George Kurosawa

George Kurosawa inquired about the drivers behind the return to sequential paying user growth, the sustainability of these improvements, and the divergence between revenue stabilization and weaker ARR trends.

Answer

CEO Drew Houston attributed paying user improvements to new leadership, enhanced retention, and growth in the individual business. He outlined 2026 priorities for the teams business, including reducing churn, simplifying pricing, and improving trial and onboarding experiences, further bolstered by Dash integrations. CFO Ross Tennenbaum explained the ARR divergence as a slight, temporary discrepancy due to FX tailwinds in ARPU and timing differences, expecting both metrics to align in the future.

George Kurosawa inquired about the drivers behind the sequential growth in paid users and the sustainability of these improvements, also asking about the divergence between ARR and revenue trends.

Answer

Drew Houston, CEO and Co-Founder, attributed improvements to new leadership, enhanced retention, and strong individual business growth, with a focus on the teams business for 2026 through pricing, packaging, and Dash integration. Ross Tennenbaum, CFO, explained the ARR and revenue divergence as slight, influenced by FX in ARPU and timing differences, expecting them to align in the future.

George Kurosawa followed up on the timing of enablement campaigns that were pushed from Q4 2025 into the first half of 2026, asking for color on when execution is expected, particularly if they are skewing more towards Q2 than Q1. He also sought clarification on the line of sight to normalizing headwinds for 3P Carbon6 customers and how long those headwinds are expected to persist.

Answer

CEO Chad Collins clarified that the slipped programs are moving forward, with some running currently, but the actual customer count impact (when billing starts) is expected later, probably in the latter stages of Q2 and more in Q3. Regarding 3P customers, Chad explained that the focus is on 1P customers, who often are existing SPS clients and don't increment customer count. He noted that 3P businesses are smaller with higher churn rates, contributing to the sequential decline, and that this dynamic is expected to continue.

George Kurosawa followed up on the timing of enablement campaigns pushed from Q4 2025 into the first half of 2026, specifically asking if they are skewing more towards Q2 than Q1, and sought color on the line of sight to normalization for 3P customer declines in Carbon6.

Answer

CEO Chad Collins clarified that while enablement programs are moving forward, the actual customer count impact and billing will likely occur later in Q2 and Q3 due to lag. He differentiated 1P customer count (flat, often existing SPS customers) from 3P (higher churn due to smaller businesses and less strategic focus), explaining the dynamics of customer count changes.

George Kurosawa from Citi inquired if the observed macro pressure was concentrated in specific customer segments, like the mid-market, and asked if the company could quantify what a medium-term growth outlook might look like in a normalized environment.

Answer

CEO Chad Collins clarified that the spending pressure is most pronounced in the mid-market ERP segment ($10M-$300M revenue companies), where ERP purchasing decisions are being delayed. He explained that it is difficult to parse out the exact impact of the current macro environment on the long-term forecast but noted optimism for improvement as conditions stabilize.

George Kurosawa inquired about the drivers behind the stronger-than-modeled license revenue in the quarter and how to project this line given OpenText's aggressive cloud transition. He also sought clarification on the full-year guidance in light of the eDOCS divestiture.

Answer

Interim CEO James McGourlay attributed the license revenue strength to large deals, particularly in the government sector, noting that deal timing can fluctuate but overall forecasts remain on track. Executive Chair and Chief Strategy Officer Tom Jenkins and EVP and CFO Steve Rai clarified that while the eDOCS divestiture reduces reported revenue, the full-year guidance is maintained, implying an organic performance consistent with prior expectations, as eDOCS cannot be accounted for as a discontinued operation mid-fiscal year.

George Kurosawa inquired about the specific areas of strength that led to license revenue coming in ahead of models and how that line should be viewed going forward with OpenText's cloud focus, and sought clarification on the full-year guidance maintenance despite the eDOCS divestiture.

Answer

Executive Chair and Chief Strategy Officer Tom Jenkins noted strong license deals in the government sector and across the board, with some deals from the pipeline closing in Q2, expecting continued alignment with forecasts. Mr. Jenkins and Executive Vice President and CFO Steve Ray clarified that the full-year guidance is maintained, but investors should logically reduce their models for divested businesses like eDOCS, as accounting rules prevent declaring them as discontinued mid-fiscal year.

George Kurosawa questioned the tone of customer conversations regarding AI product adoption, especially in the context of accelerating CRPO and NRR.

Answer

Chairman and CEO John Hall observed that customer conversations have evolved from curiosity to experimentation, now focusing on articulating clear business value from AI deployments. He emphasized that early 'killer apps' are driving sales and monetization, validating Intapp's 'applied AI' strategy.

George Kurosawa questioned the 18%-20% renewal contribution to RPO for 2026, noting it was lower than anticipated, and asked if this reflected conservatism or duration dynamics. He also inquired about the confidence underpinning the 3% growth guidance for the services business, especially given plans for hiring into that group.

Answer

President and CEO Eric Clark confirmed that the renewal percentage reflects a strategic decision to allow for shorter contract durations (e.g., three years) to enable more frequent price increase opportunities, rather than strictly targeting five-year renewals, which could result in a higher RPO growth number. He explained that confidence in services growth stems from strong Q4 bookings, successful conversion programs, and the significant opportunity presented by agentic AI, leveraging their domain expertise and forward-deployed engineers.

George Kurosawa asked if the 18%-20% RPO bookings from renewals for 2025 and 2026 reflected a conservative estimate or was influenced by duration dynamics. He also questioned the basis for Manhattan Associates' confidence in the 3% services business growth target for the year, given its historical visibility challenges and planned hiring.

Answer

President and CEO Eric Clark confirmed a conservative approach to renewal duration, emphasizing that shorter 3-year renewal terms, rather than 5-year, offer an advantage for future price increases, supported by sticky products and high renewal rates. He attributed confidence in services growth to strong Q4 and full-year bookings, successful conversion programs, and the significant opportunity presented by Agentic AI, leveraging their domain-expert services team.

George Kurosawa asked about the drivers behind the services upside in Q3, particularly the $2 million shift from Q4, and whether it was due to resumed projects. He also inquired about the progress of go-to-market hiring and the initial productivity ramp for new hires.

Answer

President and CEO Eric Clark attributed the services upside to the team's high execution, accelerating projects, and happy customers wanting to move faster, which is building a strong pipeline and backlog for 2026. On hiring, Mr. Clark described a 'snowball effect' where known talent attracts more, leading to a strong candidate pipeline. He noted a steady growth pace to ensure new hires become effective quickly. CFO Dennis Story added that the company continues to drive solid margins despite these investments.

George Kurosawa asked about the drivers behind the services upside in Q3, particularly the $2 million shift from Q4, and whether it was due to resumed or accelerated projects. He also inquired about the progress of go-to-market hiring relative to plan and the initial productivity ramp for new hires.

Answer

President and CEO Eric Clark attributed the services upside to the team's high-level execution and their ability to accelerate projects due to happy customers wanting to move faster, contributing to a building pipeline and backlog for 2026. Regarding hiring, Mr. Clark described a 'snowball effect' where new leaders attract more talent, allowing for steady growth of the sales team at a pace that ensures quick effectiveness. CFO Dennis Story added that the company continues to drive solid margins despite these investments.

George Kurosawa of Citi inquired about business linearity during the quarter and into July, and asked for more detail on the timing and preparation for the 2026-2027 renewal cycle.

Answer

President & CEO Eric Clark noted there was no material change in business trends or the macro backdrop during the quarter or into July. Regarding the renewal cycle, Clark clarified that it will be a gradual wave, not a single event. He stated that the company is already preparing by building the necessary team and structure, and is actively tracking renewals 18 months out to prepare for cross-sell conversations and ensure customers are budget-ready.

George Kurosawa requested qualitative insights from customer conversations that led to the decision to reiterate guidance. He also asked for an update on the foreign exchange impact baked into the full-year revenue guide.

Answer

Executive Vice Chairman Eddie Capel clarified that reiterating guidance was based on constant communication with customers and prospects, not a formal research project. President and CEO Eric Clark added that active monitoring of services demand also informed their view. Regarding FX, Dennis Story and Eddie Capel stated the impact is now a tailwind of less than 1% for the full year.

George Kurosawa from Citigroup inquired about the company's view on the potential impact of tariffs on its business. He also asked for the reasoning behind the slight downward revision to the 2025 operating margin guidance, given the stronger relative mix of software revenue.

Answer

CEO Eddie Capel stated that the company expects little direct impact from tariffs, as its systems primarily manage finished goods after they arrive at ports. He explained the margin guide adjustment was due to several factors, including continued investment increases in R&D and Sales & Marketing, FX headwinds, and the impact from the lower total revenue outlook.

George Kurosawa from Citi asked for details on the new AI leadership team (Shane and Eddy), their focus, and potential low-hanging fruit for cross-portfolio application. He also inquired about the tailwinds for core gross margin improvement in Q4 and its sustainability.

Answer

Neil Hunn, President and Chief Executive Officer, explained that Shane and Eddy's team focuses on accelerating AI product development, coaching technical leaders, building an AI development strike team, and identifying reuse opportunities across the portfolio. Jason Conley, Executive Vice President and Chief Financial Officer, noted that Q4 core EBITDA margin expanded 60 basis points, representing 54% incremental margin, and that long-term incremental margins are around 45%. He projected Application Software margins to be up slightly in 2026, Network down due to bolt-ons, and TEP flat to slightly down in H1 due to consumables.

George Kurosawa asked about the new AI leadership team (Shane and Eddy), their focus, and potential low-hanging fruit for the portfolio. He also inquired about the tailwinds behind the core gross margin improvement in Q4 and its sustainability.

Answer

Neil Hunn, President and Chief Executive Officer, explained that Shane and Eddy's team focuses on accelerating top-line goals, AI product development, and monetization through coaching, building an AI development strike team, and identifying reuse opportunities across the portfolio. Jason Conley, Executive Vice President and Chief Financial Officer, noted that long-term incremental EBITDA margins are around 45%. For 2026, Application Software margins might be up slightly, Network margins will be lower due to Convoy and Outgo, and the Tech segment will be flat-ish, with more lower-margin consumables in H1.

George Kurosawa asked about Roper Technologies' high-level organic growth picture, seeking confidence in a re-acceleration for 2026, and inquired about the pace of AI innovation, including an updated number of AI-enabled products or features.

Answer

Neil Hunn, President and CEO, attributed the quarter's softness to Deltek's government shutdown impact and Neptune's tariff issues, expressing optimism for 2026 improvements in GovCon, Foundry, CenturyEqu, and Subsplash. Regarding AI, Mr. Hunn highlighted strong progress, the shift to AI SKUs, and internal knowledge sharing, noting that commercialization efforts are underway.

George Kurosawa asked about Roper Technologies' high-level organic growth picture and confidence in re-acceleration, particularly looking ahead to 2026, and later inquired about the updated number of AI-enabled products and the pace of AI innovation across the businesses.

Answer

President and CEO Neil Hunn attributed Q3's organic growth softness to Deltek's government contracting activity and Neptune's tariff impact, expressing optimism for 2026 improvements in GovCon, Foundry, CentralReach, and Subsplash. Regarding AI, Mr. Hunn noted strong progress, a shift towards AI SKUs, and building momentum from commercialization efforts across the portfolio, with significant internal knowledge sharing.

George Kurosawa followed up on the impact of Enterprise Advanced, asking about the relative contributions of price per seat uplift versus use case expansion and seat growth, and the long-term significance of these factors for Net Retention Rate (NRR). He also sought insights into Box's confidence regarding revenue acceleration into fiscal year 2027, considering current revenue, billings, and CRPO growth rates.

Answer

CEO Aaron Levie confirmed continued strength in both pricing and net seat growth from Enterprise Advanced, noting that seat dynamics represent the largest area of upside for NRR improvement. CFO Dylan Smith stated that Box is focused on returning to double-digit top-line growth, acknowledging that while billings and current RPO are not perfect leading indicators, the underlying business momentum and revenue trajectory provide a good indication of future performance, with more specifics to be shared on the Q4 call.

George Kurosawa followed up on Enterprise Advanced, asking about the significance of use case expansion and seat growth for long-term Net Retention Rate (NRR), and also questioned the confidence in revenue acceleration into FY27 given current growth metrics.

Answer

Aaron Levie, Box Co-founder and CEO, confirmed continued strength in both pricing and net seat growth from Enterprise Advanced, highlighting seat dynamics as the biggest area of upside for NRR improvement. Dylan Smith, Box Co-founder and CFO, stated a focus on returning to double-digit top-line growth, noting that underlying momentum and revenue trajectory are good indicators, with more specifics for FY27 to be shared on the Q4 call.

George Kurosawa of Citi inquired about the current demand environment, the impact of the macroeconomic climate, and the level of prudence baked into the full-year guidance. He also asked for clarification on the disparity between strong Q1 billings and RPO growth versus the constant currency revenue growth forecast.

Answer

CEO Aaron Levie described customer conversations as 'healthy and robust,' driven by the company's AI-first strategy, but noted the guidance reflects prudence due to the dynamic macro environment. CFO Dylan Smith explained that the strong Q1 billings were influenced by timing and approximately $7 million in early renewals, which pulled some revenue forward from Q2, and that the full-year outlook includes incremental conservatism.

George Kurosawa asked for a characterization of the demand environment, including sales cycles and retention. He also followed up on the $100 million CapEx for data center and AI investments, asking if free cash flow should be considered $100 million higher excluding this, and if it was a one-time investment.

Answer

Chad Richison, President and CEO of Paycom Software, stated that demand remains strong due to a differentiated product and low market penetration, with retention reported annually. Regarding the $100 million CapEx, Mr. Richison confirmed it was a one-time investment for Iwant's capacity, not expected in the next couple of years, and emphasized the strategic decision to self-fund for control and cost-effectiveness, expecting it to positively impact future free cash flow conversion.

George Kurosawa asked for characterization of the demand environment, specifically regarding sales cycles and retention. He also followed up on the $100 million CapEx for data center and AI investments, asking if free cash flow should be considered $100 million higher excluding this, the components of the spend, and if it's a one-time investment.

Answer

Chad Richison, President and CEO, stated that demand remains strong due to Paycom's differentiated product and less than 5% market penetration, indicating the company creates and captures its own demand. He noted that retention data is reported annually but expects current work to favorably impact it. Regarding CapEx, Mr. Richison confirmed the $100 million investment was for capacity to support IWant and future AI initiatives, providing a multi-year runway. He clarified that this was a front-loaded, one-time investment, and no similar level of spend is expected in the next couple of years, emphasizing the competitive advantage of owning their data centers.

George Kurosawa of Citi, on behalf of Steve Enders, asked if the revised 2025 guidance impacts the long-term growth targets from the Investor Day and requested details on announced changes to hiring plans.

Answer

President and CEO David DeStefano affirmed that the long-term growth targets remain intact, citing strong, persistent tailwinds from e-invoicing and the inevitable ERP cloud migration cycle. He explained that reduced headcount growth is enabled by internal efficiencies and is focused on non-strategic areas, preserving investments in key priorities.

George Kurosawa of Citi inquired about the drivers of go-to-market productivity in fiscal 2025 and plans for improvement in fiscal 2026. He also asked about the typical trigger points for a customer to adopt 'Paylocity for Finance'.

Answer

President, CEO & Director Toby Williams stated that the company successfully drove productivity from its ~8% sales headcount growth in FY25 and aims to do the same with a similar headcount increase in FY26. Executive Chairman Steve Beauchamp explained that the primary trigger for adopting the finance solution is the compelling value proposition of a fully integrated platform that simplifies spend management and reporting.

George Kurosawa, on for Steve Enders, asked if the cautious tone from customers was appearing in forward-looking indicators like top-of-funnel metrics and requested details on investments in the strong broker channel.

Answer

Executive Chairman Steven Beauchamp affirmed that the cautious tone is purely qualitative and not reflected in pipeline metrics. President and CEO Toby Williams described the broker channel strategy as one of consistency, focusing on being a steady, non-competing technology partner rather than launching new, specific initiatives.