Isaac Saulson

Isaac Saulson asked about the expectations for Corporate ARPA in 2026, specifically whether eFax Protect would continue to have a dilutive impact and if there were any offsetting factors. He also requested clarification on gross margin expectations, given the modest cost increases and impairments mentioned.

Answer

Johnny Hecker, Chief Revenue Officer and EVP of Operations, explained that the success of eFax Protect, with its high volume, tends to bias the aggregate Corporate ARPA downwards, while the non-eFax Protect cohort's ARPA is growing. He suggested that the revenue retention rate is a more indicative metric for the corporate business. Scott Turicchi, CEO, clarified that most cost increases are in OpEx rather than COGS, and therefore, non-GAAP gross margins are expected to remain stable around 80% for 2026 and beyond, as the largest cost component (people) is primarily expensed in OpEx.

Isaac Saulson asked about the expectations for corporate Average Revenue Per Account (ARPA) in the upcoming year, specifically if eFax Protect will continue to have a dilutive impact, and requested additional details on gross margin expectations.

Answer

Johnny Hecker, CRO and EVP of Operations, stated that eFax Protect will likely continue to exert downward pressure on aggregate corporate ARPA, suggesting the revenue retention rate is a more indicative metric. Scott Turicchi, CEO, clarified that most cost increases are in OpEx rather than COGS, and therefore, gross margins are expected to remain stable around 80%.

Representing Ian Zaffino, Isaac Saulson asked for the main drivers of the strong fiscal 2025 revenue guidance, seeking a breakdown by vertical or geography. He also requested clarification on the impact of the 53rd week in the fiscal year.

Answer

CFO Jim Tarangelo explained the 7.5% to 9.5% organic revenue growth guide includes an approximate 2% benefit from the 53rd week. He detailed the remaining growth as broad-based, comprising 2-3% from pricing, 2-3% from the in-year impact of net new business, and the remainder from volume. CEO John Zillmer clarified the annualized net new business target is 4-5%.