcoming quarter, trends in average deal sizes, and management's high-level perspective on the macroeconomic outlook from customers.

Answer

CFO David Morton indicated that Q3 is off to a good start and should not be as back-end loaded as Q2. CEO John Hall explained that while lumpy, average deal sizes should trend up over time with increased focus on large enterprise accounts. On the macro front, Hall noted that beyond the strong secular trend of digitalization, there is a more recent increase in optimism flowing from his customers' clients, which is a positive signal for their business.

Brian Schwartz followed up on the less robust large deal activity, asking if it was due to seasonality or macro factors, and inquired about the capital markets assumptions in the growth guidance.

Answer

CEO John Hall attributed the large-deal dynamic primarily to the internal sales team realignment at the start of the fiscal year, not macro issues, citing continued strength in the mid-market. CFO David Morton added that end markets remain healthy and the company's guidance is based on its own execution rather than assumptions about external factors like interest rates or election cycles.

Brian Schwartz from Oppenheimer & Co. inquired about the consumption trends for the AI Agent Studio, asking if customers are in production or still piloting. He also asked about leading indicators such as pipeline growth, RFP rates, and deal sizes.

Answer

CEO David Steinberg confirmed that a meaningful percentage of customers have adopted the agentic AI and are in production, noting these customers are growing consumption revenue over 40% YoY. He highlighted the opportunity in agentic workflows. CFO Chris Greiner stated that leading indicators remain strong, with the sales pipeline growing faster than revenue, a healthy RFP backdrop, and strong sales productivity across all cohorts. Steinberg added that the pipeline, RFPs, and conversions are the best he's ever seen.

Brian Schwartz from Oppenheimer & Co. Inc. asked about the reasons for the guided revenue deceleration in Q1 beyond tougher comps and political headwinds, and inquired about the expected revenue mix percentage from the agency business in the 2028 plan.

Answer

CFO Chris Greiner attributed the Q1 guide to the company's standard conservative forecasting approach rather than any specific underlying business weakness. Regarding the 2028 agency mix, both CFO Greiner and CEO David Steinberg clarified that while the agency business will be a larger piece of the pie than its current ~20%, they do not expect it to double as a percentage of total revenue, though the business itself is expected to grow significantly.

Brian Schwartz of Oppenheimer asked where customer spending for the new AI agent studio product is being sourced from—IT, marketing, or new AI budgets—and how Zeta plans to gain share.

Answer

CEO David Steinberg responded that spending comes from multiple buckets, but he sees enterprises increasingly creating standalone AI innovation budgets. He emphasized that Zeta gains share by delivering clear ROI, as the AI agents can replace significant data science salary costs for a fraction of the price, while also making clients stickier and helping them scale faster.

Brian Schwartz from Oppenheimer asked about the source of customer budgets for Zeta's new AI agent studio product—whether from IT, marketing, or new dedicated AI funds—and how Zeta plans to secure its market share in this emerging area.

Answer

CEO David Steinberg responded that spending currently comes from multiple budgets, but he sees enterprises establishing standalone AI innovation budgets for 2025. He emphasized that Zeta's value proposition is a strong ROI driven by cost savings and increased customer stickiness, which is key to winning share.

Brian Schwartz inquired about the current demand environment amid market turmoil, whether macro risks were factored into guidance, and the timing for realizing cost and revenue synergies from the acquisitions.

Answer

CEO Sandeep Sahai stated that no significant macro impact was observed in Q1 or April, highlighting the revenue model's downside protection. CFO Jim Cox noted a slight NRR dip was due to a smaller AUM tailwind, not a headwind. Sahai expressed high confidence in achieving stated synergies, including improving Enfusion's gross margin and realizing $20 million in cost savings, noting that actions on G&A synergies have already begun.

Brian Schwartz inquired whether the NAIC regulation changes will continue to be a tailwind for replacement activity in 2025 or if the demand boost mostly occurred in 2024. He also asked how quickly Clearwater expects to achieve synergies from the Enfusion acquisition.

Answer

CEO Sandeep Sahai and CFO James Cox confirmed that regulatory changes, including from the NAIC, remain a persistent tailwind. They explained that while a specific $3 million project was accelerated into Q4 2024, the underlying value proposition is stronger than ever, as non-Clearwater clients struggled with the changes, highlighting the platform's benefits. Regarding Enfusion, Sandeep Sahai expressed high confidence in achieving synergies quickly, noting that the similar cloud-native, single-instance, multi-tenant architectures of both companies should facilitate a smoother integration.

Brian Schwartz inquired about the source of Clearwater's strong quarterly bookings, asking if it was driven by outsized deals or was broad-based, and questioned if the 114% Net Revenue Retention (NRR) rate means the 115% long-term target is a soft ceiling.

Answer

CEO Sandeep Sahai confirmed that booking strength was very broad-based across geographies and industries, with new products contributing about a quarter of the total. CFO Jim Cox stated that while they are buoyed by the strong NRR, the 115% goal for 2026 remains the focus, emphasizing the need for durable and consistent performance as new products mature.

Brian Schwartz asked about the monetization path for the company's 'Agentic AI' vision, specifically how embedding AI across the platform will translate into revenue, whether through increased volume, velocity, or direct pricing.

Answer

CEO Andres Reiner explained that the strategy is to ensure AI is core to a capability that delivers significant, tangible value. These AI-powered innovations are then sold as individual, sellable SKUs, such as the Dynamic Ancillary Pricing (DAP) solution. This approach creates more products to sell to new logos and expand within existing accounts, aligning with the company's 'land, realize, expand' strategy.

Brian Schwartz inquired about the mix between new customer acquisitions and expansion deals within the B2B business. He also asked for the rationale behind raising subscription revenue guidance while keeping the subscription ARR guidance unchanged.

Answer

President and CEO Andres Reiner stated that the B2B bookings mix was 50% new logos and 50% expansions in Q3, a balance they are pleased with. CFO Stefan Schulz explained that subscription revenue guidance was raised due to strong Q3 linearity and B2B performance. However, subscription ARR guidance was maintained because Q4 is the largest bookings quarter, and they chose to remain prudent given macro uncertainties.

Brian Schwartz from Oppenheimer asked if it was possible to compare the Average Selling Prices (ASPs) of new Agentic Automation deals with other products, and whether these deals could ultimately be larger in scale.

Answer

CEO Daniel Dines confirmed that Agentic deals can drive larger deal sizes, citing the quarter's largest deal as a prime example. He explained that Agentic Automation enables new pricing models, such as per-use-case, which can better align with customer value and positively impact ASPs.

Brian Schwartz asked about the timing of the company's optimization strategy, specifically whether the initial changes to drive profitable growth would focus more on the product or the go-to-market structure.

Answer

President and CEO Rory Read explained that while both are critical, changes to the go-to-market structure will have a more immediate impact and are planned for implementation at the start of FY'26. He noted that new product functionality, which is also in the pipeline and key to long-term growth, naturally has a longer delivery cycle. Therefore, the effects of go-to-market changes will be seen first, with product impacts flowing through the year.

Brian Schwartz inquired about the business outlook for the second half of the year, the state of the sales pipeline exiting Q2, the impact of AI on brand spending, the nature of key customer churn, and performance trends across different geographies.

Answer

EVP & CSO Pin-Jen Chen confirmed that robust renewals support the reiterated annual guidance, with potential upside from macro improvements. CEO Alice Chang noted strong global B2C growth but slower B2B upsells, despite high brand interest in new GenAI/GPT solutions. Mr. Chen added that brands are allocating special AI budgets for pilot projects and that key customer churn is typically a downgrade below the $50k threshold for smaller brands, not a complete loss. Geographically, he highlighted strong B2C growth in Latin America and challenges in China.

Brian Schwartz of Oppenheimer & Co. Inc. inquired about the drivers of strong SKU growth, plans for expanding sales capacity, the reasons behind the decline in key customer count, and the sustainability of lower G&A expenses.

Answer

CEO Alice H. Chang explained that SKU growth is spread across makeup, skin, and jewelry, with makeup remaining the largest contributor. She noted that sales capacity is being cautiously expanded in high-growth areas like skin and fashion. Regarding customer churn, both Chang and EVP & Chief Strategy Officer Louis Chen clarified that it's concentrated among smaller, financially distressed clients and is not a material revenue impact. Chen also stated that the lower G&A expense reflects maturing public company processes and reduced costs like D&O insurance, suggesting it's not a one-off reduction.