Q4 2024 nCino Inc Earnings Call

Yeah.

Speaker Change: Thank you for standing by and welcome to Encino fourth quarter fiscal year 2025 earnings Conference call.

Speaker Change: At this time all participants are in a listen only mode.

Speaker Change: After the speaker presentation, there will be a question and answer session.

Speaker Change: To ask a question during the session you will need to press star one one on your telephone.

Speaker Change: To remove yourself from the queue you May press Star one one again.

Speaker Change: I would now like to hand, the call over to Harrison Masters Director of Investor Relations. Please go ahead.

Harrison Masters: Good afternoon, and welcome to <unk> fourth quarter fiscal 2025 earnings call with me on today's call are Shawn Desman, Encino, as Chief Executive Officer, and Greg <unk> Chief Financial Officer.

Harrison Masters: During the course of this conference call, we will make forward looking statements regarding trends strategies and anticipated performance of our business. These forward looking statements are based on management's current views and expectations entail certain assumptions made as of today's date and are subject to various risks and uncertainties described in our SEC filings.

Harrison Masters: Fillings and other publicly available documents, the financial services industry and global economic conditions.

Harrison Masters: <unk> disclaims any obligation to update or revise any forward looking statements.

Harrison Masters: Further on today's call. We will also discuss certain non-GAAP metrics that we believe aid in the understanding of our financial results a reconciliation to comparable GAAP metrics can be found in today's earnings release, which is available on our website and as an exhibit to the form 8-K furnished with the SEC just before this call.

Harrison Masters: As well as the earnings presentation on our Investor Relations website at Investor <unk> Dot com.

Sean: Now I will turn the call over to Sean.

Sean: Good afternoon, everyone and thank you for joining us today to discuss <unk> fourth quarter and fiscal 2025 financial results.

Speaker Change: As many of you know this is my first time addressing you as CEO and I want to start by saying how honored and excited I am to take on this responsibility.

Speaker Change: It is a remarkable company one that pioneered and built a strong foundation and cloud banking software.

Speaker Change: Now my focus is on taking this great company and making sure. It is a great long term business.

Speaker Change: One that executes with urgency and precision delivers sustainable and profitable growth and fully capitalizes on the sizable opportunities ahead to deliver strong returns to all of our stakeholders.

Speaker Change: As we delivered on the promise of being the worldwide leader in cloud banking in the company's first chapter I am here to lead <unk> evolution to be the worldwide leader in AI banking.

Speaker Change: We are marshalling the energy of the company to capitalize on the vertical AI opportunity to drive efficiency into the financials of our customers as well as into our own bottom line.

Speaker Change: For those of you who have been following the company you are aware that we have been very focused on leveraging data analytics and AI for the past five years.

Speaker Change: In addition to our commercial pricing and profitability auto spreading and portfolio monitoring solutions, we have been steadily developing banking adviser functionality and plan to launch numerous new capabilities at our insight user conference in May.

Speaker Change: For those of you joining us at insight you will hear directly from early banking adviser customers about the meaningful efficiency gains they are already realizing with this AI technology.

Speaker Change: Seeing the market catch up to our strategic vision is very exciting and reinforces the unique competitive position we have.

Speaker Change: I know firsthand just how significant this opportunity as.

Speaker Change: I have spent almost 30 years in the software industry and nearly 12 hadn't seen it most.

Speaker Change: Most recently as chief product officer, and before that as chief customer success Officer.

Speaker Change: During that tenure I've had approximately two thirds of the company's employees in my reporting chain and have worked closely with every function of our global business.

Speaker Change: I've also worked alongside our customers, including sponsorship of sales opportunities ensuring successful project deliveries.

Speaker Change: Clients with our SLA adopt.

Speaker Change: Adoption of our user experiences and realization of our committed business outcomes.

Speaker Change: I understand exactly what our diverse customer base, which includes banks credit unions independent mortgage bankers.

Speaker Change: And non bank lenders needs to run their business more efficiently and effectively.

Speaker Change: I have also overseeing the development of the very products that serve as the system of record for our customers' banking operations.

Speaker Change: Over the past two quarters have spent time in our offices in Wilmington, North Carolina, Lehigh, Utah, London, England, Sydney, and Melbourne, Australia.

Speaker Change: <unk>, New Zealand, and Johannesburg, and Cape Town South Africa.

Speaker Change: On each of these visits I've spent time, not only with our employees, but with our customers and partners in our ecosystem listening intently.

Speaker Change: These experiences give me deep conviction in our strategy the strength of our platform and.

Speaker Change: And the product portfolio and the highly differentiated value, we provide to financial institutions.

Speaker Change: I firmly believe that the next decade holds far more growth and opportunity for <unk> to innovate and transform the financial services industry.

Speaker Change: In the previous decade.

Speaker Change: There is no doubt that financial institutions across the globe continue to struggle with inefficiencies caused by legacy infrastructure.

Speaker Change: Too many of them still rely on fragmented tech stacks and siloed data, making critical processes far too slow and cumbersome.

Speaker Change: We are re imagining these processes and delivering world class experiences to name just a few onboarding complex commercial clients proactively and continuously monitoring small business and commercial loan portfolios providing.

Speaker Change: Providing frictionless account opening experiences and efficiently scaling mortgage lending with AI powered document validation and processing.

Speaker Change: And <unk> is uniquely positioned to solve all of these problems.

Speaker Change: We are the only cloud based SaaS provider that enables financial institutions around the world to seamlessly manage lending.

Speaker Change: On boarding the account opening and portfolio management across multiple lines of business connected.

Speaker Change: Scalable platform powered by AI.

Speaker Change: We are the enabler of our customers' most critical operations and we have a broad diverse and sizable customer base across more than 20 countries.

Speaker Change: This global reach combined with our broad and deep product capabilities provides us with a competitive moat that nobody can match.

Speaker Change: Since our IPO in 2020, we have delivered strong revenue growth significantly increased our operating margin expanded our customer base extended our geographic presence and build out the breadth and depth of our solutions.

Speaker Change: But while our scale has increased I don't believe our execution has kept pace with the full extent of the market opportunity.

Speaker Change: I think it's important not only to be a cheerleader for encino, but also to be pragmatic and realistic.

Speaker Change: Importantly, we need to consistently execute at a level that reflects the strength of our market position and the ambitions we have for this business.

Speaker Change: Of course, our ability to execute over the past couple of years was significantly impacted by macroeconomic headwinds beyond our control.

Speaker Change: The rapid rise in interest rates in 2022 caused banks to pull back on spending and the liquidity crisis in early 2023 lead to even greater caution around large scale technology investments.

Speaker Change: These external factors, certainly dampened, our sales momentum and new bookings growth.

Speaker Change: But there were also challenges within our control.

Speaker Change: As we expanded beyond our commercial banking roots into consumer lending, we ultimately brought to market a product capable of leapfrogging our competitors.

Speaker Change: But not as quickly as we originally planned.

Speaker Change: We also saw customers paused their onboarding buying decisions. This past year until we completed our highly anticipated platform integration of the intellectual property, we acquired in our acquisition from dark box.

Speaker Change: With the benefit of hindsight, we were also too optimistic in expecting a drop in interest rates to drive an increase in mortgage activity.

Speaker Change: Additionally, our sales execution and sense of urgency in certain international markets, most notably Europe was not as crisp as it needed to be.

Speaker Change: Some of these challenges created compounding headwinds that further impacted our new bookings momentum in fiscal 'twenty, five and our chief contributors to our fiscal 2006 revenue outlook, which is below our expectations.

Speaker Change: The good news is that we have already taken decisive action to address these challenges that have impacted us and I am confident there is squarely behind us.

Speaker Change: During my tenure as Chief product Officer, we did bring to market a best in breed consumer lending product last year, which helped us outperform our internal expectations for sales of that solution in fiscal 'twenty five.

Speaker Change: Leveraging our best in breed digital mortgage technology, we are bringing to market full omnichannel capabilities across our consumer solutions at insight.

Speaker Change: This consistent experience for bankers and their customers alike, whether digital or in branch will help us further accelerate bookings of our products in fiscal 2006 and beyond.

Speaker Change: In addition, we plan to release, our fully integrated Onboarding solution that Leverages the technology acquired in the dark box acquisition in the second quarter.

Speaker Change: Locking numerous pent up opportunities.

Speaker Change: On the personnel front, we have made key leadership changes in our European operations with the hiring of Joaquin <unk> whaler, a seasoned software sales executive with a great track record on the European continent, as EMEA general manager to sharpen our execution.

Speaker Change: Our team has been aggressively assembling his go to market team to capture the full potential of the EMEA Sam beyond just the UK, where we've had a strong presence to date.

Speaker Change: We have also added several other key leaders across our sales and marketing organizations hardening, our product marketing and credit Union posture, and we just appointed an AI catalyst Chief Technology Officer will Joan to our product development and engineering organizations.

Speaker Change: All of our new leaders and restructured teams are laser focused on increasing and accelerating our sales momentum in gross bookings.

Operating with a keen sense of urgency and purpose, we are well positioned to re accelerate new bookings growth. Although we expect it will take a few quarters for consistent momentum to build.

Speaker Change: As Greg will discuss when he reviews the financials, we expect improved gross bookings growth as the year progresses.

Speaker Change: This will result in subscription revenue growth Reacceleration in fiscal 2007, as we get back on track to achieving our double digit long term growth ambitions.

Speaker Change: Not surprisingly one of the most exciting areas of opportunity ahead for Encino is our ability to help financial institutions better connect their data so they can meaningfully harness AI.

Speaker Change: Specifically, we continue to build generative and adjourn take AI powered solutions and embed them throughout the Encino platform.

Because <unk> serves as a system of record for our customers' banking operations, we sit at the heart of their most critical financial processes.

That means we are in a unique position to help them leverage their data to operationalize AI efficiently automd.

Speaker Change: Automation and eliminate workflows and deliver better customer experiences.

Speaker Change: I touched upon banking adviser earlier in my comments, but it's worth reinforcing that the capabilities within our AI driven banking advisers suite of skills have already reduced complex banking processes from days to seconds.

Speaker Change: And this is just the beginning.

Speaker Change: Take for example document validation in U S mortgage, which with AI verifies that customers have uploaded the correct documentation avoiding an approval delay for the borrower and saving the loan officer about 40 minutes per loan.

Speaker Change: Our continuous credit monitoring functionality eliminates hours of manual work gathering data to assess a clients borrowing position.

Speaker Change: And tax statements III uses a large language model trained in house to process tax statements avoiding 15 to 20 minutes of manual work per statements.

Speaker Change: As we lead this charge our customers are validating that they ultimately prefer agenda capabilities embedded in our platform they already trust with their data.

Speaker Change: The data is fundamental to our strategy.

Speaker Change: We are leaning into our acquisition of sandbox banking to complete a unified the API layer that becomes the access point or gateway for financial institutions globally.

Speaker Change: Thus.

Speaker Change: Our AI strategy is to deepen our moat by expanding banking advisers skills.

Speaker Change: Mobilize agents and manage the gateway.

Speaker Change: Clearly, we believe that AI, both generative and <unk> and the unique dataset, we have to fuel AI will be key drivers of growth for encino.

Speaker Change: Powerful differentiators across our entire platform that will further enhance our market leadership position and accelerate platform adoption as we continue to evolve the company and lead the vertical AI and movement in bank.

Speaker Change: Beyond AI, we've been hard at work strengthening our core business and we believe these improvements will drive solid bookings trends in the quarters and years ahead.

Speaker Change: One of the most powerful aspects of our competitive moat is the reputation we have built through our success in commercial banking.

Speaker Change: We are recognized as the gold standard in this space and that credibility is opening doors as we drive deeper into consumer small business and mortgage opportunities.

Speaker Change: As a reminder, over 70% of our global Sam is outside of commercial lending and more than half of our bookings in fiscal 'twenty five came from solutions other than commercial lending.

Speaker Change: We are leveraging our reputation and track record of success to demonstrate our solutions to new customers and to deepen our existing relationships with current customers as being senior ecosystem adopt more of our products.

Speaker Change: Turning encino from a great company into a great long term business requires discipline.

Speaker Change: Focus and relentless execution.

Speaker Change: That means making sure our product roadmap aligns tightly with market needs driving strong top line growth, while maintaining financial discipline.

Speaker Change: And making thoughtful capital allocation decisions.

Speaker Change: It means being sharp and how we position ourselves in the market and ensuring that every experience we serve up to customers is truly best in class.

Speaker Change: I am maniacally focused on these execution tasks and firmly believe the team will exceed my expectations.

Speaker Change: To that end, we are seeing signs that the changes we have made are driving results.

Speaker Change: Our fiscal 'twenty, five ACB growth accelerated to 9% organically from 8% in fiscal 'twenty four on a constant currency basis.

Speaker Change: On a reported basis this ACB year over year growth was 8% organically or 13%, including ACB from acquisitions.

Speaker Change: Our expansion on the European continent, and seeing signs of traction as well with our largest new logo by ACD in Q4 coming from CES Obi a top three bank in the Czech Republic, and we also had another major win in Japan.

Speaker Change: And while it took longer than we originally expected our consumer lending business is seeing momentum.

Speaker Change: The 200 billion asset bank, we discussed winning in late fiscal 'twenty four is now live on <unk> consumer lending.

Speaker Change: And we added over 20, new consumer lending deals in Q4, including two large banks with 80 billion and $50 billion in assets respectively.

Speaker Change: On the M&A front, we are very excited about the four acquisitions, we closed over the past year and expect each of them to be strong positive contributors to our future financial performance.

Speaker Change: Our Doctor Ox and full circle acquisitions expanded our Sam and the Onboarding Arena and provided our sales teams unique and highly desirable solutions to cross sell to a very happy customer base.

Speaker Change: Allegro is an important addition to our consumer lending offering delivering on the need for indirect lending functionality, particularly as we expand more aggressively into credit unions.

Speaker Change: In fact, leveraging Encino has established a market leading portfolio analytic solution, which serves up approximately 40% of the United States credit Union market.

Speaker Change: We have visibility into over $600 billion in assets across more than 800 credit Union customers.

Speaker Change: We are leaning into this unique and powerful data set and our acquisition of Allegra and have launched a dedicated credit Union go to market team and are developing new solutions to bring to this market, including financial product performance and pricing models and peer analysis products for competitor insights.

Speaker Change: Finally on the M&A integration front sandbox banking is a highly strategic acquisition that reaches far beyond core integration capabilities.

Speaker Change: And <unk> customers will quickly realized the benefit of customer data alignment and system Operability with a unified API layer and integration hub for the platform.

Speaker Change: I am also energized by the AI first culture and DNA of the talent that accompanies these acquisitions.

Speaker Change: That said, while we of course remain alert to potential future M&A, where we see compelling value in accelerating our technology profitable growth or addressable market. We expect our focus for fiscal 2006 will be on realizing the planned synergies and expected investment returns from these completed.

Speaker Change: Actions as opposed to pursuing any additional M&A.

Speaker Change: In summary, this is an extraordinary time for encino and with the vertical AI opportunity. There has never been more excitement in this intersection of technology and banking.

Speaker Change: The secular growth in front of us, which is helping financial institutions truly modernize their operations is massive.

Speaker Change: The ability to accelerate this transformation through our scalable tested and trusted platform with intelligence embedded throughout our solutions makes it even more exciting and the improvements we have made in our product functionality and international operations sets us up for success.

Speaker Change: Additionally, while there is currently volatility in the financial markets, the macro headwinds that specifically challenged us and our customer base over the past couple of years have eased quite a bit.

Speaker Change: Our customers by and large have healthy balance sheets and are forecasting growth in their loan portfolios deposit positions and earnings per share.

Speaker Change: Our U S customers are also telling us that the potential for deregulation could free up capital stream.

Speaker Change: Streamline decision, making and enable them to further adopt best in class technology solutions.

Speaker Change: Our sales teams are aggressively pursuing bookings in fiscal 'twenty six that we expect will drive reacceleration in subscription revenue growth in fiscal 2007, and we are investing accordingly, with a plan to drive sustainable long term revenue growth and further margin expansion.

Speaker Change: While Greg will walk you through our financial guidance in more detail.

Speaker Change: A reminder, that our revenue growth is a lagging indicator of our bookings growth.

Speaker Change: While we were forecasting lower year over year revenue growth in the second half of the year. We believe this is temporary and do two trailing factors that have now been addressed as well as to difficult year over year second half comparisons that Greg will elaborate on.

Speaker Change: I have tremendous confidence in our team our technology and our market position.

Speaker Change: This confidence is supported by the $100 million.

Speaker Change: Stock repurchase program, our board of directors authorized that we announced this afternoon.

Speaker Change: The foundation is in place and now it's all about execution.

Speaker Change: Pierre was the visionary who built this company and I deeply respect the impact he has.

Speaker Change: My role is to take that vision and turn it into durable scalable and long term profitable growth.

Speaker Change: We are not selling a dream and encino, we're committing to execution.

Speaker Change: To that end the metrics I am laser focused on our growth in gross bookings, achieving our rule of targets and over time free cash flow.

Speaker Change: On behalf of the entire Encino team I want to thank you for your continued support.

Speaker Change: I am incredibly energized by what lies ahead and look forward to delivering results and building credibility with our shareholders.

Speaker Change: With that I'll turn it over to Greg to walk through the details of our quarter and outlook.

Greg: Thanks, Sean and thank you all for joining us today.

Greg: Note that all numbers referenced in my remarks are on a non-GAAP basis, unless otherwise stated.

Greg: A reconciliation to comparable GAAP metrics can be found in today's earnings release, which is available on our website and as an exhibit to the form 8-K furnished with the SEC just before this call.

Greg: Turning to our fourth quarter results.

<unk> revenues were $141 4 million in the fourth quarter, an increase of 14% year over year.

Greg: And $540 7 million for fiscal 'twenty, five an increase of 13% over fiscal 'twenty four.

Greg: Subscription revenues were $125 million in the fourth quarter, an increase of 16% year over year.

Greg: And $469 2 million for the full year, an increase of 15% year over year.

Greg: Organic subscription revenues were $118 $3 million in the fourth quarter, an increase of 10%.

Greg: And $456 9 million for fiscal 'twenty, five an increase of 12% year over year.

Greg: Professional services revenue were $16 4 million in the fourth quarter, an increase of 1% year over year.

Greg: Full year professional services revenues were $71 $5 million, an increase of 7% year over year.

Greg: Non U S. Total revenues were $33 3 million in the fourth quarter up 34% year over year or 38% in constant currency.

Non U S. Total revenues were $116 $2 million in fiscal 'twenty five.

Greg: 30% year over year, and also up 30% in constant currency.

Greg: Full circle contributed approximately $4 $3 million to both the fourth quarter and full year non U S total revenues.

Greg: non-GAAP operating income was $24 4 million or 17% of total revenues compared with $19 $3 million or 16% of total revenues in the fourth quarter of fiscal 'twenty four.

Greg: Year over year non-GAAP operating margin expansion was muted in the fourth quarter by $3 2 million of incremental operating expenses contributed by full circle as integration activities began our.

Greg: Our non-GAAP operating income for fiscal 'twenty, five was $96 2 million or 18% of total revenues compared with $61 8 million or 13% of total revenues in fiscal 'twenty four.

Greg: non-GAAP net income attributable to Encino for the fourth quarter of fiscal 'twenty, five was $13 9 million or <unk> 12 per diluted share compared to $23 $8 million or 21 per diluted share in the fourth quarter of fiscal 'twenty four.

Greg: non-GAAP net income attributable to Encino for fiscal 'twenty, five was $76 1 million or <unk> 66 per diluted share compared to $58 million or <unk> 51 per diluted share in fiscal 'twenty four.

Greg: Fiscal 'twenty five non-GAAP net income attributable to Encino included $3 million of interest expense on our credit facility in the fourth quarter and $5 $7 million for the full year.

Greg: Fiscal 'twenty five non-GAAP net income attributable to Encino also included other nonoperating predominantly noncash expenses from fluctuations in foreign currency on intercompany loans of approximately $10 $3 million in the fourth quarter and $10 $5 million for the full year.

Greg: Free cash flow was negative $10 4 million in the fourth quarter of fiscal 'twenty five down from $7 7 million in the fourth quarter of fiscal 'twenty four.

Greg: Due to acquisition related costs of $2 $8 million.

Greg: $3 million of additional interest expense and timing related fluctuations and net working capital.

Greg: Free cash flow for fiscal 'twenty, five was $53 4 million compared to $53 8 million in fiscal 'twenty four.

With growth in this metric temporarily impacted by acquisition related costs of $12 $2 million.

Greg: And $4 8 million of additional interest expense as we drew on our line of credit to complete the acquisition of full circle.

Greg: Subsequent to the end of the quarter, we closed the acquisition of sandbox banking for a purchase price of $52 $5 million in cash subject to customary adjustments and an additional earn out opportunity of up to $10 million.

Greg: The transaction was financed with our revolving credit facility.

Greg: Sandbox provides middleware that has become critical to our integration strategy for connecting Encino with our customers' core processing and other third party systems.

Greg: This transaction immediately yields cost of goods sold savings of approximately $1 million annually that we would otherwise have incurred under our former partnership agreement with sandbox.

Greg: And is expected to deliver accretive subscription revenue growth and reduce implementation timelines, thereby helping to improve professional services gross margins.

Greg: We ended fiscal 'twenty five with 549 customers that contributed greater than $100000 to fiscal 'twenty five subscription revenues, an increase of 10% from fiscal 'twenty four.

Greg: Of these 105 contributed more than $1 million for fiscal 'twenty five subscription revenues, an increase of 22% from fiscal 'twenty four and.

Greg: In 2014 contributed more than $5 million to fiscal 'twenty five subscription revenues, an increase of 27% from fiscal 'twenty four.

Greg: Our remaining performance obligation or <unk> was $1 2 billion as of January 31, 2025 up 15% over $1 billion as of January 31, 2024, with $797 million expected to be recognized in the next 24 months up 18.

Greg: Percent from $675 million as of January 31, 2024.

Greg: Acquisitions completed in fiscal 'twenty, five contributed approximately $24 million to total <unk> and $22 million and less than 24 months <unk>.

Greg: Before turning to our fiscal 'twenty six guidance I wanted to provide an update on our new pricing framework as well as on the new Kpis, we are providing to assist you in better understanding our business and measuring our progress.

Greg: On our new pricing framework recall that in fiscal 'twenty, four we began implementing platform pricing for our mortgage customers and for consumer lending customers and this year, we began implementing platform pricing for all of our other solutions.

Greg: As of January 31, 2025, approximately 15% of our ACB is on platform pricing and we expect to complete the transition of remaining HCV over the next four years.

Greg: Due specifically to the pricing transition we are modeling an approximately 1% subscription revenue growth benefit from the pro rata contribution of deal signed in fiscal 'twenty six relative to how we would have recognized subscription revenues on our legacy seat based model.

Greg: This benefit along with that of renewals, where we are targeting an appropriate price uplift to reflect the meaningful innovation, we have added to our product portfolio, including from banking adviser will be larger in subsequent years as more of our customer base has converted to new pricing.

Greg: Please reference slide 18 in the appendix of our earnings presentation for an illustrative example of subscription revenue recognition for both new and renewal agreements under platform pricing.

Greg: We look forward to discussing the new pricing model in more detail at our upcoming Investor day at our insight user conference in May <unk>.

Greg: Including the benefits, we expect to realize from the shift and the anticipated impact to our reported metrics.

Greg: Turning to the new Kpis. Please refer to slide four in our earnings presentation to reference these updated disclosures.

Greg: Going forward, we will be guiding to in reporting HCV annually as of the end of our fiscal years.

Greg: We define ACB as the highest annualized subscription fee obligation under customer contracts in effect at the end of the reporting period.

Greg: Note that <unk> does not include any fees generated from consumption above contracted minimums for our mortgage banking advisor solutions.

Greg: ACB is management's preferred kpis for sales achievement, including for determining variable compensation for employees on sales Commission plans are.

Greg: Our customers signed large multi year agreements some of which ramp over time and.

Greg: And we expect high retention rates, so optimizing the fees at the end of a contract term is what we emphasize and for our sales force.

Greg: On a reported basis ACB as of January 31, 2025 was $516 4 million, an increase of 13% year over year or 8% on an organic basis, reflecting and improving gross bookings trend versus the prior fiscal year, most notably in the U S.

Greg: And regional and enterprise markets, both of which exceeded their gross bookings targets in fiscal 'twenty five.

Greg: While international and mortgage gross bookings were below plan.

Greg: On a constant currency basis, ACD grew 14% in total and 9% on an organic basis in fiscal 'twenty five.

We are also introducing another new disclosure ACB net retention rate, which increased to 106% in fiscal 'twenty five versus 102% in the prior year.

Greg: We define ACB net retention rate is total HCV at the end of the fiscal year from customers with ACB as of the end of the prior fiscal year.

Greg: Expressed as a percentage of AC as of the end of the prior fiscal year.

Greg: <unk> converted to U S dollars with foreign exchange rates in effect as of the end of the applicable period.

Greg: We believe this improvement is indicative of growing demand from our existing customers to more broadly adopt our platform and have churn beginning to normalize as market driven headwinds subside.

Greg: I would note that we are aligning the definition of our subscription revenue net retention rate with the details disclosed in our quarterly SEC filings regarding changes in subscription revenues from new versus existing customers based upon when a customer first contributes to subscription revenues.

Greg: A comparison to the prior reported metric is available in our Form 10-K.

Greg: Subscription revenue net retention rate moderated to 110% down from 116% in fiscal 'twenty four.

Greg: Like subscription revenues. We believe this is a lagging indicator and its decline was primarily an output of the elevated churn in fiscal 'twenty for that impacted subscription revenues in fiscal 'twenty five.

Greg: Total churn in fiscal 'twenty five ended up at $26 million of annualized subscription revenues down from $31 million in fiscal 'twenty four.

Greg: Of this amount mortgage churn was $9 million in fiscal 'twenty five down from $13 million in fiscal 'twenty four.

Greg: As we expect churn to continue moderating towards our historic norms.

Greg: Going forward, we will quantify and discuss retention on a net basis with our new disclosure framework.

Greg: As Sean noted we are very excited about the future and we are absolutely leaning in on the growth opportunities. We see ahead of us so that we can leverage our leading position in this market.

Greg: This involves making certain investments, particularly in international sales and marketing to capitalize on this opportunity.

Greg: Despite these investments we expect steady operating margin expansion beginning in the second half of this year.

And while we're not ready to provide specific guidance beyond fiscal 'twenty. Six we are focused on achieving the rule of 40 milestone and are confident in our trajectory to accomplish this somewhere around the fourth quarter of next year.

Greg: We believe the returns on our investments in sales and marketing and the product innovation, we are bringing to market. This year.

Greg: Coupled with the cost efficiencies, we expect to achieve in our R&D organization by leveraging AI and through other organizational efficiency initiatives will be instrumental in achieving this.

Greg: While the exact timing may vary by a quarter or two based on market conditions and investment opportunities.

Greg: You should be confident that we are laser focused on ensuring that we achieve the rule of 40 in a sustainable and disciplined manner.

Greg: Turning to fiscal 'twenty six guidance, we take our commitments to the street very seriously and recognize that our prior revenue guidance philosophy could have been more conservative to lead us greater flexibility in operating the business.

Greg: Recognizing this we have adjusted our guidance framework and have attempted to de risk our guidance as much as possible.

Greg: With that in mind I'd like to provide some additional details to help you contextualize the fiscal 'twenty six guidance and in particular the year over year growth trajectory throughout the year.

Greg: Note that we are giving these additional data points to help you more clearly understand how we built our model and developed our guidance for fiscal 'twenty six.

Greg: While we will of course address general trends and our guidance on each earnings call. We do not plan on going through and updating each of these assumptions on a quarterly basis.

Greg: First we expect the approximately 1% currency headwind to ACP growth in fiscal 'twenty five to have a commensurate negative impact on fiscal 'twenty six subscription revenues.

Greg: Second we expect to have dock Fox integration complete by insight and our expectation is that bookings for this product will increase meaningfully in the second half of the year.

Greg: We continue to believe that the onboarding opportunity for Encino on a global basis is significant.

Speaker Change: With that said as Sean mentioned bookings for this solution were below plan in fiscal 'twenty five as product integration activities were prioritized and as a result, there is a lagging effect that impacts our subscription revenue growth in fiscal 'twenty six.

Speaker Change: We expect the anticipated bookings rebound for Onboarding in the second half of fiscal 'twenty six will contribute to accelerating subscription revenue growth in fiscal 'twenty seven.

Speaker Change: Third our U S mortgage business grew 8% in fiscal 'twenty five in what remains a difficult market.

Speaker Change: Despite this growth and the many opportunities we see for our mortgage solution in the market, including taking it more upmarket to regional and enterprise banks as well as to more and more credit unions.

Speaker Change: In light of the uncertainty around the path of mortgage rates in the U S. Our guidance for fiscal 'twenty six assumes no year over year increase in U S mortgage subscription revenues.

Speaker Change: Any growth in this business, including growth in loan volume Overages would be upside to our numbers.

Speaker Change: Finally, our second half year over year subscription revenue comparisons will be negatively impacted by approximately 3% in both the third and fourth quarters of fiscal 2006 as a result of one time subscription revenues that occurred in the second half of fiscal 'twenty five.

Speaker Change: Affecting our U S mortgage and international businesses as a result of one time revenues that occurred in the second half of fiscal 'twenty five.

Speaker Change: These revenues primarily related to one time catch up mortgage revenues as noted on our Q3 earnings call.

Speaker Change: And a contract buyout by a customer that following management changes at the bank and internal restructuring of the business that had sponsored our program decided that now it was not the right time to move forward with their implementation.

Speaker Change: For the first quarter of fiscal 'twenty six we expect total revenues of 138 $75 million to a 140 $75 million with subscription revenues of 121 $75 million.

Speaker Change: To $123 $75 million, an increase of 9% and 11% respectively at the midpoint of the ranges.

Speaker Change: Beginning this quarter, our guidance for and reported non-GAAP net income attributable to <unk> per share will exclude any impact from currency exchange on intercompany transactions.

Speaker Change: non-GAAP operating income in the first quarter is expected to be $22 $5 million to $24 5 million and non-GAAP net income attributable to <unk> per share to be 15 to 16.

This guidance assumes interest expense incurred under our credit facility of approximately $3 5 million.

Speaker Change: This is based upon a weighted average of approximately 119 million diluted shares outstanding before any share repurchases.

Speaker Change: For fiscal 'twenty, six we expect to add $48 million to $51 million to ACB on a constant currency basis, including approximately $4 5 million from the acquisition of sandbox.

Speaker Change: This represents 19% organic net ACD bookings growth at the midpoint of the range, which should accelerate subscription revenue growth in fiscal 'twenty seven.

Speaker Change: For fiscal 'twenty six we expect total revenues of $574 5 million to $578 $5 million with.

Speaker Change: <unk> revenues of $503 million to $507 million.

Speaker Change: Resenting growth rates of 7% and 8% respectively at the midpoint of the ranges.

Speaker Change: Excluding the impact of the onetime items noted above and currency fluctuations our organic subscription revenue growth rate in fiscal 'twenty six is expected to be approximately 7% at the midpoint of the range.

Speaker Change: In light of the specific headwinds I highlighted earlier, we expect subscription revenue growth to be approximately six points lower than the second half of the year versus the first half before re accelerating in fiscal 'twenty seven.

Speaker Change: We expect full circle will contribute approximately $13 $3 million to subscription revenues through the first nine months of fiscal 'twenty six.

Speaker Change: Including approximately $4 3 million in the first quarter.

Speaker Change: In that sandbox banking will contribute approximately $4 $2 million to subscription revenues for the full year, including approximately 750000 in the first quarter.

Speaker Change: For fiscal 'twenty, six we will refer to the nine months contribution of full circle and the 12 month contribution of sandbox is inorganic as these periods compared to the prior year periods, which preceded each acquisition.

Speaker Change: We expect non-GAAP operating income for fiscal 'twenty, six to be $107 million to a $111 million.

Speaker Change: 13% increase over fiscal 'twenty five at the midpoint.

Speaker Change: After playing defense for the better part of the past two plus years in light of the macro difficulties impacting financial institutions around the world, we're going on the offensive and investing in areas of high growth.

Speaker Change: To that end our guidance assumes an increase in sales and marketing expense related to additional quota carrying sales representatives to cover the U S credit Union market.

Speaker Change: Emerging geographies in EMEA, and Japan and investments in digital marketing initiatives amounting to approximately $10 million for the full year.

Speaker Change: These investments reflect the sizeable opportunity we see in front of us.

Our guidance assumes approximately 100 basis points of operating margin expansion at the midpoint of the range for the full year.

With the first half of the year flat to that of last year.

We expect the second half of the year will yield approximately 200 basis points of expansion as we leverage the sales and marketing investments made at the start of the year <unk>.

Speaker Change: Beyond our annual user conference in May and realize additional operating efficiencies in our R&D organization.

Speaker Change: We expect additional margin expansion in fiscal 'twenty, seven and beyond as we generate scale and efficiency from these investments and efficiency gains.

Speaker Change: non-GAAP net income attributable to <unk> per share is expected to be 66 to 69.

Speaker Change: Excluding the impact of currency fluctuations and is based upon a weighted average of approximately 120 million diluted shares outstanding before any share repurchases.

Speaker Change: This guidance also assumes interest expense incurred under our credit facility of approximately $14 million.

Speaker Change: In closing I appreciate that we have provided you with a lot of information today, and we will do our best to make ourselves available over the coming days to answer your questions and provide clarity about the disclosures made.

Speaker Change: I also look forward to seeing many of you at insight next month in Charlotte, North Carolina, where you'll be able to see firsthand the unique and exciting product innovation, we are bringing to market.

Speaker Change: And where we will go into more detail about the business our financials and the opportunities we have in front of us.

Speaker Change: With that I will open the line for questions.

Speaker Change: As a reminder to ask a question you will need to press star one one on your telephone to remove yourself from the queue. You May press star one again.

Speaker Change: Please limit yourself to one question and one follow up to allow everyone the opportunity to participate.

Speaker Change: Please standby, while we compile the Q&A roster.

Speaker Change: Our first question.

Kalia: Comes from <unk> Kalia of Barclays. Please go ahead.

Speaker Change: Okay, Great Hey, guys. Thanks for taking my questions here and congrats Sean on your promotion to CEO very well deserved.

Kalia: Thank you for that.

Speaker Change: Absolutely, Sean maybe maybe for you.

Speaker Change: Im curious what youre hearing back from your customers.

Speaker Change: Just as.

Speaker Change: I don't know you spent a lot of time with customers what are you hearing back from them.

Speaker Change: As they think about their willingness to invest here in 2025, particularly as we look at sort of the implied organic growth here in fiscal 'twenty six.

Speaker Change: Yes, I appreciate the question and yes, we've got customers coming through our headquarters in global offices on a regular basis and what we hear from executives across our customer base.

Speaker Change: Is that although they acknowledged the volatility in the markets currently.

Speaker Change: There are also <unk>.

Speaker Change: Turning the corner on some of the headwinds that we've experienced in the previous years.

Speaker Change: Liquidity crisis passed the longest inverted yield curve, we've had in the past 46 years, good thing for banks, specifically and.

Speaker Change: And by and large they are telling us their balance sheets are healthy and they are expecting growth in their loan portfolios and their deposit positions.

Speaker Change: And as well as their own EPS. So these are all good signals for them to focus internally on how they can improve their efficiency, which plays exactly to our value proposition.

Speaker Change: Got it got it Greg maybe maybe for you I appreciate the additional disclosure, but I was wondering could you just maybe dig into the difference between sort of the growth rates between <unk> and revenue in fiscal 'twenty, six, but I think the ACB growth at the midpoint.

Speaker Change: Yes, I don't know high single digits I think the revenue growth is a couple of points lower than that how do you sort of think about those two things differently.

Speaker Change: Thank you for the question Zack it.

Speaker Change: As Sean noted on the call revenue growth is a lagging indicator or a metric of where we've been while bookings are ACB growth as a leading indication of the future and where we're going.

Speaker Change: So as noted our ACD accelerated a percent on a constant currency basis in fiscal 'twenty five.

Speaker Change: And we look forward to updating you on our bookings progress throughout the year.

Speaker Change: From a revenue perspective on a point you to slide 16 in the presentation that we that we posted which walks you through the bridge between fiscal 'twenty five in fiscal 'twenty six.

Speaker Change: Specifically, you'll note from a headwinds perspective, 1% for FX.

Speaker Change: About 1% the mortgage business dilutive in light of the Conservative nature, we took around our guidance with mortgage this year.

Speaker Change: There is a 2% headwind on the onetime revenues that I commented on in my prepared remarks, and then finally, there is a 6% if you exclude mortgage organic headwind and Thats really a combination of a couple of things. One is gross bookings, which were a little shy of where we expected to end the year.

Speaker Change: Mainly because of international in mortgages, we've been talking about in the second half of last year.

Speaker Change: As well as a little bit higher churn again, referring back to my prepared comments in terms of the onetime nature of a customer in Q4.

Speaker Change: And then two other things I'd point you to one is just from a linearity of fiscal 'twenty six bookings.

Speaker Change: As part of.

Speaker Change: Our modeling this year, we did go more conservative in terms of forecasting bookings more backend weighted than normal.

Speaker Change: And that really I think touches probably upon the biggest point socket is just a change in the guidance philosophy as I noted on the call.

Speaker Change: I think last year, we got a lot of feedback in terms of the guidance that we gave and how the year progressed and ultimately our goal. This year was to be much more conservative in the guidance and try to derisk. It as much as we possibly could and as we see momentum building through the through the year, our goal and expectation is to be able to update you on that <unk>.

Speaker Change: <unk> and ultimately see that momentum with the business and ultimately with our with our guidance going forward.

Speaker Change: Got it that's super helpful. Thanks, guys.

Speaker Change: Thank you.

Speaker Change: Thank you. Our next question comes from Terry Tillman of true Securities. Your question. Please Terry.

Speaker Change: Yes, thanks for kind of broke up there, but I think that was for me. So all sorts of single question I was going to be a lot of questions.

Speaker Change: Just a heads up it's a multi part of though I.

Speaker Change: I think in you All's prepared remarks, you all talked about going on the offensive.

Speaker Change: And mentioning increase go to market investments.

Speaker Change: On the gross bookings are definitely underwhelmed.

Is this signifying yard and have enough sales capacity is that enough sharing of the salesforce. So first I'd just like to know kind of what's informing kind of the go to market investments and then I had a second part of the question.

Speaker Change: Yeah. Thank you Terry I appreciate it.

Speaker Change: A couple of things.

Speaker Change: First and foremost we are leaning into the go to market motion and solidifying our internal team here across sales product marketing and CFS and making sure that we have solid investments a layer down in the organization. So specifically we brought in a new head of product marketing.

Speaker Change: To lead that organization, we've got leadership in place in EMEA, specifically, where as you all know from the prepared remarks, we were not satisfied with the year over year growth this past year.

Speaker Change: And those two appointments as well as launching a go to market team and the credit Union space to focus specifically on an area, where we think we have a lot of upside.

Speaker Change: And beyond that we have put new mortgage leadership in place as well. So there have been a lot of intentional moves for reacceleration of growth in sales leadership as well as in the marketing functions.

Speaker Change: And those teams are collaborating really well together out of the gate driving with a sense of urgency gives us a real confidence this year in growth in bookings.

Speaker Change: And Terry the other thing that I would add is as I noted we have been playing defense in light of the macro and.

Speaker Change: Ultimately putting salespeople in the field when you appreciate what the buying environment is or maybe what it's not.

Speaker Change: Is not very productive or efficient.

Speaker Change: So in terms of adding capacity I think you should take that as a sign of the opportunities that we see.

Speaker Change: And ultimately the market and some of the headwinds that we've had to navigate easing again getting back to health in general of our customer base.

Speaker Change: Which again.

Speaker Change: Comes out of a couple of years of some difficulties and so it really is a reflection more on the market opportunity that we see right now versus frankly, where we were a year or two ago.

Speaker Change: Yeah got it on that thanks, Greg and John also congrats on the new appointment.

Speaker Change: The second part of the question just relates to <unk>.

Speaker Change: He was surprised by the idea of go to market or operating leverage in the second half. After some go to market investments is maybe that apples and oranges and actually the leverage you see in the second half is just from normal course of business bookings improving.

Speaker Change: We get leverage that fast if youre, making investments in the first half of the year. Thank you.

Speaker Change: Jerry I think it's a combination of improved bookings activity ultimately, but again I think we're continuing to see opportunities from an efficiency standpoint, as we constantly are looking at the organization and seeing challenge ourselves, where we should invest and ultimately we should may redirect investment and so that's a constant activity for us.

Speaker Change: And I think we see continued opportunities I'll also add that with AI. It certainly brings opportunities in terms of leverage and we have been as Sean noted in our prepared remarks, we have been focusing on data analytics and AI for quite some time.

Speaker Change: And we think that presents opportunities for us as the year as the year progresses as well.

Speaker Change: Alright, thank you.

Speaker Change: Thanks Terry.

Speaker Change: Thank you our next question.

Speaker Change: Comes from the line of Alex Sklar of Raymond James. Please go ahead Alex.

Alex Sklar: Great. Thank you, Sean or Greg just on the HCV guidance I appreciate the new disclosure there in the prepared remarks, you talked about easing macro improving international activity accident year, a better gross retention and then the more strategic products with commercial Onboarding solutions I'm, just curious with all of that kind of being factored.

Speaker Change: Can you talk about the puts and takes that are embedded in that ACG growth outlook, why that wouldnt be better than the kind of 9% constant currency you saw in FY 'twenty five.

Speaker Change: Yeah, I will remind the revenue is a lagging indicator of bookings right and so we do believe that we have good upside opportunities with the maturity of our solutions hardening of our Onboarding.

Solutions and we've added a lot of sand through our acquisitions in the past year of stockpiling and full circle capitalizing on those opportunities we will believe.

Speaker Change: We'll be good upside for us and our consumer lending solution, where we signed up 20, new customers in Q4, including two banks north of $50 billion in assets and attacking the credit Union market with that solution will.

Speaker Change: We will be another good opportunity for us all of that said those will show up in Reacceleration.

Speaker Change: In FY 'twenty seven due to some of the revenue lag we talked about earlier and then of course, the personnel changes and the momentum we see in the international opportunity would be a good year over year growth in our bookings yes.

Speaker Change: Yeah, and Alex the only other thing to add again I'd go back to the guidance philosophy that I touched upon.

Speaker Change: In response to <unk> comment as well as in my prepared remarks.

Speaker Change: I think where it took a step back we took a whole bunch of feedback from <unk>.

Speaker Change: Investors last year, particularly after our Q3 call and again I think our focus is on again building momentum throughout the year and setting ourselves up for success.

Speaker Change: And so again I would just note that as you think about the differences between what we're talking about now versus what we spoke about last year at this time.

Speaker Change: Okay, great. Thank you both and Greg maybe just a quick follow up for you that the $10 million of higher sales and marketing investments. This year can you just talk about how comprehensive those are versus the opportunity that you see is this is this part one is kind of a multiyear sales and marketing investment cycle.

Speaker Change: One time step up this year to cover some green shoots in demand areas.

Speaker Change: Deleverage there how are you thinking about sales and marketing over a multiyear period.

Alex Sklar: Yes, Alex I don't think its a multi year.

Alex Sklar: Issue versus again with us seeing some falling of the market.

Alex Sklar: And us seeing opportunity out there I think paired with the maturation of our products.

Alex Sklar: <unk> talked about insight, where we're going to be coming out with a whole bunch of new products and innovation.

Alex Sklar: It's really just trying to reflect the opportunity that we see and so some of it is in sales capacity. As we noted other is in digital marketing software and activities in terms of pipe and things like that.

Alex Sklar: And so again from our perspective, it's a specific investment that we're making this year and again reflects as I said the opportunity and frankly, the foreign nature of the end market that we've been that we serve and have been navigating the headwinds of over the last couple of years.

Alex Sklar: Alright, great. Thank you both for the color.

Speaker Change: Thanks, Alex.

Thank you.

Speaker Change: Our next question comes from James Faucette of Morgan Stanley. Please go ahead James.

Speaker Change: Thank you so much filling in for Mike Lynn phosphate here this afternoon.

Speaker Change: Wanted to ask a kind of all positioning our market positioning question just as a reminder.

Speaker Change: A lot of the commentary from the Treasury and Congress secretaries.

Speaker Change: And the new administration have indicated a lot of the.

Speaker Change: Deregulation focus has been concentrated on stratus buying capital requirements based on bank size complexity et cetera, which I think should disproportionately benefits small and community banks more than retail and enterprise, but can you remind us of your exposure to that smaller cohort and if youre seeing.

Speaker Change: Any of that sentiment reflected in your RFP or engagement activity.

Speaker Change: Yes, sure specifically in terms of the platform scalability. It has a unique position that we have to serve enterprise clients as well as community banks and everybody in between.

Speaker Change: And that goes beyond banking into the credit Union as well as <unk>.

Speaker Change: Space, but overall the community bank market for US remains one of our major portfolios, we have a significant percentage of our customer base, specifically doing commercial lending in that community bank space and this past year, we had over 50% of our overall bookings outside of the commercial space in <unk>.

Speaker Change: <unk> banking.

Speaker Change: Great. That's really helpful. Nuance, there and then just I wanted to circle back on.

Speaker Change: <unk> commentary about magnitude of pricing benefit it sounds like if we're interpreting what youre, saying correctly it could be low single digit benefit.

Speaker Change: Curious if we're in the right range and what that will be in fiscal year 2016, given the phased rollout.

Speaker Change: Yeah, James if you wouldn't mind repeating that I think you referred to a comment from Pierre you're talking about a prior call.

Speaker Change: Yes, yes, that's right just like just general yes, just generally the magnitude of pricing benefit I know that you guys have are changing pricing and just wondering if.

Speaker Change: It sounds like Youre expecting some of that those pricing changes could be a low single digit benefit this year, but just wondering what that if we're understanding that correctly for fiscal year 2006, given the phased rollout.

Speaker Change: Yes, sure James got it. Thank you for the clarification. So noted that we expect a 1% uplift this year based on deal signed this year.

Speaker Change: And again Thats, just the pro rata benefit that we would expect from the new.

Speaker Change: The new platform pricing again, and I also will comment that.

Speaker Change: We were more back half back half weighted bookings expectations again, consistent consistent with our conservative philosophy on guidance.

Speaker Change: And we also commented that you should expect that not only to get the full benefit next year, which would be an increase.

Speaker Change: But that to continue as we cycle through the remaining 85% of customers as we migrate them to new pricing. So we do see that as an as an opportunity and I think that it reflects the innovation and the investments that we've made.

Speaker Change: The new products that we have come out with and are coming out with and ultimately specifically the banking adviser opportunity, which we think is quite exciting recognizing that it's early.

Speaker Change: It's early in that rollout the product and the adoption of AI.

James Faucette: And James Thank.

Speaker Change: Thank you.

Speaker Change: Sorry, circling back to your previous question on market segmentation about two thirds of our overall business is in the community and regional market in the U S. Specifically.

Speaker Change: Oh, great I appreciate that thanks, so much everybody.

James Faucette: Thanks James.

Speaker Change: Thank you.

Speaker Change: Next question comes from Koji Ikeda of Bank of America.

Speaker Change: Please go ahead Koji.

Speaker Change: Yeah, Thanks, guys for taking the questions. So.

Speaker Change: In the prepared remarks.

Speaker Change: You guys mentioned that it's going to take several quarters to see the progress in the sixes.

Speaker Change: And it did seem like you alluded to that there is there is some confidence there.

Speaker Change: That youre going to be able to achieve that improvement in the execution in the next couple of quarters. So maybe can you go deeper in some of the things that you've done internally or.

Speaker Change: Maybe pipeline build trends.

Speaker Change: Since the changes were made internally, that's giving you that confidence to make that statement.

Speaker Change: Yeah, absolutely and again the revenue being a lagging indicator of bookings we are seeing bookings momentum and growth now that were excited that will show up in the revenue side of the equation.

Speaker Change: Later, but specifically some of the maturity and the follow through on the commitments we've made to our customers.

Speaker Change: That we've resolved is exciting and we're hearing that feedback from our customers specifically the on boarding solution that when we acquired dock Fox last year. There was an expectation that a certain amount of customers would take that solution standalone.

Speaker Change: As we integrated that fully with the platform they confirm that they'd prefer us to go ahead and fully integrate that with the platform and we expect to see that realized and momentum on that in the second half of this year. So on boarding is one key contributor to our confidence in the back half of this year.

Speaker Change: The EMEA leadership changes we've alluded to.

Speaker Change: We put <unk> in place in November as I mentioned he is building out his go to market team that's largely in place now.

Speaker Change: And as they do both go through the pipeline quantitatively and qualitatively that seems to be trending in the right direction in all areas.

Speaker Change: And then on the mortgage side of the house here in the U S. We have hard into that and matured the mortgage solution in terms of readiness for the enterprise. We had several key initiatives last year underway on being ready for a secure multi tenant environment for enterprise grade customers rounding out our Apis with encompass.

Speaker Change: And some of our <unk> integration is all converging on completion now give us cause for excitement in the back half of the year with mortgage and then finally as we changed our guidance philosophy that shows up over time.

Speaker Change: Got it no. Thank you for that and maybe a follow up here.

Speaker Change: Do I understand you guys are targeting kind of a reacceleration in growth.

Speaker Change: In fiscal 2007, but I guess the question here is what is.

Speaker Change: What if the growth continues to be constrained for longer than expected and into 'twenty seven how should we be thinking about balancing the growth and profitability profile and that sort of scenario. Thanks guys.

Speaker Change: Thanks, Koji ultimately I'd refer back to the rule of 40 commentary that I had in my prepared remarks.

Speaker Change: And again, we targeted around the fourth quarter of next year.

Speaker Change: We didn't specify.

Speaker Change: That that would be silly.

Speaker Change: Contingent on growth.

Speaker Change: So that's what I'd point you to.

Speaker Change: Our focus on that and achieving that target.

Speaker Change: Got it thanks, Greg Thank you guys.

Speaker Change: Thank you.

Speaker Change: Thank you.

Speaker Change: Our next question comes from Ryan Tomasello of <unk>.

Speaker Change: W. Please go ahead Ryan.

Speaker Change: Hi, everyone. Thanks for taking the questions wanted to start with U S mortgage.

Speaker Change: One of your U S mortgage competitors, I think recently announced more.

Speaker Change: <unk> will move into the RMB space and also alluded to some competitive gains. So I was hoping you can provide just more context on how you view the competitive positioning there.

Speaker Change: Any elaboration on where.

Speaker Change: Win rates have been running and how you feel about that.

Speaker Change: <unk> positioned our business for 26 thanks.

Speaker Change: Alright. Thanks for the question I think we feel really good about where we are from a mortgage standpoint again aside from the guidance philosophy.

Speaker Change: Sean just highlighted the investments that we made last year in terms of being more aggressive going up market, which is a space that that business has not historically focused on but obviously with our customer base and the large number of enterprise customers. We have we think that that's.

Speaker Change: A nice opportunity for us, particularly as we talk about the platform and that being part of our platform.

Speaker Change: So we haven't really seen a change in the competitive dynamics.

We continue to win market share and logos. If you look at the presentation you will see that we added 24, new <unk> customers last year and so from our perspective it's.

Speaker Change: It remains the same from a competitive standpoint, and I think we continue to feel very good about our positioning.

Speaker Change: Our technology and our ability to continue to grab market share as we have done over the last couple of years and what's been a very difficult market.

Speaker Change: Okay.

Speaker Change: Thanks for that and then in the past I think I think specifically last year you talked about.

Speaker Change: The visibility you tend to have entering the year on what's already fully baked into the subscription guide I guess, given the new guidance philosophy here and what sounds like.

Speaker Change: The attic and conservatism, you're baking in or is that visibility.

Speaker Change: Higher than usual in.

Speaker Change: And any way to kind of quantify that relative to the.

Speaker Change: Organic growth targets.

Speaker Change: <unk> offset for us on the subscription revenue for this year. Thanks.

Speaker Change: Yes, Thanks, Brian Yes, consistent with the guidance philosophy, you can assume that as it relates to the midpoint of our guidance. We are in a better position than we were last year or the year before and so that would be consistent with our approach this year for guidance.

Speaker Change: Thanks for taking the questions.

Speaker Change: Thanks Ryan.

Speaker Change: Thank you.

Speaker Change: Our next question.

Speaker Change: Comes from Chris Kennedy with William Blair Your.

Speaker Change: Your line is open Chris.

Speaker Change: Yes. Good afternoon. Thanks for taking my question and squeezing me in here, Sean given your former overall can you just provide some perspective on the evolution of your consumer lending product you guys have been working at it for a long time, we understand bookings.

Speaker Change: It was over 50% of bookings.

Speaker Change: Last year, but just talk about that evolution. Please.

Speaker Change: Yeah.

Speaker Change: So again, we were proud of the accomplishments we've had the back half of last year, specifically in the momentum we have with consumer lending and I would attribute that to the maturity and hardening of that solution, taking customer feedback and iterating with some of our early day customers on that journey, specifically I think we've really rounded out.

Speaker Change: A robust integration set there were key integrations that we needed to develop over the course of the past 18 months that we did commit to around.

Speaker Change: Around stock prep in certain other areas.

Speaker Change: As well as just time to market and speed of the overall solution, that's a space where people expect to seamless.

Speaker Change: And very quick turnaround time, specifically in the consumer lending market, where we're measuring velocity.

Speaker Change: Everyday by minutes versus hours and days and were really trending well in tracking some of those metrics and kpis are proud of our teams the leadership in the consumer lending.

Speaker Change: Side of the house for challenging the product managers and engineers on those metrics and I think that's a big part of why we've been successful and are turning the corner here.

Speaker Change: Additionally, I would say that targeting the credit union market, specifically intensifies, our focus for consumer lending and.

Speaker Change: And gives us a feedback loop from a broader set of customers that is helping us harden our solution as well.

Speaker Change: Got it. Thank you for that and then if you think about and maybe you'll give us at the Investor day, but when you think about the mix of your business.

Speaker Change: Over the next three to five years between.

Speaker Change: The commercial the mortgage Nick <unk>.

Speaker Change: Consumer any way to think about how that how you think that business will evolve over time. Thank you.

Speaker Change: Okay. Thanks, Chris.

Speaker Change: I think I noted that 70% of our Sam is outside of commercial lending.

Speaker Change: And this past year more bookings were outside of commercial lending and I think that that's really a massive opportunity for us.

Speaker Change: Not only are we going to be able to continue to sell commercial which we've had great success with but again, it's leveraging the success. We've had the customer relationships that we've built with that product and the confidence they have in us.

Speaker Change: Across the bank and so we expect great things from consumer it did take longer to get where we are than we wanted and expected, but ultimately I think we feel we feel really good about where we are and again that's reinforced by not only the $200 billion bank that we took live.

Speaker Change: I know everyone's been waiting to see that success and I think we feel really good about where that customer is.

Speaker Change: But also again, adding in over $50 billion bank over $80 billion Bank in Q4, I think again reinforces.

Speaker Change: The nature of that product, which from our perspective is the only net new in the multi tenant SaaS product out in the marketplace for consumer lending.

Speaker Change: Got it thank you.

Chris Kennedy: Thanks, Chris.

Chris Kennedy: Thank you.

Speaker Change: Our next question comes from Erin Kempson of citizens. Please go ahead Aaron.

Speaker Change: Thank you.

Speaker Change: So up on that question a lot of investors.

Speaker Change: It's driven around the best in class commercial functionality, but it seems like a lot of your focus upon the consumer opportunity, whereas you guys sequentially, but down over 70% of the Samsung.

Speaker Change: What would you say it was skeptical investors there might be a salmon issue that <unk> seen out there, particularly on the commercial side, where the consensus is intermodal Google.

Speaker Change: Yes, thanks for the question.

Speaker Change: First and foremost I would say we are committed to following through on the promises we make to our existing customers.

Speaker Change: And the platform value proposition that we actually do Onboarding, we do.

Speaker Change: Our portfolio management.

Speaker Change: We do account opening Ami do loan origination, we do that across commercial consumer small business and mortgage is a key differentiator for <unk>.

Speaker Change: But we do point back to following through on our commitment to delivering on the Omnichannel a consistent experience for our customers.

Speaker Change: And their customers whether digital in branch and that has shown up first in our core commercial customer base. When you think about the investments we've made in AI and banking advisory capabilities in the current effort to wrap agents around current workflow that's showing up first in commercial so I think we're going to have significant opportunities to cross.

Speaker Change: Sell into the commercial customer base opportunities to get those.

Speaker Change: Even more efficient through AI, and we will continue to point back to our flagship customers in terms of how we innovate and drive.

Speaker Change: Drive thoughtful innovation throughout the platform.

Speaker Change: Aaron I would also add that one of the unique things about <unk> is the global nature of our business and so you can just look at our logo counts, which again are in the presentation that we posted I mean, there is plenty of runway and room in just the U S. Both community banks as well as up market for commercial.

Speaker Change: And again I think we are by far the gold standard and so we see plenty of opportunity there and then also on a global basis.

Speaker Change: It's still early for a lot of.

Speaker Change: Countries in terms of adopting still cloud and SaaS, but ultimately again commercial and making those investments and I think we are unique in our ability to go serve a global market and I think that there is plenty of greenfield opportunity out there.

Speaker Change: Across the world and so not only do we feel like just purely with commercial lending is there plenty of opportunity.

Speaker Change: But also to Sean's point, we have now added products, whether it's through AI, whether it's through some of the acquisitions that we've done as well as internal development.

Speaker Change: By continuous credit monitoring to go to those customers that are very happy and sell them more product and so we view our commercial lending base as an asset.

Speaker Change: And we think Theres plenty of runway left for us to continue to grow that base.

Speaker Change: Thank you and then as a follow up can you remind us how you compete directly or I assume more indirectly with rocket on the mortgage side and do you see any potential implications here and seen a mortgage from rocket two recently announced deals for redfin in Mr. Cooper Sandal closing thank you.

Speaker Change: Yes, we understand they've been busy on the acquisition front of recent.

Speaker Change: And there may be some consolidation in that space, indicating that people are preparing for good news on the rate side over time, but we believe that we're firmly entrenched in the <unk> space, serving that market and very focused with our mortgage solution.

Speaker Change: And don't see that as an impediment to.

Speaker Change: Our market share.

Speaker Change: Yes, I think to Sean's point, it's interesting again as people prepare for opportunity in that space. After emerging from the last couple of years.

Speaker Change: Historically M&A has been a leading indicator of.

Speaker Change: Perceived better times ahead.

Speaker Change: So from an acquisition perspective.

Speaker Change: As we sit and look at that I mean, thats what crosses our mind.

Speaker Change: In terms of those transactions as it competes with with our mortgage solution, we're not competitive with Mr. Cooper in the servicing space.

Speaker Change: And so from that perspective, I wouldn't say, it's a net new competitive.

Speaker Change: Challenge for us.

Speaker Change: Thank you. Our next question comes from Alex Mark Graf of Kb Cm. Please go ahead Alex.

Speaker Change: Hey, thanks for the commentary on retention rates.

Speaker Change: Obviously, some headwinds in the past couple of years, just curious maybe Gregg what your view is of sort of a normalized or appropriate.

Speaker Change: Pension rate for for this business.

Speaker Change: Yes subs Rev. As we noted will moderate this year.

Speaker Change: And I think we expect HCV too.

Speaker Change: To improve and to continue to improve.

Speaker Change: And again highlighting.

Speaker Change: Highlighting that metric again, as we think about the business and measuring our performance.

Speaker Change: As we took feedback on kpis.

Speaker Change: That was one of the reasons why we wanted to bring that to you guys. So you can track it along with us, but we think thats a good metric for you guys to to follow.

Speaker Change: Thanks, and then maybe just one follow up on some of the recent head count additions can you just remind us on sort of the ramp for quota carrying reps and then.

Speaker Change: As you think about the.

Speaker Change: Geo and product set.

Speaker Change: Segment leads across mortgage EMEA and credit Union, just sort of the.

Speaker Change: Expected ramp timeline to productivity from those folks. Thank you.

Alex Sklar: Sure. Thanks for the question Alex Yeah, It really depends on the rep in terms of where theyre coming from and their knowledge of the industry.

Alex Sklar: But ultimately we assume about a six month ramp time period.

Alex Sklar: Thanks.

Speaker Change: Thank you.

Speaker Change: Thank you. Our next question comes from Brent price Glyn.

Speaker Change: Piper Sandler. Please go ahead Brent.

Speaker Change: Great. Thanks for taking the question this is Jr.

Speaker Change: Maybe building a bit more on competition.

Speaker Change: Hey, guys front, specifically continue banks looking to experiment more with estimate our workflows.

Speaker Change: We are interest largely revolving around pre packaged solutions.

Speaker Change: Yes, I'm sorry, it was a little garbled, but I believe the question was our customers experimenting customer AI solutions versus pre package is that right.

Speaker Change: Yes, that's right.

Speaker Change: Thank you.

Speaker Change: Yes, so listen there's a frenetic pace in the market.

Speaker Change: Obviously around innovation Nai and.

Speaker Change: All tracking that closely and having your own fun here at Encino on that journey, what I would tell you as our customers continue to validate that and how they think about AI is they would prefer that their trusted partner and vendor who has been with them in house their data.

Speaker Change: Would be the one to help them on that journey.

Speaker Change: And while they understand there are opportunities to imagine.

Speaker Change: Experiences.

Speaker Change: They are really encouraging us to lean into the opportunity to wrap agents around our existing workflow continue to develop out our banking adviser capabilities and lean into our acquisition of sandbox banking to build a unified late API layer that would be our data access our gateway for those customers.

Speaker Change: <unk> been encouraged by the fact that our big four.

Speaker Change: Bank in the U S enterprise market is heavily using our banking adviser capabilities and you'll hear more about that at our user at our insight user conference here in just a few short weeks.

Speaker Change: So I think they are confirming that the partner they have been with for a while they are they are willing to be a bit a bit patient and.

Speaker Change: And get the experience right in a highly regulated environment rather than rushing in to the first experience they hear about on Linkedin.

Speaker Change: Maybe a quick follow up.

Speaker Change: And your feedback to know from larger customers around the shift away from <unk>.

Speaker Change: Asset based pricing.

Speaker Change: Overall, it's been positive.

Speaker Change: I think that the customers are appreciative that we're willing to go on the journey of outcomes with them and correlate the value that they derive to what they pay.

Speaker Change: And so we would we would assume that over time their asset they are increase in assets under management would benefit everybody and their usage of banking adviser and the outcomes they get and the efficiency. They get from our AI would also correlate to what they pay and seen it.

Speaker Change: Got it helpful color. Thank you.

Speaker Change: Thank you.

Speaker Change: Thank you. Our next question comes from Ken <unk> of Autonomous Research. Please go ahead Ken.

Speaker Change: Hey, good afternoon, guys. Thanks for taking the question I know its getting laid off I'll ask maybe just about internationally I think you highlighted international as a contributor to that.

Speaker Change: Six percentage point impact on subscription revenue growth in fiscal year 'twenty six I think you guys had a good slide on the guidance assumptions is international the entire six percentage point impact.

Speaker Change: I guess one question and then I think you mentioned some leadership changes in Europe.

Speaker Change: Any additional detail in terms of what's happening.

Speaker Change: And the region is it only Europe, where youre seeing some issues or are there other markets that are contributing to that six percentage points. Thank you.

Speaker Change: Thanks, Ken six percentage points again, I'd say, it's a combination of four things one is as gross bookings.

Speaker Change: Following the little short of our expectations last year, but the two specific areas that we've noted were international and mortgage.

Speaker Change: And so international got off to a slow start last year as I think we talked about throughout the year and while they.

Speaker Change: Had some nice wins.

And when we talk about international this is more specifically EMEA.

Speaker Change: We talked about some success in Japan for example, but from an EMEA perspective got off to a slow start and they just weren't able to catch up.

Speaker Change: And so thats that we did talk about the churn being a little bit higher.

Speaker Change: As a result of one customer deciding now isn't the time to move forward and then the other two points, where again with 30 <unk>.

Speaker Change: 26 bookings, which from a modeling perspective again, we were more backend weighted than normal.

Speaker Change: We see opportunities to accelerate those but again consistent with the last point being our guidance philosophy and will need to be more conservative and trying to derisk the year as much as possible all of that.

<unk> to us coming up with that 6%.

Speaker Change: Kris.

Speaker Change: This would be the factors, maybe I'll turn it over to Sean to talk about EMEA and the opportunities that we're seeing there.

Speaker Change: Yes.

Speaker Change: The leadership front in EMEA.

Speaker Change: I'll point back to the early and continued success, we'd had specifically in the UK and Ireland markets in EMEA.

Speaker Change: Where we've been a little bit slower in terms of the expectation we have for ourselves is on the continent.

Speaker Change: And the mainland Europe, specifically and so our new leadership structure based in Madrid from Us.

Speaker Change: And operator at scale, who has run over $100 million business across Europe.

Speaker Change: And has a network and <unk>.

Speaker Change: Connections to banks across the continent, we believe as powerful as we build out that go to market team that will be our focus to continue the momentum we have in UK.

Speaker Change: But then grow aggressively on the continent, specifically, we think there's good opportunity in Spain, and the Nordics, but obviously, we just signed a big bank in the Czech Republic in Q4 as well.

Speaker Change: Okay. Thank you both.

Speaker Change: Thank you I would now like to turn the conference back to Shine investment for closing remarks, Sir.

Speaker Change: Thank you all for being with US. This afternoon, we hope to see as many of you as we possibly can at our insight user conference here in May.

Speaker Change: And we appreciate your time.

Speaker Change: This concludes today's conference call. Thank you for participating you may now disconnect.

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Speaker Change: Thank you for standing by and welcome to <unk> fourth quarter fiscal year 2025 earnings Conference call.

Speaker Change: At this time all participants are in a listen only mode.

Speaker Change: After the speaker's presentation, there will be a question and answer session.

Speaker Change: To ask a question during the session you will need to press star one on your telephone to remove yourself from the queue. You May press star one again.

Speaker Change: I'd now like to hand, the call over to Harrison Masters Director of Investor Relations. Please go ahead.

Harrison Masters: Good afternoon, and welcome to <unk> fourth quarter fiscal 2025 earnings call with me on today's call are Shawn Desman, <unk>, Chief Executive Officer, and Greg <unk> Chief Financial Officer.

Harrison Masters: During the course of this conference call, we will make forward looking statements regarding trends strategies and the anticipated performance of our business. These forward looking statements are based on management's current views and expectations entail certain assumptions made as of today's date and are subject to various risks and uncertainties described in our SEC filings.

Harrison Masters: <unk> and other publicly available documents, the financial services industry and global economic conditions.

Harrison Masters: <unk> disclaims any obligation to update or revise any forward looking statements.

Harrison Masters: Further on today's call. We will also discuss certain non-GAAP metrics that we believe aid in the understanding of our financial results.

Harrison Masters: A reconciliation to comparable GAAP metrics can be found in today's earnings release, which is available on our website and as an exhibit to the form 8-K furnished with the SEC just before this call as well as the earnings presentation on our Investor Relations website at Investor <unk> Dot com.

Harrison Masters: That I will turn the call over to Sean.

Sean: Good afternoon, everyone and thank you for joining us today to discuss <unk> fourth quarter and fiscal 2025 financial results.

Speaker Change: As many of you know this is my first time addressing you as CEO and I want to start by saying how honored and excited I am to take on this responsibility.

Sean: And <unk> is a remarkable company.

Sean: That pioneered and built a strong foundation and cloud banking software.

Sean: Now my focus is on taking this great company and making sure. It is a great long term business.

Sean: One that executes with urgency and precision delivers sustainable and profitable growth and fully capitalizes on the sizable opportunities ahead to deliver strong returns to all of our stakeholders.

Sean: As we delivered on the promise of being the worldwide leader in cloud banking in the company's first chapter.

Sean: I am here to lead <unk> evolution to be the worldwide leader in AI banking.

Sean: We are marshalling the energy of the company to capitalize on the vertical AI opportunity to drive efficiency into the financials of our customers as well as into our own bottom line.

Sean: For those of you who have been following the company.

Sean: We're aware that we have been very focused on leveraging data analytics and AI for the past five years.

Sean: In addition to our commercial pricing and profitability auto spreading and portfolio monitoring solutions, we have been steadily developing banking adviser functionality and plan to launch numerous new capabilities at our insight user conference in May.

Sean: For those of you joining us at insight you will hear directly from early banking adviser customers about the meaningful efficiency gains they are already realizing with this AI technology.

Sean: Seeing the market catch up to our strategic vision is very exciting and reinforces the unique competitive position we have.

Sean: I know firsthand just how significant this opportunity is.

Sean: I have spent almost 30 years in the software industry and nearly 12 hadn't seen it.

Speaker Change: Most recently as chief product officer, and before that as chief customer success Officer.

Speaker Change: During that tenure I've had approximately two thirds of the company's employees in my reporting chain and have worked closely with every function of our global business.

Speaker Change: I've also worked alongside our customers, including sponsorship of sales opportunities ensuring successful project deliveries compliance with our SLA as adoption of our user experiences and realization of our committed business outcomes.

Speaker Change: I understand exactly what our diverse customer base, which includes banks credit unions independent mortgage bankers and.

Speaker Change: And non bank lenders needs to run their business more efficiently and effectively.

Speaker Change: I have also overseeing the development of the very products that serve as the system of record for our customers' banking operations.

Speaker Change: Over the past two quarters have spent time in our offices in Wilmington, North Carolina, Lehigh, Utah, London, England, Sydney, and Melbourne, Australia.

Speaker Change: <unk>, New Zealand, and Johannesburg, and Cape Town South Africa.

Speaker Change: On each of these visits I've spent time, not only with our employees, but with our customers and partners in our ecosystem listening intently.

Speaker Change: These experiences give me deep conviction in our strategy the strength of our platform and.

Speaker Change: And the product portfolio and the highly differentiated value, we provide to financial institutions.

Speaker Change: I firmly believe that the next decade holds far more growth and opportunity for encino to innovate and transform the financial services industry.

In the previous decade.

Speaker Change: There is no doubt that financial institutions across the globe continue to struggle with inefficiencies caused by legacy infrastructure.

Speaker Change: Too many of them still rely on fragmented tech stacks and siloed data, making critical processes far too slow and cumbersome.

Speaker Change: We are re imagining these processes and delivering world class experiences to name just a few onboarding complex commercial clients proactively and continuously monitoring small business and commercial loan portfolios providing.

Speaker Change: Providing frictionless account opening experiences and efficiently scaling mortgage lending with AI powered document validation and processing.

Speaker Change: And <unk> is uniquely positioned to solve all of these problems.

Speaker Change: We are the only cloud based SaaS provider that enables financial institutions around the world to seamlessly manage lending.

Speaker Change: Onboarding account opening and portfolio management across multiple lines of business connected.

Speaker Change: Scalable platform powered by AI.

Speaker Change: We are the enabler of our customers' most critical operations and we have a broad diverse and sizable customer base across more than 20 countries.

Speaker Change: This global reach combined with our broad and deep product capabilities provides us with a competitive moats that nobody can match.

Speaker Change: Since our IPO in 2020, we have delivered strong revenue growth significantly increased our operating margin expanded our customer base extended our geographic presence and build out the breadth and depth of our solutions.

Speaker Change: But while our scale has increased I don't believe our execution has kept pace with the full extent of the market opportunity.

Speaker Change: I think it's important not only to be a cheerleader for encino, but also to be pragmatic and realistic.

Speaker Change: Importantly, we need to consistently execute at a level that reflects the strength of our market position and the ambitions we have for this business.

Speaker Change: Of course, our ability to execute over the past couple of years was significantly impacted by macroeconomic headwinds beyond our control.

Speaker Change: The rapid rise in interest rates in 2022 caused banks to pull back on spending and the liquidity crisis in early 2023 lead to even greater caution around large scale technology investments.

Speaker Change: These external factors, certainly dampened, our sales momentum and new bookings growth.

Speaker Change: But there were also challenges within our control.

Speaker Change: As we expanded beyond our commercial banking roots into consumer lending, we ultimately brought to market a product capable of leapfrogging our competitors.

Speaker Change: But not as quickly as we originally planned.

Speaker Change: We also saw customers pause their onboarding buying decisions. This past year until we completed our highly anticipated platform integration of the intellectual property, we acquired in our acquisition from dark box.

Speaker Change: With the benefit of hindsight, we were also too optimistic in expecting a drop in interest rates to drive an increase in mortgage activity.

Speaker Change: Additionally, our sales execution and sense of urgency in certain international markets, most notably Europe was not as crisp as it needed to be.

Speaker Change: Some of these challenges created compounding headwinds that further impacted our new bookings momentum in fiscal 'twenty, five and our chief contributors to our fiscal 2006 revenue outlook, which is below our expectations.

Speaker Change: The good news is that we have already taken decisive action to address these challenges that have impacted us and I am confident there is squarely behind us.

Speaker Change: During my tenure as Chief product Officer, we did bring to market a best in breed consumer lending product last year, which helped us outperform our internal expectations for sales of that solution in fiscal 'twenty five.

Speaker Change: Leveraging our best in breed digital mortgage technology, we are bringing to market full omnichannel capabilities across our consumer solutions at insight.

Speaker Change: This consistent experience for bankers and their customers alike, whether digital or in branch will help us further accelerate bookings of our products in fiscal 2006 and beyond.

Speaker Change: In addition, we plan to release, our fully integrated Onboarding solution that Leverages. The technology acquired in the dark box acquisition in the second quarter unlocking numerous pent up opportunities.

Speaker Change: On the personnel front, we have made key leadership changes in our European operations with the hiring of Joaquin <unk> whaler, a seasoned software sales executive with a great track record on the European continent.

Speaker Change: Our EMEA general manager to sharpen our execution.

Speaker Change: Our team has been aggressively assembling his go to market team to capture the full potential of the EMEA Sam beyond just the UK, where we've had a strong presence to date.

Speaker Change: We have also added several other key leaders across our sales and marketing organizations hardening, our product marketing and credit Union posture.

Speaker Change: We just appointed an AI catalyst Chief Technology Officer will John to our product development and engineering organizations.

Speaker Change: All of our new leaders and restructured teams are laser focused on increasing and accelerating our sales momentum in gross bookings.

Speaker Change: Operating with a keen sense of urgency and purpose, we are well positioned to re accelerate new bookings growth. Although we expect it will take a few quarters for consistent momentum to build.

Speaker Change: As Greg will discuss when he reviews the financials, we expect improved gross bookings growth as the year progresses.

Speaker Change: This will result in subscription revenue growth Reacceleration in fiscal 2007, as we get back on track to achieving our double digit long term growth ambitions.

Speaker Change: Not surprisingly one of the most exciting areas of opportunity ahead for Encino is our ability to help financial institutions better connect their data so they can meaningfully harness AI.

Speaker Change: Specifically, we continue to build generative and adjourn take AI powered solutions and embed them throughout the Encino platform.

Speaker Change: Because <unk> serves as a system of record for our customers' banking operations, we sit at the heart of their most critical financial processes.

Speaker Change: That means we are in a unique position to help them leverage their data to operationalize AI efficiently.

Speaker Change: Automate and eliminate workflows and deliver better customer experiences.

Speaker Change: I touched upon banking adviser earlier in my comments, but it's worth reinforcing that the capabilities within our AI driven banking advisers suite of skills have already reduced complex banking processes from days to seconds.

Speaker Change: And this is just the beginning.

Speaker Change: Take for example document validation in U S mortgage, which with AI verifies that customers have uploaded the correct documentation avoiding an approval delay for the borrower and saving the loan officer about 40 minutes per loan.

Speaker Change: Our continuous credit monitoring functionality eliminates hours of manual work gathering data to assess a client's borrowing position.

Speaker Change: And tax statements III uses a large language model trained in house to process tax statements avoiding 15 to 20 minutes of manual work per statements.

Speaker Change: As we lead this charge our customers are validating that they ultimately prefer agenda capabilities embedded in our platform they already trust with their data.

Speaker Change: The data is fundamental to our strategy.

Speaker Change: And we are leaning into our acquisition of sandbox banking to complete a unified API layer that becomes the access point or gateway for financial institutions globally.

Speaker Change: Thus <unk>.

Speaker Change: Our AI strategy is.

Speaker Change: Deepen our moat by expanding banking advisers skills.

Speaker Change: Mobilize agents and manage the gateway.

Speaker Change: Clearly, we believe that AI, both generative and agenda and the unique dataset, we have to fuel AI will be key drivers of growth for encino.

Speaker Change: Powerful differentiators across our entire platform that will further enhance our market leadership position and accelerate platform adoption as we continue to evolve the company and lead the vertical AI and movement in bank.

Speaker Change: Beyond AI, we've been hard at work strengthening our core business and we believe these improvements will drive solid bookings trends in the quarters and years ahead.

Speaker Change: One of the most powerful aspects of our competitive moat is the reputation we have built through our success in commercial banking.

Speaker Change: We are recognized as the gold standard in this space and that credibility is opening doors as we drive deeper into consumer small business and mortgage opportunities.

Speaker Change: As a reminder, over 70% of our global Sam is outside of commercial lending and more than half of our bookings in fiscal 'twenty five.

Speaker Change: Came from solutions other than commercial lending.

Speaker Change: We are leveraging our reputation and track record of success to demonstrate our solutions to new customers and to deepen our existing relationships with current customers as being senior ecosystem adopt more of our products.

Speaker Change: Turning encino from a great company into a right long term business requires discipline.

Speaker Change: Focus and relentless execution.

Speaker Change: That means making sure our product roadmap aligns tightly with market needs driving strong top line growth, while maintaining financial discipline.

Speaker Change: And making thoughtful capital allocation decisions.

Speaker Change: It means being sharp and how we position ourselves in the market and ensuring that every experience we serve up to customers is truly best in class.

Speaker Change: I am maniacally focused on these execution tasks and firmly believe the team will exceed my expectations.

Speaker Change: To that end, we are seeing signs that the changes we have made are driving results.

Speaker Change: Our fiscal 'twenty, five ACD growth accelerated to 9% organically from 8% in fiscal 'twenty four on a constant currency basis.

Speaker Change: On a reported basis this ACB year over year growth was 8% organically or 13%, including ACB from acquisitions.

Speaker Change: Our expansion on the European continent, and seeing signs of traction as well with our largest new logo by ACD in Q4 coming from CES Obi a top three bank in the Czech Republic, and we also had another major win in Japan.

Speaker Change: And while it took longer than we originally expected our consumer lending business is seeing momentum.

Speaker Change: The 200 billion asset bank, we discussed winning in late fiscal 'twenty four is now live on <unk> consumer lending.

Speaker Change: And we added over 20, new consumer lending deals in Q4, including two large banks with 80 billion and $50 billion in assets respectively.

Speaker Change: On the M&A front, we are very excited about the four acquisitions, we closed over the past year and expect each of them to be strong positive contributors to our future financial performance.

Speaker Change: Our dock Fox and full circle acquisitions expanded our Sam and the Onboarding Arena and provided our sales teams unique and highly desirable solutions to cross sell to a very happy customer base.

Speaker Change: Allegro is an important addition to our consumer lending offering delivering and the need for indirect lending functionality, particularly as we expand more aggressively into credit unions.

Speaker Change: In fact, leveraging Encino has established a market leading portfolio analytic solution, which serves up approximately 40% of the United States credit Union market.

Speaker Change: We have visibility into over $600 billion in assets across more than 800 credit Union customers.

Speaker Change: We are leaning into this unique and powerful dataset and our acquisition of Allegro and have launched a dedicated credit evening and go to market team and are developing new solutions to bring to this market, including financial product performance and pricing models and peer analysis products for competitor insights.

Speaker Change: Finally on the M&A integration front sandbox banking is a highly strategic acquisition that reaches far beyond core integration capabilities.

Speaker Change: And <unk> customers will quickly realized the benefit of customer data alignment and system Operability with a unified API layer and integration hub for the platform.

Speaker Change: I am also energized by the AI first culture and DNA of the talent that accompanies these acquisitions.

Speaker Change: That said, while we of course remain alert to potential future M&A, where we see compelling value in accelerating our technology profitable growth or addressable market. We expect our focus for fiscal 2006 will be on realizing the planned synergies and expected investment returns from these completed.

Speaker Change: Actions as opposed to pursuing any additional M&A.

Speaker Change: In summary, this is an extraordinary time for encino and with the vertical AI opportunity. There has never been more excitement in this intersection of technology and banking.

Speaker Change: The secular growth in front of us, which is helping financial institutions truly modernize their operations is massive.

Speaker Change: The ability to accelerate this transformation through our scalable tested and trusted platform with intelligence embedded throughout our solutions makes it even more exciting and the improvements we have made in our product functionality and international operations sets us up for success.

Speaker Change: Additionally, while there is currently volatility in the financial markets, the macro headwinds that specifically challenged us and our customer base over the past couple of years have eased quite a bit.

Speaker Change: Our customers by and large have healthy balance sheets and are forecasting growth in their loan portfolios deposit positions and earnings per share.

Speaker Change: Our U S customers are also telling us that the potential for deregulation could free up capital stream.

Speaker Change: Streamline decision, making and enable them to further adopt best in class technology solutions.

Speaker Change: Our sales teams are aggressively pursuing bookings in fiscal 2006 that we expect will drive reacceleration in subscription revenue growth in fiscal 2007, and we are investing in accordingly, with a plan to drive sustainable long term revenue growth and further margin expansion.

Speaker Change: While Greg will walk you through our financial guidance in more detail. Just a reminder, that our revenue growth is a lagging indicator of our bookings growth.

Speaker Change: While we are forecasting lower year over year revenue growth in the second half of the year. We believe this is temporary and do two trailing factors that have now been addressed as well as to difficult year over year second half comparisons that Greg will elaborate on.

Speaker Change: I have tremendous confidence in our team our technology and our market position.

This confidence is supported by the $100 million.

Speaker Change: Stock repurchase program, our board of directors authorized that we announced this afternoon.

Speaker Change: The foundation is in place and now it's all about execution.

Pierre was the visionary who built this company and I deeply respect the impact he had.

Speaker Change: My role is to take that vision and turn it into durable scalable and long term profitable growth.

Speaker Change: We are not selling a dream and encino, we're committing to execution.

Speaker Change: To that end the metrics I am laser focused on our growth in gross bookings, achieving our rule of targets and over time free cash flow.

Speaker Change: On behalf of the entire Encino team I want to thank you for your continued support.

Speaker Change: I am incredibly energized by what lies ahead and look forward to delivering results and building credibility with our shareholders.

Speaker Change: With that I'll turn it over to Greg to walk through the details of our quarter and outlook.

Greg: Thanks, Sean and thank you all for joining us today.

Greg: Please note that all numbers referenced in my remarks are on a non-GAAP basis, unless otherwise stated a.

Greg: A reconciliation to comparable GAAP metrics can be found in today's earnings release, which is available on our website and as an exhibit to the form 8-K furnished with the SEC just before this call.

Greg: Turning to our fourth quarter results.

Greg: Total revenues were $141 $4 million in the fourth quarter, an increase of 14% year over year and $540 7 million for fiscal 'twenty five an increase of 13% over fiscal 'twenty four.

Greg: Subscription revenues were $125 million in the fourth quarter, an increase of 16% year over year.

Greg: And $469 $2 million for the full year, an increase of 15% year over year.

Greg: Organic subscription revenues were $118 3 million in the fourth quarter, an increase of 10%.

Greg: And $456 9 million for fiscal 'twenty, five an increase of 12% year over year.

Greg: Professional services revenue was $16 4 million in the fourth quarter, an increase of 1% year over year.

Greg: Full year professional services revenues were $71 5 million, an increase of 7% year over year.

Greg: Non U S. Total revenues were $33 3 million in the fourth quarter up 34% year over year or 38% in constant currency.

Greg: Non U S. Total revenues were $116 $2 million in fiscal 'twenty five.

Greg: Up 30% year over year, and also up 30% in constant currency.

Greg: Full circle contributed approximately $4 $3 million to both the fourth quarter and full year non U S total revenues.

Greg: non-GAAP operating income was $24 4 million or 17% of total revenues compared with $19 $3 million or 16% of total revenues in the fourth quarter of fiscal 'twenty four.

Greg: Year over year non-GAAP operating margin expansion was muted in the fourth quarter by $3 $2 million of incremental operating expenses contributed by full circle as integration activities began.

Greg: Our non-GAAP operating income for fiscal 'twenty, five was $96 2 million or 18% of total revenues compared with $61 8 million or 13% of total revenues in fiscal 'twenty four.

Greg: non-GAAP net income attributable to Encino for the fourth quarter of fiscal 'twenty, five was $13 9 million or <unk> 12 per diluted share compared to $23 $8 million or 21 per diluted share in the fourth quarter of fiscal 'twenty four.

Greg: non-GAAP net income attributable to Encino for fiscal 'twenty, five was $76 1 million or <unk> 66 per diluted share compared to $58 million or <unk> 51 per diluted share in fiscal 'twenty four.

Greg: Fiscal 'twenty five non-GAAP net income attributable to Encino included $3 million of interest expense on our credit facility in the fourth quarter and $5 $7 million for the full year.

Greg: Fiscal 'twenty five non-GAAP net income attributable to Encino also included other non operating predominantly noncash expenses from fluctuations in foreign currency on intercompany loans of approximately $10 $3 million in the fourth quarter and $10 $5 million for the full year.

Greg: Free cash flow was negative $10 4 million in the fourth quarter of fiscal 'twenty five.

Greg: Down from $7 7 million in the fourth quarter of fiscal 'twenty four.

Greg: Due to acquisition related costs of $2 $8 million.

Greg: $3 million of additional interest expense and timing related fluctuations and net working capital.

Greg: Free cash flow for fiscal 'twenty, five was $53 4 million compared to $53 8 million in fiscal 'twenty four.

Greg: With growth in this metric temporarily impacted by acquisition related costs of $12 $2 million.

Greg: And $4 8 million of additional interest expense as we drew on our line of credit to complete the acquisition of full circle.

Greg: Subsequent to the end of the quarter, we closed the acquisition of sandbox banking for a purchase price of $52 $5 million in cash subject to customary adjustments and an additional earn out opportunity of up to $10 million.

Greg: The transaction was financed with our revolving credit facility.

Greg: Sandbox provides middleware that has become critical to our integration strategy for connecting Encino with our customers' core processing and other third party systems.

Greg: This transaction immediately yields cost of goods sold savings of approximately $1 million annually that we would otherwise have incurred under our former partnership agreement with sandbox.

Greg: And is expected to deliver accretive subscription revenue growth and reduce implementation timelines, thereby helping to improve professional services gross margins.

Greg: We ended fiscal 'twenty five with 549 customers that contributed greater than $100000 to fiscal 'twenty five subscription revenues, an increase of 10% from fiscal 'twenty four.

Greg: Of these 105 contributed more than $1 million for fiscal 'twenty five subscription revenues, an increase of 22% from fiscal 'twenty four and.

Greg: In 2014 contributed more than $5 million to fiscal 'twenty five subscription revenues, an increase of 27% from fiscal 'twenty four.

Greg: Our remaining performance obligation or <unk> was $1 2 billion as of January 31, 2025 up 15% over $1 billion as of January 31, 2024, with $797 million expected to be recognized in the next 24 months up 18.

Greg: Percent from $675 million as of January 31, 2024.

Greg: Acquisitions completed in fiscal 'twenty, five contributed approximately $24 million to total <unk> and $22 million and less than 24 months <unk>.

Greg: Before turning to our fiscal 'twenty six guidance I wanted to provide an update on our new pricing framework as well as on the new Kpis, we are providing to assist you in better understanding our business and measuring our progress.

Greg: When our new pricing framework recall, then in fiscal 'twenty four we began implementing platform pricing for our mortgage customers and for consumer lending customers and this year, we began implementing platform pricing for all of our other solutions.

Greg: As of January 31, 2025, approximately 15% of our ACB is on platform pricing and we expect to complete the transition of remaining ACB over the next four years.

Greg: Due specifically to the pricing transition we are modeling an approximately 1% subscription revenue growth benefit from the pro rata contribution of deal signed in fiscal 'twenty six relative to how we would have recognized subscription revenues on our legacy seat based model.

Greg: This benefit along with that of renewals, where we are targeting an appropriate price uplift to reflect the meaningful innovation, we have added to our product portfolio, including from banking adviser will be larger in subsequent years as more of our customer base has converted to new pricing.

Greg: Please reference slide 18 in the appendix of our earnings presentation for an illustrative example of subscription revenue recognition for both new and renewal agreements under platform pricing.

Greg: We look forward to discussing the new pricing model in more detail at our upcoming Investor day at our insight user conference in May.

Greg: Including the benefits, we expect to realize from the shift and the anticipated impact to our reported metrics.

Greg: Turning to the new Kpis. Please refer to slide four in our earnings presentation to reference these updated disclosures.

Greg: Going forward, we will be guiding to in reporting HCV annually as of the end of our fiscal years.

Greg: We define ACB as the highest annualized subscription fee obligation under customer contracts in effect at the end of the reporting period.

Greg: Note that <unk> does not include any fees generated from consumption above contracted minimums for our mortgage banking advisor solutions.

Greg: ACB is management's preferred kpis for sales achievement, including for determining variable compensation for employees on sales Commission plans are.

Greg: Our customers signed large multi year agreements some of which ramp over time and.

Greg: And we expect high retention rates, so optimizing the fees at the end of a contract term is what we emphasize and for our sales force.

Greg: On a reported basis ACB as of January 31, 2025 was $516 4 million, an increase of 13% year over year or 8% on an organic basis, reflecting on improving gross bookings trend versus the prior fiscal year, most notably in the U S.

Greg: And regional and enterprise markets, both of which exceeded their gross bookings targets in fiscal 'twenty five.

Greg: While international and mortgage gross bookings were below plan.

Greg: On a constant currency basis, ACD grew 14% in total and 9% on an organic basis in fiscal 'twenty five.

Greg: We are also introducing another new disclosure ACB net retention rate, which increased to 106% in fiscal 'twenty five versus 102% in the prior year.

Greg: We define ACB net retention rate is total HCV at the end of our fiscal year from customers with ACB as of the end of the prior fiscal year.

Greg: Expressed as a percentage of AC as of the end of the prior fiscal year.

Greg: Converted to U S dollars with foreign exchange rates in effect as of the end of the applicable period.

Greg: We believe this improvement is indicative of growing demand from our existing customers to more broadly adopt our platform and have churn beginning to normalize as market driven headwinds subside.

I would note that we are aligning the definition of our subscription revenue net retention rate with the details disclosed in our quarterly SEC filings regarding changes in subscription revenues from new versus existing customers based upon when a customer first contributes to subscription revenues.

A comparison to the prior reported metric is available in our Form 10-K.

Greg: Subscription revenue net retention rate moderated to 110% down from 116% in fiscal 'twenty four.

Greg: Like subscription revenues. We believe this is a lagging indicator and its decline was primarily an output of the elevated churn in fiscal 'twenty for that impacted subscription revenues in fiscal 'twenty five.

Greg: Total churn in fiscal 'twenty five ended up at $26 million of annualized subscription revenues down from $31 million in fiscal 'twenty four.

Greg: Of this amount mortgage churn was $9 million in fiscal 'twenty five down from $13 million in fiscal 'twenty four.

Greg: As we expect churn to continue moderating towards our historic norms.

Greg: Going forward, we will quantify and discuss retention on a net basis with our new disclosure framework.

Greg: As Sean noted we are very excited about the future and we are absolutely leaning in on the growth opportunities. We see ahead of us so that we can leverage our leading position in this market.

Greg: This involves making certain investments, particularly in international sales and marketing to capitalize on this opportunity.

Greg: Despite these investments we expect steady operating margin expansion beginning in the second half of this year.

Greg: And while we're not ready to provide specific guidance beyond fiscal 'twenty. Six we are focused on achieving the rule of 40 milestone and are confident in our trajectory to accomplish this somewhere around the fourth quarter of next year.

Greg: We believe the returns on our investments in sales and marketing and the product innovation, we are bringing to market. This year.

Greg: Coupled with the cost efficiencies, we expect to achieve in our R&D organization by leveraging AI and through other organizational efficiency initiatives will be instrumental in achieving this.

Greg: While the exact timing may vary by a quarter or two based on market conditions and investment opportunities.

Greg: You should be confident that we are laser focused on ensuring that we achieve the rule of 40 in a sustainable and disciplined manner.

Greg: Turning to fiscal 'twenty six guidance, we take our commitments to the street very seriously and recognize that our prior revenue guidance philosophy could have been more conservative to leave us greater flexibility in operating the business.

Greg: Recognizing this we have adjusted our guidance framework and have attempted to derisk our guidance as much as possible.

Greg: With that in mind I'd like to provide some additional details to help you contextualize the fiscal 'twenty six guidance and in particular the year over year growth trajectory throughout the year.

Greg: Note that we are giving these additional data points to help you more clearly understand how we built our model and developed our guidance for fiscal 'twenty six.

Greg: While we will of course address general trends and our guidance on each earnings call. We do not plan on going through and updating each of these assumptions on a quarterly basis.

Greg: First we expect the approximately 1% currency headwind to <unk> growth in fiscal 'twenty five to have a commensurate negative impact on fiscal 'twenty six subscription revenues.

Greg: Second we expect to have dock Fox integration complete by insight and our expectation is that bookings for this product will increase meaningfully in the second half of the year.

Greg: We continue to believe that the onboarding opportunity for Encino on a global basis is significant.

Speaker Change: With that said as Sean mentioned bookings for this solution were below plan in fiscal 'twenty five as product integration activities were prioritized and as a result, there is a lagging effect that impacts our subscription revenue growth in fiscal 'twenty six.

Speaker Change: We expect the anticipated bookings rebound for Onboarding in the second half of fiscal 'twenty six will contribute to accelerating subscription revenue growth in fiscal 'twenty seven.

Speaker Change: Third our U S mortgage business grew 8% in fiscal 'twenty five in what remains a difficult market.

Speaker Change: Despite this growth and the many opportunities we see for our mortgage solution in the market, including taking it more upmarket to regional and enterprise banks as well as to more and more credit unions.

Speaker Change: In light of the uncertainty around the path of mortgage rates in the U S. Our guidance for fiscal 'twenty six assumes no year over year increase in U S mortgage subscription revenues.

Speaker Change: Any growth in this business, including growth in loan volume Overages would be upside to our numbers.

Speaker Change: Finally, our second half year over year subscription revenue comparisons will be negatively impacted by approximately 3% in both the third and fourth quarters of fiscal 'twenty six as a result of one time subscription revenues that occurred in the second half of fiscal 'twenty five.

Speaker Change: Affecting our U S mortgage and international businesses as a result of one time revenues that occurred in the second half of fiscal 'twenty five.

Speaker Change: These revenues primarily related to one time catch up mortgage revenues as noted on our Q3 earnings call.

Speaker Change: And a contract buyout by a customer that following management changes at the bank and internal restructuring of the business that had sponsored our program decided that now it was not the right time to move forward with their implementation.

Speaker Change: For the first quarter of fiscal 'twenty six we expect total revenues of 138 $75 million to $140 $75 million with subscription revenues of 121 $75 million to $123 $75 million, an increase of 9% and 11% respectively.

Speaker Change: At the midpoint of the ranges.

Speaker Change: Beginning this quarter, our guidance for and reported non-GAAP net income attributable to encino per share will exclude any impact from currency exchange on intercompany transactions.

Speaker Change: non-GAAP operating income in the first quarter is expected to be $22 $5 million to $24 $5 million.

Speaker Change: And non-GAAP net income attributable to <unk> per share to be 15 to 16.

Speaker Change: This guidance assumes interest expense incurred under our credit facility of approximately $3 5 million.

This is based upon a weighted average of approximately 119 million diluted shares outstanding before any share repurchases.

Speaker Change: For fiscal 'twenty, six we expect to add $48 million to $51 million to ACB on a constant currency basis.

Speaker Change: Including approximately $4 5 million from the acquisition of sandbox.

Speaker Change: This represents a 19% organic net ACB bookings growth at the midpoint of the range, which should accelerate subscription revenue growth in fiscal 'twenty seven.

Speaker Change: For fiscal 'twenty six we expect total revenues of $574 5 million to $578 $5 million with subscription revenues of $503 million to $507 million.

Speaker Change: Presenting growth rates of 7% and 8% respectively at the midpoint of the ranges.

Speaker Change: Excluding the impact of the onetime items noted above and currency fluctuations our organic subscription revenue growth rate in fiscal 'twenty six is expected to be approximately 7% at the midpoint of the range.

Speaker Change: In light of the specific headwinds I highlighted earlier, we expect subscription revenue growth to be approximately six points lower than the second half of the year versus the first half.

Speaker Change: For re accelerating in fiscal 'twenty seven.

Speaker Change: We expect full circle will contribute approximately $13 $3 million to subscription revenues through the first nine months of fiscal 'twenty, six including approximately $4 3 million in the first quarter and.

Speaker Change: In that sandbox banking will contribute approximately $4 $2 million to subscription revenues for the full year <unk>.

Speaker Change: Including approximately 750000 in the first quarter.

Speaker Change: For fiscal 'twenty six we.

Speaker Change: We will refer to the nine month contribution of full circle and the 12 month contribution of sandbox is inorganic.

Speaker Change: As these periods compared to the prior year periods, which preceded each acquisition.

Speaker Change: We expect non-GAAP operating income for fiscal 'twenty, six to be $107 million to $111 million, a 13% increase over fiscal 'twenty five at the midpoint.

Speaker Change: After playing defense for the better part of the past two plus years in light of the macro difficulties impacting financial institutions around the world. We are going on the offensive and investing in areas of high growth.

Speaker Change: To that end our guidance assumes an increase in sales and marketing expense related to additional quota carrying sales representatives to cover the U S credit Union market emerging geographies in EMEA, and Japan and investments in digital marketing initiatives amounting to approximately $10 million for the full year.

Speaker Change: These investments reflect the sizeable opportunity we see in front of us.

Speaker Change: Our guidance assumes approximately 100 basis points of operating margin expansion at the midpoint of the range for the full year with.

Speaker Change: With the first half of the year flat to that of last year.

Speaker Change: We expect the second half of the year will yield approximately 200 basis points of expansion as we leverage the sales and marketing investments made at the start of the year get beyond our annual user conference in May and realize additional operating efficiencies in our R&D organization.

Speaker Change: We expect additional margin expansion in fiscal 'twenty, seven and beyond as we generate scale and efficiency from these investments and efficiency gains.

Speaker Change: non-GAAP net income attributable to <unk> per share is expected to be 66 to 69.

Speaker Change: Excluding the impact of currency fluctuations and is based upon a weighted average of approximately 120 million diluted shares outstanding before any share repurchases.

Speaker Change: This guidance also assumes interest expense incurred under our credit facility of approximately $14 million.

Speaker Change: In closing I appreciate that we have provided you with a lot of information today, and we will do our best to make ourselves available over the coming days to answer your questions and provide clarity about the disclosures made.

Speaker Change: I also look forward to seeing many of you at insight next month in Charlotte, North Carolina, where you will be able to see firsthand the unique and exciting product innovation, we are bringing to market.

Speaker Change: And where we will go into more detail about the business our financials and the opportunities we have in front of us.

Speaker Change: With that I will open the line for questions.

Speaker Change: As a reminder to ask a question you will need to press star one on your telephone to remove yourself from the queue. You May press star one again.

Speaker Change: Please limit yourself to one question and one follow up to allow everyone the opportunity to participate.

Speaker Change: Please standby, while we compile the Q&A roster.

Speaker Change: Our first question comes.

Kalia: Comes from <unk> Kalia of Barclays. Please go ahead.

Speaker Change: Okay, Great Hey, guys. Thanks for taking my questions here and congrats Sean on your promotion to CEO very well deserved.

Kalia: Thank you for that.

Kalia: Absolutely, Sean maybe maybe for you.

Kalia: Im curious what youre hearing back from your customers.

Kalia: Just as.

Kalia: I don't know you spent a lot of time with customers what are you hearing back from them.

Kalia: As they think about their willingness to invest here in 2025, particularly as we look at sort of the implied organic growth here in fiscal 'twenty six.

Speaker Change: Yes, I appreciate the question and yes, we've got customers coming through our headquarters in global offices on a regular basis and what we hear from executives across our customer base.

Speaker Change: Is that although they acknowledged the volatility in the markets currently there also.

Speaker Change: Turning the corner on some of the headwinds that we've experienced in the previous years.

Speaker Change: The liquidity crisis passed the longest inverted yield curve, we've had in the past 46 years good thing for banks specifically.

Speaker Change: And by and large they are telling us their balance sheets are healthy and they are expecting growth in their loan portfolios and their deposit positions and.

Speaker Change: And as well as their own EPS. So these are all good signals for them to focus internally on how they can improve their efficiency, which plays exactly to our value proposition.

Speaker Change: Got it got it Greg maybe maybe for you I appreciate the additional disclosure, but I was wondering could you just maybe dig into the difference between sort of the growth rates between <unk> and revenue in fiscal 'twenty, six, but I think the ACB growth at the midpoint.

Speaker Change: Yes, I don't know high single digits I think the revenue growth is a couple of points lower than that how do you sort of think about those two things differently.

Speaker Change: Thank you for the question Zack it.

Speaker Change: As Sean noted on the call revenue growth is a lagging indicator or a metric of where we've been while bookings are ACB growth as a leading indication of the future and where we're going.

Speaker Change: So as noted our ACD accelerated a percent on a constant currency basis in fiscal 'twenty five.

Speaker Change: And we look forward to updating you on our bookings progress throughout the year.

Speaker Change: From a revenue perspective on a point you to slide 16 in the presentation that we that we posted which walks you through the bridge between fiscal 'twenty five in fiscal 'twenty six.

Speaker Change: Specifically, you'll note from a headwinds perspective, 1% for FX.

Speaker Change: About 1% the mortgage business dilutive in light of the Conservative nature, we took around our guidance with mortgage this year.

Speaker Change: There is a 2% headwind on the onetime revenues that I commented on in my prepared remarks, and then finally, there is a 6% if you exclude mortgage organic headwind and Thats really a combination of a couple of things. One is gross bookings, which were a little shy of where we expected to end the year.

Speaker Change: Because of international in mortgages, we've been talking about in the second half of last year.

Speaker Change: As well as a little bit higher churn again, referring back to my prepared comments in terms of the onetime nature of our customer in Q4.

Speaker Change: And then two other things I'd point you to one is just from a linearity of fiscal 'twenty six bookings as part of.

Speaker Change: Our modeling this year, we did go more conservative in terms of forecasting bookings more backend weighted than normal.

Speaker Change: And that really I think touches probably upon the biggest point.

Speaker Change: It is just a change in the guidance philosophy as I noted on the call.

Speaker Change: I think last year, we got a lot of feedback in terms of the guidance that we gave and how the year progressed and ultimately our goal. This year was to be much more conservative in the guidance and try to derisk. It as much as we possibly could and as we see momentum building through the through the year, our goal and expectation is to be able to update you on that <unk>.

Speaker Change: <unk> and ultimately see that momentum with the business and ultimately with our with our guidance going forward.

Speaker Change: Got it that's super helpful. Thanks, guys.

Speaker Change: Thank you.

Speaker Change: Thank you. Our next question comes from Terry Tillman of true Securities. Your question. Please Terry.

Speaker Change: Yes, thanks for kind of broke up there, but I think that was for me. So all sorts of single question I was going to be a lot of questions.

Speaker Change: Just a heads up it's a multi part of though.

Speaker Change: I think in you All's prepared remarks, you all talked about going on the offensive.

And mentioning increase go to market investments.

Speaker Change: Results on the gross bookings are definitely underwhelmed.

Speaker Change: Is this signifying yard and have enough sales capacity is that enough sharing of the salesforce. So first I'd just like to know kind of what's informing kind of the go to market investments and then out of <unk>.

Speaker Change: Part of the question.

Terry Tillman: Yeah. Thank you Terry I appreciate it.

Speaker Change: A couple of things.

Speaker Change: First and foremost we are leaning into the go to market motion and solidifying our internal team here across sales product marketing and CFS and making sure that we have solid investments a layer down in the organization. So specifically we brought in a new head of product marketing.

Speaker Change: To lead that organization, we put leadership in place in EMEA, specifically, where as you all know from the prepared remarks, we were not satisfied with the year over year growth this past year.

Speaker Change: And those two appointments as well as launching a go to market team and the credit Union space to focus specifically on an area, where we think we have a lot of upside.

Speaker Change: And beyond that we have put new mortgage leadership in place as well. So there have been a lot of intentional moves for reacceleration of growth in sales leadership as well as in the marketing functions and those teams are collaborating really well together out of the gate driving with a sense of urgency gives us a.

Speaker Change: Real confidence this year in growth in bookings.

Speaker Change: And Terry the other thing that I would add is as I noted we have been playing defense in light of the macro and other.

Speaker Change: Ultimately putting salespeople in the field when you appreciate what the buying environment is or maybe what it's not.

Speaker Change: Is not very productive or efficient.

Speaker Change: So in terms of adding capacity I think you should take that as a sign of the opportunities that we see.

Speaker Change: And ultimately the market and some of the headwinds that we've had to navigate easing again getting back to the health in general of our customer base.

Speaker Change: Which again.

Speaker Change: Comes out of a couple of years of some difficulties and so it really is a reflection more on the market opportunity that we see right now versus frankly, where we were a year or two ago.

Speaker Change: Yeah got it thanks, Greg and John also congrats on the new appointment.

Speaker Change: The second part of your question just relates to <unk>.

Speaker Change: He was surprised by the idea of go to market or operating leverage in the second half. After some go to market investments is maybe that apples and oranges and actually the leverage you see in the second half is just from normal course of business bookings improving.

Speaker Change: We get leverage that fast if youre, making investments in the first half of the year. Thank you.

Speaker Change: Jerry I think it's a combination of improved bookings activity ultimately, but again I think we're continuing to see opportunities from an efficiency standpoint, as we constantly are looking at the organization and seeing challenging ourselves, where we should invest and ultimately we should may redirect investment and so that's a constant activity for us.

Speaker Change: And I think we see continued opportunities I'll also add that with AI. It certainly brings opportunities in terms of leverage and we have been as Sean noted in our prepared remarks, we have been focusing on data analytics and AI for quite some time.

Speaker Change: And we think that presents opportunities for us as the year as the year progresses as well.

Speaker Change: Alright, thank you.

Terry Tillman: Thanks Terry.

Speaker Change: Thank you our next question.

Speaker Change: Comes from the line of Alex Sklar of Raymond James. Please go ahead Alex.

Speaker Change: Great. Thank you, Sean or Greg just on the HCV guidance I appreciate the new disclosure there in the prepared remarks, you talked about easing macro improving international activity accident year, a better gross retention and then the more strategic products with commercial Onboarding solutions I'm, just curious with all of that kind of being factored.

Can you talk about the puts and takes that are embedded in that ACG growth outlook, why that wouldnt be better than the kind of 9% constant currency as you saw in FY 'twenty five.

Speaker Change: Yeah, I will remind the revenue is a lagging indicator of bookings right and so we do believe that we have good upside opportunities with the maturity of our solutions hardening of our Onboarding.

Speaker Change: Solutions and we've added a lot of sand through our acquisitions to past year of stockpiling and full circle capitalizing on those opportunities we will believe.

Speaker Change: We'll be good upside for us and our consumer lending solution, where we signed up 20, new customers in Q4, including two banks north of $50 billion in assets and attacking the credit Union market with that solution will.

Speaker Change: We will be another good opportunity for us all that said those will show up in Reacceleration.

Speaker Change: In FY 'twenty seven due to some of the revenue lag we talked about earlier and then of course, the personnel changes and the momentum we see in the international opportunity would be a good year over year growth in our bookings yes.

Speaker Change: Yeah, and Alex the only other thing to add again I'd go back to the guidance philosophy that I touched upon.

Speaker Change: In response to <unk> comment as well as in my prepared remarks.

Speaker Change: I think where it took a step back we took a whole bunch of feedback from <unk>.

Speaker Change: Investors last year, particularly after our Q3 call and again I think our focus is on again building momentum throughout the year and setting ourselves up for success.

Speaker Change: And so again I would just note that as you think about the differences between what we're talking about now versus what we spoke about last year at this time.

Speaker Change: Okay, great. Thank you, Bob and Greg maybe just a quick follow up for you that the $10 million of higher sales and marketing investments. This year can you just talk about how comprehensive those are versus the opportunity that you see is this is this part one is kind of a multiyear sales and marketing investment cycle.

Speaker Change: One time step up this year to cover some green shoots in demand areas.

Speaker Change: Deleverage there how are you thinking about sales and marketing over a multiyear period.

Alex Sklar: Yes, Alex I don't think its a multi year.

Alex Sklar: Issue versus again with us seeing some falling of the market.

Alex Sklar: And are seeing opportunity out there I think paired with the maturation of our products.

Speaker Change: <unk> talked about insight, where we're going to be coming out with a whole bunch of new products and innovation.

Speaker Change: It's really just trying to reflect the opportunity that we see and so some of it is in sales capacity as we noted other digital marketing software and activities in terms of pipe and things like that.

Speaker Change: And so again from our perspective, it's a specific investment that we're making this year and again reflects as I said the opportunity and frankly, the foreign nature of the end market that we've been that we serve and have been navigating the headwinds of over the last couple of years.

Speaker Change: Alright, great. Thank you both for the color.

Alex Sklar: Thanks, Alex.

Speaker Change: Thank you.

James Faucette: Our next question comes from James Faucette of Morgan Stanley. Please go ahead James.

James Faucette: Thank you so much filling in for Michael and phosphate here. This afternoon.

James Faucette: Wanted to ask a kind of all positioning our market positioning question just as a reminder.

James Faucette: A lot of the commentary from the Treasury and Congress secretaries.

James Faucette: And the new administration have indicated a lot of the.

James Faucette: Deregulation focus has been concentrated on stratus by capital requirements based on bank size complexity et cetera, which I think should disproportionately benefits small and community banks more than retail and enterprise, but can you remind us of your exposure to that smaller cohort and if youre seeing.

James Faucette: Any of that sentiment reflected in your RFP or engagement activity.

James Faucette: Yes, sure specifically in terms of the platform scalability. It has a unique position that we have to serve enterprise clients as well as community banks and everybody in between.

James Faucette: And that goes beyond banking into the credit Union as well as AMB.

James Faucette: Space, but overall the community bank market for US remains one of our major portfolios, we have a significant percentage of our customer base, specifically doing commercial lending in that community bank space and this past year, we had over 50% of our overall bookings outside of the commercial space in <unk>.

James Faucette: <unk> banking.

Speaker Change: Great. That's really helpful. Nuance, there and then just I wanted to circle back on.

Speaker Change: <unk> commentary about magnitude of pricing benefit it sounds like if we're interpreting what youre, saying correctly it could be low single digit benefit.

Speaker Change: Curious if we're in the right range and what that will be in fiscal year 2006, given the phased rollout.

Speaker Change: Yeah, James if you wouldn't mind repeating that I think you referred to a comment from Pierre you're talking about a prior call or this question just like just general yes, just generally the magnitude of pricing benefit I know that you guys have are changing pricing and.

Speaker Change: Just wondering if.

Speaker Change: It sounds like Youre expecting some of that those pricing changes could be a low single digit benefit this year, but just wondering what that if we're understanding that correctly for fiscal year 2006, given the phased rollout.

Speaker Change: Yes, sure James got it. Thank you for the clarification. So noted that we expect a 1% uplift this year based on deal signed this year.

Speaker Change: And again Thats, just the pro rata benefit that we would expect from the new.

Speaker Change: The new platform pricing again, and I also will comment that.

Speaker Change: We are more back half back half weighted bookings expectations again, consistent consistent with our conservative philosophy on guidance and we also commented that you should expect that not only to get the full benefit next year, which would be an increase.

Speaker Change: But that to continue as we cycle through the remaining 85% of customers as we migrate them to new pricing. So we do see that as an as an opportunity and I think that it reflects the innovation and the investments that we've made the the new products that we have come out with and are coming out with and ultimately specifically the banking adviser opportunity, which we think.

Speaker Change: Is quite exciting recognizing that it's early it's early in that rollout the product and the adoption of AI.

James Faucette: And James certainly thank.

Speaker Change: Thank you.

Speaker Change: Sorry, circling back to your previous question on market segmentation about two thirds of our overall business is in the community and regional market in the U S. Specifically.

Speaker Change: Oh, great I appreciate that thanks, so much everybody.

Speaker Change: Thanks James.

Speaker Change: Thank you.

Speaker Change: Our next question comes from Koji Ikeda of Bank of America. Please go ahead Koji.

Koji Ikeda: Yeah, Thanks, guys for taking the questions.

Speaker Change: So in the prepared remarks.

Koji Ikeda: You guys mentioned that it is.

Koji Ikeda: Going to take several quarters to see the progress in the sixes.

Koji Ikeda: And it did seem like you alluded to that there is there is some confidence there.

Koji Ikeda: But youre going to be able to achieve that improvement in the execution in the next couple of quarters. So maybe.

Koji Ikeda: Maybe can you go deeper in some of the things that you've done internally or.

Koji Ikeda: Maybe pipeline build trends.

Koji Ikeda: Since the changes were made internally, that's giving you that confidence to make that statement.

Koji Ikeda: Yeah, absolutely and again the revenue being a lagging indicator of bookings we are seeing bookings momentum and growth now that were excited that will show up in the revenue side of the equation.

Koji Ikeda: Later, but specifically some of the maturity and the follow through on the commitments we've made to our customers.

Koji Ikeda: That we've resolved is exciting and we're hearing that feedback from our customers specifically the on boarding solution that when we acquired <unk> Fox last year. There was an expectation that a certain amount of customers would take that solution standalone.

Koji Ikeda: As we integrated that fully with the platform they confirm that they'd prefer us to go ahead and fully integrate that with the platform and we expect to see that realized and momentum on that in the second half of this year. So on boarding is one key contributor to our confidence in the back half of this year.

Koji Ikeda: The EMEA leadership changes we've alluded to.

Koji Ikeda: We put <unk> in place in November as I mentioned he is building out his go to market team that's largely in place now.

Koji Ikeda: And as they do both go through the pipeline quantitatively and qualitatively that seems to be trending in the right direction in all areas.

Koji Ikeda: And then on the mortgage side of the house here in the U S. We have hard into that and matured the mortgage solution in terms of readiness for the enterprise. We had several key initiatives last year underway on being ready for a secure multi tenant environment for enterprise grade customers rounding out our Apis with encompass.

Koji Ikeda: And some of our <unk> integration those all converging on completion now give us cause for excitement in the back half of the year with mortgage and then finally as we changed our guidance philosophy that shows up over time.

Got it no. Thank you for that and maybe a follow up here.

Speaker Change: Do I understand you guys are targeting kind of a reacceleration in growth.

Speaker Change: In fiscal 2007, but I guess the question here is what is.

Speaker Change: What if the growth continues to be constrained for longer than expected and into 'twenty seven how should we be thinking about balancing the growth and profitability profile and that sort of scenario. Thanks guys.

Koji Ikeda: Thanks, Koji ultimately I'd refer back to the rule of 40 commentary that I had in my prepared remarks.

Koji Ikeda: And again, we targeted around the fourth quarter of next year.

Koji Ikeda: We didn't specify.

Koji Ikeda: That that would be silly.

Koji Ikeda: Contingent on growth.

Koji Ikeda: So that's what I'd point, you to and our focus on that and achieving that target.

Koji Ikeda: Got it thanks, Greg Thank you guys.

Koji Ikeda: Thank you.

Koji Ikeda: Thank you.

Koji Ikeda: Our next question comes from Ryan Tomasello of <unk>.

Speaker Change: VW. Please go ahead Ryan.

Ryan Tomasello: Hi, everyone. Thanks for taking the questions wanted to start with U S mortgage.

Speaker Change: One of your U S <unk>.

Ryan Tomasello: Mortgage competitors, I think recently announced a more.

Ryan Tomasello: We will move into the RMB space and also alluded to some competitive gains. So I was hoping you can provide just more context on how you view the competitive positioning there.

Ryan Tomasello: And any elaboration on where win rates have been running and how you feel about.

Ryan Tomasello: The position of our business for 26. Thanks.

Ryan Tomasello: Alright. Thanks for the question I think we feel really good about where we are from a mortgage standpoint again aside from the guidance philosophy.

Speaker Change #100: Sean just highlighted the investments that we made last year in terms of being more aggressive going up market, which is a space that that business has not historically focused on but obviously with our customer base and the large number of enterprise customers. We have we think that thats.

Speaker Change #100: A nice opportunity for us, particularly as we talk about the platform and that being part of our platform and.

Speaker Change #100: And so we haven't really seen a change in the competitive dynamics.

Speaker Change #100: We continue to win market share and logos. If you look at the presentation you will see that we added 24, new <unk> customers last year and so from our perspective. It's it remains the same from a competitive standpoint, and I think we continue to feel very good about our positioning our technology and our ability to continue to grab market share as we have done.

Speaker Change #100: Over the last couple of years and what's been a very difficult market.

Speaker Change #100: Thanks for that and then in the past I think I think specifically last year you talked about.

Speaker Change #100: The visibility you tend to have entering the year on what is already fully baked into the subscription guide I guess, given the new guidance philosophy here and what sounds like.

Speaker Change #100: The attic and conservatism, you're baking in or is that visibility.

Speaker Change #100: Higher than usual in.

Speaker Change #100: And any way to kind of quantify that relative to the <unk>.

Speaker Change #100: Organic growth targets you have.

Speaker Change #100: Guidance, you offset for us on the subscription revenue for this year. Thanks.

Speaker Change #100: Yes, Thanks, Brian Yeah, consistent with the guidance philosophy, you can assume that as it relates to the midpoint of our guidance. We are in a better position than we were last year or the year before and so that would be consistent with our approach this year for guidance.

Speaker Change #101: Thanks for taking the questions.

Speaker Change #101: Thanks Ryan.

Speaker Change #101: Thank you.

Speaker Change #101: Our next question.

Speaker Change #101: Comes from Chris Kennedy with William Blair Your.

Speaker Change #103: Your line is open Chris.

Speaker Change #103: Yes. Good afternoon. Thanks for taking my question and squeezing me in here, Sean given your former overall can you just provide some perspective on the evolution of your consumer lending product you guys have been working at it for a long time, we understand bookings.

Speaker Change #103: It was over 50% of bookings.

Speaker Change #103: Last year, but just talk about that evolution. Please.

Speaker Change #103: Yeah.

Speaker Change #103: So again, we were proud of the accomplishments we've had the back half of last year, specifically in the momentum we have with consumer lending and I would attribute that to the maturity and hardening of that solution, taking customer feedback and iterating with some of our early day customers on that journey, specifically I think we've really rounded out.

Speaker Change #103: Our robust integration set there were key integrations that we needed to develop over the course of the past 18 months that we did commit to around.

Speaker Change #103: Around stock prep in certain other areas.

Speaker Change #103: As well as just time to market and speed of the overall solution, that's a space where people expect to seamless.

Speaker Change #103: And very quick turnaround time, specifically in the consumer lending market, where we're measuring velocity.

Speaker Change #103: Everyday by minutes versus hours and days and were really trending well in tracking some of those metrics and kpis are proud of our teams the leadership in the consumer lending.

Speaker Change #103: Side of the house for challenging the product managers and engineers on those metrics and I think that's a big part of why we've been successful on return the corner here.

Speaker Change #103: Additionally, I would say that targeting the credit union market, specifically intensifies, our focus for consumer lending and.

Speaker Change #103: And gives us a feedback loop from a broader set of customers that is helping us harden our solution as well.

Speaker Change #104: Got it. Thank you for that and then if you think about and maybe you'll give us at the Investor day, but when you think about the mix of your business.

Speaker Change #103: Over the next three to five years between.

Speaker Change #103: The commercial the mortgage Nick <unk>.

Speaker Change #103: Consumer any way to think about how that how you think that business will evolve over time. Thank you.

Chris Kennedy: Okay. Thanks, Chris.

Chris Kennedy: And I think I noted that 70% of our Sam is outside of commercial lending.

Chris Kennedy: And this past year more bookings were outside of commercial lending and I think that that's really a massive opportunity for us.

Chris Kennedy: Not only are we going to be able to continue to sell commercial which we've had great success with but again, it's leveraging the success. We've had the customer relationships that we've built with that product and the confidence they have in us.

Chris Kennedy: Across the bank and so we expect great things from consumer it did take longer to get where we are than we wanted and expected, but ultimately I think we feel we feel really good about where we are and again that's reinforced by not only the $200 billion bank that we took live.

Chris Kennedy: I know everyone's been waiting to see that success and I think we feel really good about where that customer is.

Chris Kennedy: But also again, adding in over $50 billion bank over $80 billion Bank in Q4, I think again reinforces.

Chris Kennedy: The nature of that product, which from our perspective is the only net new in the multi tenant SaaS product out in the marketplace for consumer lending.

Chris Kennedy: Got it thank you.

Chris Kennedy: Thanks, Chris.

Chris Kennedy: Thank you.

Speaker Change #105: Our next question comes from Erin Kim of citizens. Please go ahead Aaron.

Chris Kennedy: Thank you.

Speaker Change #106: Up on that question a lot of investors can use to fund its drilling around the best in class commercial functionality, but it seems like audio focused Obama consumer opportunity, whereas you guys sequential began over 70% of the Samsung what.

Speaker Change #106: What would you say it was skeptical investors there might be a family issue at Encino, particularly on the commercial side, where the consensus is intermodal Google.

Speaker Change #106: Yes, thanks for the question.

Speaker Change #106: First and foremost I would say we are committed to following through on the promises we make to our existing customers.

Speaker Change #106: And the platform value proposition that we actually do Onboarding, we do.

Speaker Change #106: Our portfolio management.

Speaker Change #106: We do account opening Ami do loan origination, we do that across commercial consumer small business and mortgage is a key differentiator for encino.

Speaker Change #106: But we do point back to following through on our commitments to delivering on the Omnichannel a consistent experience for our customers.

Speaker Change #106: And their customers whether digital in branch and that has shown up first in our core commercial customer base. When you think about the investments we've made in AI and banking advisory capabilities in the current effort to wrap agents around current workflow that's showing up first in commercial so I think we're going to have significant opportunities to cross.

Speaker Change #106: Sell into the commercial customer base opportunities to get those.

Speaker Change #106: Even more efficient through AI, and we will continue to point back to our flagship customers in terms of how we innovate and drive.

Speaker Change #106: Drive thoughtful innovation throughout the platform.

Speaker Change #106: Aaron I would also add that one of the unique things about <unk> is the global nature of our business and so you can just look at our logo accounts, which again are in the presentation that we posted I mean, there is plenty of runway in room and just the U S. Both community banks as well as up market for commercial.

Speaker Change #106: And again I think we are by far the gold standard. So we see plenty of opportunity there and then also on a global basis.

Speaker Change #106: It's still early for a lot of.

Speaker Change #106: Countries in terms of adopting still cloud and SaaS, but ultimately again commercial and making those investments and I think we are unique in our ability to go serve a global market and I think that there is plenty of greenfield opportunity out there.

Speaker Change #106: Across the world and so not only do we feel like just purely with commercial lending is there plenty of opportunity.

Speaker Change #106: But also to Sean's point, we have now added products, whether it's through AI, whether it's through some of the acquisitions that we've done as well as internal development.

Speaker Change #106: By continuous credit monitoring to go to those customers that are very happy and sell them more product and so we view our commercial lending base as an asset.

Speaker Change #106: And we think Theres plenty of runway left for us to continue to grow that base.

Speaker Change #107: Thank you and then a haul up can you remind us how you compete directly or I assume more indirectly with rocket on the mortgage side and any potential implications for encino mortgage from rocket two recently announced deals for redfin of Mr. Cooper sample closing thank you.

Speaker Change #107: Yes, we understand they have been busy on the acquisition front of recent.

Speaker Change #107: And there may be some consolidation in that space, indicating that people are preparing for good news on the rate side over time, but we believe that we're firmly entrenched in the <unk> space, serving that market and very focused with our mortgage solution and don't see that as an impediment to two.

Speaker Change #107: Two our market share.

Speaker Change #108: Yes, I think to Sean's point, it's interesting again as people prepare for opportunity in that space. After emerging from the last couple of years historically.

Historically M&A has been a leading indicator of.

Speaker Change #107: Perceived better times ahead.

So from an acquisition perspective.

Speaker Change #107: As we sit and look at that I mean, thats what crosses our mind.

Speaker Change #107: In terms of those transactions as it competes with with our mortgage solution, we're not competitive with Mr. Cooper in the servicing space.

Speaker Change #107: And so from that perspective, I wouldn't say, it's a net new competitive.

Speaker Change #107: Challenge for us.

Speaker Change #109: Thank you. Our next question comes from Alex Mark Graf of Kb Cm. Please go ahead Alex.

Speaker Change #110: Hey, thanks for the commentary on retention rates.

Speaker Change #111: Obviously, some headwinds in the past couple of years, just curious maybe Gregg what your view is of sort of a normalized or appropriate retention rate for this business.

Speaker Change #111: Mostly yes subs Rev. As we noted will moderate this year.

Speaker Change #111: And I think we expect HCV too.

Speaker Change #111: To improve and to continue to improve.

Speaker Change #111: And again, highlighting that metric again, as we think about the business and measuring our performance.

As we took feedback on kpis.

Speaker Change #111: That was one of the reasons why we wanted to bring that to you guys. So you can tracking along with us, but we think thats a good metric for you guys to to follow.

Speaker Change #111: Thanks, and then maybe just one follow up on some of the recent head count additions can you just remind us on sort of the ramp for quota carrying reps and then.

Speaker Change #111: As you think about the <unk>.

Speaker Change #111: Geo and product.

Speaker Change #112: Segment leads across mortgage EMEA and credit Union, just sort of the.

Speaker Change #112: Expected ramp timeline to productivity from those folks. Thank you.

Speaker Change #113: Sure. Thanks for the question Alex Yeah, It really depends on the rep in terms of where theyre coming from and their knowledge of the industry.

Speaker Change #112: But ultimately we assume about six month ramp time period.

Speaker Change #112: Thanks.

Speaker Change #112: Thank you.

Speaker Change #112: Thank you. Our next question comes from Brent bracelet.

Speaker Change #114: Piper Sandler. Please go ahead Brent.

John: Oh, great. Thanks for taking my question. This is John.

Speaker Change #115: Maybe building a bit more on competition.

John: Hey, guys front specifically.

John: And banks looking to experiment more with estimate our workflows.

John: Customer interest largely revolving around pre packaged solutions.

Speaker Change #117: Yes, I'm sorry, it was a little garbled, but I believe the question was our customers experimenting custom AI solutions versus pre package is that right.

Speaker Change #117: That's right.

Speaker Change #117: Thank you.

Speaker Change #118: Yeah, so listen there's a frenetic pace in the market.

Speaker Change #118: Obviously around innovation and AI and <unk>.

Speaker Change #118: While tracking that closely and having your own fun here at Encino on that journey, what I would tell you as our customers continue to validate that and how they think about AI is they would prefer that their trusted partner and vendor who has been with them in house their data.

Speaker Change #118: It would be the one to help them on that journey.

Speaker Change #118: And while they understand there are opportunities to imagine.

Speaker Change #118: Experiences.

Speaker Change #118: They are really encouraging us to lean into the opportunity to wrap agents around our existing workflow continue to develop out our banking adviser capabilities and lean into our acquisition of sandbox banking to build a unified late API layer that would be our data access our gateway for those customers. We've been encouraged by the fact that our big four.

Speaker Change #118: Bank in the U S enterprise market is heavily using our banking advisory capabilities and Youll hear more about that at our user.

Speaker Change #118: Insight user conference here in just a few short weeks.

Speaker Change #118: So I think they are confirming that the partner they've been with for a while there they are willing to be a bit a bit patient and.

And get the experience right in a highly regulated environment rather than rushing in to the first experience they hear about on Linkedin.

Speaker Change #119: Okay, maybe a quick follow up.

Speaker Change #120: Feedback from larger customers around the shift away from.

Speaker Change #119: Asset based pricing.

Speaker Change #119: Overall, it's been positive.

Speaker Change #119: I think that the customers are appreciative that we're willing to go on the journey of outcomes with them and correlate the value of that data arrive to what they pay.

Speaker Change #119: And so we would we would assume that over time their asset they are increase in assets under management would benefit everybody and their usage of banking adviser and the outcomes they get and the efficiency. They get from our AI would also correlate to what they pay and seen it.

Speaker Change #119: Got it helpful color. Thank you.

Speaker Change #119: Thank you.

Speaker Change #121: Thank you. Our next question comes from Ken <unk> of Autonomous Research. Please go ahead Ken.

Speaker Change #121: Hey, good afternoon, guys. Thanks for taking the question I know its getting laid off I'll ask maybe just about international I think you highlighted international as a contributor to that.

Speaker Change #121: Six percentage point impact on subscription revenue growth in fiscal year 'twenty. Six you guys had a good slide on the guidance assumptions is international the entire six percentage point impact.

Speaker Change #121: I guess one question and then I think you mentioned some leadership changes in Europe.

Speaker Change #121: Any additional detail in terms of what's happening.

Speaker Change #121: And the region is it only Europe, where youre seeing some issues or are there other markets that are contributing to that six percentage points. Thank you.

Speaker Change #122: Thanks, Ken six percentage points again, I'd say, it's a combination of four things one is is gross bookings.

Speaker Change #122: Following the little short of our expectations last year, but the two specific areas that we've noted were international and mortgage.

Speaker Change #122: And so international got off to a slow start last year as I think we talked about throughout the year and while they.

Speaker Change #122: Had some nice wins.

Speaker Change #122: And when we talk of international this is more specifically EMEA.

Speaker Change #122: We talked about some success in Japan for example, but from an EMEA perspective got off to a slow start and they just weren't able to catch up.

Speaker Change #122: So that's to that we did talk about the churn being a little bit higher.

Speaker Change #122: As a result of one customer deciding now isn't the time to move forward and then the other two points, where again with 30.

Speaker Change #122: Fiscal 'twenty, six bookings, which from a modeling perspective again, we were more backend weighted than normal.

Speaker Change #122: We see opportunities to accelerate those but again consistent with the last point being our guidance philosophy, and they'll need to be more conservative and trying to derisk the year as much as possible all of that contributed to us coming up with that 6%.

Speaker Change #122: Decrease.

Speaker Change #122: Those would be the factors may I'll turn it over to Sean to talk about EMEA and the opportunities that we're seeing there.

Sean: Yes on the leadership front in EMEA.

Sean: Will point back to the early and continued success, we'd had specifically in the UK and Ireland markets in EMEA.

Sean: Where we've been a little bit slower in terms of the expectation we have for ourselves is on the continent.

Sean: And the mainland Europe, specifically and so our new leadership structure based in Madrid from.

Sean: And operator at scale, who has run over $100 million business across Europe.

Sean: <unk> has a network and <unk>.

Sean: Connections to banks across the continent, we believe as powerful as we build out that go to market team that will be our focus to continue the momentum we have in UK.

Sean: But then grow aggressively on the continent, specifically, we think there's good opportunity in Spain, and the Nordics, but obviously, we just signed a big bank in the Czech Republic in Q4 as well.

Speaker Change #123: Okay. Thank you both.

Sean: Okay.

Speaker Change #124: Thank you I would now like to turn the conference back to Shine investment for closing remarks, Sir.

Speaker Change #125: Thank you all for being with US. This afternoon, we hope to see as many of you as we possibly can at our insight user conference here in May.

Speaker Change #124: We appreciate your time.

Speaker Change #124: This concludes today's conference call. Thank you for participating you may now disconnect.