George Sutton

George Sutton of Craig-Hallum Capital Group inquired about the market reception of the WhiteFiber rebranding and sought an update on new platform initiatives.

Answer

Benjamin Lamson, Head of Revenue for Cloud, responded that the rebrand has been very well received, highlighted by a recently launched new website. He indicated that news on first-to-market technology, supported by third-party benchmarks, would be released in the coming weeks, and teased a revolutionary technology for cross-data center workloads planned for later in the year.

George Sutton inquired about the timing and practical assumptions for The Hackett Group's planned alliances, specifically with SIs and large software companies, given previous discussions.

Answer

Chairman and CEO Ted Fernandez highlighted that the release of AI Explorer version 4 significantly increased the company's ability to secure alliances. He noted positive reactions from prospective clients and partners, mentioned walking away from a previous SI offer for better opportunities, and expressed confidence in attracting one or two major alliance partners in the near future. He also confirmed increased client engagement and pipeline activity around GenAI since version 4's launch, expecting acceleration from channel partners.

George Sutton inquired about the timing and practical assumptions for announcing new alliances that could significantly expand growth opportunities, especially given prior discussions with SIs and large software companies. He also asked about the software side's new business and the rationale behind the Dutch auction.

Answer

Chairman and CEO Ted Fernandez explained that the release of AI Explorer version 4 has significantly increased the company's capability and positive reactions from potential partners, leading to confidence in attracting one or two major alliance partners soon. He noted that client engagement and pipeline activity for GenAI have improved since version 4's launch on September 8th. Regarding the Dutch auction, Mr. Fernandez stated it was initiated to aggressively acquire stock during a volatile Q3 and to continue aggressive buybacks given the company's pristine balance sheet and strong cash flow generation.

George Sutton of Craig-Hallum Capital Group LLC inquired about the market impact of the AI Explorer, Leeway Hertz, and ZBrain platforms, questioning the timeline for seeing tangible revenue growth. He also asked about the status of negotiations for large strategic partnerships and the rationale behind the AI-related headcount adjustments, particularly concerning the Oracle practice.

Answer

Ted Fernandez, Chairman and CEO, clarified that while GenAI services revenue was up significantly, the AI Explorer platform has not yet been licensed as the company is focusing on major enhancements for the upcoming version four. He highlighted the newly announced strategic alliance with Salonis as a key development. Regarding headcount, Fernandez explained the restructuring in the Oracle practice was a response to both a slower-than-expected replacement of a large engagement and the anticipated 20%+ productivity gains from the new 'Accelerator' GenAI delivery platform.

George Sutton of Craig-Hallum Capital Group LLC questioned the tangible impact of the AI Explorer and ZBrain platforms on current results, the status of strategic partnerships, and the reasoning behind AI-related headcount adjustments in the Oracle practice.

Answer

Chairman and CEO Ted Fernandez clarified that while GenAI-related services revenue is up significantly, the AI Explorer platform is not yet licensed as it's undergoing major innovation for an upcoming release. He announced a new strategic alliance with Salonis and mentioned ongoing talks with other potential partners. Fernandez explained the headcount reduction in the Oracle practice was due to a slower-than-expected replacement of a large engagement and expected productivity gains from their GenAI-assisted 'Accelerator' platform.

George Sutton from Craig-Hallum asked how the current environment of rapid technological change impacts a best practices consultancy, sought clarification on the "consequential impact" of AI XPLR on 2025 results, and requested an example of an ideal ideation-to-implementation client scenario.

Answer

Ted Fernandez, Chairman and CEO, explained that economic uncertainty has led them to re-emphasize strategic cost reduction services for clients. He clarified that the "consequential impact" from AI XPLR involves material GenAI revenue growth, the start of licensing revenues for both XPLR and ZBrain, and the potential for the JV to attract capital or channel partners. An ideal client scenario, he detailed, involves a top-down, enterprise-wide GenAI strategy that leads to the client licensing the AI XPLR and ZBrain platforms for their own AI Center of Innovation.

George Sutton inquired about the breadth of Gen AI projects and the pipeline's strength, the potential impact of reduced compute costs on AI application development, and whether the strong SAP performance represented a new sustainable level.

Answer

Chairman and CEO Ted Fernandez explained that Gen AI is dominating client conversations and that the company's AI XPLR and LeewayHertz capabilities position them at the 'tip of the spear.' He viewed declining compute costs as a positive catalyst for adoption. Regarding SAP, Fernandez clarified that the exceptional Q4 results were heavily influenced by large, year-end software sales not expected to repeat at the same level in Q1, but he anticipates strong underlying SAP demand throughout 2025.

George Sutton inquired about The Hackett Group's AI initiatives, asking for details on the AI XPLR 2.0 platform, the resulting sales pipeline, and its impact on rates. He also sought clarification on the expected increase in 2025 IT budgets for AI and the meaning of the historical "40% halo effect" from IP-led services.

Answer

Ted Fernandez, Chairman and CEO, explained that AI XPLR version 2, combined with the capabilities from the LeewayHertz acquisition, has significantly increased client conversion rates. He detailed that the platform can now simulate enterprise-wide use cases and calculate ROI, which is driving client engagement. Fernandez stated that while 2024 was about AI awareness, 2025 will see specific budget allocations for GenAI projects. He clarified that the 40% halo effect was downstream revenue from traditional IP offerings and expects the AI XPLR platform to expand this effect significantly.

George Sutton asked for clarification on CEO Asher Genoot's comment that AI is only the first chapter of the story, seeking more specifics on future chapters and positioning.

Answer

CEO Asher Genoot explained that the initial thesis for US Bitcoin Corp (which merged into Hut 8) was to evolve beyond Bitcoin mining as technology consumption of power increased. He highlighted the successful spin-off of American Bitcoin, which achieved $64 million in revenue and a 56% margin in its first quarter. Genoot also mentioned seeing directional interest from adjacent sectors like advanced manufacturing and large-scale campuses for robotics, but emphasized staying hyper-focused on becoming a leader in the data center industry before expanding further.

George Sutton asked for more specifics on CEO Asher Genoot's comment that AI is only the first chapter of the story, and how Hut 8 is positioning for future chapters.

Answer

CEO Asher Genoot explained that Hut 8's foundational thesis was always about evolving power consumption, starting with Bitcoin mining and now expanding to AI. He highlighted American Bitcoin's strong Q1 performance and mentioned future interests in advanced manufacturing and robotics, while remaining hyper-focused on data centers for now.

An associate speaking for George Sutton asked about the GPU-as-a-service agreement structure, future expansion plans for the vertical, the potential scope of the mining fleet upgrade, and the future trajectory of mining margins.

Answer

The executive stated the GPU-as-a-service contract structure is unchanged (5-year, fixed base plus revenue share) and expansion is being explored with project-level financing. A fleet upgrade is being actively negotiated to replace the old 31.7 J/TH fleet with new 12 J/TH miners, which would significantly improve the cost to mine a Bitcoin, building on the recent reduction in power costs to $0.032/kWh.

Logan on for George Sutton asked about the GPU-as-a-service vertical, questioning if the agreement structure had changed and what the future expansion plans were. He also requested details on the scope of the planned fleet upgrade and its potential impact on mining margins.

Answer

CEO Asher Genoot confirmed the GPU-as-a-service structure remains a 5-year contract with a fixed base payment and a revenue-sharing model. He stated that future growth is being planned in parallel with project-level financing. Regarding the fleet, Genoot emphasized the significant efficiency gains possible by upgrading to 12 joules/terahash machines, which would dramatically lower the cost to mine a Bitcoin from the current $26,232, and noted active discussions are underway for a fleet refresh.

George Sutton of Craig-Hallum inquired about the status and composition of the 1.1 gigawatt opportunity pipeline and sought details on the unique revenue-sharing component of the new GPU deal.

Answer

CEO Asher Genoot confirmed the pipeline has grown beyond 1,100 megawatts and projects have advanced, reinforcing the company's long-term vision as an energy infrastructure provider focused on Bitcoin mining and high-density compute. Regarding the GPU deal, he described it as a joint-venture-like structure with a revenue share designed to capture more upside from on-demand pricing, but declined to share further competitive details.

Asked for an update on the 1.1 gigawatt opportunity pipeline, its composition, and details about the unique revenue-sharing structure of the new GPU deal.

Answer

The pipeline has grown beyond 1.1 GW and opportunities have progressed. The company's strategy is to be an energy infrastructure company focusing on Bitcoin mining and high-density compute (AI) as primary use cases. The GPU deal has a revenue-sharing component to capture more upside from on-demand compute pricing, structured like a JV to prove out the model for scaling.

George Sutton of Craig-Hallum requested an update on the 1,100-megawatt opportunity pipeline and asked about the unique revenue-sharing structure of the new GPU deal.

Answer

CEO Asher Genoot confirmed the pipeline has grown beyond 1,100 megawatts and projects have advanced, reinforcing the company's vision as an energy infrastructure platform targeting Bitcoin mining and high-density compute. Regarding the GPU deal, Genoot explained that the joint venture structure includes a revenue share to capture more upside from on-demand pricing, creating a levered return profile. He remained intentionally discreet on further details to maintain a competitive edge.

George Sutton inquired if Agilysys is now attracting attention from major hospitality players, including those who previously opted for 'thin code-based software vendors.' He also asked about the progress in closing the gap on Agilysys's brand awareness in key market circles, and whether reference customers are the primary driver for this.

Answer

Ramesh Srinivasan, President and CEO, confirmed that larger players are indeed taking notice, attributing this to the superior product ecosystem and the credibility of senior sales staff like Joe Youssef. He acknowledged that while significant progress is being made in raising awareness for 'today's Agilysys' through marketing, thought leadership, and event sponsorships, it's a continuous effort, not a quick fix.

George Sutton asked if Agilysys is gaining attention from major hospitality players, particularly those who previously opted for thin code-based software vendors, and about the progress in becoming better known as 'today's Agilysys' in the market.

Answer

Ramesh Srinivasan, President and CEO of Agilysys, confirmed that larger players are indeed taking notice, attributing this to the impressive product ecosystem and the credibility of senior sales staff like Joe Yousef. He acknowledged the ongoing challenge of making 'today's Agilysys' known, moving beyond older perceptions, and highlighted significant progress through marketing, thought leadership, and increased participation in industry events.

George Sutton from Craig-Hallum inquired about the scale of the international market opportunity and requested an update on the performance and integration of the Book4time acquisition, which was excluded from many of the reported sales metrics.

Answer

President & CEO Ramesh Srinivasan described the international opportunity as a 'massive growth area' where Agilysys's product ecosystem faces less competition. He characterized the Book4time acquisition as highly successful, adding talent and a respected brand. He also noted that the cross-selling of the full Agilysys product suite by the Book4time team is now beginning as planned for fiscal 2026.

George Sutton inquired about the development process for the major Marriott project, asking about scope changes, the significance of upcoming test properties, the drivers behind the potential record international sales quarter, and the company's brand perception domestically versus internationally.

Answer

President and CEO Ramesh Srinivasan confirmed the Marriott project is on plan with no major changes, having moved from development to the testing and deployment planning phase, with pilot sites expected in H2 calendar 2025. He noted that potential record international sales depend on a few large deals, highlighting the need to build a more consistent pipeline of smaller wins. Srinivasan also explained that building the "new Agilysys" brand is an easier task domestically where the company is already known, whereas internationally they must first establish the brand itself.

George Sutton asked for more detail on the Book4Time cross-sell opportunity, particularly whether the remote sales team could realistically gain traction with large enterprise players like IHG and Accor. He also asked for key takeaways and any surprises from the recent G2E (Global Gaming Expo) trade show.

Answer

CEO Ramesh Srinivasan explained the cross-sell opportunity is broad, encompassing hundreds of independent properties where the Book4Time team has strong relationships, in addition to larger chains where new CCO Joe Youssef adds influence. Regarding G2E, Srinivasan reported it was a 'very busy' and 'uniformly positive' show, with a notable absence of customer complaints and strong interest in the Agilysys ecosystem. He expressed such confidence in customer sentiment that he invited analysts to the company's next user conference.

George Sutton with Craig-Hallum asked about the specific contract requirements that led WhiteFiber to adjust plans for MTL-2, the strategy for monetizing 700 uncontracted GPUs, and the risks and development process for a hypothetical customer seeking deployments in multiple new markets.

Answer

WhiteFiber Head of Revenue Ben Lampson clarified that MTL-2's original customer contract didn't align with WhiteFiber's underwriting criteria, primarily due to term and price, as they prioritize private cloud deployments over public cloud competition. He noted the 700 GPUs are a mix of on-demand and long-term contracts. President Billy Krassakopoulos detailed that multi-market deployments involve close customer collaboration on site selection, deep credit checks, and ensuring expansion potential with utility providers.

George Sutton asked about the contract requirements that were not met at Montreal 2, the marketing strategy for the 700 uncontracted GPUs, and the risks and processes involved in a hypothetical multi-site deployment for a customer.

Answer

Benjamin Lamson, Head of Revenue, explained that Montreal 2's original customer did not meet White Fiber's contractual requirements, primarily regarding term and price, leading to the decision to open it for colocation. He noted the 700 GPUs are a mix of on-demand and long-term contracts, with expectations of quick deployment. Billy Krassakopoulos, President of Data Centers, detailed that for multi-site deployments, White Fiber works closely with the customer on site selection, conducts deep credit checks, and secures guarantees like OEM backstops, ensuring expansion potential.

George Sutton inquired about the specific contract requirements that led to Montreal 2 not meeting White Fiber's needs, the marketing strategy for the 700 uncontracted GPUs, and the risks and development process for a hypothetical customer-driven expansion into a new market.

Answer

Ben Lampson, Head of Revenue at WhiteFiber, clarified that the Montreal 2 situation was due to a combination of price and, predominantly, contract term. He explained that White Fiber focuses on private cloud and on-prem as a service for customers who cannot use public cloud, and shorter-term contracts did not align with this strategy. Regarding the 700 GPUs, Ben Lampson stated they are scattered across clusters and will be a blend of on-demand service with partners and long-term contracts, with no expectation of significant free capacity for long. Billy Krassakopoulos, President of WhiteFiber, addressed the new market expansion, stating that White Fiber would work hand-in-hand with the customer on site selection, conduct deep due diligence, and secure strong contractual guarantees like credit checks and OEM backstops. He emphasized that they would only enter markets with expansion potential, working with utility providers to ensure future capacity.

George Sutton from Craig-Hallum Capital Group LLC asked about the shift in tone regarding SelectRx growth from cautious last quarter to more optimistic, questioned the company's AEP hiring plans, and inquired about the role of AI in enhancing customer service. He also sought details on the expected contribution from the Select Patient Management segment in fiscal 2026.

Answer

President Robert Grant clarified the focus has shifted from rapid membership growth to EBITDA growth and margin expansion, projecting over 20% revenue growth for SelectRx. CEO Tim Danker noted expectations for elevated plan disruption during AEP. Robert Grant then detailed that AI is used to make simple interactions more efficient, saving agent time and citing a 25% reduction in enrollment time, but will not replace complex agent conversations. He added that Select Patient Management is not expected to provide meaningful EBITDA in fiscal 2026 but remains a key long-term opportunity.

George Sutton inquired about the dynamic between the decline in Medicare Advantage volume and the strong growth in SelectRx, particularly concerning the customer feeder mechanism. He also asked about agent growth plans for the next season and the potential for additional receivable securitization.

Answer

President Bob Grant explained that a smaller but more tenured agent force was more efficient at identifying customer needs and driving transfers to Healthcare Services, resulting in a stronger attachment rate for SelectRx. CEO Tim Danker added that while he is pleased with the synergy, Healthcare Services growth will lag Senior's seasonality. Regarding agent growth, Danker noted their improved capital position creates an opportunity, and Grant confirmed hiring is underway. CFO Ryan Clement stated that receivable securitization is a potential path being explored with Jefferies, among other options, to optimize the capital structure.

George Sutton from Craig-Hallum Capital Group asked for specifics on the operational flexibility gained from the $350 million preferred equity offering, beyond the stated debt paydown. He also posed a hypothetical question about how much additional MA business could have been written with earlier access to this capital and inquired about the outlook for the regulatory environment.

Answer

CFO Ryan Clement detailed that after using ~$260 million to retire term debt, the company will have approximately $100 million in liquidity and will reduce annual cash interest obligations by about $30 million. CEO Tim Danker added this capital enables 'measured and responsible growth' in the MA platform and allows for exploration of new healthcare service opportunities. Regarding growth, executives confirmed they were capital-constrained during AEP and that the new structure allows them to return to growth, supported by a more favorable regulatory outlook.

George Sutton asked for more detail on the company's claims of a widening competitive advantage amid shifts in carrier benefit plans. He also questioned the impact of the political advertising season on AEP and whether the company could handle excess lead flow with a reduced agent count.

Answer

CEO Tim Danker stated that carriers increasingly value SelectQuote's high-quality, differentiated distribution, which includes value-added services like SelectRx. William Grant explained that the company's reduced reliance on TV advertising has mitigated the impact of political ads. Regarding capacity, Robert Grant noted that while they can't add agents mid-season, the high efficiency of their tenured agents allows them to be more selective with marketing sources to capitalize on excess demand.

George Sutton of Craig-Hallum Capital Group LLC asked about the source of pressure driving ocean freight carriers toward modernization and requested Chairman Udo Lange's perspective on becoming the 'booking.com of the space.'

Answer

CEO Zvi Schreiber explained that pressure for digitalization comes directly from Freightos's network of large shippers and forwarders who are demanding modern, API-based connections instead of manual processes. Chairman Udo Lange added that the company is focused on both near-term execution to achieve breakeven and long-term strategic resource allocation to capture the vast market opportunity.

George Sutton asked for a detailed breakdown of the potential impacts from tariffs and inquired about the anticipated rollout and timing for the company's new AI-driven solutions, such as the Skyrate tool.

Answer

CEO Zvi Schreiber detailed two potential tariff effects: a negative headwind from dampened world trade, which is factored into guidance, and a potential positive impact if the 'de minimis' exemption is canceled, which would increase available capacity for Freightos' core business. Regarding AI, he stated that the Skyrate dynamic pricing tool is in a successful pilot stage, with one airline seeing a 70% revenue increase, and that AI is being integrated across all product development.

George Sutton asked about the disconnect between the oversubscribed accelerator program and the company's stock price, how the program is positioned to create urgency among utilities, and the current status of the strategic alternatives process.

Answer

CEO & President Scott Lang addressed the stock price by stating that a lack of announcements does not mean a lack of progress, as large utility contracts are methodical and take time. He confirmed that utilities view the accelerator program as a scarce resource compared to costly alternatives. Regarding strategic alternatives, Lang described the process as 'active but fairly passive' at current valuations, noting that strategic interest comes from parties who see the broader ecosystem value Anterix unlocks.

George Sutton of Craig-Hallum Capital Group LLC inquired about Anterix's Accelerator program, asking about the incentives for the oversubscribed program, the engagement of partners, and whether the future 5x5 MHz offering might delay current customer decisions on the 3x3 MHz product.

Answer

CEO & President Scott Lang confirmed the program's success, noting strong demand from over a dozen utilities leading to active negotiations. He emphasized that the program validated the correlation between favorable economics and customer action. COO Ryan Gerbrandt added that partners like Ericsson, Nokia, and GE created unique offerings to support the initiative. Lang concluded that customers are not hesitating to adopt the current 3x3 MHz offering, as it is robust enough for current needs and the path to 5x5 MHz provides future confidence.

George Sutton from Craig-Hallum Capital Group inquired about the origins of the inbound strategic interest, questioning if it stemmed from the company's undervalued stock and the move toward 5x5 spectrum. He also asked for clarification on the new industry initiative and the specific motivations for utilities to accelerate their adoption timelines.

Answer

President and CEO Scott Lang attributed the strategic interest to a combination of factors: Anterix's market leadership, its extensive ecosystem, successful customer deployments moving from lab to field, a strong sales pipeline, and the future potential of 5x5 spectrum. He added that the company's strong financial position, with no debt and significant contracted proceeds, also plays a role. Regarding the industry initiative, Lang explained that seeing early adopters succeed creates a wave of interest, and Anterix is now being aggressive on pricing and terms to make the adoption process 'frictionless' for the next group of utilities.

George Sutton inquired about the strategic differences between CEO Scott Lang's past experience at Silver Spring Networks and his current role at Anterix, particularly regarding technology adoption cycles in the utility sector. He also asked for the economic rationale behind accelerating spectrum delivery to fund a more aggressive share buyback program.

Answer

CEO Scott Lang explained that while his past work at Silver Spring Networks established initial smart meter connectivity, Anterix is now enabling a more advanced smart grid with its secure, 5G-capable spectrum, a natural progression utilities understand. CFO Tim Gray added that accelerating spectrum delivery is driven by customer requests to deploy networks faster, which in turn accelerates cash receipts (e.g., an expected $35 million in Q4) to fund more aggressive share repurchases. Chief Regulatory and Communications Officer Chris Guttman-McCabe noted this delivery flexibility is a unique competitive advantage.

George Sutton inquired how much of the slowdown in the POS sales process was driven by PAR's strategic focus on signing multi-product deals, and asked for specific metrics demonstrating the value of its 'online ordering 2.0' thesis.

Answer

CEO Savneet Singh clarified the slowdown was less about the sales process and more about the rollout of already-signed deals, which involves customer CapEx. He estimated the multi-product focus has a minor (10-15%) impact on timing. For ordering 2.0, he stated that bundling with loyalty increases conversion, basket size, and long-term customer value, offering examples like personalized menus based on declared allergies.

George Sutton of Craig-Hallum Capital Group LLC asked if customer RFPs are evolving from single-product requests to broader platform-based requests and sought confirmation on the impressive multiproduct adoption metrics mentioned.

Answer

CEO Savneet Singh confirmed the market is shifting towards consolidated buying decisions, where customers seek integrated outcomes rather than siloed products, which benefits PAR's platform strategy. He verified the strong multiproduct metrics: 100% of new Operator Solutions deals in the last two quarters were multiproduct, and 57% of new Engagement deals in Q1 were multiproduct, a significant increase from 14% a year prior, driven by the new PAR Ordering solution.

George Sutton asked for an update on the opportunity to use the newly acquired TASK system to support U.S. brands' international growth. He also questioned PAR's capacity to handle additional large-scale brand rollouts concurrently.

Answer

CEO Savneet Singh noted that while it's still early, the TASK acquisition has already generated inbound interest from brands seeking an international solution, validating the strategy. Regarding capacity, Singh expressed confidence that PAR can currently take on other large opportunities and will likely maintain its implementation resources given the strong pipeline.

George Sutton of Craig-Hallum Capital Group LLC inquired about the status of discussions for the company's revolver renewal and asked about the potential of AI-based accent neutralization technology to expand TTEC's offshore operations.

Answer

Founder, Chairman & CEO Kenneth Tuchman confirmed that discussions for the revolver renewal are active and expected to conclude in Q3 2025. Regarding accent neutralization, Tuchman explained that the technology is operational with multiple clients, enabling TTEC to tap into talented labor pools in new markets by making agent accents sound more indigenous to the country being served.

George Sutton of Craig-Hallum Capital Group LLC inquired about the progress of bank discussions for the revolver renewal and the potential of TTEC's accent neutralization technology to expand its offshore operations.

Answer

Kenneth Tuchman, Founder, Chairman & CEO, confirmed that discussions for the revolver renewal are active and expected to conclude in the third quarter. He elaborated that the AI-based accent neutralization technology is fully operational and improving with use, enabling TTEC to access highly talented labor markets that were previously challenging due to accents, thereby opening up more opportunities for offshore expansion.

George Sutton of Craig-Hallum Capital Group LLC inquired about the status of discussions for the company's revolver renewal and the potential for AI-based accent neutralization technology to expand TTEC's offshore operations.

Answer

Kenneth Tuchman, Founder, Chairman & CEO, confirmed that discussions regarding the revolver renewal are active and expected to conclude in the third quarter. He also explained that accent neutralization technology is a significant enabler, allowing TTEC to tap into highly talented labor markets that were previously challenging due to accents, thereby broadening the company's global talent pool and service capabilities.

George Sutton of Craig-Hallum Capital Group LLC inquired about the progress of bank discussions for the revolver renewal and asked for details on the company's accent neutralization technology and its potential to expand the offshore business model.

Answer

Founder, Chairman & CEO Kenneth Tuchman confirmed that discussions for the revolver renewal are active and expected to conclude in Q3 2025. He explained that the AI-based accent neutralization technology is fully operational, improving with use, and allows TTEC to tap into talented labor markets that were previously challenging due to accents, thereby expanding their global reach.

George Sutton of Craig-Hallum Capital Group LLC inquired about the status of discussions with banks regarding the revolver renewal expected next year and asked for more details on the company's accent neutralization technology and its potential to expand the offshore model.

Answer

Kenneth Tuchman, Founder, Chairman & CEO, confirmed that discussions for the revolver renewal are active and that the company is confident of bringing the matter to a close in the third quarter. Regarding technology, Mr. Tuchman explained that AI-based accent neutralization allows TTEC to tap into highly talented labor markets where accents were previously a barrier, opening up new regions and improving the quality of service for clients in countries like the US, UK, and Australia.

George Sutton of Craig-Hallum Capital Group LLC inquired about the progress of bank discussions for the revolver renewal and the potential for AI-based accent neutralization technology to accelerate the company's offshore expansion.

Answer

Kenneth Tuchman, Founder, Chairman & CEO, confirmed that discussions for the revolver renewal are active and expected to conclude in Q3. He elaborated that accent neutralization technology is fully operational, enabling TTEC to tap into highly talented labor pools in markets previously challenging due to accents, thereby expanding their global reach and talent acquisition capabilities.

George Sutton asked for clarification on the contrast between client caution in technology adoption and the enthusiastic, non-cautionary approach of hyperscaler partners.

Answer

Chairman and CEO Kenneth Tuchman explained that while clients are excited about new technologies like AI, they are hesitant to make large initial investments. He attributed this caution to concerns about AI reliability, a need for education on different AI types, and broader economic uncertainty related to global trade policies, which impacts their capital expenditure plans. He noted clients are currently taking a more experimental, phased approach rather than committing to large-scale projects upfront.

George Sutton of Craig-Hallum Capital Group LLC inquired about the expected revenue contribution trajectory from FedRAMP, given the earlier-than-expected certification. He also asked about the timeline for seeing the impact of the newly appointed CRO, Mark, on financial results.

Answer

CEO Alessio Artuffo explained that FedRAMP unlocks a $2.7B TAM and, due to a strengthening pipeline, he expects meaningful contributions by H2 2026, with potential wins this year. CFO Brandon Farber added that the state and local government sector is also performing well. Regarding the new CRO, Artuffo expects an immediate impact on execution and velocity, with a longer-term contribution from better integrating sales and customer success to improve retention metrics.

George Sutton questioned if the revised 9-10% growth guidance implies Docebo is becoming a single-digit growth company, contrary to its DNA. He also asked about the adoption of Agentic AI, specifically whether it would be driven by the Chief Learning Officer or other organizational roles.

Answer

CEO Alessio Artuffo agreed that the company is not being built for single-digit growth, stating the guidance is a prudent reflection of the current macro environment. He highlighted product innovation, AI enablement, and the 'Project Harmony' agentic AI initiative as key future growth levers. Artuffo clarified that Agentic AI adoption will be driven by a diverse set of stakeholders, including CMOs and CROs, not just the CLO, aligning with Docebo's multi-use case strategy.

George Sutton from Craig-Hallum inquired about the specifics of the Agentic AI offering and its potential for user engagement, and also asked for an update on the new leadership team's integration and any changes to the go-to-market strategy.

Answer

CEO Alessio Artuffo explained that Agentic AI aims to simplify platform use, automate complex tasks, and accelerate time-to-value, with a long-term vision to create a new UI for L&D professionals. He also addressed leadership changes, highlighting the strategy of blending new external talent with leaders promoted from within to preserve culture while equipping the company for future growth.

George Sutton of Craig-Hallum Capital Group asked for an update on the timing for FedRAMP certification and the potential market opportunity it unlocks. He also inquired about the new Communities module and the customer need it addresses.

Answer

Interim CEO Alessio Artuffo stated that FedRAMP efforts are on track, with systems and processes ready for a sponsor agency, highlighting a market with over $200 million in new LMS initiatives in the past three years. Regarding the Communities module, Artuffo explained it supports the customer experience (CX) use case by enabling deeper collaboration, a pervasive need identified from customer feedback, with encouraging results from beta programs.

George Sutton of Craig-Hallum Capital Group LLC sought clarification on the identity segment's revenue and cost figures related to its profitability 'fulcrum point,' the strategy for migrating customers to the MyVIP platform, the evolution of Check Fraud Defender into a broader enterprise fraud platform, and specifics on which KPIs are showing positive signals.

Answer

CFO Dave Lyle and CEO Ed West confirmed the $75 million LTM identity revenue figure and explained that cost efficiencies have lowered the breakeven 'fulcrum point' to below $80 million, with durable profitability being very close. West affirmed the strategy is to migrate customers to the MyVIP platform, which is seeing the most transactional growth. He described the enterprise fraud platform as an evolution beyond checks, leveraging Mitek's deep FI relationships to address fraud across various payment types. Lyle specified that positive KPIs include improved gross profit per journey and rapid growth in transaction volumes.

George Sutton asked for an update on the identity business's transition from point solutions to platform sales, inquiring about previously delayed deals. He also sought clarity on the opportunity represented by Check Fraud Defender's data reach versus its customer penetration and asked CEO Ed West to compare the Mitek opportunity to his turnaround experience at Cardtronics.

Answer

CFO David Lyle confirmed that large, complex identity deals pushed from late fiscal 2024 are now anticipated in the latter half of fiscal 2025 and into 2026, with the opportunities remaining viable. CEO Edward West explained that CFD's value is in its network effect, where data from a small number of FIs enriches the dataset for all participants. West drew parallels between Mitek and Cardtronics, highlighting the similar opportunity to leverage strong financial institution relationships and build a network effect to drive organic growth.

Sought clarification on the EU pipeline growth, European expansion strategy, the impact of EU rules on international sellers, the drivers for the aspirational EPS goal, and the nature of products being phased out from acquisitions.

Answer

The company confirmed the 3x pipeline growth is specific to the EU, where they are expanding by adding salespeople and increasing marketing. They haven't yet seen EU rules affect U.S. practices but expect it with enforcement. The 30% EPS goal is driven by enterprise growth, EU contribution, and partner expansion. The phased-out products are lower-margin legacy services like one-time audits, and the higher-than-expected churn from this migration is directly tied to a reversed earn-out liability.

Inquired about business momentum in Europe, including sales force expansion and new partnerships, the potential impact of a recent Minnesota ADA ruling on U.S. demand, and clarification on any other significant new partners besides Finalsite and CivicPlus.

Answer

The company sees Europe as a huge opportunity with a mandate driving demand. They are winning deals, adding sales staff, and observing larger deal sizes than in the U.S. They are not seeing a significant impact from any single U.S. court ruling, as demand remains historically consistent. New partnerships are being developed in the EU.

Asked about the potential for growth acceleration in 2026 based on the GDPR rollout analogy, feedback on DOJ enforcement of new accessibility rules, and the rollout and impact of the audit capabilities from the ADA Site Compliance acquisition.

Answer

An acceleration in growth for 2026 is considered a fair assumption, though the 2025 guidance remains prudent due to economic uncertainties. The company does not expect direct DOJ enforcement of new rules, anticipating that enforcement will be driven by private litigation. The ADA Site Compliance acquisition has been integrated rapidly, and its capabilities are being used to successfully upsell customers.

George Sutton inquired about the specific impacts of tariff policies on international versus domestic operations, sought more detail on the new direct-to-consumer e-commerce initiative in Columbus, and asked about the process for transitioning certain programs from a purchase model to a consignment model.

Answer

CEO William Angrick explained that while international tariff uncertainty can cause temporary buyer delays in specific verticals like biopharma and semiconductors, the North American market remains robust, with record asset volumes offsetting softer vehicle pricing. He detailed the Columbus B2C auction pilot, which leverages the recently acquired Auction Software platform to create a scalable, asset-light model for selling value-priced goods directly to consumers, with plans for a national rollout via a licensed affiliate model. Regarding the shift to consignment, Angrick described it as a standard portfolio optimization strategy, where periodic reviews lead to reallocating resources from lower-margin purchase programs to higher-margin consignment opportunities to maximize shareholder value.

George Sutton of Craig-Hallum asked about the potential benefits of tariffs on the used goods market, progress with federal government agencies, and specific new features being developed by the auction software and Machinio businesses.

Answer

Chairman and CEO Bill Angrick confirmed that tariffs historically drive buyers to the used equipment market, stimulating activity. Regarding federal agencies, he described the process as slow and complex but noted the company has run successful pilots and is well-positioned. On software, Angrick detailed numerous enhancements, including AI-assisted asset descriptions, improved buyer matching, mobile upload simplification, personalized seller landing pages, and new third-party selling tools for international e-commerce partners, highlighting that the recent acquisition was for talent and engineering capacity.

George Sutton asked about the drivers of market share gains versus general market improvement, the historical impact of tariffs, and the strategic rationale for the Simple Auction acquisition.

Answer

Chairman and CEO Bill Angrick attributed growth to operational execution, or "blocking and tackling," rather than just market conditions, noting that persistent inflation drives buyers to their platform. He explained that tariffs can be a "neutral positive" by increasing the value of used equipment already in the U.S. Regarding the acquisition, Angrick described it as an "acqui-hire" for software talent and a strategic move to provide SaaS tools to their B2B buyer base, many of whom are resellers, thereby expanding their ecosystem in an asset-light way.

George Sutton from Craig-Hallum Capital Group LLC asked new CFO Bobby Leibrock to compare the growth dynamics at ACI to his experience at Red Hat. He also asked CEO Tom Warsop to comment on ACI's strategic positioning relative to competitors like FIS and Fiserv, given their recent outlooks.

Answer

CFO Robert Leibrock drew parallels between ACI's customer trust and Red Hat's model, highlighting an opportunity at ACI to improve operational execution and investor transparency to accelerate growth. CEO Thomas Warsop differentiated ACI from FIS and Fiserv, noting their business drivers are different and that ACI's business model is performing very well, with strong sales execution and solidifying customer relationships, insulating it from the specific headwinds affecting those peers.

Speaking for George Sutton, an analyst asked for more detail on the new pipeline opportunities resulting from the combination of the bank and merchant segments, and also inquired about the revenue contribution from real-time payments during the quarter.

Answer

CEO Thomas Warsop gave an example of how the combined segment structure enabled a more comprehensive fraud solution discussion with a bank client and its merchant customers, creating a new pipeline opportunity. CFO Scott Behrens explained that real-time payments constitute about 10% of the business and grow at a double-digit rate, but quarterly revenue can be volatile due to the timing of on-premise license deals and renewals.

George Sutton of Craig-Hallum asked for more specifics on the 2025 launch of the 'Kinetic' payment hub, its incremental functionality, and whether the Merchant segment is being de-emphasized within the new 'Payment Software' group.

Answer

CEO Thomas Warsop clarified that the sales force is already selling 'Kinetic' now that a functional demo is available. The initial functionality focuses on account-to-account payments, with card and ACH functionality to follow. He emphasized that the Merchant segment is not being de-emphasized; rather, the combination creates leverage as the 'Kinetic' platform's payment orchestration capabilities are highly relevant to large merchants, not just banks.

George Sutton of Craig-Hallum Capital Group LLC inquired about the rationale for excluding the new, higher broker commission rates from the updated 2025 guidance, the functionality of the new AI voice agent pilot, and sought more clarity on the company's capital structure strategy, particularly concerning the term loan and convertible preferred instrument.

Answer

CEO Francis Soistman explained that eHealth is awaiting more visibility from carrier meetings before fully incorporating the commission rate increase, though he is cautiously optimistic they will exceed the forecast. He described the AI voice agent as a highly effective screening tool that gathers customer data before an immediate transfer to a licensed agent, which has received positive feedback. Regarding capital structure, he confirmed the priority is addressing the term loan and gaining financial agility by leveraging the commission receivable asset, but a solution for the convertible preferred is not expected at this time. SVP & Chief Revenue Officer Michelle Barbeau added that the AI screening process transfers immediately to a live adviser.

Asked about the rationale for not including the new commission rates in guidance, the functionality of the new AI voice agent, and for clarification on the capital structure strategy.

Answer

The company is waiting for more visibility from carrier partners before incorporating the full commission rate increase but is optimistic it will exceed their forecast. The AI agent is a non-licensed screening tool that gathers demographic info before a live transfer to a licensed adviser to improve efficiency. The capital strategy aims to address the term loan, increase access to capital, and validate the commission receivable asset, but a solution for the convertible preferred instrument is not expected at this time.

Asked what specific positive regulatory developments, beyond reimbursement rates, the company is looking for, and how a sustained positive rate environment might impact the strategy for its Amplify business.

Answer

The executive is cautiously optimistic about the regulatory environment, noting the absence of new burdensome regulations is a positive sign. The next key data points are carrier bid strategies and commission rates. Regarding the Amplify business, it is expected to continue to evolve and find opportunities irrespective of the rate environment, as carriers will still see value in outsourcing complex and seasonal call center operations.

Speaking on behalf of George Sutton, an analyst asked about which potential final rule changes beyond reimbursement rates could benefit eHealth, and how a sustained positive rate environment might alter the strategy for the Amplify business.

Answer

CEO Fran Soistman expressed cautious optimism, noting that the absence of new burdensome regulations is a positive. He is awaiting the final broker commission rates from CMS, which often correlate with carrier rates but are not yet factored into forecasts. Regarding Amplify, Soistman believes it will continue to grow irrespective of the rate environment, as the complexity and seasonality of call center operations motivate carriers to seek outsourced solutions to avoid fixed costs.

George Sutton from Craig-Hallum Capital Group questioned the pragmatic 2025 growth outlook, given positive factors like a better regulatory environment and competitor exits, and also asked for details on the strategy to extend the eHealth brand beyond its core Medicare offerings.

Answer

CEO Fran Soistman clarified the outlook is 'pragmatic' due to uncertainties with the new administration, pending the final MA rates in April. Executive Kate Sidorovich added that the prior year's record-high member switching rate is unlikely to repeat. Regarding brand extension, Soistman explained the goal is to replicate the successful brand-building from Medicare Advantage (which saw a 23% awareness increase) across its E&I and Med Supp products to create a unified consumer experience.

George Sutton asked for an update on the activity and pipeline for Metaswitch and BroadSoft licensee opportunities and inquired how new AI innovations, like AI call bots, would be priced for existing versus new customers.

Answer

CEO Jeff Korn stated that while the sales process is long, there is significant interest and a large number of 'sandboxes' out with potential customers. COO Doug Gaylor added that the two new logos won in the quarter were larger than average. Gaylor confirmed that new AI features represent an upsell opportunity for existing customers and a key technology advantage to attract new ones.

George Sutton asked for details on the strategy for targeting licensees, the reasons for increased optimism on M&A, and the potential opportunities arising from Mitel's bankruptcy.

Answer

CEO Jeffrey Korn confirmed a targeted outreach strategy but withheld specific marketing plans. CRO Jon Brinton highlighted the value proposition that attracts partners like VOIPLY. Regarding M&A, Korn noted that seller valuation expectations have become more rational, making accretive deals more feasible. Brinton added that disruptions at legacy providers like Mitel and Avaya are driving their channel partners to seek alternatives like Crexendo.

George Sutton of Craig-Hallum Capital Group LLC asked about the strategic rationale for including the newly acquired Cerus farmland assets in WisdomTree's model portfolios, given the lack of competition from large asset managers. He also sought an updated outlook for the models business, which has already exceeded its full-year target, and inquired about the future marketing strategy for WisdomTree Prime following its recent approval in Texas.

Answer

CEO Jonathan Steinberg confirmed they will actively seek to integrate farmland allocations into models and ETFs, emphasizing the unique competitive landscape. President & COO R. Jarrett Lilien stated that while the models business is outperforming, the focus remains on execution rather than updating guidance. Head of Digital Assets Will Peck outlined a prudent marketing ramp-up for WisdomTree Prime in the fall, focusing on new on-chain functionality and the growing stablecoin ecosystem.

George Sutton asked for details on the on- and off-ramp opportunity for WisdomTree Prime, including rollout timing and potential partnerships, and also inquired about the company's AI deployment strategy and its expected impact.

Answer

William Peck, Head of Digital Assets, described on- and off-ramps as a critical feature for interacting with public blockchains, noting a measured rollout over the summer leading to a larger marketing push in September. He mentioned ongoing partnership discussions but offered no specific guidance. Jonathan Steinberg, executive, and Robert Lilien, executive, explained that AI is being deployed across the company to enhance customer experience, improve growth and efficiency, and aid in decision-making, with every employee involved in the initiative.

George Sutton from Craig-Hallum asked about the mid-term growth expectations for advisor penetration in the models business and questioned the drivers behind the lowered discretionary spending guidance.

Answer

Executive Robert Lilien established a baseline expectation of adding 1,000 advisors annually to the models platform, with ambitions to exceed that figure. CEO Jonathan Steinberg explained the reduced spending guidance is a result of both finding new operational efficiencies and a slower-than-planned national rollout of WisdomTree Prime, which defers some marketing costs. Head of Digital Assets Will Peck added that the new WisdomTree Connect platform is not reliant on marketing spend, contributing to a high ROI.

George Sutton of Craig-Hallum asked about the market impact of Meta's acquisition of competitor Scale.ai, the potential speed of customer shifts, and the company's strategic vision for the emerging robotics and hardware-based AI market.

Answer

CEO Jack Abuhoff responded that Scale.ai's success validates the importance of data in AI and believes their new focus will accelerate market opportunities for Innodata. He confirmed that Innodata has increased its outreach to certain companies following the event. Regarding robotics, Abuhoff explained that deploying advanced LLMs on edge hardware will create highly capable robots, opening up a significant new market for simulation data, training, and evaluation services which he believes could eventually dwarf the current market for frontier model training.

George Sutton asked for details on the new Statement of Work (SOW) with Innodata's largest customer, its potential size relative to existing work, and how it relates to the Q2 revenue forecast. He also inquired about the company's win rate for new business opportunities.

Answer

CEO Jack Abuhoff explained that the new SOW opens up a new, significantly larger budget category within the largest customer's organization. He clarified that while Q2 revenue from this customer might fluctuate, the new SOW represents a long-term growth opportunity. Regarding win rates, Abuhoff stated that their 'land and expand' strategy is proving successful, with a very high win rate on projects that move past the pilot stage, as evidenced by recent expansions with several Big Tech clients.

George Sutton inquired about the growth outlook for the seven other big tech customers, the source of potential 7-8 figure pilot deals, the long-term duration of the largest customer relationship, and the company's opportunities across open-source versus closed-source AI models.

Answer

CEO Jack Abuhoff explained that the large-scale pilots originate from both the expanding big tech customer group and a key enterprise client. He used a 'football vs. dime' analogy to illustrate the vast amount of data still required for AGI, suggesting a long growth runway with major clients. Abuhoff confirmed that Innodata sees significant opportunities with both closed and open-source models, highlighting open-source as a key enabler for future enterprise agentic ecosystems.

George Sutton from Craig-Hallum Capital Group asked for clarity on the Q4 revenue guidance, questioning the composition and deltas from Q3, particularly the contribution from the largest customer versus new ones. He also sought confirmation that Innodata's data engineering services are precisely what Big Tech firms require for training AI models.

Answer

CEO Jack Abuhoff confirmed that the largest customer is expected to continue its significant contribution with potential for growth in 2025. He highlighted that momentum with the other seven Big Tech customers is building and they will become a more significant part of the revenue mix next year. Abuhoff affirmed that Innodata's supervised fine-tuning data is exactly what Big Tech needs for complex AI model training, positioning the company to capitalize on this trend.

George Sutton inquired whether negotiations with hyperscalers are for full-stack campus ownership by Applied Digital or for powered shells, and also asked for an update on sales tax legislation progress in South Dakota.

Answer

CEO Wes Cummins stated that the company is exclusively focused on a full-stack model where they own and operate the facilities, viewing it as a better business model than powered shells for a public company. He also reported no new progress on the South Dakota sales tax issue, indicating it would likely be addressed in the next legislative session.

George Sutton of Craig-Hallum inquired about the expectations of potential data center tenants regarding the cloud business sale process and asked about the role of the company's existing third-party data center capacity in the transaction.

Answer

Executive Wesley Cummins clarified that there are no hard requirements from tenants regarding the sale process, emphasizing it is the right time to separate the businesses. He highlighted that the existing third-party data center capacity, secured at 2023 pricing, is a valuable asset in the potential sale, offering immediate growth potential to a buyer.

George Sutton sought clarification on a February 15, 2025 date in the financing facility, confirmed the nature of the Macquarie deal as the infrastructure equity component, and asked how the 15% ownership stake for Macquarie functions.

Answer

Executive Wesley Cummins clarified that the February 15 date is for other items and is not a lease signing deadline. He confirmed the deal represents the equity component for project finance. Both Cummins and CFO Mohammad Saidal Mohmand explained that Macquarie's 15% ownership applies on an asset-by-asset basis, only for projects they choose to fund.

George Sutton of Craig-Hallum Capital Group sought more specific details on the remaining steps to finalize the hyperscaler lease and inquired about the financial structure for developing the second and third buildings at the Ellendale campus.

Answer

Executive Wesley Cummins explained that very little remains on the lease and described the delay as a process issue, estimating it could be finalized within days or up to 6-8 weeks. For buildings 2 and 3, he clarified that while minor earthwork has begun, significant capital expenditure will not occur until a lease and project-level financing are secured.

Asked about the company's current lending appetite, particularly in SBA, the progress of its key fintech partnerships, and the specific stock price trigger that would prompt a share buyback.

Answer

Management confirmed they are actively lending in all areas except franchise finance and expect to meet SBA origination goals. Fintech partnerships are growing strongly, contributing significantly to deposits and revenue. The CEO indicated that a stock price falling into the teens would trigger buybacks, overriding current capital preservation priorities.

Logan W Lillehaug, on for George Sutton, asked for an update on the fintech partnership pipeline and the expected cadence of Net Interest Margin (NIM) expansion for the remainder of the year.

Answer

The company reported a strong pipeline of higher-quality fintech partners and expects to significantly exceed its initial 2025 revenue forecast for the segment. They anticipate a larger NIM expansion in Q2 compared to Q1, driven by holding SBA loans on the balance sheet longer and the payoff of high-cost brokered deposits at the end of Q1. NIM expansion is expected to continue but at a more moderate pace in Q3 and Q4.

George Sutton asked for more details on delinquencies in the franchise finance portfolio and the bank's plans for that business. He also posed a broader question about whether the bank is seeing increased business enthusiasm and loan demand in the current economic environment.

Answer

Executive Kenneth Lovik stated that growth in the franchise finance portfolio will be pulled back significantly as capital is allocated to other areas like SBA. Executive David Becker added that the relationship with their partner has improved, allowing them to address issues earlier. Regarding the economy, David Becker offered a conservative 'Midwest' perspective, stating the bank focuses on consistent, rock-solid business and is not seeing massive spikes in demand or problems.

Asked for more details on the delinquencies in the franchise finance portfolio and the plans for that program's growth. Also asked a broader economic question about whether the bank is seeing increased business enthusiasm and loan demand.

Answer

The executives responded that growth in the franchise finance portfolio will be significantly pulled back. They are working with a new servicer and have improved the relationship with their partner, allowing them to address issues earlier. On the broader economy, they are not seeing a 'golden age' spike in demand but rather rock-solid, consistent business, consistent with their conservative 'Midwest' approach.

George Sutton of Craig-Hallum challenged CEO David Becker's comment that the company was 'firing on all cylinders,' asking what that would truly look like and what key drivers would enable that state.

Answer

CEO David Becker clarified the comment reflects the strong momentum heading into Q4 and 2025, where he anticipates falling interest rates will significantly boost earnings. He defined 'firing on all cylinders' as leveraging a pristine balance sheet, managing credit effectively, and capitalizing on emerging growth opportunities with key fintech partnerships, some of which could involve acquiring fintechs that are struggling to raise capital. He stated the outlook for 2025 is exceptionally strong.

Speaking on behalf of George Sutton, an analyst asked what gives Core Scientific confidence in its ability to add 300 megawatts of capacity at existing sites, particularly regarding utility discussions, and how investors should think about the terms of new deals compared to the unique CoreWeave contract.

Answer

CEO Adam Sullivan attributed the confidence to strong, long-standing relationships with utility partners, confirming active discussions about future power contracts. He explained that new deals will involve a balance between non-recurring charges (NRC) for CapEx and monthly recurring charges (MRC), noting that large enterprise deals offer attractive return profiles.

George Sutton asked for reconciliation between statements that customers want to 'move faster' yet are conducting more 'due diligence.' He also questioned the rationale for Core Scientific funding the CapEx in the latest CoreWeave deal.

Answer

CEO Adam Sullivan clarified that customers want faster delivery timelines post-contract, while the increased upfront due diligence is to filter out less capable operators. Regarding the CapEx funding, he explained that the company's strong balance sheet allows it to make this investment in a unique asset, which in turn provides the benefit of full rental payments during the first two years of the contract.

George Sutton asked for details on the company's expanded capacity in the industrial business. He also sought clarity on the types of assets and timing for the NLEX business, specifically mentioning auto loans and fintech. Lastly, he inquired about the potential size and vertical focus of the M&A prospects the company is pursuing.

Answer

CEO Ross Dove explained that the company acquired a new building to increase warehouse space for relocated assets and expanded its team to handle an anticipated wave of plant closings. Regarding NLEX, he confirmed that escalating defaults on credit cards and auto loans are expected to produce more charge-off products for their marketplace. On M&A, Dove stated that sellers are becoming more realistic on price and that the company is closest to deals on the bio-pharma side, which would enhance their ALT subsidiary's presence.

George Sutton from Craig-Hallum asked for the annualized revenue impact from the C-store customer that exited in 2024 to better understand year-over-year comparisons. He also questioned the specific complexities of the ongoing strategic review process and inquired about the market opportunity for the new EPIC TR80 printer.

Answer

Executive Steve DeMartino clarified the lost customer represented about $3-4 million in annualized revenue, with roughly half of that impacting 2024. Executive John Dillon explained the strategic review's complexity stems from managing two distinct businesses (a steady, profitable legacy business and a high-growth FST business) that are operationally intertwined. DeMartino added that the EPIC TR80 printer targets the large and growing sports betting market, and the company is now re-engaging with that market after a multi-year absence.

The analyst (Logan W Lillehaug on for George Sutton) asked if partners are showing more caution due to the regulatory environment, whether compliance is now a competitive advantage, and for specifics on planned investments and features for GO2bank.

Answer

The company confirmed that prospective partners are conducting heightened due diligence on compliance, which Green Dot views as a strength. For GO2bank, a major user experience upgrade is planned for the first half of the year, with plans to add marketplace-like capabilities through third parties in late 2025 and 2026, though specific product details were not provided.

George Sutton from Craig-Hallum inquired about specific use cases for the new 2-way IoT device and asked for details on the go-to-market strategy and applications for the partnership with Parsons Corporation.

Answer

CEO Paul Jacobs explained that 2-way IoT enables command-and-control of remote assets and highlighted a future use case involving on-device AI for intelligent monitoring and alerts. For the Parsons partnership, he stated the go-to-market strategy leverages Parsons' established government channels. The primary application is providing resilient communications for government and defense clients in RF-challenged environments, with initial tests proving highly successful.

George Sutton sought clarification on the difference between the new micro-lending program and the existing Cantaloupe One offering. He also asked about customer feedback from the Vendex North event and the economic model for the new Cantaloupe advertising program.

Answer

CEO Ravi Venkatesan distinguished that Cantaloupe One is for scaling their full solution, whereas the new micro-lending is a broader tool for customers to fund working capital or other equipment. He described feedback from Vendex as 'exceedingly positive,' with the Smart Store's theft-prevention capabilities being a key driver. For advertising, he outlined two models: a standard marketplace-based per-impression model and a custom campaign model, both designed to share revenue with customers.

George Sutton of Craig-Hallum Capital Group requested a strategic update on Cantaloupe's international markets, asking if the opportunity remains as significant as initially thought and how partnerships fit into the strategy. He also asked about the future trajectory of the revenue per connection metric.

Answer

Executive Ravi Venkatesan stated he is now more bullish on Europe and Latin America, citing strong reception for 'Smart Stores' and traction in new verticals like convenience stores. He confirmed that partnerships are a key part of the expansion strategy. Executive Scott Stewart addressed revenue per connection, stating it is expected to continue increasing, driven by higher average transaction prices and the launch of new add-on modules like digital advertising management.

Asked about the long-term market share opportunity with large commercial payers, the specific nature of the 'election cycle distraction' and its removal, and the timeline for seeing EBITDA benefits from the RecordsOne acquisition.

Answer

The company plans to grow within large commercial payers via its 'land and expand' strategy, taking share from incumbents. The end of the election should reduce conservatism at CMS regarding audit volumes. EBITDA benefits from the RecordsOne integration will begin to appear in 2025 guidance and grow in subsequent years.

Asked for the math behind how new content can significantly lift the overall daily win per unit (DWPU) in the second half and questioned why the Dynasty View cabinet underperformed initially and what new content is coming.

Answer

The DWPU lift comes from continuously replacing older games/cabinets with new ones, which can increase a single unit's win by $10-$20+ per day. Regarding the Dynasty View, executives are enthusiastic about a strong pipeline of new games with familiar mechanics, such as "Smoking Hot Stuff," and noted the number of available titles for the cabinet has more than doubled, which is expected to drive performance.

Asked for an outlook on free cash flow drivers for 2024 and for a simplified timeline of the key upcoming gaming cabinet and content releases.

Answer

The company expects 2024 free cash flow to benefit from EBITDA growth, with total CapEx remaining flat year-over-year as increased investment in new gaming products is offset by the completion of one-time projects. The key new cabinet launches are staggered from late Q3 2023 through Q1 2024, supported by a significant pipeline of new game content.

George Sutton sought clarification on the strategy for appointment-based businesses beyond salons and spas, questioned the 3% growth in high-value subscribers, and asked about the impact of a recent post-quarter system outage.

Answer

CEO Rick Stollmeyer clarified the focus is exclusively on the wellness and beauty ecosystem. He explained that the 3% high-value subscriber growth figure is suppressed by the attrition of non-target customers, while the core target market is growing in the teens. Regarding the April 5th outage, he confirmed it did not trigger SLAs, but the company issued goodwill credits that will have a minor impact on Q2 guidance.

George Sutton asked about the customer response to the 'Make America Well' national advertising campaign and inquired about the impact the first 2,300 studios have seen from adopting dynamic pricing.

Answer

CEO Rick Stollmeyer described the campaign's reception as 'excellent' because it helps customers attract more clients to fill their excess capacity. Regarding dynamic pricing, he noted that adoption has been strong since its Q4 launch and that it is proving effective at bringing new customers to studios, with the average dynamically priced class selling for nearly $20.