Stephen Sheldon

Stephen Sheldon inquired about the newly introduced Platform Fee, specifically its structure, anticipated impact on gross margins over time, and any initial pushback received from partners. He also asked for details on Coursera's incremental investment areas for the 2026 budget, seeking to understand where the company is accelerating spending compared to historical levels, particularly regarding product ambitions.

Answer

President and CEO Greg Hart explained the Platform Fee's purpose is to fund ongoing platform improvements for learners and content partners, noting partner curiosity about the 2026 roadmap. CFO Mike Foley added that the fee, along with Coursera-produced content investment, is a significant component for gross margin uplift in H2 2026 and 2027, despite mix shifts from faster-growing, lower-margin consumer subscriptions. Mike Foley also highlighted increased investments in sales and marketing efficiency, and a more substantial investment in R&D for 2026, including hiring and software tools.

Stephen Sheldon asked for more details on the newly introduced Platform Fee, its structure, expected gross margin uplift over time, and any initial pushback received from partners.

Answer

Greg Hart, President and CEO of Coursera, explained the Platform Fee's intent is to fund ongoing platform improvements for learners and content partners. Mike Foley, Chief Financial Officer, added that a meaningful gross margin uplift is expected in the second half of 2026 and into 2027, though partially offset by revenue mix shifts. Stephen Sheldon also inquired about incremental investment areas for the 2026 budget. Mike Foley highlighted increased investments in sales and marketing for learner acquisition efficiency, and in R&D for hiring, software tools, and engineering.

Stephen Sheldon asked about the factors driving continued consumer acceleration, particularly the impact of international localized pricing on volume mix, and its potential to support strong future consumer growth. He also questioned the enterprise net retention rate (NRR) of 89%, trends across different end markets (business, government, campus), and any additional softening in corporate spending.

Answer

CEO Greg Hart attributed consumer growth to improved marketing, responsive course offerings, product experience enhancements, and catalog expansion, especially in generative AI. He noted that geo-pricing changes, which lowered prices by up to 60% in some markets, have been positive. For enterprise, Mr. Hart expressed dissatisfaction with the 89% NRR, highlighting mixed trends (Campus stronger, Government challenged) and a muted corporate spending environment, but expressed excitement for new Enterprise GM Anthony Salcito and the recently launched Skills Tracks.

Stephen Sheldon asked about the factors driving continued consumer acceleration, particularly the impact of localized international pricing on volume and monetization, and its potential to support future growth. He also inquired about enterprise Net Retention Rate (NRR) trends across business, government, and campus verticals, and whether corporate spending on learning has softened further.

Answer

CEO Greg Hart cited improved marketing, product experience, and catalog expansion, especially in generative AI, as drivers for consumer growth. He highlighted geo-pricing adjustments (up to 60% reduction in some markets) as a successful strategy to increase accessibility and revenue. For enterprise, he expressed dissatisfaction with 89% NRR, noting mixed trends (Campus stronger, Government weaker, Business muted) and no anticipated material improvement, while introducing SkillsTrax to address workforce needs.

Steven Sheldon asked for more color on K-12's underlying trends, specifically the traction of newer products like ALEKS Adventure and McGraw Hill Plus, and how these new product capabilities and bundling could help win larger core contracts. He also questioned if incremental spending priorities have shifted, particularly regarding product development and sales capacity across segments.

Answer

Simon Allen, Chairman, President, and CEO, noted that ALEKS Adventure and McGraw Hill Plus are driving new growth, with McGraw Hill Plus showing substantial increases in teacher intervention due to valuable student performance data. He explained that these supplemental tools, integrated with core offerings like Reveal Math and ELA adoptions, are key to extending market share and growth in the supplemental intervention space. Bob Sallmann, EVP and CFO, added that McGraw Hill is expanding share in K-12, growing 200 basis points when excluding three large states. He highlighted that 25% of teachers using Reveal Math now access McGraw Hill Plus, with a 4X increase in unique users year-over-year, driving stickiness and retention. Regarding spending, Bob Sallmann stated that the overall investment level (8-9% of revenue) remains unchanged, but efficiencies in product development allow for accelerated investment in new AI tools, with the expectation of continued margin expansion.

Stephen Sheldon inquired about the financial impact of Agentic AI solutions, specifically regarding productivity and efficiency gains, the outlook for Capital Markets trends in Q4 and 2026, and whether AUM valuation increases signal a bottoming out of CRE valuations.

Answer

Christian Ulbrich (CEO) stated that AI's primary benefit is efficiency gains across processes and business lines, leading to significant productivity increases, particularly in Capital Markets. He noted strong momentum in Capital Markets, with accelerated growth in Q3 and a steady, positive recovery outlook. Christian Ulbrich (CEO) also confirmed that AUM valuation increases suggest commercial real estate values have bottomed out and are now on a slight upward trend, supported by strong equity raises.

Stephen Sheldon inquired about the financial impact of JLL's agentic AI solutions, specifically regarding producer productivity and efficiency gains, and where the biggest benefits have been observed. He also asked for insights into capital markets trends for the seasonally important fourth quarter, what was factored into the annual guidance, and the pipeline for 2026. Additionally, Sheldon questioned if the modest valuation increases supporting AUM indicated a bottoming out for CRE valuations.

Answer

CEO Christian Ulbrich stated that the main benefit of AI solutions is currently efficiency gains, driven by process optimization and automation in shared service centers and business lines, noting significant productivity increases in capital markets. He described the capital markets recovery as steady and positive, with good momentum continuing into Q4 and a very positive outlook for 2026. Ulbrich confirmed that the small increase in underlying values for AUM suggests that CRE values have bottomed out and are now on a slight upward trend, supported by strong equity raises.

Stephen Sheldon asked about the financial impact of Toast IQ's high early adoption (over 25,000 locations), including associated AI hosting costs, and whether it is currently a separate SKU or if there are plans to monetize it through pricing increases or improved product attach rates in the future.

Answer

CEO Aman Narang stated that the current focus for Toast IQ is on adoption and driving customer value, given the strong early engagement. He highlighted product-led growth opportunities and the potential for AI-driven automation in marketing and back-office functions. Regarding monetization, he mentioned it's early, but usage-based monetization, similar to GPT, is an obvious consideration, with the primary goal being customer adoption and value to drive overall growth.

Stephen Sheldon from William Blair followed up on Toast IQ, expressing surprise at its rapid adoption and asking about its financial impact, including AI hosting costs. He also inquired whether it's currently a separate SKU, if it will be monetized in the future, or if it will drive pricing increases and product attach rates.

Answer

CEO Aman Narang stated that the current focus for Toast IQ is on adoption and customer value, not immediate monetization, though usage-based monetization is a potential future consideration. He highlighted product-led growth opportunities, such as expanding the marketing platform with AI-driven automation for personalized campaigns, and other agentic use cases in back-office functions.

Stephen Sheldon asked about the factors maintaining the real estate services revenue guide, interest in building out more technical capabilities for data centers through M&A, and the organic growth outlook for engineering in Q4.

Answer

Christian Mayer (CFO) confirmed no lumpy transactions in Q3 and expressed confidence in Q4 real estate services performance, driven by capital markets, leasing, and outsourcing. Jay Hennick (Global Chairman and CEO) noted that while Colliers has technical capabilities in engineering, current valuations for data center-focused firms are too high for attractive returns, preferring to build out the engineering segment and invest in data centers through investment management. Christian Mayer (CFO) confirmed a small step down in engineering organic growth for Q4, but still within the mid-to-high single-digit full-year guidance.

Stephen Sheldon asked about the factors maintaining the real estate services revenue guide, interest in building out more technical capabilities for data centers through M&A, and the organic growth outlook for engineering in Q4.

Answer

Christian Mayer (CFO) confirmed no lumpy transactions in Q3 and expressed confidence in Q4 real estate services performance, driven by capital markets, leasing, and outsourcing. Jay Hennick (Global Chairman and CEO) noted that while Colliers has technical capabilities in engineering, current valuations for data center-focused firms are too high for attractive returns, preferring to build out the engineering segment and invest in data centers through investment management. Christian Mayer (CFO) confirmed a small step down in engineering organic growth for Q4, but still within the mid-to-high single-digit full-year guidance.

Stephen Sheldon inquired about the sequential booking trends for core businesses like CoStar Suite, Apartments.com, and LoopNet in Q3, and the expected bookings trajectory for Q4, considering the expanded sales force and ramping productivity.

Answer

CFO Chris Lown stated that booking trends are positive, with salesforce expansion still in early stages of productivity ramp-up, leading to increased full-year guidance. CEO Andy Florance highlighted a 53% quarter-over-quarter bookings increase for Homes.com and noted re-acceleration in CoStar's trends and solid growth for Apartments.com.

Stephen Sheldon of William Blair asked for more detail on sequential booking trends in Q3 for core businesses like CoStar Suite, Apartments.com, and LoopNet, and the outlook for Q4 bookings given the expanding sales force and ramping productivity.

Answer

CEO Andy Florance highlighted Homes.com's 53% quarter-over-quarter bookings increase. CFO Chris Lown emphasized positive trends and re-acceleration for CoStar Suite, strong performance for LoopNet, and Apartments.com trends meeting expectations, all contributing to increased full-year guidance.

Stephen Sheldon inquired if the recent guidance increase was primarily due to broad-based sales activity or if assumptions regarding the Marriott rollout had materially changed. He also asked about the factors driving strength in the managed food service (FSM) vertical for POS, including market size, competition, and product mix. Finally, he asked about the highest attach rates for PMS add-on products and any surprising trends.

Answer

Dave Wood, CFO, and Ramesh Srinivasan, President and CEO, clarified that the guidance increase was solely due to general sales momentum and excluded all Marriott PMS project-related revenue and sales. Ramesh Srinivasan explained FSM strength is product-driven, stemming from modernized, unified POS solutions and effective sales staff, noting competition exists but often from smaller vendors. He added that high PMS attach rates are expected due to more add-on modules and the need for a unified guest experience, with popular add-ons including golf, spa, sales and catering, booking engine, and loyalty promotions.

Asked for feedback on new initiatives like Aspire and their potential impact on agent count, and inquired about the revenue decline and leadership transition at the Motto mortgage business.

Answer

Early feedback on new initiatives is positive with strong adoption, and they are optimistic it will stabilize and grow U.S. agent count, citing improved April numbers. The Motto revenue decline is macro-driven, but they see signs of stabilization. An active search is underway for a new leader for the mortgage business.

Stephen Sheldon asked about the strategy for expanding the international service provider base and its impact on growth. He also inquired about the ARPU expansion opportunity in the core residential business for 2025 and 2026.

Answer

CEO Stephen Trundle stated that international growth is expected to outpace the rest of the business. The strategy is shifting from focusing only on large 'whale' partners to also building out a 'long tail' of regional and local providers, similar to the North American model. Regarding residential ARPU, he noted that while the large installed base makes the average hard to move, new subscribers are adopting a richer mix of services like video, which lifts ARPU on new installs. This trend, along with new RVM offerings, should provide a long-term tailwind.

Asked about the impact of new product bundling and packaging on sales, and inquired whether the trend of elongated sales cycles in higher education is improving or worsening.

Answer

The company is encouraged by the pipeline building around the new product bundles and sees it facilitating broader platform discussions. Regarding sales cycles, there has been no material change in their length, but the company is cautiously optimistic that new institutional budget cycles will act as a catalyst for decisions.

Inquired about the financial contribution of Parchment in the 2024 guidance and the potential for expanding the LearnPlatform product into the higher education market.

Answer

The company expects high single-digit ARR growth for the combined business in 2024, with margin expansion from Parchment synergies expected in 2025. There is strong demand for LearnPlatform in higher education, and a beta version for that market is planned for the second half of 2024.