Will Jellison

Will Jellison inquired about the latest impact of the U.S.-Canada tariff situation and any general effects of seemingly souring U.S.-Canada relations on BWXT. He also asked about the timing of SMRs, Canadian new builds, microreactors, and other long-term growth layers beyond the DEUC, HPDU, and naval growth expected in 2027.

Answer

CEO Rex Geveden stated that BWXT has not been impacted by tariffs so far, operating under the USMCA agreement which exempts medical products and nuclear components. He expressed hope for continued normal trade relations. Regarding long-term growth, he noted current AP1000 business in Europe, ongoing SMR contracts with various OEMs, and expected additional BWRX-300 and AP1000 orders this year. Microreactors, including the Janus program, are expected to build over the next few years, and the Medical segment continues its 20% compounded growth, with strong demand across all markets.

William Jellison asked about Phreesia's labor strategy, referencing a noted increase in international talent in the 10-K and how it connects to the company's expense trajectory.

Answer

CFO Balaji Gandhi clarified that the increase in international headcount was not from new hiring but resulted from the consolidation of a long-standing team in India into a formal corporate entity, Phreesia India, which caused them to be included in the official headcount.

Will Jellison asked for an update on the key drivers of the subscription revenue stream, including gross retention, pricing, cross-selling, and volume per client.

Answer

Executive Balaji Gandhi clarified that Phreesia views subscriptions as a revenue stream, not a standalone business. He explained that the company optimizes for total client value across all three revenue lines, so breaking out specific subscription metrics would not be a helpful way to view the business.

Will Jellison of D.A. Davidson & Co. inquired about the components within the maintained full-year revenue guidance, the drivers behind increased sales and marketing spend, and the current business outlook for trailing edge customers.

Answer

Executive John Kibarian confirmed guidance is on track, with growth in IYR and analytics driven by advanced nodes and enterprise solutions like Sapience. He noted that trailing edge customers are aggressively adopting AI to improve operational nimbleness, creating strong demand. Executive Adnan Raza added that higher S&M spend is capitalizing on broad product opportunities, with John Kibarian linking it to converting prior R&D investments into new bookings.

Will Jellison of D.A. Davidson & Co. asked about the market receptivity to PDF's MLOps product and its importance to the 2025 growth outlook. He also questioned the cause of the elevated accounts receivable balance at quarter-end.

Answer

Executive John Kibarian stated that MLOps receptivity has been high, with customer conversions in 2024 and several ongoing pilots. He highlighted that AI adoption drives both direct product sales and indirect demand for foundational data platforms like Exensio. Executive Adnan Raza addressed the accounts receivable, explaining the increase was due to the timing of billings, particularly the large eProbe system sale. Raza assured that collections were already progressing well post-quarter-end and were not a cause for concern.

Will Jellison of D.A. Davidson & Co. requested an update on the progress of MLOps pilot programs and asked for more color on the small investment PDF Solutions made in a private company during the quarter.

Answer

CEO John Kibarian reported that several MLOps pilots are ongoing, focusing on complex test flows like virtual burn-in and chiplet matching to optimize downstream testing. CFO Adnan Raza detailed the private investment as a $2 million convertible note in a company with differentiated technology. Kibarian added that the technology is in physical measurement, is synergistic with the eProbe and the company's software stack, and provides additional insights into the relationship between design layout and test faults for leading-edge applications.

Will Jellison asked about the catalyst behind the incremental capital committed to AI and inquired about any early learnings from these investments.

Answer

CEO David DeStefano explained that the AI investment is heavily driven by customer feedback and a core strategy to build a unified, trusted data structure for AI applications like smart categorization. He shared that early feedback from design partners has been very positive, with customers pushing Vertex to accelerate the training of its AI models for more complex product categories.

Will Jellison asked if the strong long-term growth drivers and accelerated investments alter the company's long-term goal of significantly increasing its Average Annual Revenue Per Customer (AARPC).

Answer

CEO David DeStefano confirmed a direct correlation, stating that investments in new products like e-invoicing and AI are driven by customer demand for more value, which in turn drives AARPC higher. He noted that AARPC has been growing at 10-15% quarterly and sees no reason for that trend to stop, reinforcing the long-term growth potential of the metric.

Will Jellison asked about the 20% year-over-year increase in go-live volume and its expected progression, particularly with the complex intercompany solution, and its impact on revenue momentum.

Answer

An executive, likely Co-CEO Owen Ryan, attributed the improvement to a focus on 'time to value' and better alignment with customers on implementation requirements. While progress has been made in FRA and invoice-to-cash, he acknowledged intercompany is more complex. The key lesson learned is to solidify requirements upfront to accelerate value delivery, which is becoming more critical amid discussions of tariffs and trade.

William Jellison asked about the impact of European expansion on the new TAM's customer count and questioned the drivers behind the strong implied EBITDA margin guide for 2025, given recent dilutive acquisitions.

Answer

Executive Chad Collins stated that the international portion of the TAM has been consistent in their methodology and the increase was proportional across geographies, not specifically driven by the European presence. Executive Kimberly Nelson explained that the strong 22-24% adjusted EBITDA growth guidance is largely driven by expected continued improvement in gross margin, as the company scales and grows into prior investments.

Will Jellison from D.A. Davidson & Co. asked for an update on efficiency trends and attrition within the professional services organization. He also inquired about the hiring outlook for that division in light of the updated 2025 services revenue expectations.

Answer

CEO Eddie Capel confirmed that efficiency in the professional services organization continues to improve, aided by very low attrition. Regarding hiring, he stated that the company will balance supply with the lower near-term demand, keeping a close eye on the profile as they expect demand to pick up in the second half of the year before making specific hiring decisions for 2025.

Will Jellison of D.A. Davidson & Co. inquired about the delivery timeline for the EUR176 million backlog and the production ramp-up schedule for the new U.S. facility.

Answer

CEO and Founder Thomas Speidel clarified that the entire current backlog is scheduled for delivery by the end of 2023. Regarding the U.S. facility, he explained that it will open in Q4 2022 to handle services, warehousing, and initial battery assembly, with a gradual ramp-up into full production over the following year.