Ken Wong

Ken Wong inquired about the go-to-market optimizations planned for 2027, including commission changes and direct sales restructuring, asking if these were part of the original blueprint or informed by 2026 observations. He also asked about the reallocation of resources from the 7% reduction in force and its impact on margin profitability.

Answer

President and CEO Andrew Anagnost confirmed that most go-to-market actions were part of the original blueprint, focused on driving efficiency, optimizing renewals, and shifting resources to new business development. EVP and CFO Janesh Moorjani stated that the guided 75 basis points of operating margin improvement reflects underlying leverage and restructuring savings, offset by planned investments, an incremental headwind from the new transaction model, and prudence from the revenue guide.

Ken Wong asked whether the go-to-market optimizations for fiscal year 2027, including commission changes and direct sales restructuring, were part of the original blueprint or informed by observations from fiscal year 2026. He also inquired about the reallocation of resources from the 7% reduction in force and its impact on margin profitability.

Answer

Andrew Anagnost, President and CEO, stated that the FY2027 go-to-market optimizations were largely part of the original blueprint, focused on driving efficiency, renewal automation, and shifting resources to new business development. Janesh Moorjani, EVP and CFO, explained that the 75 basis points margin improvement reflects operating leverage and restructuring savings, but also planned investments, an additional 1 point headwind from the new transaction model, and prudence from the revenue guide.

Ken Wong asked if the $4 million revenue miss in Q4 2025 was entirely due to the large AI LLM deals and how much of that revenue is factored into the Q1 2026 guidance. He also inquired if the core business's organic growth rate is expected to be in the high single digits until go-to-market and product strategies are fully sorted for 2026.

Answer

CEO Or Offer confirmed that the majority of the Q4 miss was due to the two large LLM deals slipping. He noted a more cautious approach for Q1 guidance, with some of the revenue from those deals expected later in the year or split into smaller amounts, one of which already closed. He also explained that the focus on large LLM deals, while a big opportunity, can divert attention from other organic growth efforts, leading to the creation of a dedicated team for better forecasting and execution.

Ken Wong of Oppenheimer & Co. questioned the slight decline in Revenue Per User (RPU) despite a focus on up-market customers and sought insight into future RPU trends. He also asked about the potential impact of declining SEO traffic on demand for web intelligence and core products, considering the company's AI tools for other channels.

Answer

Rami Myerson, Head of Investor Relations, clarified that RPU fluctuations are influenced by the addition of customers, particularly those below the average, emphasizing that increasing customer count for future land-and-expand opportunities is the primary focus. Or Offer, Co-Founder and CEO, countered that declining SEO traffic actually increases demand for Similarweb's solutions as companies seek to understand and compensate for traffic gaps. Maoz Lakovski, Chief Business Officer, added that they are actively investing in GEO/AEO offerings and seeing positive initial monetization from Web Intelligence 4.0.

Ken Wong asked about the expected timeline for adoption of Underwriting and Pricing Center, comparing it to the longer lift of PolicyCenter versus faster adoption of ClaimCenter, and inquired about initial feedback and potential stumbling blocks. He also asked if the nice uptick in subscription and support gross margins was due to efficiency gains or one-time items.

Answer

CEO Mike Rosenbaum suggested adoption could be slightly faster than core products, potentially more incremental or greenfield, and not an 'all-or-nothing' replacement, with positive initial receptivity. CFO Jeff Cooper confirmed a very small contribution from one-time items, but primarily attributed the margin uptick to significant progress in driving efficiency across the organization, leading to a raised full-year guide.

Ken Wong asked for context on the Liberty Mutual deal's fully ramped basis, specifically how it compares given Guidewire's practice of capping fully ramped ARR at five years, and its comparability for further years of the arrangement.

Answer

CFO Jeff Cooper reiterated that Guidewire caps its fully ramped ARR metric at five years and cannot disclose specific terms of the Liberty Mutual deal. He noted that it was a very meaningful deal that significantly changes the financial and strategic arrangement with the customer.

Ken Wong asked for color on the contributing factors to the Q4 bookings guide, specifically how it compares to the previous quarter's raise which was primarily driven by the core business. He also inquired about the profitability outlook, asking if, despite the upfront costs and lower gross margins, some margin expansion could still be expected, and sought Lior's early thoughts on this.

Answer

CFO Lior Shemesh clarified that most of the increase in the Q4 bookings guidance is now driven by the strength of the Base44 business, a shift from previous expectations. He stated that the margin headwind is expected to continue, and even hoped for, as it signifies high demand and growth. Lior indicated that while there will be short-term pressure on margins, he is unsure when margin expansion will resume, suggesting it depends on Base44's demand, but reiterated that the company has a track record of driving profitability over time with new products.

Ken Wong sought feedback from Groundbreak attendees regarding the competitive landscape and asked about the key drivers behind customers opting for longer contract durations.

Answer

Tooey Courtemanche, Founder, CEO, and President, Procore Technologies, stated that no customers mentioned competitors at Groundbreak, emphasizing overwhelmingly positive feedback on Procore's achievements and excitement about AI. Matt Puljiz, Senior Vice President of Finance, Procore Technologies, added that internal data shows a favorable competitive dynamic. Matt Puljiz explained that longer contract durations are primarily driven by pooled contract models, offering customers flexibility with project schedule uncertainty, and are not incentivized by the go-to-market team. Tooey Courtemanche added that Procore's mission-critical nature makes longer-term investments sensible for customers.