Ian Black is an Equity Research Analyst at Needham & Company, focusing primarily on companies within the finance and consumer services sectors. He covers a variety of listed firms, with involvement evidenced in recent earnings calls for companies such as SPS Commerce and maintains an extensive network within the industry. Ian began his career in finance and has built a track record leveraging analytical expertise at Needham & Company, with access to proprietary equity research and institutional client services. He is FINRA-registered, holding necessary securities licenses for his analyst role.
Ian Black asked if the Paylocity for Finance solution impacts long-term financial targets, specifically regarding gross margins.
President and CEO Toby Williams confirmed that Paylocity is comfortable that the Paylocity for Finance solution will achieve similar margins to the rest of the portfolio over time, contributing to confidence in increasing long-term gross margin targets.
Ian Black from Needham & Company asked if the Paylocity for Finance solution impacts the company's long-term financial targets, specifically inquiring about its effect on gross margins.
Toby Williams, President and CEO, expressed confidence that the Paylocity for Finance solution will achieve gross margins similar to the rest of their portfolio over time, and this expectation is reflected in their increased long-term gross margin target.
Ian Black asked whether UiPath's new agentic portfolio enables the implementation of RPA in additional workflows or if the primary focus is on adding agentic capabilities to existing workflows.
Daniel Dines, Founder and CEO, explained that the agentic portfolio extends UiPath's RPA and broader automation capabilities. He noted a renewed interest from customers in identifying processes better suited for combining agentic and automation, leading to more opportunities surfacing than in past years.
Ian Black from Needham & Company asked for insight into how ON24 is driving greater penetration within its enterprise customers, questioning if it's a balance between increased volume or product cross-selling.
Sharat Sharan, Founder and CEO, explained that the growth in the 100k+ ARR customer base signals strong traction in the enterprise segment. He attributed this success to a combination of new business acquisitions and existing customers expanding their commitments. He highlighted key metrics reaching all-time highs, including average core ARR per customer and the percentage of ARR from multi-year agreements. The growth is driven by broader adoption of use cases, increased uptake of the AI-powered ACE solution, and overall strength in new business acquisition.
Ian Black of Needham & Company inquired whether ON24 expects to be free cash flow positive again in fiscal year 2025.
CFO Steve Vattuone confirmed that since the company is guiding to EPS profitability for 2025, he would also expect ON24 to be free cash flow positive for the year, excluding any potential onetime or restructuring charges.
Ian Black, on behalf of Scott Berg from Needham & Company, asked how CS DISCO's strategic move upmarket to larger matters impacts revenue visibility and durability. He also inquired about the specific revenue uplift being generated by the Cecilia AI product.
CEO Eric Friedrichsen explained that larger matters enhance revenue predictability as they have a longer duration and originate from larger customers, creating efficient expansion opportunities. CFO Michael LaFaire noted that while the specific revenue from Cecilia is not disclosed, its adoption is strong, particularly in large multi-terabyte matters, which adds significant value and stickiness to the core platform.
Ian Black, on behalf of Scott Berg at Needham & Company, asked if the release of the new transitional IAM SKU impacted renewals and how that SKU has affected the go-to-market motion.
CFO Blake Grayson stated that the transitional SKU was immaterial to the quarter's results and has not had a significant impact on the go-to-market motion. He noted it is an option for customers, but its impact is expected to be relatively small and is included in the guidance.
Ian Black asked where the Dollar Net Retention (NRR) rate might normalize and inquired about the remaining impact from customer capacity rationalization following the COVID-era boom.
CFO Blake Grayson stated he does not have a target for where NRR will normalize but is pleased with the recent stabilization and improvement from its historical low. He clarified that contracts written during the 2020-2021 COVID period now represent less than 1% of the book of business, indicating the company is largely through that rationalization period. He pointed to improving usage and utilization trends as positive leading indicators.
Ian Black of Needham & Company asked about the importance of the Lexion acquisition's functionality to the new IAM platform and the expected timeline for its full integration.
CEO Allan Thygesen expressed that he was 'thrilled' with the Lexion acquisition, calling it principally a product and team acquisition. He highlighted the rapid progress, stating that two significant features enabled by Lexion would ship within four months of the deal closing. He emphasized that Lexion's technology is 'dead center' in the IAM vision and has provided a welcome infusion of entrepreneurial energy and innovation to the product roadmap.
Ian Black, on for Scott Berg of Needham & Company, asked about the outlook for the federal government opportunity, considering both potential spending pressures and the recent FedRAMP High authorization.
Co-Founder and CEO Tom Shea stated that OneStream views the federal sector as a significant long-term opportunity, reinforced by the major investment to achieve FedRAMP High status. He emphasized that because OneStream is an 'efficiency play,' its platform has a strong value proposition for government agencies, and the company's strategy and investment in the sector remain unchanged despite potential headwinds.
Ian Black, on for Scott Berg, asked if the Carbon6 acquisition would lead to higher customer adds in 2025 and what the ongoing quarterly contribution to customer count might be.
Executive Kimberly Nelson confirmed that the Carbon6 acquisition is expected to add approximately 6,500 customers in Q1, primarily from the third-party Amazon marketplace. She cautioned that these customers have a smaller price point, which will lower the overall ARPU by about $1,000. She noted it was premature to provide specific guidance on ongoing quarterly customer adds from Carbon6 but that its revenue contribution is factored into the full-year guidance.
Ian Black asked about the traction BILL is seeing with its Spend & Expense solution within the accounting partner channel, following recent product and service improvements.
Chairman, CEO and Founder René Lacerte stated that while it is still 'early days' for Spend & Expense adoption in the accountant channel, partners are 'very interested' and are adopting the solution. He highlighted that new leadership, focused teams, and successful tools like Sync Assist are creating significant opportunity for continued growth and deeper penetration within their 8,500+ accounting firm partners.
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