Stephen Sheldon

Stephen Sheldon asked about the future growth avenues for CBRE in supporting data centers over the next two to three years and whether data center monetization is expected to become a larger component of overall EBITDA. He also questioned updates on CBRE's strategy to enhance relationships with occupiers and drive wallet share gains.

Answer

CEO Robert Sulentic projected data centers to contribute around 10% of earnings this year and more next, emphasizing sustainable business building across all segments, from land acquisition and project management to brokerage and operations. He detailed the evolving occupier strategy, leveraging integrated offerings from Turner & Townsend and Industrious, and focusing on client satisfaction with individual services to drive cross-sell.

Stephen Sheldon asked about the future growth avenues for CBRE in supporting data centers over the next two to three years, and whether data center monetization is expected to become a larger part of the overall business mix beyond the 10% of EBITDA reported in Q3 2025. He also inquired about updates on CBRE's strategy to enhance relationships with occupiers and drive wallet share gains.

Answer

CEO Robert Sulentic projected data centers to contribute around 10% of earnings this year and more next year, emphasizing building sustainable businesses across the data center lifecycle (build, operate, redevelop) through Trammell Crow Company's land investments, Turner & Townsend's project management, data center brokerage, and BOE's digital infrastructure services. Mr. Sulentic also discussed the evolving occupier relationships, driven by the acquisitions of Turner & Townsend and Industrious, offering integrated services across all four segments to drive cross-sell.

Stephen Sheldon of William Blair & Company, L.L.C. asked for clarification on the outlook for project management revenue growth in the second half, noting some reporting noise in the second quarter.

Answer

CFO Emma Giamartino confirmed that the company expects low double-digit net revenue growth for the full year in project management. She explained that a revenue mischaracterization made Q2 growth appear low, which will reverse in Q3, with results normalizing for the full year.

Stephen Sheldon requested more detail on the Industrial Leasing outlook amid tariff uncertainty, asked about cost management levers in a potential downturn, and questioned if hiring plans have changed.

Answer

CEO Robert Sulentic explained that Industrial Leasing is expected to normalize to flattish year-over-year growth, with a notable trend of users shifting to 3PLs for flexibility. CFO Emma Giamartino confirmed they can quickly manage costs through variable compensation, discretionary spending cuts, and hiring adjustments if needed. She also stated that hiring plans for the year have not changed.

Stephen Sheldon asked for the 2025 outlook for industrial leasing and inquired about talent management within advisory services, including headcount trends and the competitive environment for producers.

Answer

CEO Bob Sulentic projected low single-digit growth for industrial leasing in 2025, with an expected pickup in subsequent years as sublease space is absorbed. Regarding talent, he stated that CBRE competes effectively due to its brand and stability, has capacity to grow revenue without adding headcount, and may see favorable recruiting economics as some competitors are less aggressive.

Stephen Sheldon inquired about incremental margins in capital markets, including the need for rehiring, and asked about the long-term levers available to drive margin expansion in the GWS segment.

Answer

Chair and CEO Bob Sulentic noted that CBRE has considerable existing capacity in its capital markets teams and does not need to rehire to achieve material growth, though it continues to invest in talent. CFO Emma Giamartino outlined several levers for GWS margin expansion, including resetting the cost base, securing higher-margin contracts, acquiring higher-margin technical services businesses, and optimizing existing contracts.

Stephen Sheldon requested more context on the two 'mega tier one' POS deals PAR is pursuing, including potential timing, and asked about the slight sequential decrease in active sites for the Operator and Engagement clouds.

Answer

CEO Savneet Singh revealed the deals are with three top-20 brands (two of which are top-10) and are all POS-related, with decisions for two expected in 2025 and one in 2026. He noted these deals were made possible by the TASK acquisition. Regarding active sites, Singh explained the dip was a timing issue, with signed Engagement Cloud deals not yet live and Operator Cloud rollouts weighted toward the second half of the year.

Stephen Sheldon of William Blair & Company asked for clarification on the slight downward revision to historical ARR figures and inquired about the potential for organic ARR growth in 2026 given the recent momentum from major Tier 1 wins.

Answer

CEO Savneet Singh and CFO Bryan Menar explained that the historical ARR adjustment was entirely due to foreign exchange (FX) fluctuations, primarily from the Australian and New Zealand dollars following the TASK acquisition. Menar highlighted that sequential ARR grew $10 million in constant currency. Regarding 2026, Singh stated that while it's too early for specific guidance, he feels positive about the outlook due to the increasing number of multiproduct deal wins, which enhances the value of each new customer.

Stephen Sheldon asked for clarification on the specific products included in the expanded Burger King contract, such as PAR Ops, Data Central, and Delaget. He also requested more detail on the 2025 organic ARR growth outlook beyond the stated '20% annual growth' target.

Answer

CEO and President Savneet Singh clarified the expansion into PAR Ops is for the Data Central product, with potential to add Delaget in the future. Regarding the 2025 outlook, he reiterated that growth would be higher in the second half of the year, driven by the Burger King acceleration and other large, signed deals, expressing high confidence in the full-year target.

Stephen Sheldon inquired about the sales pipeline for convenience stores and plans to allocate more resources to that market. He also asked about the expected timeline to reach positive free cash flow following the achievement of positive adjusted EBITDA.

Answer

CEO Savneet Singh confirmed that PAR has already increased resources for the convenience store market and plans to grow the go-to-market team there next year. Regarding free cash flow, Singh anticipates roughly a one-quarter lag from positive adjusted EBITDA, with the primary difference being interest expense from the debt used to fund the TASK acquisition.

Stephen Sheldon from William Blair & Company, L.L.C. asked about the financial impact of the revenue share model changes, gross margin expectations for the second half of the year, and the current agent and team recruiting pipeline.

Answer

CEO Tamir Poleg clarified that the revenue share model changes will not have a financial impact on the company's statements as the total payout is capped; it will only redistribute funds within the agent community. CFO Ravi Jani confirmed that gross margins are expected to decline year-over-year in the second half due to a higher mix of productive, capped agents, a trend seen across the industry. Tamir Poleg added that the recruiting pipeline remains strong, noting the addition of 1,200 agents in the five weeks since the quarter ended, following a significant off-boarding of non-productive agents in Q2.

Stephen Sheldon inquired about the potential applications for voice AI within the agent value proposition, the key drivers of Real's strong agent recruitment in a declining market, and the operational impact of converting contractors in India to full-time employees.

Answer

CEO Tamir Poleg detailed plans to use his AI voice for the agent support line and test Leo for real-time conversations with clients, with a long-term vision of providing agents their own AI assistants. CFO Ravi Jani attributed strong agent attraction to the company's balance of value and cost. He also stated that converting India-based contractors to employees would not have a material financial impact but should strengthen team commitment and could positively impact time to market.

Stephen Sheldon asked about the sustainability of the strong agent growth momentum seen in early 2025 and the current state of the recruiting pipeline for agent teams and independent brokerages. He also requested more detail on the strategy for growing the mortgage loan officer headcount and improving attach rates.

Answer

President Sharran Srivatsaa confirmed the agent growth momentum is strong, with the recruiting pipeline being the largest in the company's history, driven by the 'flywheel' effect of having more agents. However, he cautioned that onboarding larger teams and brokerages is a more complex and lengthy process. Chairman and CEO Tamir Poleg added that the loan officer count at One Real Mortgage grew from 18 to 90 in 2024, with about half being existing Real agents. He detailed initiatives to boost attach rates, including a $2,500 buyer credit and a new API to facilitate agent commission advances.

Stephen Sheldon inquired about the agent recruiting pipeline, asking if Q4 agent additions would outpace Q3, similar to the prior year's trend. He also requested early usage data and feedback for the recently launched Real Wallet and sought a framework for the expected sequential increase in Q4 operating expenses.

Answer

President Sharran Srivatsaa noted that while Q4 and Q1 are seasonally strong for agent moves and conversations are active, he could not provide a precise forecast. Chairman and CEO Tamir Poleg shared early Real Wallet metrics, including over $100,000 in debit card spending and $80,000 in credit lines drawn. CFO Michelle Ressler confirmed OpEx would rise sequentially due to recent and planned headcount additions in R&D and operations but did not provide specific guidance.

Stephen Sheldon of William Blair & Company, L.L.C. asked for an update on Capital Markets pipelines, the risk of further Fannie Mae loan losses, and clarification on potential contract churn in the property management business.

Answer

CEO Christian Ulbrich described Capital Markets pipelines as 'fairly strong' and up notably year-over-year. CFO Kelly Howe addressed the other points, stating that while JLL continues to monitor its portfolio, no other specific areas of fraud have been identified. She clarified that the potential for 'elevated contract churn' is specific to the property management business as it undergoes a strategic review to optimize for growth and profitability.

Patrick McIlwee, on behalf of Stephen Sheldon, asked about the remaining growth runway for office and industrial leasing and JLL's level of participation in the data center market.

Answer

CFO Karen Brennan highlighted that U.S. office leasing has significant runway as large transactions remain 30% below pre-pandemic levels. For industrial, she noted JLL's outperformance despite market softness. Regarding data centers, she described it as a small but rapidly growing part of the business where JLL is active across the asset lifecycle.

Stephen Sheldon of William Blair & Company inquired about the assumptions behind the 2025 EBITDA guidance range, the outlook for incremental margins in transactional businesses, and the progress of JLL's AI initiatives.

Answer

CFO Karen Brennan detailed that the EBITDA guidance midpoint assumes a gradual recovery, with the range dependent on the pace of this recovery. She noted that 2024 incremental margins were affected by one-off items, with Markets Advisory's high margin expected to moderate and Capital Markets' depressed margin likely to normalize. CEO Christian Ulbrich added that JLL is highly focused on deploying its dozens of AI products to drive significant productivity gains and enhance client services.

Stephen Sheldon asked about the potential cadence of the capital markets recovery over the next few years and inquired about the strategic plan for leveraging the newly acquired Race Commercial Real Estate (RES) technology across JLL's leasing business.

Answer

Global CEO Christian Ulbrich stated that the capital markets environment is steadily improving, expecting a seasonal Q4 uptick and continuous improvement through 2025. Regarding RES, he explained its technology platform will be rolled out to all U.S. leasing brokers over 18 months to enhance productivity and client experience. CFO Karen Brennan added that while RES's revenue contribution is small, it is expected to generate an attractive ROIC within three years through cost offsets.

Stephen Sheldon of William Blair inquired about the drivers of the strong EMEA performance, the outlook for Services growth post-divestiture, and whether the 96% GOS retention rate represents a significant improvement.

Answer

CEO Michelle MacKay attributed EMEA's strength to a combination of improving market dynamics and internal operational efficiencies, creating a 'multiplier effect.' She also confirmed the 96% GOS retention is a 'notable improvement.' CFO Neil Johnston affirmed that Services guidance implies mid-single-digit reported growth in the second half of the year.

Stephen Sheldon asked for a framework on full-year 2025 margins, commentary on the Capital Markets pipeline and early 2025 activity, and the expected growth trajectory for the Services business.

Answer

CEO Michelle MacKay acknowledged margin pressure from long-term investments. CFO Neil Johnston added that the company will balance investment spend with growth, expecting to outpace 2024's 8% EPS growth. Johnston noted Q1 margins would be flat year-over-year. Regarding Capital Markets, MacKay highlighted a strong pipeline with a notable shift toward institutional investors. For Services, Johnston projected a gradual improvement to a mid-single-digit growth rate by mid-2025, driven by recurring contracts and project management.

Stephen Sheldon asked for clarification on the Q4 Capital Markets growth forecast and questioned the company's confidence in reaccelerating Services organic growth to mid-single-digits in 2025.

Answer

CFO Neil Johnston confirmed the 20% Capital Markets growth forecast is year-over-year. He also expressed strong confidence in the 2025 Services growth target, citing momentum in facilities management in APAC, healthier contracts in facility services, and a strong development pipeline for global occupier services.

Stephen Sheldon of William Blair & Company, L.L.C. asked for a breakdown of the raised full-year guidance between M&A and organic growth. He also questioned if the recent rebranding of the Investment Management segment sets the stage for a potential spin-off to address the company's valuation.

Answer

CFO Christian Mayer clarified that the guidance increase is driven equally by completed acquisitions and improved organic growth expectations, particularly in real estate services and engineering. CEO Jay Hennick stated that while Colliers is undervalued, the rebranding was a natural strategic step. He noted that any decision on a spin-off is pending a sustained recovery in fundraising, which is now beginning to pick up.

Stephen Sheldon asked for a breakdown of the full-year guidance increase between M&A and organic growth, and questioned if the Investment Management rebranding is a precursor to a potential spin-off.

Answer

CFO Christian Mayer stated the guidance raise is split evenly between acquisitions and improved organic growth expectations, particularly in real estate services and engineering. CEO Jay Hennick noted that while the company feels undervalued, the rebranding was a strategic move regardless of any spin-off considerations, which are not final and are influenced by the recent pickup in fundraising.

Stephen Sheldon inquired about the breakdown of the raised full-year guidance, asking how much was driven by M&A versus improved organic expectations. He also asked if the Investment Management rebranding could be a precursor to a potential spin-off.

Answer

CFO Christian Mayer stated that the guidance increase is split evenly between the impact of recent acquisitions and higher expectations for organic growth, especially in real estate services and engineering. CEO Jay Hennick explained that while the company feels undervalued, the rebranding was a natural strategic step. He noted that any decision on a spin-off is not final and is influenced by the improving fundraising environment.

Stephen Sheldon inquired about the drivers behind the raised full-year guidance, seeking a breakdown between M&A and organic growth. He also asked if the rebranding of the Investment Management segment sets the stage for a potential spin-off.

Answer

CFO Christian Mayer explained that the guidance increase is split evenly between the impact of recent acquisitions and improved organic growth expectations, particularly in real estate services and engineering. CEO Jay Hennick stated that while the company continually evaluates its valuation, the rebranding was a natural strategic step. He noted that a pick-up in fundraising makes it an appropriate time for these changes, but no final decision on a spin-off has been made.

Stephen Sheldon inquired about the breakdown of the raised full-year guidance between M&A contributions and organic growth. He also asked if the Investment Management rebranding is a preparatory step for a potential spin-off to unlock shareholder value.

Answer

CFO Christian Mayer explained that the guidance increase is split evenly between the impact of recent acquisitions and improved organic growth expectations, particularly in engineering and real estate services. CEO Jay Hennick stated that while the company is undervalued, the rebranding was a natural strategic step. He noted that any decision on a spin-off is contingent on the fundraising environment, which is now improving.

Stephen Sheldon asked for a breakdown of the drivers behind the raised full-year guidance (M&A vs. organic growth) and questioned if the Investment Management rebranding sets the stage for a potential spin-off.

Answer

CFO Christian Mayer clarified that the guidance increase is driven roughly 50% by acquisitions and 50% by stronger organic growth expectations, especially in engineering and real estate services. CEO Jay Hennick stated that while the company is undervalued, the rebranding was a natural strategic step. He noted that while no final decision on a spin-off has been made, the improving fundraising environment makes it an opportune time for these changes.

Stephen Sheldon followed up on the Engineering business, asking about its performance relative to expectations and the extent of cross-selling benefits. He also requested more detail on the leasing slowdown, the tough comparisons cited, and the outlook for office versus industrial leasing.

Answer

CEO Jay Hennick stated that cross-selling is significant within the engineering platform itself and is beginning to develop with the traditional real estate business, noting it's still in the early stages but showing more promise than other historical cross-selling initiatives. CFO Christian Mayer explained the leasing decline was due to tough comps from large data center transactions in prior years and expects a return to mid-single-digit growth for the full year.

Stephen Sheldon requested more detail on the operational integration within the Investment Management segment, asking what functions would be integrated and how it would improve financial contribution. He also asked for the underlying assumptions within the Real Estate Services mid-single-digit growth guidance for 2025, particularly for Leasing and Capital Markets.

Answer

CEO Jay Hennick clarified that Investment Management integration is focused on back-office, regulatory, and fundraising functions to create a more streamlined operation, while core investment strategies will remain independent. CFO Christian Mayer broke down the Real Estate Services outlook, assuming high single-digit growth for Capital Markets and mid-single-digits for Leasing and Outsourcing. He noted this guidance is tempered by macro uncertainty and a 2-3% negative impact from foreign exchange rates.

Stephen Sheldon asked about the reasons for the growth deceleration in the Outsourcing & Advisory segment and requested a framework for modeling interest expense following the Englobe acquisition.

Answer

CFO Christian Mayer attributed the slowdown in Outsourcing & Advisory to persistent flatness in the valuation business, which is tied to depressed capital markets activity, while reaffirming the full-year mid- to high single-digit growth outlook. Regarding interest expense, Mayer advised that the model should incorporate the recent use of the revolving credit facility to finance the approximately $480 million Englobe acquisition.

Stephen Sheldon from William Blair & Company, L.L.C. questioned the implied Q4 guidance deceleration and inquired about Coursera's strategy to partner with big tech companies on AI skills education.

Answer

CFO Ken Hahn clarified that the Q4 guidance reflects seasonality and the decline of the Degrees product, with the overall guidance lift driven by the Consumer segment. CEO Greg Hart added that Coursera is well-positioned with its trusted content and AI platform to help enterprises, including big tech, navigate the rapid skill shifts driven by AI.

Stephen Sheldon inquired about the biggest opportunities for content expansion and the potential for the new career discovery solution to become a monetization channel.

Answer

CEO Gregory Hart explained that content strategy focuses on breadth, depth, and nimbleness, highlighting growth in topical areas like GenAI and entry-level certificates, and increased investment in Coursera-produced content for better economics and testing. Regarding career discovery, he noted it's showing positive early signs on conversion but that any direct monetization by connecting learners to employers is a potential long-term opportunity, not a near-term focus.

Stephen Sheldon asked about the monetization level of AI-related courses in the Consumer segment and for more detail on recent areas of weakness. He also followed up on the rationale for the new cost reduction initiative.

Answer

CEO Jeff Maggioncalda explained that AI course monetization is still in its early stages and not yet a major revenue driver, though enrollment demand is high. He identified softer month-to-month retention, potentially due to macro factors, as the primary source of Consumer weakness. Regarding cost cuts, Maggioncalda stated the strategy is to reallocate resources to high-growth, high-leverage opportunities. CFO Ken Hahn added that the timing is intended to set up for 2025 EBITDA performance and growth, noting that development headcount is still planned to increase.

Stephen Sheldon of William Blair & Company, L.L.C. inquired if the restoration business could become less volatile by focusing on day-to-day work and asked where the greatest potential for long-term margin improvement lies within the FirstService Brands division.

Answer

CEO D. Scott Patterson explained that gaining share in day-to-day national accounts also improves their position during major catastrophic events, thus improving overall revenue capability rather than necessarily reducing volatility. CFO Jeremy Rakusin added that for margin improvement, the home improvement segment's gains are tied to a macro-driven top-line recovery, while restoration's margin expansion is a multi-year effort that will not be linear due to its dependence on activity levels.

Stephen Sheldon asked for details on the efficiency drivers behind the residential segment's margin expansion, whether the long-term margin outlook has changed, and about the potential for expanding into new service lines.

Answer

Executive Jeremy Rakusin attributed margin gains to headcount reductions in client accounting and the use of digital and AI tools in contact centers to improve productivity. He reaffirmed the long-term 9% to 10% margin target for the segment, expecting to be in the upper half this year. Executive D. Patterson added that while the focus is on current brands, the company remains interested in adjacencies within the 'repair and maintenance of the built environment' thesis, such as painting, which would fit into existing segments.

Stephen Sheldon from William Blair & Company asked for a breakdown of the 2025 revenue guidance between organic and acquisition growth, the long-term margin profile for Roofing Corp, and whether residential budget pressures might affect seasonal amenities.

Answer

Jeremy Rakusin (executive) clarified that 2025 revenue growth is expected to be 4-5% organic, with the remainder from tuck-under acquisitions. D. Patterson (executive) and Jeremy Rakusin detailed that Roofing Corp's scale benefits include servicing premier accounts and better purchasing, but significant near-term margin expansion beyond previous guidance shouldn't be modeled. D. Patterson added that amenity staffing might be reduced as part of broader cuts, but openings are not expected to be impacted.

Stephen Sheldon asked about the duration of the HOA budgetary challenges in the residential segment and whether new legislation could drive more outsourcing. He also inquired about the current M&A pipeline, with a specific focus on the roofing sector.

Answer

D. Patterson (executive) explained that budgetary pressures from rising costs, particularly in Florida, have created a temporary headwind expected to last into early 2025 before growth normalizes back to the mid-single-digit range. He noted incremental opportunities in project management and loan facilitation for communities. Regarding M&A, Patterson described the roofing market as highly active and competitive, with elevated multiples due to private equity activity, stating the company will be selective in pursuing deals.

Stephen Sheldon inquired about the key drivers behind the significant improvement in Net Promoter Scores (NPS) for Homes.com and future plans to enhance its ROI.

Answer

CEO Andy Florance attributed the NPS growth to the new sales force becoming more effective at communicating the product's value proposition. He noted it's a learning curve for a new product and highlighted the strong uptake of the integrated Matterport offering as a key differentiator. He stated that building high NPS scores takes years, but the business is on the right trajectory.

Stephen Sheldon from William Blair & Company, L.L.C. inquired about the key drivers behind the significant improvement in Net Promoter Scores (NPS) for Homes.com and what areas require more work to enhance member ROI.

Answer

Founder & CEO Andy Florance explained that the NPS improvement stems from the new sales team becoming more effective at communicating the product's strong value proposition. He highlighted the compelling ROI for agents who win more listings and noted the strong uptake of the integrated Matterport offering. He framed the progress as part of a multi-year journey to build high NPS and renewal rates.

Stephen Sheldon from William Blair & Company asked if CoStar's thinking on pricing for the CoStar Suite has changed, suggesting the typical 3-5% uplift could be more aggressive given its market position and improving CRE backdrop.

Answer

CEO Andrew Florance stated that the company historically slows price increases in tough markets but can be 'a touch more aggressive' as the CRE market clearly improves. CFO Christian Lown added that the product's value proposition has expanded dramatically with new data and tools like STR and lender products, supporting its value.

Stephen Sheldon asked about the expected timeline for LoopNet's revenue growth to accelerate following the shift to asset-based pricing and a focus on silver packages, and also inquired about early 2025 bookings trends.

Answer

CEO Andrew Florance noted strong early results, with 71% of January net new sales being the high-renewing silver ads, and tracking for the best January and February in years. CFO Christian Lown added that while 2025 growth is expected to be similar to 2024, he anticipates momentum will build each quarter, setting up for an acceleration in 2026. He declined to give specific Q1 bookings guidance but expressed confidence in the forecast.

Stephen Sheldon inquired about the growth outlook for CoStar Suite and LoopNet in 2025, considering the improving commercial real estate market and the end of the Homes.com sales force distraction.

Answer

CEO Andy Florance responded that the company has performed remarkably well in a difficult market, and an easing of market pressures should turn headwinds into tailwinds, benefiting growth. He noted that there is significant room for market penetration and that investing in growing the sales force for these core products will also provide a boost, leading to optimism for the upcoming year.

Stephen Sheldon from William Blair & Company, L.L.C. inquired about the 45% year-over-year increase in sales capacity, asking where the new hires were focused and about their productivity. He also asked about the drivers of international momentum and the cost impact of the Inspire user conference shifting to Q1.

Answer

CEO Ramesh Srinivasan explained that sales capacity was added primarily in the hotel/resorts vertical and a new inside sales team, leading to better territory coverage and more opportunities. He noted that while productivity can still improve, the new hires are already contributing to recent sales success. For international growth, he emphasized that Agilysys's integrated product ecosystem is the key differentiator, especially in large, multi-product deals. CFO Dave Wood clarified that the user conference accounted for most of the sequential increase in sales and marketing expenses but that the full-year margin outlook remains on track.

Stephen Sheldon inquired about the primary drivers for the strong Q4 POS bookings, the implementation mix between internal teams and third-party SIs, and the implied organic growth within the fiscal 2026 subscription revenue guidance.

Answer

President & CEO Ramesh Srinivasan attributed the POS success to the company's now fully modernized and unified platform, which has improved implementation efficiency and moved past prior challenges. He also confirmed most complex implementations are handled by Agilysys's internal teams. CFO Dave Wood clarified that the 25% subscription growth guidance for FY26 implies an organic growth rate of approximately 22-23% after accounting for the Book4time acquisition.

Stephen Sheldon sought clarity on the reduction in full-year organic subscription revenue expectations, from over 27% previously to around 25%. He asked whether this was tied to the mentioned slowdown in APAC or the ongoing challenges in the POS segment. He also requested more color on the market dynamics in APAC.

Answer

CEO Ramesh Srinivasan attributed the slight moderation in organic subscription growth expectations primarily to the lingering effects of the POS business transformation, which impacted sales in recent quarters, although Q2 showed improvement. Regarding APAC, Srinivasan described the region as 'up and down' and 'frustrating,' citing longer deal cycles and the difficulty of establishing the brand against large, entrenched competitors, but noted they are pursuing sizable opportunities.

Stephen Sheldon inquired about additional levers to accelerate Rasmussen's profit trajectory beyond leveraging fixed costs and asked about APEI's competitive positioning to capture enrollment share if a countercyclical economic environment with higher unemployment emerges.

Answer

CEO Angela Selden detailed several profit levers for Rasmussen, including optimizing classroom capacity ('filling the back row'), refining the program mix at each campus to align with student and employer demand, and improving marketing effectiveness. Regarding market positioning, she emphasized the 'natural moats' of APEI's military-focused (APUS) and healthcare-focused (Rasmussen, Hondros) businesses, which are somewhat insulated from general economic cycles and benefit from durable demand in their respective fields.

Stephen Sheldon inquired about the drivers of APUS's enrollment trends, the timeline for Rasmussen's return to double-digit EBITDA margins, and the reasons for the expected Q1 2025 adjusted EBITDA contraction despite revenue growth.

Answer

CFO Rick Sunderland explained that a two-week military tuition assistance portal outage impacted Q1 APUS enrollment guidance, but the issue is now resolved. CEO Angela Selden noted that while APEI is not providing multi-year guidance, she is pleased with Rasmussen's enrollment momentum and expects significant profit flow-through. Mr. Sunderland attributed the Q1 EBITDA pressure to increased investments in advertising and student-facing staff to support growth.

Stephen Sheldon asked for an update on the potential timing and monetization strategy for AI solutions like suchef and Toast IQ. He also inquired about international traction and any commonalities among wins abroad.

Answer

CEO Aman Narang explained that it's still early for AI, with the current focus on demonstrating customer impact, such as increased check sizes and effective marketing campaigns, before finalizing monetization. Regarding international markets, he noted that traction is strong and mirrors the early days in the U.S., with a focus on replicating the successful U.S. playbook.

Stephen Sheldon of William Blair asked about the momentum in the enterprise pipeline following the Potbelly win and inquired about the key product capabilities that are helping Toast win against competitors in the upmarket segment.

Answer

CEO Aman Narang expressed excitement over the Potbelly win and noted that the enterprise pipeline continues to build and scale each year. He attributed the success to go-to-market execution and, more importantly, product investments in upmarket capabilities like enterprise configuration management and other 'above store' tools. He characterized enterprise as a steady, important long-term growth vector for the next decade.

Stephen Sheldon asked about the drivers behind the quarter's gross profit acceleration, the potential split between payments and software, and for confirmation of reacceleration after Q2. He also inquired about Olo's competitive positioning and future product white space.

Answer

CFO Peter Benevides confirmed expectations for gross profit growth to reaccelerate in the second half of 2025, attributing Q1's strength to faster-than-expected customer deployments and strong order volumes in the QSR segment. Founder and CEO Noah Glass affirmed Olo's strong competitive position, citing high gross revenue retention, and outlined growth opportunities across the Order (Catering+), Pay (card-present), and Engage (guest data) suites.

Stephen Sheldon inquired about the specific timing of the expected gross profit growth acceleration in 2025 and asked about the revenue materiality and margin profile of the rapidly growing Catering+ product.

Answer

Peter Benevides, CFO, projected that gross profit growth will reaccelerate in the second half of 2025, with Q2 likely representing the trough due to tougher year-over-year comparisons. He stated that Catering+ is currently a key driver of ARPU growth and carries high, software-like margins, which contributes to the positive gross profit outlook. He also noted its potential to pull through other modules like Dispatch and Pay.

Stephen Sheldon from William Blair inquired about the sophistication of enterprise restaurants in using guest data and whether it's a top priority, and also asked for the underlying non-GAAP gross profit growth rate excluding one-time items.

Answer

CEO Noah Glass confirmed that driving profitable traffic with data is a top-of-mind issue for restaurant leadership, especially as an alternative to discounting. He noted Olo's professional services are key to helping brands utilize these new data tools effectively. CFO Peter Benavides clarified that excluding one-time items, non-GAAP gross profit growth would have been just over 13% year-over-year, marking a sequential increase for the second consecutive quarter.

Matt Filek, on behalf of Stephen Sheldon, inquired about the strategies Alarm.com's partners use to increase video adoption within their existing subscriber base. He also asked if the current elevated Net Revenue Retention (NRR) is expected to continue through 2025.

Answer

CEO Stephen Trundle acknowledged this is an opportunity, suggesting dealers can upsell video to customers at contract renewal and that a new, fully wireless battery-powered camera coming later in the year should help drive adoption. CFO Kevin Bradley clarified that the company's guidance does not assume the elevated NRR will persist at current levels for the full year, modeling a return to the historical range in the second half.

Stephen Sheldon questioned the implied sequential revenue decline for Udemy Business in Q1, asking about the contributing factors and the outlook for the rest of the year. He also requested more details on the upcoming career academies.

Answer

CFO Sarah Blanchard attributed the sequential Q1 dip to FX headwinds, reduced SMB sales capacity, and fewer days in the quarter, stating it's not expected to continue. CTO Eren Bali added that they will launch a diverse set of career academies in H1 to refine the model before scaling. Both confirmed the features would benefit consumer and enterprise segments.

Stephen Sheldon from William Blair inquired about the current corporate L&D spending environment compared to the first half of the year and asked for more specific guidance on Udemy Business growth expectations for 2025.

Answer

CEO Greg Brown characterized the spending environment as having "continued scrutiny on budgets" but noted this creates an opportunity for Udemy to be a platform consolidator. CFO Sarah Blanchard addressed the 2025 outlook, highlighting headwinds from a $20 million reduction in SMB quota capacity and continued softness in EMEA, which will impact overall and Udemy Business growth. She reiterated the focus is on a transition year to achieve the 2025 adjusted EBITDA target of $70 million.