James Faucette

James Faucette asked about the impact of un-gating products on activity levels and user additions, questioning if this could accelerate member growth. He also sought color on credit mix improvement, particularly with the Chime Card relaunch, and customer response to secured card rewards, including incremental spend per user, and how this ties into attracting higher-income consumers.

Answer

Chris Britt, Co-Founder and CEO, affirmed that opening the top of the funnel has improved customer acquisition payback periods. He expects continued innovation to make account funding and service access easier, aiming to be a top consideration for primary banking relationships. Matt Newcomb, CFO, highlighted the strong early progress of the Chime Card, noting a 30% increase in credit mix as a percentage of purchase volume from September to December. He added that new cohorts show over 50% adoption of the Chime Card, with these members using it for over 70% of their Chime spend and spending more overall. The new premium membership tier will offer even better rewards to attract higher-income members.

James Faucette inquired about the impact of un-gating products on activity levels and member growth acceleration. He also asked for color on credit mix improvement, customer response to Chime Card rewards, incremental spend per user, and how this ties into attracting higher-income consumers.

Answer

Chris Britt, Co-Founder and CEO, affirmed the positive impact of opening the top of the funnel, leading to improved customer acquisition payback periods. Matt Newcomb, CFO, expressed enthusiasm for Chime Card's early progress, highlighting its nearly 2x take rate versus debit, a 30% increase in credit mix since launch, and strong adoption among new cohorts, which are spending more. He linked the premium membership tier to attracting higher-income consumers with better rewards.

Inquired about the balance between reducing MyPay loss rates to the 1% target versus using the product for customer growth and engagement. Also asked for an update on the Chime Workplace enterprise initiative and key milestones to watch.

Answer

The company controls the balance on MyPay loss rates and may not follow a linear path to the 1% target, as they prioritize member experience and overall business impact. The 1% target is seen as a medium-term goal. On the Chime Workplace initiative, the team has built a strong pipeline with large enterprises, and early partner launches are exceeding expectations in adoption and satisfaction. Specific partner announcements are expected in the coming weeks and months.

James Faucette inquired about how Chime balances the goal of reducing MyPay loss rates to its 1% target against using the product as a tool for customer growth and engagement. He also asked for an update on the Chime Workplace enterprise initiative.

Answer

CFO Matt Newcomb stated that Chime controls the 'dials' on MyPay loss rates and that the path to the 1% target may not be linear as they prioritize member experience. He clarified the target is achievable in the medium term. COO Mark Troughton described Chime Workplace as a key new acquisition channel with a strong pipeline, noting that partner announcements are expected in the coming weeks and months.

James Faucette asked about Circle's strategy to become integral to evolving AI-driven payment networks, considering competition from other solutions like Ether or general crypto. He sought insights into the advantages and challenges of establishing Circle's position in an agentic world.

Answer

Jeremy Allaire, Co-founder, CEO, and Chairman of Circle, highlighted Circle's extensive investment over 4-5 years to ensure USDC's availability on over 30 blockchain networks, which is crucial as AI agents may anchor on various platforms. He noted Circle's co-authorship and participation in key agentic payment standards, giving them a first-mover advantage, with 99% of measured agentic payments reportedly in USDC. Allaire also mentioned surfacing Circle's APIs and protocols as skills libraries and MCP servers for seamless AI developer integration. He believes Arc, with its USDC-centric capabilities, capital efficiency, interoperability, and cost efficiency, will be an attractive high-throughput infrastructure for this evolving landscape.

James Faucette of Morgan Stanley referred to the AI hackathon comments and asked about Circle's to-do list to become integral to evolving AI payment networks. He also inquired about the pluses and minuses of establishing Circle's position in an agentic world, especially considering other solutions like Ethereum or broader crypto.

Answer

Jeremy Allaire, Co-founder, CEO, and Chairman of Circle, highlighted Circle's extensive investment over 4-5 years to ensure USDC's network is available on over 30 blockchain platforms, crucial for developers building applications across various chains. He noted Circle's co-authorship and participation in key agentic payment standards (like X402 and ERC8004), leading to USDC being used in an estimated 99% of measured agentic payments, giving Circle a first-mover advantage. Allaire also mentioned surfacing Circle's APIs and protocols as skills libraries and MCP servers for seamless AI developer integration. He acknowledged the new challenge of distribution in the AI agent world, citing the AI hackathon as a powerful marketing activity. Technologically, Allaire believes Arc, with its USDC-centric capabilities, capital efficiency, interoperability, and cost efficiency, will be an attractive high-throughput infrastructure for the agentic world.

James Faucette from Morgan Stanley inquired about the primary drivers behind the significant month-to-month volatility observed in the latter months of 2025 and how Western Union extrapolates these trends for the rest of 2026, given the ongoing fluctuations. He also asked for a comparison between the European retail and U.S. business models, seeking a realistic timeframe and required investment for the U.S. model to transition to a more European-like structure.

Answer

CEO Devin McGranahan explained that the business has become less predictable, requiring a more dynamic operating model to quickly adjust go-to-market strategies, agent incentives, and marketing spend in response to market changes. CFO Matt Cagwin added that while specific markets are volatile, the overall industry slowdown in Q2 2025 will lead to easier comps from Q2 2026 onwards. CEO Devin McGranahan stated that the transformation of the U.S. retail business, particularly to a more tactical, location-based strategy similar to Europe, is contingent on the close and integration of Intermex, which is now expected earlier in Q2.

James Faucette asked about the primary drivers behind the month-to-month volatility observed in late 2025 and how Western Union plans to extrapolate these trends for the rest of 2026. He also inquired about comparing European retail to U.S. business and the timeframe and investment required to transition the U.S. model.

Answer

CEO Devin McGranahan explained that increased market dynamism necessitates a more agile operating model, with dynamic adjustments to go-to-market strategies, agent incentives, and marketing. CFO Matt Cagwin added that Western Union's global presence helps manage volatility, and easier year-over-year comparisons are expected from Q2. For the follow-up, CEO Devin McGranahan stated that the Intermex acquisition and integration are the key impetus for transforming the U.S. retail model to a more tactical, location-based approach, similar to Europe, with the earlier close accelerating this transition.

James Faucette asked about the dynamic pricing strategy in Spain, its successful results, and the timeline for rolling it out to other markets to achieve similar benefits. He also inquired about future cost efficiency programs and incremental opportunities after the completion of current initiatives.

Answer

CEO Devin McGranahan explained that strategic pricing has been rolled out in about half to two-thirds of the European market and is now being implemented in three U.S. metro markets, with full U.S. rollout anticipated by the end of 2026, especially with Intermex integration. CFO Matt Cagwin teased that more details on future cost efficiency programs would be shared at the upcoming Investor Day, while Devin McGranahan added that the next phase would leverage new technology, AI adoption, and business model shifts beyond initial 'blocking and tackling' efficiencies.

James Faucette asked about the dynamic pricing strategy in Spain, its rollout speed to other markets, and the benefits. He also inquired about future cost efficiency programs and incremental opportunities.

Answer

Devin McGranahan (CEO) stated that dynamic pricing is implemented in 1/2 to 2/3 of the European market and is being rolled out in three U.S. metro markets, with full U.S. implementation expected by the end of 2026, aided by Intermex. He noted less applicability in the Middle East and Asia. Matt Cagwin (CFO) teased more details on future cost efficiencies at Investor Day, while Devin McGranahan highlighted a shift from basic operational efficiencies to benefits from new technology and AI adoption.

James Faucette asked about a potential delinquency high watermark, inquiring at what point Klarna might feel compelled to pull back on GMV, especially with the ramp-up of fair financing. He also sought initial insights into how unit economics and agentic e-commerce might evolve for Klarna, particularly given reports of labs charging merchants high fees.

Answer

CEO Sebastian Siemiatkowski emphasized Klarna's 20-year history of underwriting $500 billion with record low credit losses, expressing strong confidence in their proprietary models and viewing current dynamics as primarily a timing issue. CFO Niclas Neglén added that Klarna's ability to constantly adjust its portfolio due to low average order values and short tenors, with weekly cohort monitoring, allows for disciplined management rather than a fixed 'bar.' Sebastian Siemiatkowski reiterated the strategy of underwriting primarily to existing customers, maintaining low average balances, and having short durations. Regarding agentic e-commerce unit economics, Sebastian Siemiatkowski stated no specific comment, reiterating Klarna's strong distribution, growth, and the U.S. as a higher-margin opportunity.

James Faucette asked about a potential delinquency high watermark that might compel Klarna to pull back on GMV, especially with ramping fair financing, and about the evolution of unit economics in agentic e-commerce.

Answer

CFO Niclas Neglén explained that Klarna continuously adjusts its portfolio due to low average order values and short tenors, monitoring cohorts weekly rather than having a fixed 'bar.' He emphasized their 20 years of experience in disciplined underwriting. CEO Sebastian Siemiatkowski reiterated confidence in their underwriting, highlighting low average balances ($100 for payers, $500 for bankers vs. $5,000 for credit cards) and short durations, allowing for quick adjustments to macroeconomic conditions. On agentic e-commerce unit economics, Sebastian Siemiatkowski stated no specific comment, noting that the U.S. generally offers higher margin opportunities compared to Europe.

James Faucette asked for further details on the stability of the service fee take rate, including any benefits from Marks & Spencer and value-added services, and the narrowing gap between GMV and revenue growth. He also sought clarification on the mechanical changes in Managed Markets 2.0 and its embedded contribution to the 2026 outlook.

Answer

Nir Debbi, Co-founder and President, clarified that Marks & Spencer did not significantly impact service fee take rates, which remained stable due to a consistent mix, and noted that value-added services are starting to contribute revenue. Amir Schlachet, CEO, explained that the biggest mechanical change in Managed Markets 2.0 is its full integration with Shopify Payments, harmonizing financial and operational flows. Ofer Koren, CFO, indicated a cautious outlook for Managed Markets' contribution in 2026, with expected growth in the latter half of the year.

James Faucette of Morgan Stanley followed up on the service fee take rate, asking about the benefit from Marks & Spencer and value-added services, and why the gap between GMV and revenue growth is expected to narrow in 2026 compared to previous medium-term frameworks. He also sought details on the mechanical changes in Shopify Managed Markets version 2.0 and its embedded contribution to the 2026 outlook.

Answer

Co-founder and President Nir Debbi explained that the service fee take rate has stabilized due to a consistent mix, with Marks & Spencer not having a significant effect. He attributed the narrowing GMV-revenue gap to a strong pipeline with a mix similar to current trends, slightly more towards Multi-Local, and growing revenue from value-added services like borderfree.com and trade compliance. Co-founder and CEO Amir Schlachet highlighted that Managed Markets 2.0's biggest mechanical change is the full integration of financial and operational flows through Shopify Payments, enabling greater harmonization. CFO Ofer Koren noted that Managed Markets is expected to weigh slightly on growth in early 2026 but contribute above-average growth in the latter half, with cautious optimism embedded in the guidance.

James Faucette from Morgan Stanley questioned the drivers of the implied growth acceleration in the second half of the year, focusing on pipeline composition and net new merchant GMV. He also asked for the forward-looking drivers of both service fee and fulfillment take rates.

Answer

CFO Ofer Koren responded that solid trading patterns and same-store sales support the back-half outlook. He noted that while new merchant adds are less concentrated than last year, the total GMV contribution from new merchants is expected to be similar. Koren projected the service fee take rate to remain stable near H1 levels, while the fulfillment take rate should stay close to Q2 levels as multi-local adoption impact is offset by AOV seasonality.

James Faucette inquired about Net Dollar Retention (NDR) expectations given moderating same-store sales versus the aggressive ramp of large merchants signed in late 2024. He also asked to parse the Q1 GMV impact from factors like FX, the Marks & Spencer cyberattack, and the Forever 21 bankruptcy.

Answer

CEO Amir Schlachet confirmed that same-store sales are slightly below historical averages, as anticipated, but this is balanced by a strong ramp-up from new large merchants. He stated FX had no material impact. While the M&S cyberattack had a partial effect in Q1, it was not material, and some impact is factored into Q2 guidance. He noted that general macro headwinds were already considered in the full-year guidance.

James Faucette asked for insight into why some Borderfree merchants chose not to replatform onto Global-e and whether they might become customers in the future.

Answer

Executive Nir Debbi explained that the merchants who did not migrate were primarily traditional retailers who decided not to prioritize the investment in a new integration at this time. He noted that the financial impact going forward is minimal as most GMV has either migrated or churned. However, he mentioned that discussions are ongoing with some of these brands, leaving the door open for them to become Global-e clients in the future.

James Faucette requested insight into the reasons why some merchants from the acquired Borderfree platform chose not to replatform onto Global-e.

Answer

President Nir Debbi explained that the merchants who did not migrate were mostly traditional retailers with other pressing priorities that superseded investing in a new platform integration. He emphasized that the financial impact from this is now minimal as most of the Borderfree GMV has either been migrated or has churned, and noted that merchants who did migrate are seeing strong results.

James Faucette sought clarification on take rate trends, asking if the service fee take rate was stable excluding the Ted Baker impact and questioning the drivers of the fulfillment take rate this quarter.

Answer

CFO Ofer Koren confirmed that the service fee take rate was stable after accounting for the loss of the Ted Baker account and is expected to remain so. He explained that the fulfillment take rate benefited from a positive mix and a slight decrease in AOV, and that the lower take rate embedded in Q4 guidance is a good proxy for the future.

James Faucette asked about anticipated target unit economics and borrower acquisition costs for auto and home loans compared to traditional personal loans, and about cross-sell opportunities for HELOC borrowers and their impact on the medium-term outlook.

Answer

Paul Gu, Co-founder and CTO, explained that auto (outside refinance) is a B2B product embedded at dealerships, leading to low per-loan acquisition costs after initial go-to-market. HELOC has D2C and B2B segments, targeting similar acquisition margins per loan as personal loans but with larger loan sizes. He confirmed significant cross-sell for HELOCs from personal loan marketing, as automating the HELOC process makes it highly attractive for overlapping customers, contributing to the outlook.

James Faucette asked about target unit economics and borrower acquisition costs for auto and home loans compared to traditional personal loans. He also inquired if HELOC borrowers are being cross-sold from the existing funnel and how this opportunity is built into medium-term outlooks.

Answer

Paul Gu, Co-founder and CTO, explained that acquisition costs vary: auto (outside refinance) is B2B with potentially low per-loan costs, while HELOC has both D2C and B2B components, targeting similar acquisition margins per loan but with larger dollar costs due to bigger loan sizes. He confirmed active cross-selling for HELOCs from the personal loan funnel, leveraging automated processes to make HELOCs an attractive refinancing option.

James Faucette of Morgan Stanley inquired about the evolution of customer acquisition channels, particularly the mix of organic versus paid, and asked about the current automation levels for newer products like HELOC and auto loans.

Answer

CEO Dave Girouard highlighted a long-term trend towards more repeat borrowers and cross-selling, reducing reliance on paid channels. CTO Paul Gu added that while automation for new products is less mature than for personal loans, it is on a strong trajectory, citing recent progress in automating new steps in the HELOC process.

James Faucette asked about the evolution of customer acquisition channels and the current automation levels for newer products like HELOC and auto loans.

Answer

CEO Dave Girouard highlighted a long-term shift toward more repeat borrowers and cross-selling, reducing reliance on paid acquisition channels. CTO Paul Gu noted that while automation for new products is less mature than for personal loans, significant progress is being made, including the first instant property verification for a HELOC, putting them on a strong trajectory.

An analyst on for James Faucette asked for a segmentation of the total addressable market (TAM) by FICO score to better understand market penetration and inquired about the evolving mix of customer acquisition channels.

Answer

CEO David Girouard estimated that the personal loan market is split roughly evenly between prime/super-prime and the near-prime segments, suggesting Upstart has effectively doubled its TAM by expanding its focus. CFO Sanjay Datta noted that there have been no significant changes in the mix of customer acquisition channels recently.

James Faucette from Morgan Stanley asked about the key factors influencing the contribution margin and its realistic range going forward. He also inquired about the strategy for customer acquisition channels and any anticipated changes in the mix.

Answer

CFO Sanjay Datta identified three levers for contribution margin: take rates, acquisition costs, and operating/servicing costs, noting the margin has been stable between 58-62%. CEO David Girouard explained that the growing base of repeat users lowers average acquisition costs and that the strategic goal of offering the 'best rate' will enable more broad-based marketing, like OTT television, in the future.

James Faucette followed up on recent fee changes, asking about merchant response, measurable impacts on churn or retention, and the expected duration of these impacts.

Answer

CEO Mike Lyons stated that the specific Clover fee changes were implemented and received positive feedback from partners. He noted that while direct attribution to in-quarter movements is not clear, the changes were considered the right thing to do for customers, partners, and the business.

James Faucette from Morgan Stanley inquired about the merchant response to recent fee changes, including measurable impacts on churn or retention, and the anticipated duration of these impacts.

Answer

Paul Todd, CFO of Fiserv, stated that positive feedback was received from partners regarding the Clover fee changes, which were implemented as the right decision for customers, partners, and the business. He noted that while there wasn't direct in-quarter attribution to specific movements, the company continues to operate with this customer-centric approach.

James Faucette inquired about any impact the ongoing SEC review might have had on Kyndryl's forward commentary and sought further details on the extending sales cycles, including the types of incremental work or changes in scope customers are requesting.

Answer

Chairman and CEO Martin Schroeter stated that the company cannot comment on the SEC examination until it's complete, but reiterated confidence in fiscal 2028 goals and no expectation of a restatement. Interim CFO Harsh Chugh elaborated on sales cycles, noting that conversations are more promising, driven by industry disruption from AI, data sovereignty, and the evolving relationship between data and AI. He highlighted Kyndryl's increased relevance through hyperscaler partnerships and private cloud expansion in these modernization discussions.

James Faucette inquired about any impact of the ongoing SEC review on Kyndryl's forward commentary and sought more detail on the extended sales cycles, including the types of incremental work customers are seeking.

Answer

Chairman and CEO Martin Schroeter stated that while they cannot comment on the ongoing SEC examination, they remain confident in their fiscal 2028 goals and do not expect a restatement. Interim CFO Harsh Chugh elaborated that extended sales cycles are driven by industry disruptions like AI and data sovereignty, leading to more complex but promising long-term infrastructure modernization discussions, positioning Kyndryl as a relevant partner across various ecosystems.

James Faucette asked about Jack Henry's execution requirements and potential challenges in capitalizing on competitors' core platform consolidation. He also inquired about the attach rate and bundling strategy for complementary products with new competitive core deals, and examples of frequent bundles.

Answer

Gregory Adelson (President, CEO, and Board Member) stated that capitalizing on this 'once in a lifetime' opportunity is the number one priority, with sales, operations, finance, and marketing teams aligned. He noted that operational readiness is easier given the 15-18 month core deal cycle, with focus on marketing, sales, and finance gearing up. He identified the 'trifecta' (card and digital) as the most frequent bundle, stating Jack Henry still averages 35-50 products per deal, with more lucrative ones being card, digital, and financial crimes.

James Faucette asked about Jack Henry's execution requirements for capitalizing on the competitor core platform consolidation opportunity, inquiring about potential pitfalls and the company's checklist for taking advantage. He also questioned the attach rate and bundling strategy, specifically how complementary attach rates are trending at signing and 12 months post-conversion, and sought quantified examples of frequently bundled products.

Answer

Gregory Adelson, President and CEO, stated that capitalizing on the consolidation opportunity is the number one priority, with sales, operations, finance, and marketing teams fully aligned. He noted significant opportunities already in the pipeline across all products, emphasizing that operational readiness is manageable given the 15-18 month timeline for core deals, with focus on gearing up marketing, sales, and finance. Regarding bundling, Mr. Adelson identified the "trifecta" (card and digital) as the most frequent, with deals still averaging 35-50 products, and highlighted card, digital, and financial crimes as the more lucrative components.

James Faucette from Morgan Stanley asked about the key levers for non-GAAP margin expansion in fiscal 2026. He also inquired about early transaction trends for Banno Business and the go-to-market strategy, especially in light of the competitive landscape.

Answer

CFO & Treasurer Mimi Carsley cited process improvement, disciplined headcount management, and efficiencies from cloud migrations as key margin drivers. President & CEO Greg Adelson added that internal AI initiatives and the tech modernization platform, which reduces duplicate development efforts, also contribute. Regarding Banno, Adelson noted they are winning more competitive deals and that new solutions like Tap to Local and Rapid Transfers will be key differentiators.

James Faucette asked how competitive intensity has manifested in terms of engagements, win rates, or pricing, and also inquired about the traction of the Banno Business solution.

Answer

CEO Greg Adelson stated that while pricing sensitivity is not new, Jack Henry's win rates remain the best in the industry, and he has not seen strategic changes from competitors yet. On Banno, he reported over 270 clients are now live on Banno Business, with feature parity expected in the summer, which he sees as a turning point for selling the solution outside the Jack Henry core client base.

James Faucette of Morgan Stanley inquired if regulatory timelines for public cloud adoption might accelerate and asked about the evolving mix between Banno Retail and Banno Business clients.

Answer

President and CEO Greg Adelson suggested that a change in administration could make regulators more comfortable with public cloud adoption sooner, noting Jack Henry's long history of educating regulators via its Banno platform. He stated that Banno Business penetration is at 20% of the Banno Retail base and is expected to reach 65-70%. He added that the upcoming SMB solution with Moov and achieving feature parity with competitors this summer will be significant growth drivers.

James Faucette inquired about the trends in implementation backlogs and how the company balances investing in more resources to speed up implementations against its margin expansion goals. He also asked for a progress update on the Moov partnership.

Answer

CEO Greg Adelson stated that the company evaluates the balance between expediting revenue and managing margins monthly, noting they have added staff where needed, such as for Financial Crimes Defender. He mentioned that some delays are tied to data migration or core conversion schedules, not just staffing. On the Moov partnership, he confirmed significant progress has been made and the solution remains on track for an early adopter launch with Banno clients in May 2025.

James Faucette from Morgan Stanley asked for more color on near-term activity and sales engagement, specifically the softness observed in Q4, where it was seen, and the potential for discretionary work to return. He also inquired about the timeframe for a decision or calendar regarding the exploration of a primary offering and secondary listing in India.

Answer

CEO Ravi Kumar noted that financial services, Cognizant's largest vertical, showed strong discretionary spending with 9%+ growth in Q4 and 7%+ for the full year, its best performance since 2018. He anticipates that as AI pivots from productivity to innovation, more discretionary spending will flow in, acting as a catalyst for CapEx cycles in enterprises. CFO Jatin Dalal stated that progress is being made on the India listing, with ongoing engagement with advisors and regulators, but a decision has not yet been made, and they will provide updates at a later juncture.

James Faucette asked about the near-term activity and sales engagement softness observed in Q4, where it was most prevalent, and the potential for discretionary work to return, particularly faster-term business. He also requested an update on the timeframe for the exploration of an India listing.

Answer

Ravi Kumar, CEO, anticipated continued large deal momentum and innovation levers boosting smaller deals and discretionary spending. He highlighted Financial Services' strong performance (+9% Q4, +7% full year), its largest vertical, as a positive indicator for discretionary spend, noting it was the best since 2018. He believes AI's pivot from productivity to innovation, along with physical AI and production-grade AI experiments, will catalyze discretionary spending. Jatin Dalal, CFO, stated that progress continues on the India listing, with ongoing engagement with advisors and regulators. He mentioned they are still evaluating the decision and regulatory framework and will provide more updates at a later point. Ravi Kumar added that discussions with regulators have been constructive, aligning with their commitment to shareholders.

James Faucette from Morgan Stanley asked how Cognizant is pricing and incorporating its proprietary AI intellectual property, such as its agentic AI platforms, into client deals under its "Vector" strategy. He also inquired about the M&A pipeline and valuation environment.

Answer

CEO Ravi Kumar S explained that Cognizant's "IP on the Edge," including platforms and reusable agents, is a key differentiator that allows for stickier relationships and premium, outcome-based pricing. He noted this creates new addressable spend by enabling Cognizant to run entire processes for clients. CFO Jatin Dalal reiterated the long-term capital allocation policy, stating that for 2025, about $500 million remains available for M&A with a decent pipeline.

James Faucette sought clarification on the 250 basis point revenue contribution from Belcan in 2025 and asked if the guidance includes other unannounced M&A. He also inquired about any year-end budget flush and the early outlook for client budgets.

Answer

CFO Jatin Dalal confirmed the 250 bps contribution is solely from the approximately eight additional months of Belcan revenue in 2025 and does not include any other potential M&A. CEO Ravi Kumar S noted a pro-business mood and reduced uncertainty are helping discretionary spend, particularly in financial services. He highlighted the Global Capability Centers (GCCs) trend as a key opportunity and expressed overall optimism about the demand environment compared to a year ago.

James Faucette asked for more details on Galaxy Digital's engagements with potential tenants for the Helios campus, particularly regarding hyperscalers' interest in larger power allocations, potential partners, and timing.

Answer

President and CIO Chris Ferraro confirmed a focus on hyperscalers and other large-scale players seeking significant power capacity. He noted that while CoreWeave was a unique partner for the initial 800 MW, future 830 MW allocations would prioritize higher credit quality tenants. Ferraro stressed the paramount importance of capital and credit availability for multi-billion dollar data center development.

James Faucette asked for more details on Galaxy Digital's engagements with potential tenants for the Helios campus, particularly how hyperscalers are approaching larger capacity needs, thoughts on potential partners, and the expected timing of these discussions.

Answer

President and Chief Investment Officer Christopher C. Ferraro stated that Galaxy Digital is focused on hyperscalers, neoclouds, direct model builders, and equipment manufacturers. He noted that while CoreWeave was a unique initial partner, for the next 830 MW, the focus is on higher credit quality tenants, with capital availability being paramount. He stressed the need for prudent yet timely decision-making.

James Faucette inquired whether the incremental realized gains from the Paycor investment portfolio were included in the full-year guidance and if they were contemplated in the Q2 forecast. He also asked for an update on the go-to-market changes, such as territory resets and broker program launches, their efficacy, and when the full benefit in bookings momentum is expected.

Answer

CEO John Gibson confirmed that the realized gains from the Paycor investment portfolio were included in the full-year guide and were contemplated for Q2. He explained that this was part of the integration plan to reallocate Paycor's largely short-term client funds portfolio to longer-term investments, locking in balances before interest rates declined and balancing the overall long-term portfolio duration. Regarding go-to-market changes, Mr. Gibson stated that the disruptive work (new teams, territories, Partner+ Program) was largely completed post-acquisition (April-May timeframe). He reported continued acceleration in activity and bookings through the first half, with broker network contributions remaining strong and broker bookings returning to pre-acquisition levels in Q2, expressing satisfaction with the progress despite the complexity.

James Faucette asked if the incremental realized gains on the investment portfolio from Paycor were included in the full-year guide and contemplated for Q2, and then inquired about the go-to-market changes, territory resets, and broker program launches, seeking insights on efficacy and expected full benefit in bookings momentum.

Answer

CFO Bob Schrader confirmed that the realized gains from strategically repositioning Paycor's client funds portfolio were included in the full-year guide and contemplated for Q2. He explained this was part of the integration plan to allocate funds long-term and rebalance the duration of the overall portfolio. CEO John Gibson stated that the disruptive go-to-market work (new teams, territories, Partner Plus program) done post-acquisition is largely behind them. He noted accelerating activity and bookings through the first half, with broker bookings returning to pre-acquisition levels in Q2, expressing satisfaction with the progress and staffing for the remainder of the selling season.

James Faucette from Morgan Stanley asked about capital allocation plans post-Paycor acquisition, specifically the balance between buybacks and debt reduction, and whether the Q4 trend of micro-business bankruptcies was persisting.

Answer

CFO Bob Schrader stated that the capital allocation strategy remains unchanged: prioritizing business investment and dividends, with a focus on deleveraging through EBITDA growth and paying down maturing debt. President & CEO John Gibson noted the bankruptcy trend was not persisting and was likely a short-term reaction to Q4's macro uncertainty, with the company assuming a more stable environment ahead.

James Faucette asked about post-acquisition capital allocation plans, specifically the balance between share buybacks and debt reduction, and whether the Q4 trend of micro-business bankruptcies was persisting.

Answer

CFO Bob Schrader stated the capital allocation strategy remains unchanged, prioritizing dividends and business investment, with a focus on deleveraging through EBITDA growth and paying down maturing debt. President & CEO John Gibson noted the bankruptcy trend was not persisting and was likely a reaction to unique Q4 macro uncertainty.

James Faucette inquired about early adoption metrics for the Flex Engage product and the metrics used to measure the effectiveness of the new recruiting Copilot tool.

Answer

Executive Robert Schrader noted that Flex Engage adoption is progressing well, primarily in the upmarket segment, and expressed excitement about combining it with Paycor's talent capabilities. CEO John Gibson explained that the recruiting Copilot is measured by adoption, reuse, and placements. He observed strong uptake from HR professionals but noted that smaller business owners may prefer a service-technology solution, indicating more product development work is needed for that segment.

Speaking for James Faucette, an analyst asked about the current competitive environment regarding pricing and discounting, and for color on the composition of bookings between HCM and Insurance/Retirement.

Answer

CEO John Gibson stated that the competitive pricing environment is stable compared to previous quarters. He noted that while it remains highly competitive, he is not seeing dramatic changes. Regarding bookings, Gibson observed that proposal volumes are up year-over-year across almost all segments, indicating a stable demand environment as the company enters its key selling season.

James Faucette asked for insights into the mix of advanced AI engagements, specifically between proof-of-concept type projects and those moving into full production, and sought examples of industries or project types scaling into production. He also questioned the evolution of pricing on a like-for-like basis, including its puts and takes, and its relationship to Accenture's margin and margin growth objectives.

Answer

Julie Sweet, Chair and Chief Executive Officer, explained that clients are moving beyond models to integrated solutions involving various AI types, with scaling seen in customer service (e.g., Virgin Media O2), finance, and procurement. She noted that industries like manufacturing and engineering are still early in their digitization journey. Angie Park, Chief Financial Officer, indicated that pricing is improving in several parts of the business, contributing positively to contract profitability this quarter.

James Faucette from Morgan Stanley sought clarity on the mix of proof-of-concept versus full production engagements within Accenture's AI bookings, requesting examples of scaling projects by industry. He also asked about the evolution of like-for-like pricing and its implications for margin growth objectives.

Answer

Julie Sweet, Chair and CEO, explained that AI engagements are shifting from models to embedded solutions, often involving various AI forms. She highlighted customer service, finance, and procurement as areas scaling into production due to technology readiness and data quality. Sweet also noted early scaling in core value chains like utilities and pharma R&D, emphasizing Accenture's industry and functional expertise. Angie Park, CFO, stated that pricing is improving in several business areas, contributing to better contract profitability and supporting margin objectives.

James Faucette from Morgan Stanley inquired about the increase in CapEx, specifically where these investments are being directed. He also asked about the evolution of pricing for Gen AI projects and the velocity of projects transitioning from proof of concept to production.

Answer

CFO Angie Park stated that the expected $1 billion in CapEx for FY2026, an increase of $400 million, is primarily for expanding real estate and leasehold improvements in major markets, driven by more people returning to the office. She added that pricing for advanced AI projects is accretive to Accenture's overall average. CEO Julie Sweet noted an increasing trend of projects moving from proof of concept to production, with companies seeking help to scale successful initial implementations.

James Faucette questioned the details behind the projected increase in CapEx for FY2026, seeking clarification on investment areas. He also asked about the evolution of pricing for Gen AI projects and the velocity of projects transitioning from proof of concept to production.

Answer

CFO Angie Park stated that the $1 billion CapEx for FY2026 (up $400 million from FY2025) is primarily for real estate expansion and leasehold improvements, driven by increased office returns. She added that Gen AI project pricing is accretive to Accenture's average. CEO Julie Sweet noted an increasing number of projects moving to production, with overall growth in new spend, acknowledging varying client adoption stages.

James Faucette (Morgan Stanley) asked for details on the increased CapEx forecast, specifically where the investment is being directed and its expected future impact. He also questioned how the pricing of Gen AI projects is evolving and whether the velocity of projects transitioning from proof of concept to production has changed.

Answer

Chief Financial Officer Angie Park stated that the expected $1 billion in CapEx for the year, an increase of $400 million, is primarily for expanding real estate and leasehold improvements in key geographies, driven by more people returning to the office, as added by Chair & CEO Julie Sweet. CFO Angie Park also noted that pricing for advanced AI projects is accretive to Accenture's overall average. Chair & CEO Julie Sweet added that more projects are moving from proof of concept to production, and while the transition can be lumpy, the overall trend shows accelerating growth and Accenture's increasing share of new AI spend.

James Faucette of Morgan Stanley followed up on acquisitions, asking if Accenture is changing its criteria regarding the types of companies or skill sets it targets. He also asked about the outlook for maintaining the organic growth rate as the company exits the fiscal year.

Answer

CEO Julie Sweet responded that acquisition criteria remain consistent, driven by a disciplined 'build vs. buy' analysis tied to the company's business strategy. CFO Angie Park addressed growth, noting that the full-year guidance of 6-7% implies 3-4% organic growth, and the Q4 guidance of 1-5% implies organic growth of up to 4% at the high end.

James Faucette followed up on acquisitions, asking if the company's strategy regarding the types of target companies is changing, and also questioned if the organic growth rate can be maintained exiting the fiscal year.

Answer

CEO Julie Sweet explained that the acquisition strategy remains tied to business needs like scaling and new capabilities, and that the primary focus is on organic growth, with a disciplined approach to building versus buying. CFO Angie Park specified that the full-year guidance of 6-7% growth implies 3-4% organic growth, and the Q4 guidance of 1-5% implies up to 4% organic growth at the high end.

James Faucette asked for a characterization of recent market uncertainty by geography or industry and inquired about how Accenture is working with software partners on GenAI go-to-market strategies.

Answer

CEO Julie T. Sweet clarified they have not seen a slowdown but an 'elevated level of uncertainty' due to global tariff talks and consumer sentiment. She emphasized that GenAI go-to-market is a 'critical' three-way collaboration between Accenture, its ecosystem partners, and clients. She also highlighted that GenAI revenue reached $1.1B in the first half of FY25, surpassing the full FY24 total.

James Faucette inquired about Accenture's capital structure and allocation strategy, asking if the company plans to continue raising debt to fund acquisitions and shareholder returns. He also asked for color on the nature of consulting bookings, specifically whether they are driven more by cost control, revenue generation, or new technology evaluation like AI.

Answer

CFO Angie Park stated the recent $5 billion bond offering was a routine optimization of the capital structure and does not change their capital allocation strategy. CEO Julie T. Sweet added that this year's M&A spending is expected to be around a more typical $3 billion, but they retain the flexibility to use their balance sheet for strategic opportunities. On consulting bookings, Sweet explained that most deals are multi-service solutions addressing the twin themes of cost efficiency and growth, which are in demand across all industries.

Speaking on behalf of James Faucette, an analyst asked about recent spending trends in cloud migration projects, the outlook for cloud growth in fiscal 2025, and the company's organic headcount growth and hiring strategy.

Answer

CEO Julie T. Sweet explained that cloud growth continues to be driven by migrations of high-performance compute applications, modernization of existing cloud infrastructure, and adoption by industries still early in their journey, like retirement services. Incoming CFO Angie Park noted the addition of 24,000 people in Q4 reflects business momentum, with Sweet adding that hiring is focused on technology roles, primarily in India.

James Faucette followed up on 0% APR loans, asking about the FICO uplift for new Affirm users, the aggressiveness of leaning into 0% offers, the potential mix over multiple years, and learnings from the '0% Days' event.

Answer

Max Levchin explained that Affirm's ability to target specific offers based on detailed purchase information is powerful for merchants. He noted that 0% deals attract higher credit quality consumers and that the '0% Days' event successfully demonstrated Affirm's ability to drive new sales for retailers through targeted promotions. Rob O'Hare added that Affirm will continue to lean heavily into 0% offers due to their unique transparency and value proposition.

James Faucette asked about Affirm's strategy for 0% APRs, including the FICO uplift observed, the aggressiveness of their approach, the potential mix of 0% loans over time, and learnings from their 'Zero Days' promotion.

Answer

Max Levchin, Founder and CEO, explained that 0% offers are a powerful promotional mechanism for merchants, tailored to each borrower. He noted that 0% deals attract higher credit quality and saw increased consumer activity during 'Zero Days'. Rob O'Hare, CFO, emphasized that Affirm's 0% loans are truly transparent with no hidden fees, making them uniquely positioned to offer such products.

James Faucette from Morgan Stanley asked about the importance of the Payment Service Provider (PSP) channel for merchant acquisition, especially offline, and sought color on the recent shortening of 0% loan durations.

Answer

Founder & CEO Max Levchin described PSP integrations as a crucial 'enabling technology' that significantly reduces friction for offline merchants. CFO Rob O'Hare explained the shorter 0% duration was a mix of seasonality and a strategy to offer 0% on the shortest term to new merchants, showcasing the platform's flexibility.

James Faucette of Morgan Stanley asked about the long-term vision for the Affirm app, specifically how it balances its role as a loan repayment tool with its potential as a platform for promotional offers.

Answer

CEO Max Levchin described the repayment function as a non-negotiable "key guardrail." He positioned the app as a "search engine" for the best financial offers on the Affirm network, where consumers can find deals like 0% APRs. He also hinted at future enhancements leveraging generative AI to improve this experience.

James Faucette asked about Affirm's target high watermark for delinquency rates and how much incremental GMV could be unlocked by increasing its risk exposure.

Answer

CEO Max Levchin strongly refuted the premise of linking growth to increased credit risk. He emphasized that credit decisions are driven entirely by commitments to capital partners regarding yield and safety, and are kept separate from growth initiatives. He stated that growth comes from product and merchant initiatives, like 0% APR programs, and that loosening credit standards to drive volume is a 'preverbal hell' the company will never entertain.

James Faucette inquired about the outlook for 0% APR promotions heading into the holiday season and how these promotions might influence Revenue Less Transaction Costs (RLTC).

Answer

CEO Max Levchin highlighted strong merchant demand for 0% promotions, which are a key tool for new consumer acquisition. COO Michael Linford added that the company's strong unit economics allow it to be more aggressive with competitive pricing and promotions compared to previous years.

James Faucette asked about Affirm's current customer profile and the tools being used to expand engagement towards ambitious goals, such as the $7,500 annual spend target for the Affirm Card.

Answer

CEO Max Levchin explained that they serve different consumer segments with tailored products, from those needing longer payment terms to sophisticated users seeking 0% APR deals. He positioned the Affirm Card as a universal platform to deliver these varied offers. CFO Michael Linford added that the cohort engagement charts in the shareholder letter already show strong progress from existing products.

James Faucette asked about the long-term objective of the Affirm app, seeking to understand the balance between its function as a repayment tool and its growing role as a platform for discovering deals and promotions.

Answer

CEO Max Levchin described the app's repayment function as a non-negotiable 'guardrail.' He framed the app's primary long-term objective as being a 'search engine' for consumers to find the best financial offer for a potential purchase. He also hinted that generative AI would play a role in enhancing this discovery experience in the future.

James Faucette asked about the impact of ramping incremental markets (like Klarna) on Marqeta's ability to add new markets for other partners and accelerate operational processes for them.

Answer

CEO and CFO Michael Milotich stated that Marqeta helps a broad number of customers, including many fintech winners, expand products and geographic reach. He noted that 8 of their top 10 customers operate in more than one geography (U.S., Canada, Europe, Australia, Latin America), and a mid-teens percentage of top 20 customers are also multi-market. He emphasized that the TransactPay acquisition further enhances their consistent platform capabilities globally. Marqeta targets multinational companies in its pipeline, leveraging its modern, scalable, single-stack platform for various use cases across debit, credit, consumer, and commercial, making multi-market expansion seamless compared to competitors.

James Faucette asked how Marqeta's experience with Klarna's market expansion influences its ability to help other partners add new markets, and what operational accelerations are in place to support this process.

Answer

CEO and CFO Michael Milotich affirmed that Marqeta actively helps a broad range of customers with geographic expansion, noting that eight of their top ten customers already operate in more than one geography (U.S., Canada, Europe, Australia, Latin America), with a similar trend among their top 20. He highlighted that the TransactPay acquisition further enhances platform consistency for geographic expansion. Milotich emphasized that Marqeta's unique "one stack" approach, supporting all use cases (debit, credit, consumer, commercial) at scale, makes it easy for customers to move between markets, unlike competitors requiring different platforms. He stated that multinational companies seeking rapid multi-market presence are a key target in their pipeline.

James Faucette sought clarification on delayed investments, asking to distinguish between temporary timing issues and a sustained lower operating expense run rate, and also asked about progress in embedded finance.

Answer

Interim CEO & CFO Mike Milotich explained that about half of the Q2 expense outperformance was due to timing (hiring, marketing), while the other half reflected sustainable efficiencies that support the accelerated 2026 GAAP breakeven goal. On embedded finance, he noted the sales cycle is longer than expected but Marqeta is building a full-stack solution to meet the demand from large, non-payment-native companies.

James Faucette asked for more detail on the drivers of non-Block growth, including specific customer types and the contribution from use cases like earned wage access. He also sought clarity on how Marqeta improves its economics, distinguishing between platform partner and customer renegotiations.

Answer

Mike Milotich, Interim CEO and CFO, explained that non-Block growth is broad-based across financial services, BNPL, and expense management, with TPV from customers outside the top 5 growing at more than twice the company rate. He clarified that the recent economic improvement came from a renegotiation with a platform partner, with savings passed to Cash App, impacting revenue but not gross profit. Customer renewals are managed by offsetting price reductions with new value-added services.

James Faucette asked about Mastercard's role in the evolution and enablement of agentic commerce, including how it accelerates adoption, unique threats, risks, legal issues, and methods for tracking its growth and contribution.

Answer

CEO Michael Miebach explained that agentic commerce represents a significant paradigm shift with an "extra party" (the agent) in the payment ecosystem, introducing legal and security complexities. Mastercard AgentPay certifies and registers bots, provides a "no-code" merchant framework, and ensures consumer authentication flows through the new transaction structure. He emphasized Mastercard's focus on safety, security, and trust, leveraging services like Ethoca for transaction detail and identity solutions to manage chargebacks and other issues, seeing it as a significant business opportunity.

James Faucette asked about Mastercard's role in accelerating agentic commerce, including unique threats, risks, legal issues, and how to track its growth and contribution.

Answer

CEO Michael Miebach explained that agentic commerce introduces new complexities, such as bot certification, merchant integration (Mastercard Agent Pay's no-code approach), consumer authentication, and dispute resolution. He emphasized Mastercard's focus on safety, security, and trust, leveraging services like Ethoca and identity solutions, and sees it as a significant opportunity to drive business by solving these challenges. He also noted the evolving legal and regulatory framework.

James Faucette of Morgan Stanley asked for an assessment of the B2B and commercial payments space, questioning why growth hasn't accelerated more rapidly and what tools Mastercard is deploying.

Answer

Chief Executive Officer Michael Miebach described commercial as a massive opportunity with solid momentum, citing 11% currency-neutral growth in Q3. He noted that historical barriers are easing, and growth is being driven by back-office integrations with partners like Oracle and SAP, the rise of digitally-savvy treasurers, and strong issuer interest in virtual card solutions.

James Faucette asked for ADP's perspective on the potential use of stablecoins as a mechanism for employee payments, including the company's intention to support this as a payment rail and the regulatory, compliance, or tax constraints that would need to be addressed.

Answer

Maria Black (President and CEO) stated that ADP is closely monitoring the "regulatory environment," which she identified as the primary factor that needs to be resolved. She confirmed that ADP is preparing for "all possibilities" from a banking perspective, including real-time and payment rails, to ensure the company can support clients and their employees' preferred payment methods as these technologies evolve.

James Faucette inquired how ADP's expanding use of partnerships affects sales channel management and forecast reliability, and also asked for an update on the Wisely and Earned Wage Access (EWA) products.

Answer

President & CEO Maria Black and CFO Peter Hadley asserted that partnerships are managed to enhance, not impede, visibility and have no adverse effect on forecasting. Regarding EWA, Ms. Black noted it's a small but pleasing part of the business, with adoption concentrated in specific industries and employee demographics, and pointed to ADP Research Institute reports for broader trends.

James Faucette inquired about client behavior in the PEO segment regarding benefits enrollment and asked what differentiates ADP's PEO performance from its peers.

Answer

CEO Maria Black noted that PEO retention was strong and benefits attachment remains stable, indicating the value proposition is resonating. She attributed ADP's outperformance to a differentiated model that includes targeting different industries, a predictable fully insured benefits model, and a unique distribution advantage where 50% of PEO business comes from existing ADP payroll clients.

James Faucette asked about client retention trends, specifically the underlying drivers and the assumption for small business bankruptcies in the second half. He also requested a status update on AI initiatives and their impact on service efficiency and sales productivity.

Answer

CEO Maria Black confirmed the outlook assumes a pickup in SMB bankruptcies but noted retention modestly beat expectations again. On AI, she detailed a three-pronged strategy impacting products (ADP Assist), service (agent assist, call summarization), and sales (opportunity prioritization), citing specific efficiency gains like reduced call times. CFO Don McGuire added that while results are positive, the full bottom-line impact is longer-term as the tools are still being deployed.

James Faucette asked for clarification on whether PEO pays per control is still expected to grow, for quantification of Q1 Employer Services bookings, and about the swing factors in the full-year bookings guidance.

Answer

CFO Don McGuire confirmed that PEO pays per control is still expected to grow for the year, albeit at a softer rate than Employer Services. He did not quantify Q1 bookings but reiterated it was a record first quarter and that the company is maintaining its 4% to 7% full-year guidance. He stated that execution is the key swing factor, as the macroeconomic demand backdrop appears solid and stable.

James Faucette sought Bill Stone's insight on the general environment, specifically regarding private credit flows and recent chatter about potential "squishiness" in that market. He also asked about the qualitative and quantitative impact of SS&C's initiative to sell enterprise solutions combining multiple products and services on average deal size or customer retention.

Answer

Chairman and CEO Bill Stone dismissed the "squishiness" chatter, explaining that as more participants enter private markets, they need to understand its nuances. He highlighted that private credit continues to offer 100-200 basis points more return than public markets, ensuring its continued growth. Regarding enterprise solutions, Bill Stone noted that while large institutions desire speed, they often struggle with it. He positioned SS&C as a large organization (27,000 people, 120-130 offices) that can provide scale while still moving quickly relative to gigantic banks, which appeals to top management.

James Faucette asked about the general environment, specifically regarding private credit flows and recent chatter about market 'squishiness,' seeking Bill Stone's insight on whether this is a significant trend or just noise. He also inquired about the impact of SS&C's go-to-market strategy, which focuses on selling enterprise solutions combining multiple products and services, on average deal size or customer retention.

Answer

Bill Stone, Chairman and Chief Executive Officer, explained that as more participants enter the private markets, they need to understand its nuances compared to public markets. He noted that industry experts are focused on private credit for higher returns (100-200 basis points more than public markets), and there's no indication this trend will slow down. Regarding the go-to-market strategy, Bill Stone highlighted that while large institutions desire speed, they often struggle with it. SS&C, with its 27,000 people and 120-130 global offices, offers both scale and agility, moving quickly relative to gigantic banks.

James Faucette of Morgan Stanley inquired about the drivers behind the forecasted acceleration in closed sales, asking if Broadridge is seeing sales cycle elongation similar to peers, and questioned the materiality of the Distributed Ledger Repo (DLR) platform as a sales driver and the hurdles to broader adoption of tokenization.

Answer

CEO Tim Gokey acknowledged that sales cycles have been longer over the past year but expressed confidence due to a strong pipeline and demand for new products in areas like voting choice, wealth, and AI-enabled solutions. Regarding DLR, he noted significant volume growth to over $200 billion in daily averages, driven by sponsored repo needs ahead of treasury clearing changes. While not moving the overall company sales needle, it is a material driver for the product itself, with eight new clients signed in FY25.

James Faucette asked about the potential timeline for monetizing AI-related product enhancements and requested an update on the company's progress toward its target for incremental module sales within the wealth management segment.

Answer

CEO Tim Gokey explained that AI is being integrated across the business to enhance products, launch new solutions like BondGPT, and drive productivity, but a measurable revenue impact is not expected in the near term (fiscal '26). For the wealth segment, he confirmed that Broadridge is on track to achieve its goal of an incremental $20 million to $30 million in wealth sales this year, supported by a record-high sales pipeline.

James Faucette questioned the drivers behind the flat growth in customer communications revenue and asked for the outlook, and also inquired about how Broadridge is mitigating the increased costs for brokers resulting from the T+1 settlement cycle.

Answer

CEO Tim Gokey affirmed that customer communications (BRCC) revenue is on track to accelerate to mid-to-high single-digit growth for the full year, driven by the onboarding of recent large sales wins that occurred late in Q1. On T+1, Gokey acknowledged the challenges the U.S. transition is creating for global firms, noting that Broadridge helps clients mitigate this through its managed services and BPO, and would consider developing new technology if a significant timing gap persists before a European rollout.

James Faucette from Morgan Stanley inquired about the evolution of bank technology roadmaps, particularly regarding the move to public cloud and componentized core banking solutions.

Answer

CEO Stephanie Ferris explained that larger financial institutions are shifting from 'big bang' core conversions to a more modular, component-based approach. She emphasized that FIS's product strategy is aligned with this trend, allowing clients to modernize piece by piece, which presents a significant opportunity for the company.

On behalf of James Faucette from Morgan Stanley, a question was asked about consumer spending trends within the merchant acquiring segment. The query sought to identify any notable changes in spending categories and what trends have been observed through July, especially amid macro uncertainty.

Answer

EVP & CFO Joaquin Castrillo-Salgado responded that overall consumer spending has remained resilient. He noted that lower gas prices created a drag on sales volume in that specific category, while government-related payments from tax season provided a seasonal boost. However, he stated that no other significant changes in spending patterns or trends directly attributable to tariffs or macro weakness have been identified in the portfolio.

James Faucette from Morgan Stanley asked about the strategy to expand PayPal's brands into offline channels, seeking details on the roadmap for geographic and product expansion and key milestones for investors to track.

Answer

President, CEO & Director Alex Chriss detailed the omnichannel strategy, highlighting the addition of 5 million new PayPal debit card users and 75% TPV growth for the card in Q2. He pointed to the successful launch of an end-to-end wallet in Germany, which includes NFC tap-to-pay and offline BNPL, as a key milestone. The U.K. is the next market for this expansion.

James Faucette followed up on the topic of 'changing the conversation' with merchants, asking about the long-term potential for pricing and value creation from new services like the ad platform.

Answer

CEO Alex Chriss reiterated that the goal is to build deeper, strategic relationships monetized across a full suite of value-added services, including processing, an ads platform, and Fastlane. He highlighted the appeal of PayPal's demographics through initiatives like PayPal Everywhere and Pay with Venmo. CFO Jamie Miller added that while some large renegotiations are complete, more will occur over the next few years, with margin accretion expected to emerge over time as new value-added services are adopted.

Speaking on behalf of Meta Marshall, James Faucette asked for reasons behind the apparent slowdown in new product growth compared to the prior quarter. He also asked whether the sequential decline in Remaining Performance Obligation (RPO) was due to macro factors or the accelerated Fuze transition.

Answer

CEO Samuel Wilson attributed the slight slowdown in new product growth to a combination of the macroeconomic environment, tougher comparisons as the business scales, and the law of large numbers. He confirmed that the sequential step-down in RPO was mainly a result of accelerating the Fuze platform transition and the associated revenue runoff.

James Faucette questioned how GenAI spending is being reflected in DXC's P&L, the growth rate and size of these projects, and how the duration of new contracts is impacting revenue visibility.

Answer

CEO Raul Fernandez explained that current GenAI projects are typically smaller pilots under $5 million, serving as foundational building blocks for future growth. He emphasized DXC's unique position due to its insight into client data and infrastructure readiness. CFO Rob Del Bene added that stronger bookings in the CES business are for longer-duration strategic projects, which extends the revenue conversion timeline but improves long-term visibility and is factored into the guidance.

James Faucette asked for color on which industry verticals were delivering better-than-expected growth and inquired about the potential impact of public policy on DXC's public sector business.

Answer

CFO Rob Del Bene highlighted strength in insurance, public sector, communications, media, and healthcare for the GBS segment, and in travel, transportation, healthcare, and energy for the GIS segment. CEO Raul Fernandez clarified that DXC's public sector business is primarily outside the United States, mainly in the U.K. and Australia, and is therefore not impacted by U.S. domestic policy changes.

James Faucette inquired about the traction Endava is seeing with GenAI projects, specifically their scaling from proof-of-concept. He also asked whether this AI work is displacing traditional work or is primarily incremental.

Answer

CEO John Cotterell confirmed a pickup in AI work, highlighting a shift towards more reliable and enterprise-ready 'agentic AI' solutions, which is driving larger engagements in partnership with firms like OpenAI and Google. He characterized this trend not as displacement but as a 'digital shift,' where traditional product engineering work is evolving to become AI-enabled. He stated the entire organization is well into this transition.

James Faucette inquired about the traction Endava is seeing with Generative AI projects, specifically their scaling from proof-of-concept, and how this AI work fits into the broader portfolio—whether it's incremental or displacing other work.

Answer

CEO John Cotterell reported a pickup in AI work, highlighting a shift towards more complex 'agentic AI' solutions that are driving larger-scale enterprise engagements, often in partnership with OpenAI and Google. He characterized this trend not as incremental work but as a fundamental 'digital shift,' where traditional product engineering is evolving to become AI-enabled across the entire organization, a transformation he stated is already well underway.

James Faucette asked about the competitive landscape for larger projects and how longer conversion times impact forward visibility and hiring plans.

Answer

CEO John Cotterell described the competitive landscape as mixed, with some large deals facing formal RFPs while others are won through established relationships and proof-of-concept work. CFO Mark Thurston clarified that elongated decision-making makes pipeline conversion more challenging, leading to a cautious approach. Consequently, the company does not anticipate a significant ramp-up in headcount until after Q3, focusing only on targeted hiring for high-demand skills.

James Faucette from Morgan Stanley asked for clarification on whether elongated client decision cycles are specific to AI-related projects or a more generalized trend. He also inquired about the growth of GalaxE-related work and its impact on key metrics like revenue per employee.

Answer

CEO John Cotterell clarified that while there's elongation across most discretionary spend due to higher CFO scrutiny, the longest delays are specifically in AI and core modernization projects. On GalaxE, he mentioned they have landed a few initial cross-sell deals but most opportunities are still in the pipeline. CFO Mark Thurston added that it's too early to determine the effect on operational metrics like revenue per head, with more clarity expected after full integration in early FY25.

James Faucette from Morgan Stanley inquired about trends in international travel bookings and the forward-looking outlook, considering recent foreign exchange volatility.

Answer

CFO Chris Suh highlighted the diversity of Visa's cross-border business across multiple dimensions, including geography. He noted that while the situation is fluid, this diversification provides resilience. Specifically, he pointed out that inbound travel to the U.S. represents one of the smaller regions by cross-border volume, mitigating the impact of weakness in any single corridor.

James Faucette inquired about the impact of cryptocurrency activity on cross-border e-commerce volumes and asked for an update on visibility into travel trends and booking data.

Answer

Chris Suh, Chief Financial Officer, acknowledged that cryptocurrency activity can impact cross-border e-commerce volumes. He characterized the recent impact as a 'modest benefit' but noted it was one of the smaller drivers of the segment's strength. The question regarding travel booking visibility was not directly addressed.

James Faucette asked about the evolution of operating margins, particularly how the profitability of new international markets will mature and impact the overall margin profile as they grow.

Answer

CFO Robert Hau described a 'virtuous cycle' where investment drives growth with high fall-through, enabling margin expansion while funding further investment. He noted that while new international markets are initially dilutive, the scale of the overall business allows Fiserv to invest in them while still expanding margins. President and incoming CEO Michael Lyons added that core operational efficiency opportunities, like the new Kansas City hub, provide additional runway for margin growth.

James Faucette inquired about the go-to-market strategy for new small business offerings through financial institution partners, including the impact on operating expenses and key proof points to monitor.

Answer

Chairman and CEO Frank Bisignano explained that the strategy involves leveraging Fiserv's world-class distribution channels while also adding to the sales force. He highlighted that deep technical integration and revenue-sharing models incentivize partners to sell. The company is also increasing its digital distribution capabilities and adding more 'feet on the street' to support the rollout.

James Faucette asked how the expansion of capabilities within the SMB bundle and new go-to-market strategies for Clover might change the mix of customers or the path to achieving the $4.5 billion revenue target.

Answer

Chairman, President and CEO Frank Bisignano clarified that these initiatives have been in development for some time. He explained that the integrated SMB bundle creates a more compelling reason for merchants to switch from older devices to Clover, potentially accelerating back-book conversions. This broader capability set enhances the overall opportunity to grow Clover by making Fiserv a partner of choice.

James Faucette asked about nCino's exposure to smaller banks that could benefit from potential deregulation and sought clarification on the expected magnitude of the new pricing model's benefit in fiscal 2026.

Answer

CEO Sean Desmond clarified that approximately two-thirds of nCino's U.S. business is within the community and regional bank market. CFO Greg Orenstein stated that the new platform pricing is expected to provide a 1% uplift to subscription revenue in FY26 from deals signed during the year, with a larger benefit expected in subsequent years as more of the customer base is migrated.

James Faucette asked a bigger-picture question about the evolution of AI in the B2B space, specifically how AvidXchange anticipates its use of AI will evolve over the next few years beyond current applications.

Answer

CEO Michael Praeger detailed a two-pronged AI strategy: incorporating it into products for customers and using it internally for efficiency. He cited Payment Accelerator's AI-driven onboarding, which cut processing from days to hours, as a key product example. Internally, AI is enhancing invoice data extraction, automating payment delivery, and increasing productivity in customer care and engineering, which he believes will continue to drive margin expansion and profitability.

James Faucette asked a broader question about the evolution of AI in the B2B payments space and how AvidXchange is strategically positioning itself to leverage this technology over the next few years.

Answer

CEO Michael Praeger outlined a two-pronged AI strategy: incorporating AI into products to enhance customer value (e.g., Payment Accelerator, invoice data extraction) and using AI internally to drive efficiency (e.g., automating payment delivery, improving engineering productivity). He stated these initiatives provide confidence in achieving future gross margin expansion and overall profitability.

James Faucette asked about the potential growth contribution from major partnerships like AppFolio, M3, and Buildium, and the expected timing of their impact.

Answer

CEO Michael Praeger reported strong lead generation from these channels, with AppFolio at 2x and M3 at 3x the activity of a year ago. He explained the timing lag for revenue recognition, which includes a 30-60 day setup and a multi-month adoption ramp for invoices and payments. Consequently, customers signed in the second half of 2024 will primarily contribute to 2025 revenue.

James Faucette of Morgan Stanley asked about the appropriate level of OpEx growth given muted revenue and inquired about the potential for M&A to expand reach in the current economic environment.

Answer

CFO Joel Wilhite noted the company remains focused on disciplined spending while balancing investments for growth, with some incremental OpEx baked into the guidance for product launches. CEO Michael Praeger added that while M&A has been quiet, the company is seeing more opportunities for strategic tuck-in acquisitions as private company valuations become more reasonable, and he expects to return to a routine cadence of M&A in the future.

James Faucette followed up on the theme of prudence, asking if the conservative guidance also applies to the $9 million political revenue forecast, especially since this is the first presidential cycle with the FastPay business.

Answer

CFO Joel Wilhite confirmed that the company is being conservative with its $9 million political revenue forecast. He noted that since it is the first presidential cycle for the business under AvidXchange, and the revenue is back-end weighted, there is a range of potential outcomes they are accounting for.

James Faucette of Morgan Stanley asked for an update on the Issuer segment's 2025 outlook, particularly concerning commercial card trends and the conversion of its account backlog. He also inquired about churn and pricing trends in the ISV channel.

Answer

CFO Joshua Whipple and CEO Cameron Bready projected modest acceleration in the Issuer segment in the second half of 2025 as contract renewals are lapped and conversions ramp. They expect commercial card trends to remain similar to late 2024. Regarding the ISV channel, President & COO Bob Cortopassi noted that partners value the ability to differentiate the customer experience and integrate value-added services beyond core payments, which helps defend partnerships and pricing.

James Faucette asked about the potential for disruption from the POS replatforming initiative and how sales lumpiness might normalize. He also inquired about the 5% SMB volume growth, comparing it to the prior quarter and broader commercial trends.

Answer

CEO Cameron Bready clarified that while bookings can be lumpy, overall business performance should be more consistent, with disruption from the POS replatforming already factored into the 2025 outlook. He confirmed SMB volume growth slowed by one point from 6% in Q2, attributing it to broad economic trends and weather, and distinguished it from the commercial card trends seen in the Issuer business, which is skewed toward larger enterprises.

James Faucette inquired about the composition and durability of Flywire's Net Revenue Retention (NRR) and asked how schools' increasing direct engagement with agents impacts Flywire's strategy.

Answer

President and COO Rob Orgel stated that excluding the impact from Canada, NRR remains robust and within the historical range of just over 120%. He affirmed the durability of its drivers: client adoption, product expansion, and wallet share growth. CEO Michael Massaro added that assets like StudyLink create a synergistic opportunity, helping university clients better connect with the agent community, which he views as a growing market need.

On behalf of James Faucette, an associate asked about the company's M&A strategy, including the types of assets being targeted in the pipeline and general valuation trends in the space.

Answer

Executive David Roberts outlined the M&A framework, which prioritizes strengthening the core business and then expanding into adjacencies. He identified government software, public safety, urban mobility, and connected fleet technologies like vehicle payments and telematics as key areas of interest.

James Faucette of Morgan Stanley asked about the changing composition of work for TaskUs's largest customer and how the company's outlook accounts for the competitive pricing environment.

Answer

CEO Bryce Maddock explained that work for the largest client has evolved to include more sophisticated tasks, particularly supporting GenAI initiatives, and is expanding into new geographies. He emphasized a broader trend of moving up the value chain into more complex, AI-resilient work. On pricing, Maddock stated that TaskUs's industry-leading margins provide flexibility to be competitive, and the current guidance fully contemplates the ongoing pricing pressure by leveraging their offshore footprint and outcome-based contracts.