Joshua Riley

Joshua Riley with Needham & Company inquired about AudioCodes' updated financial targets for conversational AI growth through 2028, specifically asking if the 40%-50% annual growth is a CAGR and whether customer growth or increased spend per customer will be the primary driver. He also asked about the impact of shifting market expectations around AI on pipeline visibility and size, and the expected impact of tariffs on 2026 financials and gross margin.

Answer

Shabtai Adlersberg, President and CEO, explained that growth is expected from both a dramatic increase in new customers and higher spend per existing customer due to expanded capabilities and features, supported by significant R&D investment in Voice AI. He confirmed improved pipeline visibility for Voice AI products due to easier SaaS testing and increased sales efforts. Regarding tariffs, Mr. Adlersberg stated that gross margins are expected to remain in the 65%-68% range, with tariffs projected to decrease from $2.7 million in 2025 to $2.3 million in 2026.

Joshua Riley asked about the progress of cross-selling Cartrack Tag and video solutions in South Africa, noting the 7% year-over-year increase in ARPU, and inquired about the balance between market demand and sales execution given record net new subscribers.

Answer

Zak Calisto, Founder and Group CEO, indicated that the company is in the early stages of the cross-selling cycle in South Africa, anticipating stronger momentum next financial year. He also highlighted substantial increases in sales and marketing, strong unit economics, and overall performance aligning with plans, with some regional variations.

Joshua Riley asked about the moving parts influencing the small sequential decline in gross dollar retention, considering the recent price increase as a potential tailwind.

Answer

Caryn Seidman-Becker, CEO of Clear Secure, clarified that the 2023 price increases impact gross dollar retention over a 24-month period, with Q4 and Q5 having the greatest positive contribution. The 86.9% GDR was anticipated and in line with moderating impacts from 2023 pricing. She added that there's no material impact on retention from the July 1st price increases, and recent retention patterns are encouraging due to customer experience improvements.

Joshua Riley of Wolfe Research, via Ian Black, asked how gross retention is trending, considering the improvements in customer satisfaction (NPS) and the company lapping any churn related to the Beti transition.

Answer

CEO Chad Richison stated that Paycom reports retention annually but noted that rising Net Promoter Scores and increased product utilization are positive early indicators. He explained that these improvements are intended to have a positive impact on retention, which is reflected in the company's current results and future guidance.