Ken Wong

Ken Wong asked for clarification on the seasonality of ARR, specifically if the unchanged fiscal year ARR guide, coupled with commentary on more coming in Q4, implies an even more back-end loaded year than previously thought.

Answer

Jennifer DiRico (CFO, PTC) stated that the company expects a step-up in Q3 and a larger step-up in Q4, indicating that the shape of the ARR curve is similar to what was initially guided for the full year.

Ken Wong asked for clarification on the seasonality of ARR, specifically whether the unchanged fiscal year ARR guidance, combined with commentary about more deferred ARR coming in Q4, implies an even more back-end loaded year than previously anticipated.

Answer

CFO Jennifer DiRico clarified that the company anticipates a step-up in ARR in Q3 and a larger step-up in Q4. She affirmed that the overall seasonality and shape of the ARR curve remain consistent with the initial full-year guidance, despite the deferred ARR dynamics.

Ken Wong asked about the strategic rationale behind divesting the ThingWorx and Kepware businesses, inquiring what remains strategic within PTC's portfolio and if any other IoT components are slated for divestiture.

Answer

CEO Neil Barua explained that the divestiture aligns with PTC's sharpened focus on the intelligent product lifecycle vision, encompassing CAD, PLM, ALM, and SLM. He noted that TPG's expertise in factory floor operations makes it an ideal partner for Kepware and ThingWorx, allowing PTC to concentrate resources on its core strategic areas and product data foundation. Barua confirmed satisfaction with the remaining portfolio's alignment to this vision.

Ken Wong asked about the strategic rationale behind divesting the ThingWorx and Kepware IoT businesses, inquiring what remains strategic within PTC's portfolio and if any other IoT components are slated for divestiture.

Answer

Neil Barua, CEO of PTC, explained that the divestiture aligns with PTC's sharpened focus on the intelligent product lifecycle vision, encompassing CAD, PLM, ALM, and SLM, with an emphasis on SaaS and AI. He stated that the remaining portfolio is well-aligned with building product data foundations and applying AI, and no other components are planned for divestiture.

Ken Wong asked management to address the recent M&A headlines suggesting a potential acquisition by a competitor and advise how investors should think about PTC's position.

Answer

President and CEO Neil Barua adhered to company policy by not commenting on market speculation. However, he stated that as a strategic leader in its space, it is not surprising for PTC to be part of industry consolidation discussions. He affirmed that the company's primary focus remains on execution and creating strategic value for its customers and shareholders.

Ken Wong of Jefferies asked about the expected timing of peak disruption from PTC's go-to-market changes and whether the adjusted Q1 growth rate is an appropriate baseline for future performance.

Answer

CEO Neil Barua responded that the company is not expecting disruption and has taken significant measures to prevent it. However, he clarified that the guidance was set conservatively to provide room in case any short-term friction arises from the transition, emphasizing it was not an attempt to artificially engineer a beat-and-raise cadence.

Ken Wong of Oppenheimer asked if there's a possibility that Q1 or the first half of 2026 organic growth could fall below the 5% low end of guidance, given the timing of faster-growth businesses and lack of Deltek tailwinds. He also inquired about new business activity pipeline conversion versus renewal business trends across the portfolio.

Answer

Jason Conley, Executive Vice President and Chief Financial Officer, stated that Q1 organic growth is not expected to be below the 5% low end, anticipating mid-single-digit growth for Application Software with flat non-recurring revenue. Neil Hunn, President and Chief Executive Officer, indicated broad encouragement from year-end performance, with gross retentions in the mid-90s% for enterprise businesses and low double-digit bookings growth for the year, despite Deltek's weakness.

Ken Wong asked if Q1 or the first half of 2026 organic growth could fall below the 5% low end of guidance, given the back-half weighting of faster-growing businesses and no Deltek tailwinds. He also inquired about new business activity pipeline conversion versus renewal business trends across the software portfolio.

Answer

Jason Conley, Executive Vice President and Chief Financial Officer, stated that Q1/H1 is not expected to be below 5%, with Application Software in the mid-single digits and Network Software's recurring revenue continuing mid-single digits. Neil Hunn, President and Chief Executive Officer, reported broad encouragement from year-end performance, with good bookings and retention statistics, gross retentions in the mid-90s%, and low double-digit bookings growth for the year, despite Deltek's weakness.

Ken Wong asked Roper Technologies to clarify its organic growth, distinguishing between 'same store sales' and incremental organic growth from previously inorganic acquisitions, and inquired about the specific pieces contributing to the TEP segment's slight weakness, particularly if it was isolated to Neptune or more broad-based.

Answer

Jason Conley, EVP and CFO, explained that ProCare's transition to organic status was accretive to the segment. Mr. Conley confirmed that Neptune was the predominant factor for TEP's weakness, citing an acute impact in Q3 and a tougher Q4 setup, alongside Deltek's challenges in both quarters.

Ken Wong asked for clarification on Roper Technologies' organic growth, specifically how to differentiate between 'same store sales' and incremental organic growth from businesses that were once inorganic, and later inquired if the TEP business's organic growth weakness in Q3 and Q4 was isolated to Neptune or more broad-based.

Answer

EVP and CFO Jason Conley clarified that the question referred to the impact of businesses like ProCare becoming organic, noting its accretive contribution to the segment. Mr. Conley confirmed that the TEP segment's weakness was predominantly isolated to Neptune, citing an acute impact in Q3 and a tougher setup in Q4.

Ken Wong asked about the potential impact of the 'Big Beautiful Bill' on Roper's other segments beyond Deltek, such as healthcare and education. He also inquired about the specific drivers behind Aderant's record-setting bookings quarter.

Answer

President and CEO Neil Hunn assessed the bill's impact on healthcare and K-12/higher education as 'neutral' to 'neutral-ish,' noting offsetting factors and the resilience of their products. EVP & CFO Jason Conley added specifics on Central Reach. Regarding Aderant, Hunn attributed its outperformance to its clear market share leadership in the 'business of law,' a strong technology halo from its AI-enabled products, and the ongoing move to the cloud by large law firms.

Ken Wong asked if sales cycles were lengthening in other parts of the portfolio beyond Deltek and what countermeasures the company would implement if demand eroded.

Answer

President and CEO Neil Hunn responded that after intense review, they have not seen clear evidence of sales cycles pushing to the right elsewhere, citing strong bookings at Aderant and Strata. EVP and CFO Jason Conley added that the company has natural countermeasures, as decentralized business leaders are incentivized to manage investment pacing prudently and variable compensation is tied to growth, which helps preserve margins.

Ken Wong with Oppenheimer inquired about the timeline and strategic priorities for Skillsoft's Global Knowledge (GK) segment review, balancing speed of exit versus price optimization. He also asked about the margin expansion potential for the core Talent Development Solutions (TDS) business, clarifying if 'setting the table for growth' implies stabilization or actual growth, the stability of the public sector business post-shutdown, Q4 sales momentum for TDS, modeling assumptions for GK's future performance, and whether AI capabilities are for retention or incremental revenue capture. Finally, he questioned the company's future investment cadence.

Answer

Executive Chair and CEO Ron Hovsepian stated that speculating on the exact GK timeline is inappropriate, but improving cash flow for the remaining company is the top priority. CFO John Frederick added that the GK process is well underway. For TDS, Mr. Frederick highlighted its strong 28% EBITDA margin as a flagship for growth and profitability, with a focus on maintaining profitability while investing for growth. Mr. Hovsepian emphasized the transformation towards a content and platform model, leveraging AI, and confirmed that the company is 'absolutely setting the table for growth' in FY27, with new platform customer deals already secured. Mr. Frederick noted that the public sector's Dollar Retention Rate (DRR) for TDS is recovering at 103-104% post-shutdown. Regarding Q4, Mr. Hovsepian mentioned the successful rollout of a new sales coverage model in Q3, targeting large enterprise customers with 115% DRR, and the platform's General Availability (GA) in Q1. Mr. Frederick suggested modeling GK with a slight downtick from Q3 due to ongoing uncertainty. On AI, Mr. Hovsepian explained that AI capabilities will drive growth by enabling new conversations with existing and new customers, leveraging the company's AI-native platform and content creation (50%+ AI-driven). Mr. Frederick concluded that the investment cadence prioritizes hitting TDS EBITDA targets and driving productivity, then shifting economic gains into growth investments.

Ken Wong from Oppenheimer inquired about the specific sectors and geographic regions most impacted by the softer live learning environment, particularly in North America and the Middle East, and sought clarification on whether the observed softening was primarily a macro dynamic or a competitive situation.

Answer

Executive Chair and CEO Ron Hovsepian noted that the public sector in North America and the Middle East was significantly affected, while live learning in Europe showed good progress in bookings. He added that a review of six other companies in the virtual and physical instructor-led training sector indicated similar market trends, with most not experiencing growth. CFO John Fredericks highlighted "green shoots" and an inflection in Global Knowledge bookings in Europe, stating that the guidance adjustment was largely due to Global Knowledge and that the TDS Enterprise product line has shown consistent growth over four quarters.

Ken Wong from Oppenheimer inquired about the factors contributing to the softer live learning environment, specifically asking about affected sectors and whether the challenges were macro-driven or competitive. He also sought clarification on the updated revenue guidance, the timeline for returning to growth, and the performance of the TDS segment's dollar retention rate and non-enterprise mix. Additionally, he questioned whether Q2 represented a trough for headwinds and the sustainability of profitability given revenue adjustments.

Answer

Executive Chair and CEO Ron Hovsepian noted that public sector spending in North America and the Middle East was significantly impacted in live learning, while Europe showed promising progress in bookings. He observed that several competitors also experienced declines in the live learning segment, suggesting a broader market trend. CFO John Fredericks added that the revenue guidance adjustment primarily pertained to Global Knowledge (GK) due to anticipated continued softness, with some green shoots observed in GK Europe. He clarified that the first half revenue decline implied a larger reduction for the second half to meet the low end of guidance, accounting for seasonality. Regarding growth, Mr. Hovsepian indicated that macro uncertainty delayed their timeline by 3-6 months but expressed confidence in making up one quarter within 12-18 months, emphasizing the ongoing transformation. Mr. Fredericks highlighted that TDS Enterprise Solutions, representing over 90% of the TDS segment, continued its four-quarter growth trend. He also detailed that the year-to-date dollar retention rate was 99%, with federal business churn negatively impacting the quarter by 4 percentage points, and the B2C portion of TDS declining double digits. Mr. Fredericks stated that the updated guidance programmed in more of a trough for the GK side in the back half, with TDS expected to perform consistently. He further explained that cost management was primarily driven by previously implemented fixed cost reductions rather than variable cost changes, ensuring continued efficiency and profitability.

Ken Wong asked about specific sectors impacted by the softer live learning environment, particularly in North America and the Middle East, and sought clarity on whether the weakness was macro-driven or competitive. He also questioned the confidence in the updated revenue guidance and the timeline for Skillsoft to return to growth.

Answer

Ronald Hovsepian, Executive Chair and Chief Executive Officer, confirmed significant impact on the public sector in North America and the Middle East for live learning, while noting positive booking trends in Europe. He emphasized that market trends, including competitor performance, suggest a macro dynamic. John Frederick, Chief Financial Officer, clarified that the revenue guidance adjustment primarily reflects anticipated softness in Global Knowledge, with the TDS Enterprise segment continuing to grow. Both executives stated that macro uncertainty has delayed their growth timeline by 3-6 months, but they remain confident in their transformation initiatives and ability to regain momentum over the next 12-18 months.

Ken Wong of Oppenheimer & Co. Inc. asked for the basis of management's confidence in reiterating full-year guidance despite macro headwinds, the next phase of the company's transformation strategy, the specific drivers of the strong Q1 free cash flow, details on the softness in the government sector, and new CFO John Frederick's primary focus areas.

Answer

CFO John Frederick stated that confidence in the full-year outlook is supported by three consecutive quarters of growth in the Talent Development Solutions (TDS) segment and a strong deal pipeline in the Global Knowledge (GK) segment, assuming market stabilization. CEO Ronald Hovsepian added that while discretionary live learning spend was soft in Q1, it showed signs of recovery late in the quarter. Hovsepian outlined the next strategic phase as focusing on go-to-market execution and product plans to drive growth, funded by prior cost-saving initiatives. Frederick explained that the strong Q1 free cash flow was driven by seasonal collections from a large Q4, strong collections performance, and timing of disbursements, noting a reversal is expected in Q2. Hovsepian clarified the government softness was specific to U.S. federal discretionary live learning, while international public sector demand was strong. Finally, Frederick described his focus as deeply integrating the finance function to support go-to-market and product-led growth.

Ken Wong asked about early feedback from partners regarding the new incentive structure, which reduces focus on renewals to incentivize new business generation. He also inquired about any early impact of the 'One Big Beautiful Bill Act' (OBBA) on top-line customer spending or project activity.

Answer

CEO Andrew Anagnost stated that there has been no pronounced early change in partner behavior, as partners generally understand the shift in incentive structure to align with long-term objectives without reducing overall channel ecosystem compensation. CFO Janesh Moorjani confirmed that there was nothing directly attributable to the One Big Beautiful Bill Act impacting the top line yet.

Ken Wong asked about early feedback from partners regarding the new incentive structure, which reduces compensation for renewals to incentivize new business generation, and any observed behavioral changes. He also inquired about any early impact of the 'one big beautiful bill act' (OBBA) on customer spending behavior or project activity at the top line.

Answer

CEO Andrew Anagnost reported no pronounced early changes or behavioral shifts from partners, noting that they generally understand the strategic shift in payout to align with new business objectives. CFO Janesh Moorjani stated that there was nothing directly attributable to the 'one big beautiful bill act' impacting the top line yet.

Ken Wong from Oppenheimer & Co. Inc. sought clarification that the low end of the revised guidance is still protected against severe downturns and asked about the customer appetite for adopting new AI technologies.

Answer

EVP & CFO Janesh Moorjani confirmed the low-end guidance maintains the same cautious assumptions as the prior quarter. President and CEO Andrew Anagnost stated that customers are 'hungry' for AI-driven productivity and capacity gains, and Autodesk will monetize these new capabilities through a mix of subscription, consumption, and outcome-based models.

Ken Wong asked for context on Crossix's continued strength, whether it's consistent with previous quarters or normalizing, and the expected timeframe for gross margin tailwinds from customers migrating to Vault CRM and reducing Salesforce royalties.

Answer

Paul Shawah (EVP Strategy) confirmed Crossix's performance was in line with expectations, with stable measurement and strong audience delivery, anticipating it to be a significant growth driver for several years. Brian Van Wagener (CFO) indicated a modest headwind over the next year or two due to mixed costs for some migrating customers, but noted subscription gross margins were stable, with tailwinds expected to roll off a few years from now.

Ken Wong inquired about the context of Crossix's strength, whether it was consistent with previous quarters, and the expected timeframe for gross margin tailwinds from the reduction of Salesforce royalties.

Answer

Paul Shawah (EVP Strategy) confirmed Crossix's performance was in line with expectations, with stable measurement and strong audiences, projecting it as a continued growth driver. Peter Gassner (CEO) noted a modest gross margin headwind over the next year or two due to mixed Salesforce royalties and AWS hosting costs during migration, with significant tailwinds further out.

Ken Wong of Oppenheimer & Co. Inc. inquired about the strategic drivers behind the IQVIA lawsuit resolution and the opportunities it unlocks. He also asked for clarity on the confidence in the back-half billings guidance despite a more in-line Q2 result.

Answer

CEO Peter Gassner explained that after a decade, the competitive landscape with IQVIA has changed, making partnership mutually beneficial. The resolution removes a major barrier, allowing IQVIA data in Veeva products like Nitro and Network. CFO Brian Van Wagener added that annual billings guidance is a more reliable indicator than lumpy quarterly results and expressed confidence in the full-year forecast.

Ken Wong of Oppenheimer & Co. Inc. asked for more details on Veeva's new horizontal CRM initiative, including its approach, differentiation, and timeline. He also inquired about the specific drivers behind the significant acceleration in the commercial business.

Answer

CEO Peter Gassner expressed excitement for the horizontal CRM market, noting the team hopes to have its first customers by year-end and will focus on product excellence and customer success, likely targeting large enterprises. EVP, Strategy, Paul Shawah attributed the commercial strength primarily to Crossix, where product investments are paying off, and noted stable performance in other areas like CRM and momentum in Data Cloud.

Ken Wong asked about the early customer interest in the newly announced MLR Bot and its potential monetization model. He also inquired about the drivers behind the strong services performance in the quarter, contrasting it with earlier pushouts.

Answer

EVP of Strategy Paul Shawah confirmed significant customer excitement for MLR Bot, which will be a licensed add-on to PromoMats, with pricing details still being finalized. CFO Brian Van Wagener attributed the services beat to several projects progressing faster than expected and noted that earlier challenges with subcontractor revenue have now stabilized.

Ken Wong asked about the slight decline in revenue per user (RPU) despite a focus on up-market customers and the expected trend for RPU going forward. He also inquired about the impact of declining SEO traffic on demand for Similarweb's web intelligence and core products.

Answer

Or Offer, Co-Founder and CEO, explained that RPU is impacted by the addition of new customers, particularly those with initial contracts below the average. He emphasized that the focus is on increasing customer count for future upsell opportunities. Maury Zlakovsky, Chief Business Officer, added that declining SEO traffic actually increases the need for Similarweb's solutions as companies seek to close traffic gaps from other channels, and highlighted the new Web Intelligence 4.0 pricing schema.

Ken Wong (Oppenheimer) inquired about customer feedback regarding the competitive landscape at the recent Groundbreak conference and later asked about the key drivers behind the observed trend of longer contract durations.

Answer

Tooey Courtemanche, Founder, CEO, and President, reported that customers at Groundbreak did not mention competitors, expressing strong positive feedback on Procore's achievements and AI strategy. Matt Puljiz, SVP of Finance, added that internal data supports a favorable competitive dynamic. Matt further explained that pooled contract models, offering flexibility, are the primary driver for longer durations, alongside upmarket shifts and Procore's mission-critical status, as highlighted by Tooey.

Ken Wong asked about customer feedback regarding the impact of the Build America, Buy America Act (BABA) and requested an update on the company's product packaging and bundling pilots.

Answer

CEO Craig Courtemanche stated that BABA rarely comes up in customer conversations, as clients are focused on business optimization and have built-in resilience. CFO Howard Fu described the 'good, better, best' packaging pilots as very early-stage initiatives with a small customer set, aimed at streamlining sales rather than impacting current performance.

Ken Wong asked if Guidewire sees an opportunity to infuse its service organization with AI to streamline deployments and potentially minimize the risk associated with modernization projects.

Answer

CEO Mike Rosenbaum confirmed that infusing AI into services, in collaboration with the SI community, is a primary agenda. He noted promising early returns in data and technical migration, with efforts focused on increasing the pace and predictability of programs through more templatized approaches to configuration.

Ken Wong from Oppenheimer & Co. Inc. asked about the drivers behind record low attrition and the future pace of company investments.

Answer

CEO Mike Rosenbaum attributed low attrition to a core focus on customer success, while President & CRO John Mullen credited the maturing cloud operations team. On investments, CFO Jeff Cooper stated that the company is appropriately resourced and can address market opportunities while maintaining its long-term financial targets without a major shift in investment posture.

Ken Wong of Oppenheimer & Co. Inc. inquired about the factors behind record low attrition and high ARR ramp activity, and questioned the future pace of operating investments.

Answer

CEO Mike Rosenbaum attributed low attrition to a deep focus on customer success, while President John Mullen highlighted the maturity of cloud operations. CFO Jeff Cooper noted that while investment will continue, the company is well-resourced and confident in its ability to meet long-term targets within its current investment framework.

Ken Wong asked about any observed changes at the top of the sales funnel due to AI coding tools and whether the strategic value of domains as a customer entry point is increasing.

Answer

CEO Aman Bhutani stated that GoDaddy is not seeing a negative impact at the top of the funnel, noting strong traffic and improved conversion. He affirmed that the strategic value of the domain is increasing, as the Arrow experience transforms a simple domain purchase into the starting point for a 'business in a box,' which is a tremendous advantage.

Ken Wong of Oppenheimer & Co. Inc. inquired about the company's AI partnerships, asking whether agentic commerce represents a new GMV opportunity or simply a shift from existing channels.

Answer

President Harley Finkelstein explained that while it's too early to determine if agentic commerce is a net new channel or a shift, Shopify is preparing to be at the center of it regardless. He compared this strategy to the company's early integrations with social and video platforms, emphasizing that Shopify's core DNA is to partner and ensure its merchants are present wherever commerce happens.

Ken Wong from Oppenheimer & Co. Inc. inquired about the enhanced partnership with PayPal, asking how it advances the platform and impacts monetization.

Answer

President Harley Finkelstein explained the partnership is about providing merchant optionality by integrating PayPal wallet transactions into the Shopify Admin. CFO Jeff Hoffmeister added that for these transactions, Shopify will move to gross revenue recognition, resulting in a revenue uplift and incremental gross profit dollars, though it will be a headwind to gross margin percentage, with the impact being more of a 2025 phenomenon.

Ken Wong inquired about the specific financial contribution of the Base44 acquisition to the increased full-year bookings guidance and asked about the long-term integration plan for the business.

Answer

CFO Lior Shemesh stated that while Base44 contributes to the outlook, the guidance raise was primarily driven by stronger-than-expected new cohort growth and would have occurred even without the acquisition. Co-Founder & CEO Avishai Abrahami added that Base44 will be operated as a separate entity for the foreseeable future because it serves a different user need (applications and prototypes) compared to the core Wix platform.

Ken Wong from Oppenheimer & Co. Inc. asked about the potential impact of the 'One Big Beautiful Bill Act' (OBVA), questioning if the increased responsibility pushed down to states could negatively influence their buying behavior in the near term.

Answer

President & CEO Lynn Moore responded that they are not hearing such concerns from clients. He noted that state budgets are relatively stable after being elevated for several years. Furthermore, he clarified that less than 15% of their state-level business is funded by state expenditures, with the majority being transaction-based, thus limiting the potential impact from this act.

Asked about the company's current hiring plans for sales and marketing and whether the M&A environment for smaller tuck-in acquisitions has become more competitive.

Answer

The company is hiring carefully and strategically as it gains efficiencies from its reorganization. The M&A market for their typical tuck-in deals has not become significantly more competitive, as larger peers are focused on bigger transactions.