Daniel Jester

Daniel Jester asked if there's concern that customers might delay buying decisions for Pro products because they see Max potentially available in the near future, given current capacity limitations for the Max program.

Answer

Co-Founder and President Vahe Kuzoyan acknowledged that such delays are possible due to capacity constraints, but emphasized that nailing the product-market fit and ROI story, and consistently delivering that ROI, is more important than any potential temporary sales losses from under-capacity.

Daniel Jester asked if customers are delaying purchasing Pro products because they see the Max Program potentially becoming available to them in the near future, due to current capacity limitations.

Answer

Co-founder and President Vahe Kuzoyan acknowledged that such delays are certainly possible due to the limited capacity for Max when demand is much greater. However, he emphasized that nailing the product-market fit and consistently delivering ROI for Max is considered more important than any potential temporary losses in sales from under-capacity.

Daniel Jester asked for an explanation of why Marketing Pro is a superior solution compared to horizontal applications for the trades, and how ServiceTitan prioritizes R&D for automating back-office functions versus other opportunities.

Answer

President Vahe Kuzoyan explained that Marketing Pro's unique value comes from its deep integration with CRM data, enabling automated, targeted campaigns that horizontal solutions struggle to synchronize. This purpose-built design for the trades allows for automatic detection of optimal campaign launch times.

Daniel Jester asked about the success metrics for Intuit's 600 service centers and the in-person tax opportunity. He sought insights into the takeaways from this year's performance and how Intuit plans to leverage these centers going forward, particularly in combining human and artificial intelligence.

Answer

Chairman and CEO Sasan Goodarzi highlighted the success of the service centers, noting over 5 million unique visitors to landing pages and/or stores through early February, significantly surpassing the 4.2 million for the full prior season. He explained that these centers enhance local visibility, build customer confidence, and unlock total addressable market (TAM) by tapping into a new customer base, with the majority of engagement occurring virtually.

Daniel Jester asked about the success metrics for Intuit's 600 tax service centers and the in-person tax opportunity, inquiring about the takeaways from this year's performance and future plans, especially given the emphasis on combining human and AI intelligence.

Answer

Sasan Goodarzi, Chairman and CEO of Intuit, highlighted the success of the service centers by noting that over 5 million customers visited landing pages or stores through early February, compared to 4.2 million for the entire previous season. He explained that these locations enhance local visibility and customer confidence, allowing Intuit to tap into a new customer base and unlock TAM through its AI and HI-powered platform, even though most engagement remains virtual.

Daniel Jester sought clarification on Mailchimp's re-acceleration to double-digit growth by year-end, specifically whether this would be driven solely by mid-market improvements or also require a rebound in smaller customer segments.

Answer

CFO Sandeep Aujla expressed confidence in Mailchimp's strategic steps, including scaling the mid-market sales team, improving product experience, and increasing go-to-market efforts. He confirmed that achieving double-digit growth will require a mix of both smaller and mid-market customer contributions, with a solid read on progress expected in early calendar year and springtime.

Daniel Jester asked whether Mailchimp's re-acceleration to double-digit growth by year-end fiscal 2026 would be driven solely by improvements in the mid-market segment or if it also requires a resurgence in smaller customer acquisition.

Answer

Intuit CFO Sandeep Aujla stated that Mailchimp's re-acceleration will require a mix of both mid-market and smaller customers. He outlined strategic steps including scaling the mid-market sales team, improving product experience and onboarding across all segments, and increasing broader go-to-market efforts, including dialing up marketing that had been reduced during product fixes. Aujla expressed confidence in the momentum and expects a clearer read on Mailchimp's progress by early calendar year and springtime.

Daniel Jester asked about the maturity of the go-to-market motion for Intuit Enterprise Suite (IES) and the importance of the accounting channel to its future success.

Answer

CEO Sasan Goodarzi stated they are still in the 'early days' of the go-to-market motion for mid-market, describing it as not yet a 'finely tuned machine,' which he sees as a massive opportunity. He emphasized that accountants are viewed as critical partners, not just a channel, for both serving the firms themselves and collaborating to serve their end customers. He noted they are in the 'very early innings' of partnering with accountants to serve the mid-market together.

Daniel Jester asked for an update on the maturity of the go-to-market motion for Intuit Enterprise Suite (IES) and questioned the importance of the accounting channel for its future success.

Answer

CEO Sasan Goodarzi described the go-to-market motion as being in the 'early days' and not yet a 'finely tuned machine,' which he believes highlights the massive opportunity ahead. He stressed that accountants are viewed as critical partners, not just a channel, for serving mid-market customers, and that this partnership is in the 'very early innings,' indicating significant room for growth.

Daniel Jester asked what is resonating with QuickBooks Live customers and how the service could help accelerate Intuit's push into the mid-market.

Answer

CEO Sasan Goodarzi stated that Intuit has achieved product-market fit with QuickBooks Live for smaller businesses, and recent success comes from 'cracking the nut' on go-to-market strategy. He sees an even larger opportunity in the mid-market, as these larger customers expect services like a 'CFO for hire.' He noted that customers using Live experts show higher attachment rates for other services like payments and payroll, making it a key enabler for the upmarket strategy.

Daniel Jester asked about Seequent's performance, noting Q4 and consistent 2025 improvement, and inquired about the historical impact of upcycles in minerals, metals, and mining on the business, as well as levers for incremental revenue.

Answer

CEO Nicholas Cumins explained that a slowdown in major capital investments for mining a couple of years ago has improved through 2025, leading to cautious optimism for 2026. He highlighted Seequent's resilience, growing faster than the company even during the slowdown, due to its software being used in day-to-day operations rather than solely capital projects. Executive Chair Greg Bentley added that an increasing portion of Seequent's business is for foundation and civil engineering projects, driven by subsurface risk modeling.

Daniel Jester inquired about Seequent's performance, specifically the Q4 improvement and consistent improvement throughout 2025. He asked how an upcycle in minerals, metals, and mining has historically affected the business and what levers could drive incremental revenue with continued cyclical improvement.

Answer

CEO Nicholas Cumins explained that a slowdown in major capital investments for mining exploration and expansion, which began a couple of years ago, improved throughout 2025, leading to cautious optimism for 2026. He highlighted Seequent's resilience, growing faster than the rest of the company even during the slowdown, due to its software being deeply embedded in day-to-day operations rather than solely dependent on cyclical capital projects. Executive Chair Greg Bentley added that an increasing portion of Seequent's business now supports foundation and civil engineering projects, driven by subsurface risk modeling.

Daniel Jester asked Julie Iskow about the current opportunity in the financial services vertical and how it compares to other growth opportunities for Workiva in 2026. He also asked Barbara Larson about the foreign exchange (FX) assumptions embedded in the 2026 guidance and any specific callouts for model updates.

Answer

CEO Julie Iskow highlighted financial services as Workiva's strongest vertical, driven by large new logos and account expansions, particularly with fund reporting, regulatory use cases, and partner co-sells. She noted plans to increase investment in other verticals. CFO Barbara Larson stated that the 2026 guidance assumes FX rates consistent with January 2026 rates, following Workiva's historical approach.

Daniel Jester asked for an update on the financial services vertical opportunity, including its current standing and how it compares to other growth opportunities for 2026. He also inquired about the foreign exchange (FX) assumptions embedded in the 2026 guidance, particularly given its impact on RPO and CRPO in recent quarters.

Answer

CEO Julie Iskow highlighted financial services as Workiva's strongest vertical, driven by large new logos, account expansions, co-selling with partners, regulatory use cases, and strong performance from fund reporting. She noted plans to increase investment in other verticals. CFO Barbara Larson stated that the 2026 guidance assumes FX rates consistent with January 2026 rates, following the historical approach, and specific FX impacts will be provided with actual results.

Daniel Jester asked if the company is seeing a broader acceleration in back-office digitization or if trends are consistent with 2024. He also requested more detail on European growth, specifically the mix between CSRD-driven demand versus broader platform adoption.

Answer

CEO Julie Iskow confirmed that ERP upgrades are a strong buying trigger, often sourced through partners. Regarding Europe, she emphasized that demand is broad-based across the entire solution portfolio, not just sustainability. She attributed the strong performance to large greenfield opportunities and improved execution by the regional teams, noting that 17.5% of total revenue now comes from outside the Americas.

Daniel Jester followed up on AI, asking for examples of tools built around IWant and evidence of cross-sell opportunities as clients leverage IWant's data and functionality. He also asked CFO Bob Foster about CapEx and free cash flow expectations for 2026 following the one-time capital spending in 2025.

Answer

CEO Chad Richison explained that IWant simplifies access to value without requiring system expertise, and Paycom continues to enhance its functionality and release new products. He highlighted the goal of full-solution automation, where the system decisions everything, using time-off requests as an example of automated decisioning. CFO Bob Foster stated that while 2025 included one-time CapEx, Paycom maintains a long-term outlook and would continue to invest opportunistically, supported by strong EBITDA margins and cash flow.

Daniel Jester followed up on the development of tools around IWant, asking for examples and evidence of cross-sell opportunities. He also asked CFO Bob Foster about the expected CapEx and Free Cash Flow for 2026, considering the one-time capital spending in 2025.

Answer

CEO and President Chad Richison explained that IWant simplifies access to value without requiring system expertise, with continuous functionality additions and rapid new product releases. He highlighted the focus on full solution automation, where the system decisions everything, using a detailed example of automated time-off requests. CFO Bob Foster acknowledged the one-time CapEx in 2025, stating that Paycom would continue to invest opportunistically for client ROI, supported by strong EBITDA margins and cash.

Daniel Jester asked if there are opportunities to build more products beyond AI, serving a broader set of client use cases, especially now that executives are using Iwant more. He also inquired about the ramp of new offices and any changes in the philosophy for adding sales capacity for the upcoming year.

Answer

Chad Richison, President and CEO of Paycom Software, affirmed significant opportunities for more automation and new product releases, emphasizing the focus on automating decisions to combat decision fatigue across all HCM modules. He also discussed changes in the focus for developing sales representatives and managers, expressing optimism for expanding offices based on sales success and aiming for greater success in the coming years.

Daniel Jester asked if the increased executive usage of IWant creates opportunities to build more products beyond AI, serving a broader set of client use cases. He also inquired about the ramp of new offices and any changes in the philosophy for adding sales capacity in the upcoming year.

Answer

Chad Richison, President and CEO, confirmed significant opportunities to build more products and automation, particularly addressing 'decision fatigue' across HCM modules. He stated that Paycom will continue to release products that create value and automate more areas of the HCM process. Regarding sales capacity, Mr. Richison noted changes in the focus for developing sales representatives and managers, expressing bullishness on expanding and opening more offices, driven by greater success at the sales rep and manager levels.

Daniel Jester from BMO Capital Markets sought clarification on a prior comment about free cash flow, asking if it referred to dollars or margin and if it included tax benefits. He also asked if the planned sales and marketing investment for iWant is a temporary push or a more substantial, ongoing effort.

Answer

CFO Bob Foster clarified the comment was about free cash flow margin and confirmed it incorporates benefits from the new tax bill. CEO Chad Richison stated that the company had been preparing for increased marketing spend in Q3 and Q4 to support the iWant launch and intends to maximize the budget due to the significant opportunity, while continuing to measure its return on investment.

Daniel Jester asked if the recent accreditation for Paycom's background screening services represents an incremental revenue opportunity and inquired about specific programs aimed at winning back "boomerang" clients.

Answer

CEO Chad Richison clarified that pre-employment screening has been part of Paycom's business for a while and the accreditation serves as a proof point of its quality for both existing and prospective clients. He confirmed that Paycom has a dedicated strategy to win back former clients, stating that they are often the "best prospects" because they have experienced the pain of leaving and understand the value of Paycom's solution.

Daniel Jester asked about the 2025 product roadmap, whether new product launches are assumed in the guidance, and what interest rate assumptions underpin the $110 million interest income forecast.

Answer

CEO Chad Richison confirmed that there will be product announcements in 2025, highlighting his renewed focus on product development and automation. Retiring CFO Craig Boelte stated the interest income forecast incorporates a couple of potential Fed funds rate cuts mid-year and one toward the end of 2025.

Daniel Jester asked Chris Young about the need to innovate faster with AI and the philosophy around inorganic opportunities to accelerate this journey, and then asked John Schwab about the expected trajectory of free cash flow and cash generation for the current year.

Answer

Chris Young, President and CEO of Vertex, emphasized speeding up AI integration across the product portfolio (e.g., tax content management, returns filing) to deliver value faster. He confirmed continued activity in inorganic opportunities, including partnerships like Kintsugi and potential acquisitions, to add capabilities and drive AI innovation. John Schwab, CFO of Vertex, expects continued improvement in free cash flow and conversion in 2026, noting that significant R&D investments from 2025 will be relevant in the first half of 2026 but should tail off, leading to improved profitability and cash flow in the second half.

Daniel Jester asked President and CEO Chris Young about the company's strategy to innovate faster, particularly concerning AI, and the philosophy around inorganic opportunities to accelerate this journey. He also asked CFO John Schwab for more color on the trajectory of free cash flow and cash generation for the upcoming year.

Answer

President and CEO Chris Young stated a focus on speeding up AI delivery across the product portfolio, including SKU categorization, tax content, and returns filing, and indicated an openness to partnerships (like Kintsugi) and M&A to add capabilities. CFO John Schwab projected continued improvement in free cash flow and conversion for 2026, noting that significant R&D investments made in 2025 would start to tail off towards the latter half of the year, leading to better pull-through from profitability.

Speaking on behalf of Daniel Jester, Kyle Aberasturi asked about new logo growth trends, specifically the enterprise versus mid-market mix, and inquired about the drivers of the strong software gross margin.

Answer

CEO David DeStefano noted a solid diversity in new logos, with most wins still in the enterprise market. He highlighted that SAP and Oracle wins are typically scaled from the start, while the Microsoft ecosystem provides a mix. CFO John Schwab stated there were no one-time drivers for the strong software gross margin but was cautious about extrapolating the high rate long-term.

Daniel Jester asked for a breakdown of the e-invoicing investments between product and go-to-market, and for more explicit details on the drivers behind the record new logo growth in the quarter.

Answer

CFO John Schwab clarified that the majority of the e-invoicing investment is focused on product development, specifically expanding country coverage and integration. Both executives attributed the strong new logo growth to the broadening partner ecosystem, highlighting a 20% increase in referrals from SAP alongside growing contributions from Oracle, Shopify, and Microsoft, validating prior channel investments.

Daniel Jester asked about the expected mix of new logo growth versus expansion within the existing customer base given the tailwinds from e-invoicing and the ERP super cycle. He also inquired about the trajectory of margin expansion into 2025.

Answer

CEO David DeStefano explained that e-invoicing is primarily an expansion opportunity with existing customers, while the ERP cycle and new partnerships are expected to drive more new logos. CFO John Schwab noted that while margin expansion has been strong, the acquisition of ecosio is expected to be dilutive to adjusted EBITDA in 2025, which will impact the margin profile.

Daniel Jester asked about the common characteristics of the 25% of new bookings in Q4 that did not opt for platform pricing, and BlackLine's considerations for balancing customer readiness with its standardized bundle approach in 2026. He also inquired about the expected flow of gross margin throughout 2026 following the completion of the Google Cloud Platform (GCP) migration, and any anticipated impact of ramping up AI capabilities on gross margin.

Answer

Owen Ryan, CEO, and Patrick Villanova, CFO, explained that customers not adopting platform pricing were often larger but still navigating their digital finance transformation, or were in the lower/mid-market not yet ready for platform-level transformation. BlackLine aims to select customers likely to transition to the platform over time. Patrick Villanova stated that the 2026 guide assumes platform uptake will be north of 75% as customers recognize the value of the platform and its agents. He expects generally expanding gross margin throughout 2026 due to the GCP migration completion (reducing redundant costs) and improved case deflection via AI and other technologies.

Daniel Jester inquired about commonalities among the 25% of new bookings in Q4 that did not choose the platform, and BlackLine's considerations for balancing a standardized bundle in 2026 with meeting customers at their current stage. He also asked about the expected flow of gross margin in 2026 following the GCP migration, and any impact from ramping up AI capabilities on gross margin.

Answer

CEO Owen Ryan and CFO Patrick Villanova explained that the 25% of non-platform new bookings were typically customers at earlier stages of digital finance transformation, often in the lower mid-market, where BlackLine is selective in investing. For 2026, they expect platform uptake to be north of 75% due to the perceived value of the platform and agents. Patrick Villanova stated that gross margin is expected to expand throughout 2026 due to the completion of the GCP migration (reducing redundant costs) and improved case deflection through AI, which lowers the cost to serve.

Daniel Jester noted that industry vertical investments are helping close deals and asked if BlackLine is reprioritizing its vertical focus in the current economic environment.

Answer

An executive, likely Co-CEO Owen Ryan, responded that they are not reprioritizing and will stick with the five industry verticals they established last year. He noted that a majority of Q1 success came from these verticals, and the focused use cases are proving to be a key differentiator, even in industries facing economic pressure.

Daniel Jester from BMO Capital Markets asked about the drivers behind the strong performance of the invoice-to-cash pillar and inquired about the outlook for free cash flow in 2025.

Answer

Co-CEO Owen Ryan attributed the invoice-to-cash momentum to product improvements, a higher quality team, and increased partner activity. CFO Mark Partin outlined two key variables for 2025 free cash flow: a new cash tax burden in the low-to-mid-teens on a non-GAAP basis, and lower interest income due to a smaller cash balance and lower rates.

Daniel Jester asked about the opportunity to expand within the existing customer base, referencing the company's cohort analysis, and how innovation and go-to-market changes are expected to drive deeper customer penetration.

Answer

CFO Mark Partin confirmed that the existing customer base remains a primary growth vector, with innovation aimed at the CFO and CIO to drive cross-sell and upsell. Co-CEO Owen Ryan added that BlackLine is now more aggressively guiding customers on their transformation journey, moving them from core products to solutions like transaction matching and journals. He highlighted that co-innovation with customers and partner involvement are key to this strategy's success.

Daniel Jester asked about the strength of the selling environment, comparing it to the previous year, and inquired about customer engagement with Paylocity's AI tools, specifically if clients are building similar functionality themselves.

Answer

Toby Williams, CEO and President, characterized the selling season as strong with stable demand, noting consistent performance compared to the prior year. Steve Beauchamp, Executive Chairman, explained that Paylocity focuses on embedding AI across its suite, highlighting use cases like policies and procedures and the AI assistant, which have led to improved ease of use, increased platform engagement, and time savings for customers.

Daniel Jester asked about the opportunity in the IT department for customers, how it compares to Paylocity for Finance, and the rationale behind updating long-term financial targets, given a recent update less than two years prior.

Answer

President and CEO Toby Williams explained the IT opportunity leverages employee record data for comprehensive onboarding/offboarding, asset management, and identity management, noting its early stage but strong platform differentiation. CFO Ryan Glenn stated the updated targets acknowledge significant progress against prior goals (set August 2023), including EBITDA/free cash flow leverage and reduced stock-based compensation, with early AI/automation benefits providing incremental confidence.

Daniel Jester from BMO Capital Markets asked Paylocity to elaborate on the opportunity within the IT departments of its customers, comparing its significance to the Paylocity for Finance offering. He also questioned the timing behind updating the long-term financial targets, noting the previous update was less than two years prior.

Answer

Toby Williams, President and CEO, explained that the IT opportunity leverages employee record data for comprehensive tasks like asset and identity management during onboarding and offboarding, enhancing overall platform differentiation. Ryan Glenn, Chief Financial Officer, stated that the updated targets acknowledge continued confidence in scaling the business, significant progress against prior targets (set in August 2023), including several hundred basis points of EBITDA and free cash flow leverage, reduced stock-based compensation, and early benefits from AI and automation.

Daniel Jester of BMO Capital Markets asked about the integration status of Airbase following the launch of 'Paylocity for Finance,' whether sales resources were shifting to cross-sell the new offering, and the outlook for free cash flow in fiscal 2026.

Answer

Executive Chairman Steve Beauchamp confirmed the first major phase of the Airbase integration is complete, with ongoing enhancements planned. He explained that the field sales team is being trained to refer opportunities to a specialized inside sales team. CFO Ryan Glenn expressed confidence in continued free cash flow margin expansion for fiscal 2026, highlighting a potential tailwind from new tax legislation.

Daniel Jester inquired about customer engagement with new AI features and the primary drivers behind the company's increased focus on growing average revenue per client.

Answer

Executive Chairman Steven Beauchamp described growing adoption of embedded AI tools, like chatbots for policy questions, which aim to seamlessly improve efficiency. He explained that the focus on average revenue per client reflects a dual strategy of deepening HCM penetration and expanding horizontally into new areas like finance, which will utilize different pricing models.

Daniel Jester of BMO Capital Markets asked for clarity on the conversion of EBITDA to free cash flow, considering the impact of the Airbase acquisition. He also inquired about potential changes to the sales force mix between new business 'hunters' and existing account 'gatherers'.

Answer

CFO Ryan Glenn confirmed a roughly 100 basis point headwind to free cash flow from Airbase but stated the full-year margin should still be north of 20%, with no other major concerns. President and CEO Toby Williams explained that while they have increasingly invested in a team to sell back to the base, the primary go-to-market focus remains on acquiring new clients.

Daniel Jester asked if the Airbase product could achieve the typical 10-20% client base penetration target for new modules and requested color on the revenue mix of Airbase (subscription vs. transaction).

Answer

Executive Chairman Steven Beauchamp affirmed that achieving 10-20% penetration with Airbase over time is a feasible goal, representing a significant opportunity. CFO Ryan Glenn and Mr. Beauchamp clarified that Airbase's revenue is largely software fee-based, making it manageable to forecast and integrate into their financial models.

Daniel Jester requested an update on ServiceMax, specifically regarding its performance after a challenging previous year, and the cross-sell opportunities for fiscal 2026, referencing a positive expansion story in the slide deck.

Answer

CEO Neil Barua and CRO Robert Datta provided an update on ServiceMax, acknowledging ongoing churn but highlighting encouraging demand capture and contractual commitments in Q4 and Q1. Neil emphasized ServiceMax's competitive differentiation through its integration into the Intelligent Product Lifecycle and AI strategy. Rob added that ServiceMax is now a key focus in elevated messaging and compensation plans to boost cross-sell opportunities.

Daniel Jester requested an update on ServiceMax, given a tougher year in fiscal 2025, and the cross-sell opportunity for fiscal 2026.

Answer

Neil Barua (CEO, PTC) acknowledged ongoing churn events in ServiceMax, with most expected to be worked through by the end of Q2. He highlighted encouraging green shoots, including strong demand capture and cross-sell opportunities, particularly with ServiceMax's integration into the Intelligent Product Lifecycle and AI strategy. Robert Dahdah (Chief Revenue Officer, PTC) added that ServiceMax is now a key part of elevated messaging and compensation plans.

Daniel Jester asked for a deeper explanation of how PTC constructed the downside scenario for its 7% ARR growth guidance, including the underlying macro and deal-level assumptions.

Answer

CEO Neil Barua explained the 7% floor was derived from both a bottoms-up and a tops-down analysis. The bottoms-up view assessed the pipeline's vulnerability in key end markets like industrial manufacturing and automotive under worsening macro conditions. The tops-down view modeled PTC's performance during past major crises, like in 2009 and the pandemic. Barua emphasized that reaching this low end would require a significant deterioration in the macro environment beyond what is currently being observed.

Daniel Jester from BMO Capital Markets inquired about expected performance variations across PTC's five key product pillars, with a specific request for updates on ServiceMax and Codebeamer.

Answer

CEO Neil Barua highlighted strong, ongoing momentum in PLM (Windchill) due to enterprise penetration. He noted that Codebeamer is gaining significant traction, with two of the top ten auto OEMs expanding usage in Q4. For ServiceMax, he cited a key competitive win with a major crane manufacturer, which chose PTC specifically for the integration between ServiceMax and Windchill.

Dan Jester asked for more color on Lyric's large deals in Q2, how they were won, and if such deals should be seen more frequently, inquiring about critical mass and upmarket momentum. He also asked to compare record client satisfaction with in-line retention, seeking insights into exogenous factors impacting retention.

Answer

Maria Black, President and CEO, expressed excitement about Lyric's strong bookings, especially the two largest deals, and expects more such wins. She highlighted that 70% of Lyric's pipeline and wins are new logos, attributing success to its flexibility, dynamic tools, and AI-centric, human-centric design. She confirmed building critical mass. Regarding retention, Maria Black noted record client satisfaction is broad-based and a direct result of investments. Peter Hadley, CFO, added that the in-line retention, anticipating a 10-30 basis point moderation for the full year, is primarily due to a slight normalization of out-of-business rates in the small business segment, rather than a reflection of client satisfaction.

Dan Jester asked for more color on Lyric's large deals in Q2, how they were won, if ADP has critical mass in reference customers, and if such large deals should be expected more frequently. He also asked to compare the extremely strong customer feedback with the in-line retention commentary, inquiring about any exogenous factors impacting retention.

Answer

Maria Black, President and CEO, ADP, expressed excitement about Lyric's strong new business bookings, including two of the largest deals to date, and confirmed the expectation for more such deals. She highlighted that 70% of Lyric's wins and pipeline are new logos, attributing success to the platform's flexibility, dynamic tools, and AI-centric, human-centric design. She confirmed ADP is building critical mass with Lyric. Regarding client satisfaction, Maria Black noted a record quarter and first six months, driven by investments in tools and products. She explained that while retention is strong and connected to satisfaction, the in-line expectation reflects a planned moderation due to a normalization of out-of-business rates closer to pre-pandemic levels, rather than a competitive or macro issue.

Daniel Jester asked about any differences in the demand environment between U.S. and international markets. He also followed up on Workforce Now NextGen, inquiring about commonalities or friction among the 20% of new bookings not adopting it, and whether 100% adoption is expected this fiscal year.

Answer

President and CEO Maria Black described international demand as 'lumpy' due to large, complex deals, noting a softer Q1 FY26 after strong Q4 FY25, but with a solid pipeline. Regarding Workforce Now NextGen, she stated that 100% adoption is unlikely this fiscal year, as the 20% not adopting it are typically 'knockouts,' most commonly clients adding a location or company to their existing portfolio who desire a single offering.

Daniel Jester asked about any differences in the demand environment between the U.S. and international markets. He also inquired about the commonalities or friction points for the 20% of new mid-market bookings that do not choose Workforce Now® NextGen, and whether 100% adoption is expected for that segment of the market at some point this fiscal year.

Answer

Maria Black (President and CEO) characterized international demand as "lumpy" due to large, complex deals, noting Q1 was "a bit softer" after a strong Q4, but the pipeline remains solid. Regarding NextGen, she does not expect 100% adoption this fiscal year, explaining that the 20% not choosing it are typically "knockouts," often clients adding a location or company to their existing portfolio who prefer a single offering.

Daniel Jester asked for additional details on the fiscal 2026 margin guidance, including puts and takes from lapping the Workforce Software acquisition and FX impacts, and the drivers of the expected margin ramp during the year.

Answer

CFO Peter Hadley clarified that while acquisition-related amortization is being lapped, investment in Workforce Software integration continues. He noted the margin story for fiscal 2026 is a balance between strong client funds interest revenue and productivity gains against ongoing, meaningful investments in strategic priorities like Lyric, Workforce Software, and GenAI, which drives the cadence.

Daniel Jester inquired about the pilot programs for agentic AI within Paychex's organization, asking about expected productivity improvements and success measurement. He also sought color on learnings and modifications to the approach for cross-sell revenue synergies, referencing a recent large win.

Answer

President and CEO John Gibson detailed Paychex's extensive AI track record, leveraging a vast data set of 40 million client interactions to drive product differentiation, pricing, and back-office efficiency. He highlighted the new agentic AI tool for high-volume transactions, aiming to free up service providers for advisory roles. Gibson also reported that integration is progressing well, with Q1 revenue synergy expectations met and pipeline growth. He expressed surprise and excitement over the upmarket potential of ASO/HR outsourcing, noting large deals beyond initial targets, and the resonating value of 401(k) offerings upmarket.

Daniel Jester inquired about the agentic AI pilot programs within Paychex, asking about expected productivity improvements and how success is being measured. He also asked for insights into learnings from the revenue synergy cross-sell opportunities with Paycor clients and any modifications being made.

Answer

President and CEO John Gibson highlighted Paychex's impressive AI track record, leveraging a large data set of SMB HR interactions to drive client value, pricing, and wins. AI is used in back-office functions, to boost service provider productivity, and for sales targeting, with a new generative AI tool piloting for high-volume transactions. Regarding revenue synergies, Mr. Gibson noted that integration is progressing well, Q1 revenue synergy expectations were met, and the pipeline is growing. He expressed surprise at the upmarket potential for ASO/HR outsourcing, landing multi-thousand employee deals beyond their initial sweet spot, which is leading to a rethinking of their upmarket strategy.

Dan Jester asked about the value and competitive moats of Samsara's new pre-delivery installation program for hardware in trucks. He also inquired about the behavior of smaller and mid-sized customers, any macro impact on them, and if their behavior has been consistent.

Answer

Sanjit Biswas (CEO) explained the pre-installation program streamlines operations for large enterprises by eliminating operational headaches and ensuring vehicles are ready on day one, expanding partnerships with OEMs. Dominic Phillips (CFO) noted consistent strong growth in the commercial mid-market and SMB segments, indicating no significant change in their behavior despite the focus on large customers.

Daniel Jester of BMO Capital Markets inquired about the drivers of international momentum, asking to distinguish between the impact of increased sales capacity versus regulatory tailwinds. He also asked if the preventative maintenance solution is targeted at specific industries or has broad applicability.

Answer

Co-Founder and CEO Sanjit Biswas attributed the international strength, particularly in Europe, to sustained investment and achieving product-market fit over time, rather than a specific new regulatory driver. He also clarified that the preventative maintenance solution has broad, cross-industry appeal because customers in different verticals often use similar types of assets, like trucks.

Daniel Jester asked about the potential impact of tariffs on Samsara's hardware supply chain and questioned why free cash flow margin guidance for fiscal 2026 is similar to fiscal 2025 despite expected EBIT margin expansion.

Answer

Chief Financial Officer Dominic Phillips responded that the company has no concentrated exposure to any single country for device imports and has mitigation strategies in place, with all factors included in guidance. Regarding free cash flow, he clarified the figure was a modeling note, not formal guidance, but represents a confident starting point for the year, with potential for upward revision as the year progresses.

Daniel Jester asked if the strong performance in the public sector was a direct result of focused investments made over the past year.

Answer

CFO Dominic Phillips confirmed that the public sector has been an area of continued investment and focus. He explained that these deals have longer sales cycles and that the success seen in Q3, including a record 16 deals over $100,000, was the materialization of those efforts.

Daniel Jester from BMO Capital Markets asked two questions: whether the increased free cash flow guidance was driven by underlying efficiency or external factors like OBBA, and why the Q3 recurring revenue guidance range was particularly wide.

Answer

Executive VP & CFO Jeremy Johnson clarified that while the guidance increase from 12% to 13.5-14% was largely driven by the OBBA tax benefit, the initial expansion to 12% already reflected significant underlying productivity gains. Regarding the Q3 guidance, he explained the $10 million range simply translates to a wider percentage spread (13% to 16% constant currency) for a single quarter, whereas the full-year's $20 million range is a tighter 2-point spread.

Daniel Jester asked two questions: first, about the free cash flow seasonality for the rest of the year given the strong Q1, and second, whether the new $72 million Government of Canada contract value was net new or already contemplated in guidance.

Answer

CFO Jeremy Johnson confirmed that typical free cash flow seasonality will continue, with Q1 being the lowest quarter due to items like bonus payouts, but the overall level of cash flow is higher. The company remains on track for its 12% full-year margin target. Regarding the contract, CEO David Ossip clarified that the extension was assumed in their guidance, and the signing de-risks that revenue stream.

Daniel Jester questioned the slowdown in Dayforce Wallet customer go-lives and its future growth potential, and also asked for details on a pension settlement's impact on 2025 cash flow.

Answer

CEO David Ossip highlighted strong Wallet revenue growth, projecting over $30 million for the year, and detailed new features like cashless tips and upcoming 'Bring Your Own Card' capabilities to drive monetization. CFO Jeremy Johnson confirmed a $20-$25 million pension termination payment is included in the 2025 cash flow guidance and is expected in the second half of the year.

Daniel Jester asked for an update on the macroeconomic environment and sought details on the strong cross-sell momentum for the Financials Suite, questioning what drove the improvement and how broader suite adoption could be accelerated.

Answer

CEO Craig Courtemanche described the macro environment as 'surprisingly the same as last quarter.' CFO Howard Fu noted that the Financials suite represents the most immediate cross-sell opportunity since only about half of customers have it. Courtemanche added that success was not limited to Financials but occurred across all product lines, validating the platform's strength.

Daniel Jester of BMO Capital Markets asked for early customer feedback on Procore's AI Copilot and inquired about any foreign exchange impact during the quarter.

Answer

CEO Tooey Courtemanche shared that customers view Copilot as an "answer machine" and expressed excitement about the future of AI Agents that will proactively monitor projects to manage risk and improve margins. CFO Howard Fu stated that the impact from foreign exchange in Q4 was minimal and not notable.

Daniel Jester from BMO Capital Markets requested an update on partner investments in their OneStream practices and their participation in building for the Solution Exchange.

Answer

CEO Tom Shea described the partner ecosystem as healthy and critical to their innovation engine. He noted strong GSI interest in AI and the recent acquisition of partner-generated solutions as a key signal of the ecosystem's health, creating a 'win-win' for OneStream, its partners, and customers.

Daniel Jester of BMO Capital Markets asked about the planning opportunity, specifically how often customers deploy multiple planning solutions (e.g., capital, sales, people) and how OneStream helps unlock these silos.

Answer

CEO Tom Shea explained that customers typically follow a capability maturity journey. They start with core financial planning and, as they become proficient, layer on more granular solutions like people planning, then capital or cash planning. He described the ultimate journey as using AI to predict underlying business trends, stating this defined path is a core part of OneStream's value proposition that drives retention and expansion.

Asked for details on the two new product launches (benchmarking and forecasting), including their pricing and growth opportunity. Also requested commentary on booking conditions during the quarter.

Answer

The two new products, pay benchmarking and labor forecasting, will each add an incremental $1 PEPM. They leverage data analytics to provide insights to frontline leaders. Booking conditions during the calendar fourth quarter were consistent across all segments and in line with expectations.