Robert Oliver

Rob Oliver from Robert W. Baird & Co. asked about the impact of the new Head of North American Sales, Bill Ford, inquiring about his priorities and expected contributions to new logo acquisition. Additionally, he questioned the pause in the stock buyback program during the quarter, seeking clarity on the capital allocation strategy.

Answer

President, CEO & Vice Chairman Mike Gianoni stated that Bill Ford is expected to bring new ideas and enhance competitive positioning, leveraging his deep industry experience from Salesforce and Oracle to drive new logos and cross-sales. EVP & CFO Chad Anderson explained that capital allocation in Q2 prioritized debt repayment, leading to a reduction in leverage to 2.7x. He noted the company has repurchased 4% of shares in H1 2025, pacing well towards its annual goal, and retains the flexibility to pursue both buybacks and deleveraging.

Robert Oliver from Baird sought clarity on the macroeconomic assumptions within Blackbaud's full-year guidance, particularly concerning secondary impacts from federal funding issues, and questioned if the 'mid-single-digit plus' growth commentary signals increased confidence.

Answer

CEO Michael Gianoni explained that the guidance assumes no material macro changes, as most of their customers are not directly impacted by federal grants. He confirmed the 'plus' in the growth outlook reflects the strong Q1 start but noted the company is maintaining its full-year guidance for now, expressing overall optimism for the remainder of the year.

Robert Oliver inquired about the potential impact of changes in federal dollar allocations on Blackbaud's customer base and how that risk was factored into the 2025 guidance. He also requested a breakdown of the factors contributing to the weaker-than-expected free cash flow guidance for 2025.

Answer

CEO Mike Gianoni stated that Blackbaud sees no direct impact from federal funding changes, as its platforms focus on driving donations from individual donors, not managing federal grant workflows. CFO Tony Boor detailed the free cash flow guidance, attributing the year-over-year decline primarily to three items: a $28 million one-time payment to exit the EVERFI office lease, an $11 million net increase in interest expense from share buybacks, and a $5 million investment in a new India office.

Robert Oliver of Robert W. Baird & Co. asked for clarification on the slight downward revision in the social sector's full-year 2024 growth outlook, questioning what changed since Q2 regarding pricing acceptance or contract renewals.

Answer

EVP and CFO Anthony Boor explained that the social sector's contractual business is performing well, with pricing sticking and multi-year contract adoption rates meeting expectations. He clarified the revised outlook is not due to contractual weakness but rather the transactional business lapping difficult comparisons from prior-year viral events, which have not recurred in 2024.

Rob Oliver, Managing Director Software Research Analyst at Baird, inquired about the drivers behind the improved domain name base trends, specifically differentiating between macro-economic factors and VeriSign's marketing program effectiveness, and requested geographical insights. He also asked about the potential impact of Google's AdSense program changes on VeriSign's domain name base and sought a high-level perspective on how AI is currently impacting and is expected to influence VeriSign's business operations and the broader domain ecosystem.

Answer

Jim Bidzos, Executive Chairman, President and CEO, attributed improved domain name base trends primarily to enhanced marketing programs, strong registrar engagement, and anticipated cyclical shifts. John Calys, Executive Vice President and CFO, elaborated on regional strength, noting EMEA's consistency, the U.S.'s nice improvement in Q3, and Asia Pac's continued but less strong growth. They confirmed marketing program costs are revenue reductions and that 2026 programs are rolled out with positive initial feedback, alongside improved renewal rates. Regarding Google AdSense, Jim Bidzos stated VeriSign's exposure is minimal due to Google's long-standing strategy to reduce reliance on ad monetization for parked domains, distinguishing these from domains held for resale. On AI, Jim Bidzos highlighted a positive impact on registrations and DNS resolution, with daily DNS transactions growing significantly. He discussed AI's role in data fetching, Agentic web, domain name suggestions, and the critical function of domain names as digital trust anchors for authenticity and combating misinformation in an AI-driven environment.

Rob Oliver asked about the drivers behind VeriSign's improved domain name base trends, including the balance between macro factors and internal marketing programs, specific regional performance, the impact of Google's recent AdSense changes on the domain name base, and a high-level view on how AI is currently affecting and is expected to impact VeriSign's business.

Answer

Executive Chairman, President and CEO Jim Bidzos and Executive Vice President and CFO John Calys explained that improved marketing programs, enhanced registrar engagement, and anticipated cyclical shifts contributed to domain name base growth, with strong performance in the U.S. and EMEA. John Calys noted that marketing program costs are included in guidance and are accretive, and the preliminary renewal rate improved to 75.3%. Jim Bidzos clarified that Google's AdSense changes are part of a 15-year predictable strategy, minimizing VeriSign's exposure, and distinguished these from domains purchased for resale. Jim Bidzos also detailed AI's positive impact on registrations and DNS resolution, citing increased daily DNS transactions and AI's role in data fetching, Agentic AI, domain name suggestions, and its potential to enhance domain names as digital trust anchors.

Rob Oliver from Robert W. Baird & Co. inquired about the key drivers of the recent domain name strength, the effectiveness of marketing programs, and specific trends in the Asia Pacific region, including China.

Answer

D. James Bidzos, Executive Chairman, President & CEO, explained that the growth is driven by registrars' renewed focus on customer acquisition, amplified by VeriSign's accretive marketing programs. He also pointed to a significant renewal rate improvement. EVP & CFO John Calys added that Asia Pac showed the strongest regional growth, including positive trends from China, but noted the company maintains a degree of caution in its guidance due to historical volatility.

Rob Oliver inquired about the primary drivers of the recent strength in domain name growth, asking for details on geographical performance, the impact of VeriSign's marketing initiatives, and the specific contribution from the Asia Pacific region, including China.

Answer

Executive Chairman, President & CEO D. James Bidzos attributed the growth to registrars refocusing on new customer acquisition, a trend amplified by VeriSign's marketing programs. He also highlighted the improved renewal rate. EVP & CFO John Calys confirmed that Asia Pacific was the strongest-performing region, with marketing programs accelerating demand, but noted that guidance remains conservative due to historical volatility in China.

Robert Oliver asked for an update on the traction of marketing channel programs, management's perspective on the macroeconomic environment, whether higher Q1 expenses indicate a new run rate, and the latest developments concerning the .web TLD.

Answer

EVP and CFO George Kilguss noted encouraging early adoption of new marketing programs by registrars, which contributed to improved new registration trends. Executive Chairman, President and CEO Jim Bidzos commented that while favorable shifts like increased registrar spending on customer acquisition are positive, macroeconomic uncertainty warrants caution. Incoming CFO John Calys clarified that current operating income guidance implies a similar level of spending for the year, driven by headcount and incentive compensation. Bidzos also provided an update on .web, stating a legal panel rejected a competitor's challenge and a final hearing is anticipated in November 2025.

Robert Oliver of Robert W. Baird & Co. inquired about the outlook for domain name base growth, the impact of the macro environment, and the effectiveness of new marketing programs. He also asked about the implications of leadership changes at the NTIA and ICANN and the status of ongoing discussions with regulators.

Answer

Jim Bidzos, Executive Chairman, President and CEO, stated that while the domain name base is expected to decrease slightly in 2025, the trend is improving due to a reduced decline from China, adoption of new marketing programs, and a cyclical shift by registrars back to customer acquisition. Executive Vice President and CFO George Kilguss added that marketing programs are being refined based on registrar feedback for a broader 2025 rollout. Bidzos also addressed regulatory questions, expressing confidence in continued stable relationships with ICANN and the NTIA under new leadership, and clarified that Verisign is not government-funded and its wholesale pricing has lagged inflation.

Robert Oliver asked for an update on Verisign's channel marketing efforts, noting that the company seems less confident about returning to domain name base (DNB) growth in 2025. He also inquired about the potential for Verisign to benefit from an economic rebound in China and sought clarity on how marketing costs might impact future operating expenses.

Answer

Executive Chairman, President and CEO Jim Bidzos explained that the timeline for returning to DNB growth in H2 2025 is more challenging because registrars need more time to integrate the new marketing programs. EVP and CFO George Kilguss added that the DNB decline is driven by U.S. registrars focusing on ARPU and by continued macroeconomic weakness in China. Regarding costs, Kilguss anticipates higher expense growth in 2025 compared to 2024, noting that spending on marketing programs will be contingent on their ability to be accretive to the business.

Rob Oliver asked about the importance of the partner network in driving the company's move upmarket and whether any specific verticals or geographies were showing outsized performance or opportunity.

Answer

Co-CEO Eran Zinman responded that the company is not seeing any particular vertical or geographic segment significantly overperforming or underperforming. He stated that they plan to continue investing across all products and segments in the second half of the year. The role of the partner network was not directly detailed in the response.

Robert Oliver asked what specific aspects of new CRO Casey George's background made him the right fit for monday.com. He also inquired how the partner strategy needs to evolve to support the company's continued move upmarket.

Answer

Co-CEO Eran Zinman highlighted Casey George's deep experience in scaling enterprise software sales, managing large customer volumes with an analytical approach, and a strong personal fit. Regarding partners, he stated the strategy is consistent and will become more significant, focusing on geographic expansion, technical expertise for professional services, and industry specialization.

Rob Oliver of Robert W. Baird & Co. inquired about the general market environment, customer buying trends, the impact of GenAI as a catalyst, and the company's confidence in its Q4 ARR growth forecast.

Answer

Sharat Sharan, Founder and CEO, noted positive enterprise performance, improved retention, and traction with AI-powered ACE, especially in financial services and life sciences. He highlighted strong Q2 pipeline generation and customer win-backs signing larger deals. CFO Steve Vattuone expressed confidence in the Q4 guidance, citing strong Q2 results, six consecutive quarters of positive free cash flow, and an expectation for ARR to turn positive in Q4. Sharat Sharan added that the positive trends in the first half of 2025 support the Q4 ARR growth expectation.

Robert Oliver inquired about the dynamics of customer win-backs, particularly what drives them back to ON24 from less functional competitors, and sought commentary on the current macro trends affecting marketing spend.

Answer

CEO Sharat Sharan explained that 'boomerang' customers, who left for cheaper collaboration tools, are returning after experiencing negative pipeline impacts. He highlighted a six-figure win-back with a global cybersecurity firm as a key example. Sharan acknowledged the tough marketing budget environment, referencing a Gartner report showing a drop from 11% to 8.2% of revenue since 2019, but noted 'green shoots' and stabilization, evidenced by these win-backs and strong customer commitment metrics.

Rob Oliver requested more color on the US federal business, asking about pipeline health, feedback from the sales team, and whether the spending freeze has started to thaw.

Answer

CFO Bill Koefoed reiterated that the company's overall pipeline is the best it has ever been. For the federal sector specifically, he noted a good pipeline but with uncertainty on timing as agencies prioritize projects. He confirmed no government agencies have been lost. CEO Tom Shea added that the company is also increasing its focus on state, local, and higher education to broaden its public sector reach.

Robert Oliver of Robert W. Baird & Co. asked about the large SaaS conversions, inquiring about the opportunity to discuss the broader platform capabilities, like Sensible ML and Solution Exchange, to drive cross-sells during these transitions.

Answer

CEO Tom Shea confirmed these conversions are a 'great opportunity' to expand the customer relationship. He noted that new innovations like Sensible ML, which require a SaaS environment, are actively driving some of these transitions. He provided an example of OneStream's first-ever customer converting to SaaS and simultaneously adding a Power BI connector, demonstrating the potential for immediate upsell.

Rob Oliver inquired about how recent acquisitions have accelerated Amplitude's AI agent development and the potential timeline for monetization. He also asked about the ongoing opportunities for improving sales efficiency while balancing necessary investments.

Answer

Founder, CEO & Director Spenser Skates explained that it's still early for AI agents, with a launch planned for later in the year. He emphasized creating value first before focusing on monetization, contrasting Amplitude's approach with competitors. CFO Andrew Casey added that sales efficiency improvements stem from a shift to a value-oriented sales model, better territory management, and refined processes, which are paying off in the strategic enterprise segment.

Robert Oliver asked about the continued traction from the Google Analytics end-of-life and whether this remains a tailwind. He also inquired about the impact of the new strategic accounts team on enterprise pipeline and its role in mitigating down-sell risk.

Answer

CEO Spenser Skates confirmed that with Google Analytics on 50% of websites, it will be a relevant tailwind for the next decade as Amplitude provides an easy upgrade path. CFO Andrew Casey explained the strategic accounts team is increasingly effective at solving complex digital engagement problems for the largest global companies. This deep partnership leads to higher value, longer contract durations (improving RPO), better gross retention, and ultimately reduces churn and contraction risk.

Rob Oliver from Robert W. Baird & Co. inquired about the performance of the influencer marketing business and its role in cross-selling, and how the company balances investments with its margin expansion goals.

Answer

CEO Ryan Barretto reported positive momentum in influencer marketing, highlighting new AI and brand safety features that make it a strong 'wedge' product into new accounts. CFO Joe DelPretto reaffirmed the company's commitment to delivering a couple hundred basis points of margin improvement annually, a goal he stated is independent of growth rates or other investments.

Robert Oliver asked for an update on the enterprise pipeline for the year and the progress made in refining the ideal customer profile (ICP) to maximize high-touch sales efforts.

Answer

CEO Ryan Barretto explained that the company is leveraging data from its large customer base and product trials to sharpen its focus on the ideal customer profile. He emphasized that for enterprise clients, social customer care is a critical driver, as maintaining a social presence is essential for brand reputation.

Rob Oliver from Robert W. Baird & Co. sought more specific color on the weakness related to SAP migrations and asked how the lack of visibility might impact future guidance and the margin trajectory into next year.

Answer

President and CEO David DeStefano noted the softness is most pronounced in the U.S. market but lacked specific sector detail beyond the general elongation of migration projects. CFO John Schwab stated the long-term growth algorithm remains unchanged and that while cost actions were taken, the company will continue to prioritize strategic investments like e-invoicing, with more significant margin leverage expected after the current investment cycle.

Robert Oliver asked how the Kintsugi investment might influence the relationship with Shopify as it moves upmarket and questioned if the increased mention of Oracle wins was intentional.

Answer

CEO David DeStefano positioned the Kintsugi investment as a complement to the Shopify relationship, strengthening the offering for SMBs while Vertex serves Shopify's larger enterprise clients. He clarified that the frequent mention of Oracle was not a strategic shift in commentary but simply a reflection of several significant customer wins that closed in the Oracle ecosystem during the quarter.

Robert Oliver asked for more detail on the ERP migration tailwinds from Oracle and SAP amid investor concerns, and for the rationale behind the 2025 margin decline due to increased investments.

Answer

CEO David DeStefano confirmed that the SAP and Oracle migration pipelines remain strong and are not slowing down, viewing SAP's extended deadline as a positive tailwind. CFO John Schwab explained that strategic investments in e-invoicing and AI are timely to capture market opportunities, noting that the core business's adjusted EBITDA margin would exceed 25% without these incremental spends, demonstrating underlying leverage.

Robert Oliver asked about a specific large semiconductor deal, questioning what drove its high contract value and how those learnings could be applied to other S/4HANA migrations. He also asked for clarification on the organic change in ARR per customer and any impact from the Pagero deal unwind.

Answer

CEO David DeStefano explained the semiconductor deal's value was driven by the customer expanding its relationship to cover areas not previously served by Vertex. CFO John Schwab clarified there was no impact from the Pagero unwind and that the reported ARR per customer was impacted by the inclusion of smaller ecosio and Systax customers.

Rob Oliver from Robert W. Baird & Co. asked about the customer appeal of the new pricing model and the key learnings from deals that did not adopt it. He also asked Therese Tucker about her transition and excitement for the upcoming Beyond the Black conference.

Answer

CFO Patrick Villanova explained that the new pricing model is ahead of plan and facilitates more strategic, transformative conversations with customers, moving beyond simple license counts. Co-CEO Therese Tucker expressed her strong confidence in Owen Ryan's leadership and her excitement to focus more on customer engagement and technology application, which will be her primary focus at the conference.

Robert Oliver asked for an update on the SAP partnership's progress and sought clarity on the confidence behind the raised margin guidance, given ongoing growth investments.

Answer

An executive, likely Co-CEO Owen Ryan, detailed a more robust pipeline and better frontline alignment with SAP, supporting shared strategic goals in AI, the CFO's office, and cloud. CFO Patrick Villanova added that the Q1 margin beat was organic, achieved without compromising strategic investments, and these savings are reflected in the higher full-year guidance.

Robert Oliver inquired about the drivers behind the impressive 27% growth in customers with over $1 million in ARR, and asked for color on the divergence between strong enterprise renewal rates and weaker mid-market rates.

Answer

Co-CEO Therese Tucker attributed the large customer growth to new innovations like the Financial Reporting and Analytics (FRA) solution and the Studio platform. CFO Mark Partin explained the renewal rate divergence is a result of a deliberate strategy to focus on higher-value mid-market customers, leading to expected churn of smaller accounts. He highlighted that the enterprise renewal rate recovered to a historical high of 97%, which helped stabilize the overall dollar-based retention rate.

Rob Oliver from Baird asked about the drivers of the strong 42% international growth, the status of the language rollout, and whether this expansion is creating new upmarket opportunities with multinational companies.

Answer

CFO Amanda Whalen highlighted strong new ARR growth in Norway, Germany, and Spain, driven by product enhancements like WhatsApp support and go-to-market efforts like localized websites. Co-Founder and CEO Andrew Bialecki confirmed that international expansion is 'absolutely' unlocking new enterprise opportunities, supported by investments in data residency and new international data centers.

Robert Oliver from Baird inquired about the progress of Meta and TikTok integrations and asked why retention was better than expected after the recent pricing changes.

Answer

CEO Andrew Bialecki explained that integrations with Meta and TikTok are deepening, allowing customers to leverage Klaviyo-collected content like reviews on social platforms and acquire subscribers via lead ads. CFO Amanda Whalen attributed strong retention to proactive communication and tools that helped customers optimize their profiles, validating the platform's value and providing a strong foundation for pricing future products.

Robert Oliver requested an update on international progress in geographies like France, the 2025 roadmap for new languages or regions, and how the WooCommerce relationship might influence these plans.

Answer

Co-Founder and CEO Andrew Bialecki stated that full-year international revenue grew 42% and that the company has laid a strong foundation by expanding to 7 languages and 19 countries for SMS. He clarified that the 2025 focus is on building local sales and support teams in key European markets rather than adding more languages, as much of the product-side heavy lifting was completed in 2024.

Robert Oliver from Baird asked about cross-sell momentum beyond SMS, specifically seeking an update on the adoption of the Reviews and CDP products and the effectiveness of the new CDP packaging.

Answer

CEO Andrew Bialecki highlighted strong SMS adoption, with 80% of top customers using the product. For CDP, he explained that the analytics-focused use case is seeing great traction because it allows customers to quickly move from insight to action, generating a rapid and clear return on investment.

Rob Oliver asked if Workiva's solution-based pricing model is proving to be a competitive advantage amid concerns about generative AI's impact on seat-based models. He also sought details on the drivers behind the improved operating and free cash flow margin guidance.

Answer

CEO Julie Iskow confirmed that the solution-based licensing model, which encourages unconstrained platform use, has served them well and is seen as an advantage with customers, especially as AI capabilities are integrated. CFO Jill Klindt explained that the margin improvement is not from one specific area but from a company-wide focus on productivity, smarter work processes, and disciplined execution toward their long-term targets.

Robert Oliver asked for clarification on the 'policy and geopolitical uncertainty' impacting the 2025 guidance, questioning if it was primarily related to CSRD or other factors like trade and tariffs. He also inquired how the company's multi-product platform strategy is helping to mitigate market risks.

Answer

CEO Julie Iskow explained that the uncertainty mentioned in the guide is general, stemming from potential tariffs, exchange rates, and a new U.S. administration, rather than one specific issue like CSRD. She affirmed that the multi-product platform strategy is a significant differentiator, driving broad-based demand and growth through a mix of new logos, account expansions, and partner co-sells.

Robert Oliver from Baird asked about the current significance of ERP migrations, like S/4HANA, as a trigger event for new business. He also sought an update on the adequacy of sales investments and staffing in Europe ahead of CSRD deadlines.

Answer

CEO Julie Iskow confirmed that ERP upgrades remain a significant trigger event, often driven by partners who include Workiva in their finance transformation playbooks. CFO Jill Klindt added that the company is still actively hiring quota-reps globally, with a focus on Europe, and is not finished with its planned investments to capture the sustainability opportunity.

Rob Oliver of Robert W. Baird & Co. inquired about cross-selling, asking where the company is seeing the most traction and how the 'One Tyler' initiative is helping to create a unified pipeline across different product suites.

Answer

President & CEO Lynn Moore described the 'One Tyler' initiative as a foundational strategy that extends beyond sales to unify the cloud approach and client experience, which will drive future cross-sell and upsell. He stated that while they are seeing opportunities consistently across the board, they are still in the early stages of fully capitalizing on this long-term growth driver.

Robert Oliver of Robert W. Baird & Co. asked about the potential impact of ARPA fund clawbacks on customer spending and whether the company has assessed its federal business exposure to the DOGE efficiency initiative.

Answer

President and CEO Lynn Moore stated the company is not hearing from clients about ARPA fund clawbacks and has only seen one minor federal deal termination. Regarding DOGE, she noted that federal revenue is less than 5% of the total, and while a few small contracts were terminated (totaling <$1M), the overall impact is considered minimal.

Rob Oliver requested an update on the progress of cloud-optimizing Tyler's products and asked what milestones investors should monitor over the next few years.

Answer

CEO H. Moore expressed satisfaction with the progress on cloud optimization and version consolidation, noting that over 95% of Enterprise ERP clients are now on a single version. While not providing a new specific metric, he pointed to the long-term goal of achieving a synchronized cadence of releases across major products later in the decade as a key milestone for investors to watch.

Robert Oliver followed up on the ARPA funds topic, asking what specific actions the sales force is taking to capitalize on the upcoming deadline to obligate funds and if this could boost deal flow into 2025 and 2026.

Answer

CEO Lynn Moore responded that the sales strategy regarding ARPA has been consistent for years, with teams well-equipped with information. She reiterated that she cannot draw a direct, material correlation between ARPA funds and Tyler's overall performance, using the 12-year Kentucky deal cycle as an example where ARPA influenced payment timing but not the deal itself.

Rob Oliver inquired about the Device 42 acquisition, asking about the typical ARR uplift it provides in larger deals and the timeline for full product and business model integration.

Answer

CEO Dennis Woodside revealed that a cloud version of Device 42 is targeted for a 2026 release. He noted that in large deals, Device 42 can account for a third of the total recurring revenue, significantly helping Freshworks move upmarket. He confirmed the acquisition and integration are proceeding according to the original business plan.

Robert Oliver of Robert W. Baird & Co. inquired about the impact of Device 42 on platform wins, its pipeline growth, and trends within the CX business, specifically regarding AI-driven efficiencies versus agent seat growth.

Answer

CEO and President Dennis Woodside confirmed that Device 42 is successfully driving new business and enhancing value for existing customers, with two of the top five deals in Q1 including a Device 42 component. He stated that the overall demand environment remains stable and that in the CX business, both agent count and AI adoption continue to increase.

Robert Oliver asked if the Device42 acquisition has improved ITSM win rates and competitive positioning, and requested a reminder of key technological or financial milestones for Device42 to watch for in the coming year.

Answer

CEO Dennis Woodside confirmed that Device42 is essential for the company's upmarket motion, as it was previously losing deals over IT asset management functionality. He cited the New Balance win and a major switch from a 13-year ServiceNow customer as examples where Device42 was a critical component. He outlined two key milestones: a revamped integration with Freshservice that launched in January, and a cloud version of Device42 slated for late 2025 or early 2026.

Robert Oliver inquired about performance trends in the small and medium-sized business (SMB) sector versus expectations and asked for details on which areas were most affected by the recent reduction in force.

Answer

CEO and President Dennis Woodside explained that the SMB segment showed positive signs, with organic net customer adds increasing for the third consecutive quarter due to product investments and better free-to-paid conversion. Regarding the workforce reduction, he stated it was broad-based but included a focus on sales and marketing to concentrate efforts on fewer, larger opportunities, aligning with the company's key strategic imperatives.

Rob Oliver of Robert W. Baird & Co. asked about the enterprise pressure PagerDuty is facing, questioning whether it stems more from internal execution challenges or from market hesitancy due to the rapid evolution of generative AI. He also inquired about how 'derisked' the full-year guidance is.

Answer

CEO Jennifer Tejada attributed the challenges primarily to internal execution and a go-to-market transformation, not market hesitancy, pointing to strong new logo growth as a sign of healthy demand. CFO Howard Wilson described the full-year guidance as 'prudent,' stating it reflects the flow-through impact of Q1's execution challenges on revenue for the remainder of the year.

Robert Oliver asked for color on the commonalities behind the pushed large enterprise deals and questioned the conservatism in the full-year guidance given the Q3 beat.

Answer

CEO Jennifer Tejada explained that while proof of value is strong, the deferrals relate to navigating complex customer procurement processes, and she highlighted a new executive sponsorship program to mitigate this. CFO Howard Wilson stated the guidance remains prudent, accounting for variability from month-to-month transactions, professional services delivery during holidays, and the timing of self-managed deals.

Robert Oliver asked for more detail on the strategy behind the new 'isolated cloud' offering, questioning if it targets a new customer type. He also inquired how this single-tenant solution might impact cloud cost of goods sold (COGS) as it ramps up.

Answer

CEO Mike Cannon-Brookes explained that isolated cloud targets the largest, most complex customers who require dedicated infrastructure for security or regulatory reasons. CFO Joe Binz noted that while AI and new offerings will add costs, the company is driving structural efficiencies elsewhere in cloud COGS to create capacity, though blended gross margins are still expected to decline over the next two years per prior guidance.

Robert Oliver asked for more detail on the fiscal 2026 channel strategy, including what is new and how success will be measured. He also questioned the guidance assumption of "no material change" to the macro environment, given current market volatility.

Answer

COO Anne Raimondi stated that the channel strategy involves reallocating more resources to partners to extend geographic and vertical reach, particularly for driving AI Studio adoption. Success will be measured by growth in channel-sourced revenue. CFO Sonalee Parekh clarified that the guidance incorporates the soft macro environment seen in recent quarters, including weakness in the tech vertical, but does not assume a significant further deterioration from that baseline.

Robert Oliver inquired about the early drivers of AI Studio use cases and whether view-only licenses were contributing. He also asked for CFO Sonalee Parekh's perspective on the sales team adapting to sell consumption-based pricing.

Answer

Co-Founder and CEO Dustin Moskovitz identified the primary driver as customers adding AI to existing workflows, which enhances stickiness. He highlighted the emergence of internal 'power users' who significantly expand usage. CFO Sonalee Parekh stated that Asana can scale AI Studio sales by leveraging existing resources and noted broader opportunities for operational efficiency in sales and marketing to drive margin expansion.

Robert Oliver inquired about the macroeconomic assumptions factored into the new fiscal year's guidance, the opportunity within renewal cohorts, and the key drivers for migrations from the Community Edition.

Answer

CEO Matthew Cain stated that the guidance reflects a healthy pipeline of large strategic accounts and a larger, more balanced renewal base for the new fiscal year, providing significant opportunity. He also highlighted a strong pipeline for Capella migrations. Both Cain and CFO Gregory Henry noted that Community Edition migrations are driven by customers valuing Capella's as-a-service management, enhanced security, and support, which provides a clear ROI over self-management.

Robert Oliver asked about the company's preparedness and key learnings from customer migrations, especially heading into a large renewal year. He also inquired about the drivers for Community Edition users to migrate to paid offerings. Additionally, he followed up on the churn and downsell pressure mentioned last quarter, asking if it was still an issue.

Answer

CEO Matthew Cain affirmed the company is 'unequivocally prepared' for migrations, with key learnings focused on understanding customer-specific variables that dictate timing. CFO Gregory Henry addressed the second question, stating that Q3 saw normal levels of churn and downsell, suggesting the Q2 pressure was anomalous and is not expected to be a trailing issue into Q4.

Rob Oliver asked if the increased industry focus on generative AI and revenue management is creating more opportunities for PROS, particularly with larger airlines. He also sought more color on the confidence behind the forecast for ramping subscription revenue from travel.

Answer

CEO Andres Reiner confirmed that airlines are focused on optimizing seat and ancillary revenue, creating significant opportunities for PROS's solutions. CFO Stefan Schulz explained that confidence in the travel forecast is based on an improving pipeline, more customer opportunities, and a clear view of already-booked revenue scheduled for recognition throughout 2025.

Robert Oliver asked for an update on the integration of the B2B and air travel sales forces and its contribution to operating leverage. He also requested more detail on the state of the airline industry's IT spending and any signs of normalization heading into 2025.

Answer

President and CEO Andres Reiner clarified that while the sales force unification is progressing well, its main benefits will be seen next year; current leverage is driven by internal AI adoption for efficiency. On the airline industry, Reiner noted strong interest in PROS's innovations but a lagging pace of investment, which he sees as a 'quarters, not years' issue. CFO Stefan Schulz added that the outlook remains consistent with 90 days prior, acknowledging macro risks but seeing a stable environment.

Robert Oliver asked about the international opportunity presented by Keap's reseller network and sought to clarify whether recent ARPU pressure was driven more by the macro economy or by specific incentives for converting Marketing Services clients.

Answer

CEO Joe Walsh highlighted Keap's international presence (about 20% of its revenue) as a significant opportunity, providing an entry point into new markets without requiring a large acquisition. Regarding ARPU, he clarified the pressure is a strategic choice, stemming from migrating customers onto an introductory 'starter' Marketing Center at a lower price point. He described this as creating a 'spring-loaded' customer base for future upsells, which supports sustained high Net Dollar Retention.

Requested an update on the Digital Grid Management (DGM) deal pipeline, particularly in Europe, and asked if the Open Grid acquisition would help there. Also asked for details on the cash collection delays and the plan to mitigate them.

Answer

The DGM pipeline in Europe is developing well, and the Open Grid acquisition is expected to enhance their competitive profile globally due to regulatory requirements in Europe. Regarding cash flow, collection delays were due to administrative processes in certain regions. New, more rigorous collection processes are in place, and the company is confident in meeting its full-year free cash flow guidance.

Questioned if customers are becoming more price-sensitive and asked for clarification on the ARR guidance, specifically whether it reflects concerns about renewals, churn, or a mix of new logo and cross-sell weakness.

Answer

Tien Tzuo stated that they are not seeing significant pricing pressure and prefer to increase contract value by selling innovation rather than flat price hikes. Todd McElhatton clarified the ARR guidance adjustment is due to prudence regarding the timing of a few very large deals in the pipeline, not an expectation of increased churn.