Devin Au

Devin Au asked CFO Serge Tanjga about the framework for Appian's 2026 revenue guidance, specifically whether it incorporates similar conservatism as the 2025 guidance. He also inquired about the strategy for deploying resources to the Public Sector vertical to sustain and amplify recent success.

Answer

CFO Serge Tanjga stated that the forecasting methodology remains consistent with no incremental conservatism, noting a less uncertain macro environment than a year ago. He explained the guidance differentiates between predictable cloud revenue and lumpier non-cloud segments. Regarding Public Sector, he confirmed capacity growth in federal and other verticals, emphasizing a measured, long-term approach to sales capacity expansion.

Devin Au asked about the framework for the 2026 revenue guidance, specifically whether it incorporates a similar level of conservatism as the initial 2025 guidance. He also followed up on the public sector momentum, asking about Appian's strategy for deploying resources, particularly sales capacity, to this vertical.

Answer

CFO Serge Tanjga stated that the internal forecasting methodology hasn't changed, with no incremental conservatism, and the macro environment feels less uncertain than a year ago. He differentiated cloud guidance (narrower range) from other business segments (broader range due to lumpiness). He confirmed growing capacity in the federal vertical, alongside others, emphasizing a consistent, year-over-year approach to building sales capacity.

Devin Au of KeyBanc Capital Markets asked about the strategy behind recent leadership hires in EMEA and marketing, and requested details on the expenses that were shifted into the second half of the year.

Answer

CEO Matt Calkins explained that the new hires are part of a continuous strategy to enhance alignment and discipline in the go-to-market organization, not a sudden shift. CFO Serge Tanjga clarified that the deferred expenses were primarily for marketing and consulting services and were a minor factor in the Q2 EBITDA outperformance.

Devin Au asked about the key learnings from the successful adoption of Intelligent Document Processing (IDP) that could be applied to new AI agent offerings, and sought more detail on the strong public sector bookings growth.

Answer

Matthew Calkins, Chairman and CEO, highlighted that IDP has long been the top AI use case and its newest version can "read anything" without pre-training, making it more adaptive and accurate. He noted the 59% federal bookings growth exceeded his expectations but reiterated a stance of "cautious optimism." Mark Lynch, Interim CFO, added that federal revenue grew 21% YoY, outpacing the company's total revenue growth.

Devin Au sought clarification on whether the 15% ACV growth guide is on a constant currency or reported basis, and inquired about the extent of NRR expansion from the historical 110% level. He also asked for customer feedback and pipeline build from AWS re:Invent and an update on the AWS partnership.

Answer

COO and CFO Ken Stillwell confirmed the 15% ACV growth guide is a constant currency number. He stated that NRR expanded by approximately 150 basis points in 2025 over 2024, expecting this level to remain consistent into 2026. Ken Stillwell highlighted the critical alignment with AWS on transforming legacy workflows using Blueprint and AWS tools, leading to strong collaboration between selling teams. CEO Alan Trefler added that the AWS partnership is moving in a good direction.

Devin Au asked for clarification on whether the 15% ACV growth guide is on a constant currency or reported basis, and sought details on the NRR expansion, specifically how much it has increased from the historical 110% level. He then inquired about customer feedback and pipeline build from Pega's presence at AWS re:Invent, and the evolution of the partnership with AWS.

Answer

Ken Stillwell (COO and CFO) confirmed that the 15% ACV growth guide is on a constant currency basis. He stated that the NRR for 2025 was approximately 150 basis points higher than 2024, with this level expected to remain consistent in 2026, driven by new logos and autonomous partner selling. Regarding AWS, Ken Stillwell highlighted the strong alignment between Pega and AWS in transforming legacy workflows using Blueprint and AWS tools, leading to re-implementation on Pega Cloud (hosted on AWS). Alan Trefler (Founder and CEO) added that the AWS partnership is progressing well and anticipates a significant AWS presence at PegaWorld.

Devin Au inquired about the impact of partner-branded Blueprints on unlocking new use cases and influencing sales pipeline and velocity. He also asked about the contribution of license migrations to cloud ACV growth.

Answer

Alan Trefler, Founder and CEO, explained that 'Powered by Blueprint' allows partners to embed their best practices into the tool, creating private knowledge stores. This expands Pega's reach by enabling partners to leverage their IP with Pega's AI, potentially accelerating sales velocity. Ken Stillwell, COO and CFO, clarified that while migrations are important for moving clients to Pega Cloud and will drive down term ACV/revenue over time, the overall acceleration in total ACV is primarily driven by clients expanding their use of Pega, not materially by migrations.

Devin Au with KeyBanc Capital Markets inquired about the impact of partner-branded Blueprints, specifically if they have unlocked new use cases and influenced sales pipeline and velocity since their June launch. He also asked Ken Stillwell to quantify the contribution of license migrations to cloud ACV growth.

Answer

Alan Trefler, Founder and CEO, explained that "Powered by Blueprint" allows partners to embed their best practices and brand the tool, leveraging their IP and expanding Pega's reach beyond its direct sales force. He anticipates this will be very important for unlocking new opportunities. Ken Stillwell, COO and CFO, clarified that while migrations are important for moving clients to Pega Cloud, they are not the material driver of total ACV acceleration, which primarily comes from clients expanding their use of Pega. He noted that term revenue will decline year-over-year in Q3 and Q4 due to this cloud movement.

Devin Au asked for an update on the public sector business, particularly regarding any deal elongation. He also questioned if any deals were pulled into Q2 and whether Pega Blueprint is shortening sales cycles.

Answer

Founder & CEO Alan Trefler acknowledged some project reshuffling in the public sector but sees the government's push for efficiency as a net positive, highlighting a major UK military win. COO & CFO Kenneth Stillwell noted their FedRAMP High certification is a key advantage. Trefler explained that Blueprint primarily accelerates the front-end of the sales cycle, and Stillwell confirmed there were no unusual deal pull-ins.

Devin Au requested more detail on the deal influence of Pega GenAI Blueprint in the quarter and asked for commentary on the strong acceleration in backlog growth and any changes in contract durations.

Answer

CEO Alan Trefler stated that Blueprint's influence is now 'ubiquitous,' impacting every single deal. Executive Peter Welburn advised focusing on current RPO growth, which aligns closely with ACV growth, rather than total RPO, which can be skewed by the timing of large, multi-year cloud renewals.

Devin Au questioned the first quarter 2026 revenue guidance, noting a greater sequential decline in growth than prior years at the midpoint, and asked for factors beyond the 100 basis point headwind from degrees. He also inquired about the step down in net new enterprise accounts added in Q4, asking if deals were pushed out to 2026 or for other contributing factors.

Answer

CFO Mike Foley attributed the cautious Q1 outlook to uncertainty in the macroeconomic environment impacting the Coursera for Business segment, despite good momentum in Coursera for Campus. President and CEO Greg Hart added that the increasing success of Coursera Plus annual subscriptions leads to revenue recognition over a longer time horizon, impacting Q1 specifically. Greg Hart also noted that while deals always push out, Q4 wasn't exceptionally worse, reiterating macro trends in C4B and the lumpiness of C4G contracts as factors for net new enterprise accounts.

Devin Au asked about the factors contributing to the Q1 2026 revenue guidance, which contemplates a greater sequential decline in growth than prior years, beyond the 100 basis point headwind from Degrees.

Answer

Mike Foley, Chief Financial Officer, pointed to a cautious outlook for the Coursera for Business (C4B) segment due to macroeconomic uncertainty. Greg Hart, President and CEO, added that the increasing success of Coursera Plus annual subscriptions leads to revenue recognition over a longer time horizon, impacting Q1. Devin Au also inquired about the step down in net new Enterprise accounts added in Q4 and whether any deals were pushed out. Greg Hart stated that deal push-outs were not worse than usual, reiterating macro trends in C4B and the natural lumpiness of Coursera for Government (C4G) contracts.

Devin Au sought clarification on the ARR guidance raise, specifically asking if it still bakes in prudence for the U.S. federal business despite its normalization, or if incremental contributions from that segment are expected in the second half due to the stabilized operating environment.

Answer

Ashim Gupta, Chief Operating and Financial Officer, confirmed that the U.S. public sector is normalizing towards more predictable buying behavior. He stated that the guidance does bake in prudence, but at the same time, the company sees more contribution from the U.S. public sector, evaluating this based on the tangible pipeline from the federal government.

Devin Au of KeyBanc Capital Markets questioned the drivers behind the steady performance of Busuu's B2C segment. He also asked about the competitive positioning of Chegg's Skills business amid growing AI education initiatives from large tech companies.

Answer

President & CEO Nathan Schultz attributed Busuu's B2C strength to focusing on the 'success seeker' user persona and integrating engaging AI features like 'speaking bytes'. Regarding the Skills business, Schultz noted that after a 12-month modernization, the platform is now well-positioned with a micro-learning format to meet market demand for upskilling, with growth expected in 2026.

Devin Au asked two questions: first, for a quantification of the impact from the temporary Q4 retention dip, and second, about the promotional pricing strategy in international markets and if ARPU headwinds might moderate.

Answer

CFO David Longo estimated the retention dip had a roughly $2-3 million impact on Q4 revenue. Regarding international pricing, he explained that Chegg constantly experiments to optimize LTV. While they had rolled back some promotions in mid-2024, they reintroduced some in early February 2025 to boost international subscriber numbers, indicating a dynamic strategy rather than a permanent one.

Devin Au of KeyBanc Capital Markets asked for details on a one-time $2.5 million consumer revenue benefit and whether the recent business momentum was driven more by execution or a change in customer sentiment.

Answer

CFO Sarah Blanchard explained the revenue benefit was a one-time catch-up of cumulative breakage revenue. CEO Hugo Sarrazin attributed the business's "green shoots" to both improved execution and a clear shift in customer demand, stating that customers are now urgently seeking AI fluency solutions, which aligns perfectly with Udemy's strategic pivot to an AI-powered learning platform.

Devin Au of KeyBanc Capital Markets sought clarification on the downtick in Udemy Business net dollar retention (NDR), particularly for large customers, asking if it was driven by churn, downsell, or slower expansion.

Answer

CFO Sarah Blanchard explained the decline was caused by two issues: an unexpected one-point drop in gross dollar retention and slower upsell activity. The slower upsell was attributed to the recent sales reorganization and the time required to ramp up reps. She expressed confidence that the new Chief Customer Experience Officer will help unlock the significant expansion opportunity within the existing customer base.

Devin Au asked for color on the expectations for enterprise ARR growth in 2025, how net new ARR would trend, and whether ARR is expected to recover sooner than revenue.

Answer

CFO Sarah Blanchard confirmed that ARR, as a leading indicator, is expected to recover ahead of revenue. She projected that net new ARR would be more muted in the first half of 2025 due to the smaller SMB sales capacity and team ramping, with an acceleration expected in the second half of the year.

Devin Au from KeyBanc Capital Markets asked about the specific go-to-market strategies planned to drive more product expansion and upsells, and questioned the reason for the sequential decline in net new Udemy Business customer additions.

Answer

CEO Greg Brown explained the go-to-market strategy involves enabling the sales team to have more strategic conversations with senior leaders, using case studies to demonstrate bottom-line impact and secure larger initial deals. CFO Sarah Blanchard clarified that the step-down in net new customer logos was an expected result of the strategic resource reallocation away from the SMB segment.

Devin Au, on for Jason Celino, inquired about customer sentiment and project outlooks within the AECO segment, asking if there was an elongation of sales cycles. He also questioned if any of the strong ARR growth was due to deals being pulled forward.

Answer

CEO Robert Painter described the AECO segment as 'steady as she goes,' noting that while sales cycles for the largest enterprise customers have slightly lengthened, it hasn't fundamentally moved the needle. He pointed to strength in data centers and renewables. He estimated a minimal hardware pull-forward of less than $5 million, which was more than offset by a decrease in dealer inventories, indicating strong retail sales.

Devin Au of KeyBanc Capital Markets Inc. inquired about the near-term project outlook for AECO customers, trends in sales cycle duration, and whether strong Q1 results were influenced by deal pull-forwards.

Answer

Executive Robert Painter described the AECO segment outlook as "steady as she goes." He acknowledged slightly longer sales cycles for the largest enterprise customers but noted this was offset by strength in data centers, renewables, and small to midsized companies. He stated there was no material pull-forward of deals, estimating less than $5 million in hardware, and pointed out that dealer inventories actually declined, signaling strong end-market demand.

Inquired about customer sentiment and project outlook in the AECO segment, specifically regarding sales cycle elongation, and whether any deals were pulled forward contributing to strong growth.

Answer

The executive described AECO as 'steady as she goes.' While there are slightly longer sales cycles with the largest enterprise customers, it's not significantly impacting the business and is offset by strength in areas like data centers. Regarding deal pull-forwards, it was deemed not relevant for software and minimal for hardware (less than $5 million), which was more than offset by a decrease in dealer inventories.

Devin Au, on for Jason Celino, asked if the quarterly revenue outperformance was due to new logo strength, back-to-base sales, or customer employee retention, and also inquired about the ramp-up of new sales reps.

Answer

CFO Craig Boelte attributed the revenue beat primarily to new logo additions. CEO Chad Richison added that the new cohort of sales reps is ramping very well, noting their enthusiasm for the product is reflected in strong starts and unit numbers.

Requested more context on a specific customer win-back and asked if the macroeconomic assumptions in the full-year guidance have changed.

Answer

The win-back was attributed to Canvas's superior usability and customer service. While such wins are positive, the company emphasized that the largest growth opportunity remains in greenfield markets. Their macro assumptions have not changed, as the education market is more sensitive to specific trends like enrollment, into which they have early visibility, rather than broader economic shifts.

Asked if the higher-ed selling environment has worsened and for an update on LearnPlatform's business traction and future revenue contribution.

Answer

The higher-ed selling environment is stable, not worsening, with elongated sales cycles persisting from Q4 into Q1. LearnPlatform is performing well, contributing to strong cross-sell bookings growth, and is expected to continue being a growth area.