Q4 2025 Verint Systems Inc Earnings Call

All participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session to ask a question. During the session you will need to press star one on your telephone you will then hear an automated message advising your hand is raised to withdraw your question. Please press star. One again, please be advised that today's conference is being recorded I would now like.

Speaker Change: Turn the conference over to your speaker for today Matthew Frankel. Please go ahead.

Matthew Frankel: Thank you operator, good afternoon, and thank you for joining our conference call today.

Speaker Change: Here with Dan Bodner, <unk>, CEO Grand Islander, CFO, and Alan Roden Burns Chief Corporate development Officer.

Speaker Change: Getting started I'd like to mention that accompanying our call today to slide presentation, if you'd like to view. These slides in real time during the call. Please visit the IR section of our website at <unk> Dot com.

Speaker Change: On the Investor Relations tab, and then click on webcast My controller todays conference call.

I would also like to draw your attention to the fact that certain matters discussed in this call may contain forward looking statements within the meaning of the private Securities Litigation Reform Act 90, 95, and other provisions of the federal Securities laws.

Speaker Change: Forward looking statements are based on management's current expectations that are not guarantees of future performance.

Greetings and welcome to the direct Corporation fourth quarter and full year 2024 earnings conference call. At this time, all participants are in a listen only mode.

Speaker Change: Actual results could differ materially from those expressed in or implied by these forward looking statements before looking statements are made as of the date of this call and as except as required by law <unk> has no obligation to update or revise them.

Question and answer session will follow the formal presentation.

If anyone should require operator assistance. Please press star zero on your telephone keypad.

Speaker Change: Investors are cautioned not to place undue reliance on these forward looking statements.

Speaker Change: For more detailed discussion of how these and other risks and uncertainties could cause actual results to differ materially from those indicated in these forward looking statements. Please see our Form 10-K for the fiscal year ended June 31, 2025, one filed and other filings we make with the SEC.

As a reminder, this conference is being recorded.

Speaker Change: No my pleasure to introduce Genpact Chief Financial Officer.

Speaker Change: Good afternoon, and welcome to direct Corporation's fourth quarter 2024 earnings Conference call. This is Tim <unk>, Chief financial officer of direct.

Speaker Change: The financial measures discussed today include non-GAAP measures and certain operating metrics as we believe investors focus on those measures and comparing results between periods and among our peer companies.

Speaker Change: Before we begin I would like to remind you of our safe Harbor statement. During the course of this call. We may make forward looking statements regarding direct products and development expected product benefits, our development plans future clinical trials or projected financial results.

Speaker Change: Revenue in AOR growth, which are adjusted for the divestiture, we effectuate. It on January 31, 2024, we see today's slide presentation, our earnings release, and the Investor Relations section of our website at <unk> Dot com for a reconciliation of non-GAAP financial measures to GAAP measures as well as for more information about our key operating metrics non.

Speaker Change: Forward looking statements involve risks and uncertainties that could cause actual results to differ materially from those in such forward looking statements.

Speaker Change: non-GAAP financial information should not be considered in isolation from as a substitute for or superior to GAAP financial information.

Speaker Change: Further information regarding these and other risks can be found in our SEC filings, including our 10-K and 10-Qs under the heading risk factors.

Speaker Change: It is included because management believes provides meaningful supplemental information regarding our operating results when assessing our business and is useful to investors for informational and comparative purposes.

Speaker Change: To begin I would like to review, our fourth quarter and full year 2024 financial results.

Speaker Change: The non-GAAP financial measures. The company uses have limitations and may differ from those used by other companies.

Speaker Change: The following financial information relates solely to our continuing operations and therefore it does not include the operations of our all of that product line, which we sold in the fourth quarter of 2024.

Dan Dan: I'd like to turn the call over to Dan Dan.

Dan: Thank you Matt.

Dan: Let me begin with our growth drivers.

Speaker Change: Total revenues in 2024 were $2 million compared with $2 6 million in 2023 and half a million for the fourth quarter of 24 compared to 0.9 million for the prior year.

Dan: In Q4 are stronger momentum continued.

Dan: Driving our AUR growth two 5%.

Dan: Ahead of our guidance of 4%.

Dan: I'm pleased to report that the AOR growth accelerated every quarter last year.

2024 revenues were lower due to lower revenue per learner debut our lower revenue recognized from feasibility agreements with other companies and lower sales of excipient.

Dan: As customers expanded their AI deployments.

Dan: More and more customers are recognizing the strong AI business outcomes that variant delivers.

Speaker Change: R&D expense was $10 4 million in 2024 as compared to $29 4 million for the prior year and $1 9 million for the fourth quarter compared with $5 6 million for the prior year 2023.

Dan: And are progressing from initial AI experiments.

Dan: AI adoption at scale.

Dan: We expect this AI momentum to continue in the current quarter and throughout the year and.

Speaker Change: The decreases were primarily due to lower clinical trial related expenses following completion of the affirmed trial.

Dan: And we forecast another year of AOR growth acceleration.

Speaker Change: We also experienced lower contract manufacturing expenses and other external expenses as well as lower employee related costs.

Dan: For Q4 2006, we are.

Raising our outlook for.

Dan: Our prior guidance of $760 million.

Speaker Change: SG&A expenses were $10 million in 2024, as compared to $12 7 million for the prior year and $2 million for the fourth quarter of 24, compared with $2 2 million for the prior year. These decreases were primarily due to lower employee expenses as well as lower consulting patent and audit related expenses.

Dan: $768 million.

Dan: Reflecting 8% growth.

Dan: Let's take a closer look at the key drivers behind our AI momentum.

Dan: There are three key drivers behind the acceleration last year.

Speaker Change: As of the end of 2024, we had cash and investments of $12 million as compared to $29 8 million at December 31 2023.

Dan: Which we believe will drive further exploration in fiscal 'twenty six.

Dan: The first driver is <unk> ability to deliver strong and differentiated AI business outcomes.

Speaker Change: We believe our cash on hand is sufficient to fund operations through the third quarter of 2025.

Dan: Many of our customers started to deploy various box over the last several years.

Dan: And are now reporting strong air business outcomes.

Dan: Which clearly differentiates variant <unk> market.

Dan: There are many CX vendors talk about AI technology.

Dan: But are unable to walk the talk and demonstrate tangible business outcomes like redo.

Dan: The second driver is our ability to deliver AI business outcomes faster than any other CX vendor and without customer disruption.

Dan: With various differentiated hybrid cloud crush.

Dan: Customers are able to start their AI journey small.

Dan: Prove the desired outcomes in their own production environment.

Dan: And then quickly scale with various AI deployments in our cloud.

Dan: And the third driver is our success in seeding many customers with initial <unk> deployments in prior years.

Dan: And we expect that this year. These customers will continue to accelerate various AI consumption.

Dan: So let me elaborate on these three key growth drivers.

Dan: And gave a few customer examples.

Dan: Starting with the first growth driver, our strong and differentiated AI business outcomes.

Dan: <unk> customer reported AI business outcomes.

Dan: A healthcare insurer deployed a variant copilot box.

Dan: And reported around a 32nd reduction in average call time.

Dan: We have 30000 agents at <unk>.

Dan: Second handling time reduction.

Dan: Is equivalent to $70 million of agents capacity.

Dan: The second example is a telecom company.

Dan: Also with 30000 agents.

Dan: These customer deployed a variant copilot box.

Dan: And achieved a 5% increase in agent productivity.

Dan: Which is equivalent to $45 million of agents capacity.

Dan: In this case.

Dan: The <unk> coaching bought not only increase the customer productivity, but in addition, this customer reported increased revenue.

Dan: By improving the performance of their sales agents.

Dan: Customers are reporting stronger AI business outcomes from variant.

Dan: Than from any other CX vendor.

Dan: There's a lot of noise and high in the markets is all CX vendors are today, telling and AI technology story.

Dan: But our competitors cannot report strong ROI case studies like we do.

Dan: Today Vern stands out in the <unk> market.

Dan: As a highly differentiated vendor.

Dan: Because our customers are reporting very strong AI business outcomes.

Dan: And we are excited that many of them are one.

Dan: Willing to publicly share their success stories.

Speaker Change: This customer references.

Speaker Change: A really helpful to variant.

Speaker Change: As there are building confidence with other customers.

Speaker Change: Because they can hear directly from their peers.

Speaker Change: Now, let's discuss the second growth driver.

Speaker Change: In addition to delivering stronger AIG business outcomes than other vendors.

Speaker Change: We are also delivering strong outcomes faster than any other six vendor and.

Speaker Change: And without disrupting the customer's operation or ecosystem.

Speaker Change: Guarantee CX automation platform can be deployed in a hybrid cloud to deliver faster AI outcomes.

Speaker Change: So why is hybrid cloud so important to our customers.

Speaker Change: Brands have many different CX workflows, which are mostly manual and require a large expensive human workforce to operate.

Speaker Change: Automating this CX workflows is an increasingly important priority for brands.

Speaker Change: However, if.

Speaker Change: We are looking to achieve this automation.

Speaker Change: Without embarking on big Rip and replace infrastructure projects.

Speaker Change: It can take years to deploy and which do not guarantee AI business outcomes at the end.

Speaker Change: The first harvest cloud approach to automating CX workflows.

Speaker Change: Is what the market is looking for.

Speaker Change: And is resonating well with customers.

Speaker Change: With variants that can quickly automate existing workflows without disruption.

Speaker Change: They are able to start their journey with a small initial deployment.

Speaker Change: Prove the desired outcomes.

Speaker Change: And then quickly scale and benefits from a large ROI.

Speaker Change: Also <unk>.

Speaker Change: Customers get peace of mind.

Automating this gx workflows is an increasingly important priority for brands. However.

Speaker Change: Can keep their existing technology systems on premises or in the cloud.

Speaker Change: And layer various thoughts on top quickly.

We are looking to achieve this automation.

Speaker Change: This means that customers can continue to work with their existing AI CRM and communication vendors as they did before.

Without embarking on big Rip and replace infrastructure projects.

It can take years to deploy.

And which do not guarantee AI business outcomes at the ends.

Speaker Change: And at various hybrid cloud and talk.

Speaker Change: To automate their CX workflows now.

The various hybrid cloud approach to automating CX workflows.

It's what the market is looking for.

Let's look at various hybrid cloud in action.

And is resonating well with customers.

Speaker Change: Throughout fiscal 'twenty five.

With variants they can quickly automate existing workflows without disruption.

Speaker Change: Many brands deploy very box in hybrid cloud model.

Speaker Change: Starting small and then growing usage as they approve the desired business outcomes for example.

They're able to start their journey with a small initial deployment.

Speaker Change: A leading financial services company has expanded into various platform with hybrid cloud in fiscal 'twenty five.

Prove the desired outcomes.

And then quickly scale and benefits from a large ROI.

Also customer get peace of mind that they can keep their existing technology systems on premises or in the cloud.

Speaker Change: They added seven box.

Speaker Change: And increase their usage over time.

Speaker Change: <unk> and <unk> more than doubling.

Speaker Change: The $1 6 million in Q4 dollars 24 to.

And there are various bars on top quickly.

Speaker Change: The $3 5 million in Q4 dollars 25.

This means that customers can continue to work with their existing AI CRM and communications vendors as they did before.

Speaker Change: Another example is a leading telecom company expanding their various platform with hybrid cloud.

And at various hybrid cloud on top.

Speaker Change: They added three copilot box to their existing variant on premises solutions.

To automate their CX workflows now.

Speaker Change: Resulting in a growing from $1 4 million in Q4 'twenty four.

Let's look at various hybrid cloud in action.

Speaker Change: To $4 1 million in Q4 'twenty five.

Throughout fiscal 'twenty five.

Many brands deployed very box in hybrid cloud model.

Speaker Change: And the third example is a leading insurance company that expanded their usage of ovarian block, resulting in a growing from $2 3 million in Q4 24 to $4 3 million in Q4 25.

Starting small and then growing usage as they approve the desired business outcomes.

For example.

And leading financial services company has expanded in the <unk> platform with hybrid cloud in fiscal 'twenty five.

Speaker Change: These are three examples for customers achieving fast AI outcomes with hybrid cloud.

They added seven baas and.

And increase their usage over time.

Speaker Change: Without long and expensive rip and replace projects.

<unk> and <unk> more than doubling.

From $1 6 million in Q4 24.

Speaker Change: These are also good examples of customers that we seeded with initial AI deployments last year and.

The $3 5 million in Q4 'twenty five.

Another example is a leading telecom company.

Speaker Change: And we expect these customers to increase their usage and expand with additional boss overtime.

Spending their various platform with hybrid cloud.

They added three copilot box.

Speaker Change: Yeah.

Their existing variant on premises solutions.

Speaker Change: The third key driver for our growth acceleration.

Resulting in are all growing from $1 4 million in Q4 24.

Speaker Change: Is the customer AIC thing that we started in prior years.

$4 1 million in Q4 'twenty five.

Speaker Change: Let's look at our customers' journey over multiple years.

And the third example is a leading insurance company that expanded their usage of ovarian box, resulting in are all growing from $2 3 million in Q4, 24 to $4 3 million in Q4 'twenty five.

Speaker Change: These telecom customer started their journey with variants in fiscal 'twenty three.

Speaker Change: And over a two year period added 10 box.

Speaker Change: Growing air or from a few hundred thousand dollars in fiscal 'twenty three.

These are three examples for customers achieving fast AI outcomes with hybrid cloud.

Speaker Change: The $2 1 million in fiscal 'twenty, four and then accelerated to around $8 5 million in fiscal 'twenty five.

Without long and expensive rip and replace projects.

Speaker Change: Customers are increasing consumption of our boss overtime.

These are also good examples of customers that we ceded was initial AI deployments last year and.

Speaker Change: The economics are very favorable with significant OE.

And we expect these customers to increase their usage and expand with additional boss overtime.

Speaker Change: The fixed market is in an early stage of adoption.

Speaker Change: And we are considering our customer base with AI.

Yeah.

The third key driver for our growth acceleration.

Speaker Change: We're pleased that today more than 90 of the Fortune 500 largest brands in the world are already using various AI powered boss.

It is their customer AIC thing that we started in prior years.

Let's look at the customer's journey over multiple years.

Speaker Change: To automate their CX workflows.

These telecom customer started their AI journey was variants in fiscal 'twenty three.

Speaker Change: These are leading brands.

Speaker Change: And we expect them to scale.

Speaker Change: And to serve a strong reference customers.

And over a two year period added 10 box.

Speaker Change: To influence adoption in the rest of the market.

Loring air or from a few hundred thousand dollars in fiscal 'twenty three.

Speaker Change: Now, let's take a look at Q4 bookings and key customer wins.

The $2 $1 million in fiscal 'twenty, four and then accelerated through air off $8 5 million in fiscal 'twenty five.

Speaker Change: In Q4, we delivered record SaaS ACB bookings for new deals.

Customers are increasing consumption of our boss overtime.

Speaker Change: With 30% growth year over year.

The economics are very favorable with significant our ROI.

Speaker Change: Our record bookings and key wins were driven by customers reporting strong and fast AI outcomes and sharing their success stories with other customers.

The Phoenix market is in an early stage of adoption and.

And we've been seeding our customer base with AI.

Speaker Change: Here are examples of two large Q4 wins.

We're pleased that today more than 90 of the Fortune 500 largest brands in the world.

Speaker Change: At $27 million <unk> order from.

Are already using various AI powered boss.

Speaker Change: From an insurance company for renewal and usage extension of the various platform.

To automate their CX workflows.

These are leading brands.

Speaker Change: And the 10 million Daus TCP.

And we expect it to scale.

Speaker Change: This is the order from a telecom company to automate CX workflows and increased agent capacity.

To serve a strong reference customers.

To influence adoption in the rest of the markets.

Speaker Change: There are two main reasons behind this large competitive wins.

Now, let's take a look at Q4 bookings and key customer wins.

Speaker Change: First.

Speaker Change: More and more brands are fatigue by the AI noise.

In Q4, we delivered record SaaS ACB bookings for new deals with 30% growth year over year.

Speaker Change: Looking for vendors that can deliver proven tangible and strong AI business outcomes now.

Speaker Change: And second <unk>.

Our record bookings and key wins were driven by customers reporting strong and fast AI outcomes, ensuring their success stories with other customers.

Speaker Change: Brands are looking for vendors was hybrid cloud that can deploy AI solutions with no disruption and we as a show me first approach.

Here are examples of two large Q4 wins.

Speaker Change: In summary.

Speaker Change: We experienced strong momentum throughout last year.

At $27 million <unk> order.

We finished fiscal 'twenty five with record bookings and AOR growth acceleration and are raising the outlook for the current year, two 8% AOR growth.

From an insurance company for renewal and usage expansion of the various platform.

And the 10 million Daus TCP.

TCP order from a telecom company to automate CX workflows and increase agent capacity.

Speaker Change: We deliver stronger and faster aib's outcomes.

Speaker Change: Better than any other vendor in the six markets.

There are two main reasons behind this large competitive wins.

Speaker Change: And behind the growth outlook is the proven value that we create for our customers.

First.

More and more brands are fatigue by the AI noise.

Speaker Change: We believe the customer AI seeding that we did in prior years will benefit us in fiscal 2006 and beyond.

Looking for vendors that can deliver proven tangible and strong AI business outcomes now.

Speaker Change: Our proven differentiation.

And second.

Speaker Change: It makes us a CX automation category leader and well positioned for double digit <unk> growth longer term.

Brands are looking for vendors was hybrid cloud that can deploy AI solutions with no disruption and we as a show me first approach.

Speaker Change: And now.

Grant: Let me turn it over to grant.

Speaker Change: Grant.

Speaker Change: Thanks, Dan Good afternoon, everyone.

In summary.

We experienced strong momentum throughout last year.

Speaker Change: Our discussion today will include non-GAAP financial measures a reconciliation between our GAAP and non-GAAP financial measures is available as Matt mentioned in our earnings release and in the IR section of our website.

We finished fiscal 'twenty five with.

With record bookings and a all our growth acceleration and are raising the outlook for the current year, two 8% AOR growth.

Speaker Change: Differences between our GAAP and non-GAAP financial measures include adjustments related to acquisitions and divestitures, including fair value revenue adjustments amortization of acquisition related intangibles certain other acquisition and divestiture related expenses stock based compensation expenses.

We deliver stronger and foster AI based outcomes.

Better than any other vendor in the CX market.

And behind the growth outlook is the proven value that we create for our customers.

We believe the customer AI seeding that we did in prior years will benefit us in fiscal 'twenty six and beyond.

<unk> lease costs.

Speaker Change: Facilities and infrastructure realignment as well as certain other items that can vary significantly in tomorrow and frequency from period to period.

Speaker Change: Our proven differentiation.

Speaker Change: It makes us a CX automation category leader and well positioned for double digit growth longer term.

Speaker Change: Let me start today with subscription and <unk>.

Speaker Change: As Dan mentioned earlier variants CX automation platform delivers AI business outcomes faster and stronger than any other vendor in the market, but we are seeing growing adoption of our AI solutions from our base as well as from new customers.

Speaker Change: And now let.

Grant: Let me turn it over to grant.

Speaker Change: Grant.

Speaker Change: Thanks, Dan Good afternoon, everyone.

Speaker Change: Our discussion today will include non-GAAP financial measures a reconciliation between our GAAP and non-GAAP financial measures is available as Matt mentioned in our earnings release, and then the IR section of our website.

Speaker Change: This growing AI adoption is translating into faster growth.

Speaker Change: I am pleased to report that our subscription <unk> year over year growth rate accelerated every quarter last year and we finished the year strong.

Speaker Change: Differences between our GAAP and non-GAAP financial measures include adjustments related to acquisitions and divestitures <unk>.

Speaker Change: Including fair value revenue adjustments amortization of acquisition related intangibles certain other acquisition.

Speaker Change: In Q4.

Speaker Change: <unk> came in at $712 million up 5% year over year ahead of our 4% guidance adjusted for the divestiture.

Speaker Change: Okay.

Speaker Change: Stock based compensation expenses accelerated lease costs.

Speaker Change: Looking forward, we expect our AOR growth to continue to accelerate.

Speaker Change: Facilities and infrastructure realignment as well as certain other items that can vary significantly in tomorrow and frequency from period to period.

Speaker Change: And for the year, we are raising our outlook to $768 million, representing 8% growth.

Speaker Change: Let me start today with subscription and <unk>.

Speaker Change: Behind our AOR growth is strong bookings.

Dan: As Dan mentioned earlier, Barents Sea extra automation platform delivers AI business outcomes faster and stronger than any other vendor in the market.

Speaker Change: In Q4, SaaS ACB bookings from new deals increased 30% year over year to $32 million.

Speaker Change: We are seeing growing adoption of our AI solutions from our base as well as from new customers.

Speaker Change: I would like to highlight that $32 million was a quarterly record and follows three quarters of strong year over year bookings growth from new deals with 34% growth in Q1, 29% growth in Q2, and 37% growth in Q3.

Dan: This growing AI adoption is translating into faster growth.

Speaker Change: I am pleased to report that our subscription <unk> year over year growth rate accelerated every quarter last year and we finished the year strong.

Speaker Change: For the full year SaaS ACB bookings from new deals increased 33%.

Speaker Change: In Q4, <unk> came in at $712 million.

Speaker Change: As a reminder, customer conversions from on premise applications to the cloud were minimal in fiscal 'twenty five.

Speaker Change: Up 5% year over year ahead of our 4% guidance adjusted for the divestiture.

Speaker Change: Looking forward, we expect our AOR growth to continue to accelerate.

Speaker Change: We also expect minimal conversion bookings in fiscal 'twenty six as customers continue to take advantage of our hybrid model to add AI without disruptive rip and replace programs.

Speaker Change: And for the year, we are raising our outlook to 768 million of air are representing 8% growth.

Speaker Change: Looking ahead, we expect another year of strong new deal bookings growth driven by customers, adding new parent AI bots and increased usage.

Speaker Change: Behind our AOR growth is strong bookings.

Speaker Change: In Q4, SaaS ACB bookings for new deals increased 30% year over year to $32 million.

Speaker Change: As Dan mentioned earlier in fiscal 'twenty five we seeded many customers with initial AI deployments, which we expect will increase usage in fiscal 'twenty six.

Speaker Change: I would like to highlight that $32 million was a quarterly record and follows three quarters of strong year over year bookings growth from new deals with 34% growth in Q1.

Speaker Change: Turning to bundled SaaS revenue, we are pleased with our acceleration from 9% growth in Q1 to 23% growth in Q4.

Speaker Change: 9% growth in Q2, and 37% growth in Q3.

Speaker Change: For the full year SaaS ACB bookings from new deals increased 33%.

Speaker Change: Which was also ahead of our guidance.

Speaker Change: As a reminder, customer conversions from on premise applications to the cloud were minimal in fiscal 'twenty five.

Speaker Change: For the year bundled SaaS revenue grew 17% year over year.

Speaker Change: Bundled SaaS <unk> showed similar trends throughout the year also with 17% growth at year end.

Speaker Change: We also expect minimal conversion bookings in fiscal 'twenty six as customers continue to take advantage of our hybrid model to add AI without disruptive rip and replace programs.

Speaker Change: As a reminder.

Speaker Change: <unk> AI solutions are only offered in the cloud and therefore bundled SaaS IRR is a good proxy for our AI growth.

Speaker Change: Looking ahead, we expect another year of strong new deal bookings growth driven by customers, adding new parent AI bots and increased usage.

Dan Dan: Dan shared earlier, several examples of customers, increasing AI consumption and growing <unk>.

Speaker Change: As Dan mentioned earlier in fiscal 'twenty five we seeded many customers with initial AI deployments, which we expect will increase usage in fiscal 'twenty six.

Dan Dan: We are pleased with this AI consumption growth trend, which represents more customers evolving from initial AI experiments to deploying AI at scale.

Speaker Change: Turning to bundled SaaS revenue, we are pleased with our acceleration from 9% growth in Q1 to 23% growth in Q4.

Dan Dan: At our Investor Day, we discussed our plan to begin reporting cash generation and cash contribution to help investors understand <unk> growth on a ratable basis.

Speaker Change: Which was also ahead of our guidance.

Dan Dan: I am pleased to report fiscal 'twenty five cash generation came in 8 million ahead of guidance and our cash contribution came in 16 million ahead of guidance.

Speaker Change: For the year bundled SaaS revenue grew 17% year over year.

Speaker Change: Bundled SaaS <unk> showed similar trends throughout the year also with 17% growth at year end.

Dan Dan: Cash contributions for fiscal 'twenty five came in at $228 million, an increase of 2% year over year.

Speaker Change: As a reminder, <unk> AI solutions are only offered in the cloud and therefore bundled SaaS IRR is a good proxy for our AI growth.

Dan Dan: And drove a 4% increase in free cash flow year over year.

Dan Dan: To bridge from cash contribution to free cash flow, we subtract capex cash taxes interest expense as well as adjusted for the timing of collections and payables and other changes in working capital.

Dan: Dan shared earlier, several examples of customers, increasing AI consumption and growing <unk>.

Dan: We are pleased with this AI consumption growth trends, which represents more customers evolving from initial AI experiments to deploying AI at scale.

Dan Dan: Turning to revenue.

Dan Dan: As Dan discussed earlier customers are embracing our hybrid cloud approach to adopt AI without disruption.

Dan: At our Investor Day, we discussed our plan to begin reporting cash generation and cash contribution to help investors understand <unk> growth on a ratable basis.

Dan Dan: Which means they continue to purchase our software in both unbundled and bundled SaaS models.

Dan Dan: From a revenue perspective revenue accounting for our bundled SaaS model is ratable and revenue accounting for unbundled SaaS model is not ratable.

Dan: I am pleased to report fiscal 'twenty five cash generation came in 8 million ahead of guidance and our cash contribution came in 16 million ahead of guidance.

Dan Dan: Therefore, the timing and term length of unbundle deals can make year over year and sequential trend not meaningful and difficult to predict.

Dan: Cash contributions for fiscal 'twenty five came in at $228 million, an increase of 2% year over year.

Dan Dan: In contrast, the revenue.

Dan: And drove a 4% increase in free cash flow year over year.

Dan Dan: <unk> presents a ratable view of both unbundled and bundled models, providing consistent and meaningful trends period over period.

Dan: To bridge from cash contribution to free cash flow, we subtract capex cash taxes interest expense as well as adjust for the timing of collections and payables and other changes in working capital.

Dan Dan: Looking back in fiscal 'twenty five.

Dan Dan: <unk> growth accelerated each quarter, reflecting the true growth and trajectory of the business, while revenue trends fluctuated due to timing of unbundled SaaS revenue.

Dan: Turning to revenue.

Dan: As Dan discussed earlier customers are embracing our hybrid cloud approach to adopt AI without disruption.

Dan Dan: In Q4 revenue came in at $254 million versus our guidance of $277 million.

Dan: Which means they continue to purchase our software in both unbundled and bundled SaaS models.

Dan Dan: All revenue streams came in as expected.

Dan: From a revenue perspective revenue accounting for our bundled SaaS model is ratable and revenue accounting for unbundled SaaS model is not ratable.

Dan Dan: Four unbundled SaaS.

As you know our unbundled SaaS stream includes revenue from both renewals of multiyear contracts and bookings of new deals.

Dan: Therefore, the timing and term length of unbundle deals can make year over year and sequential trends not meaningful and difficult to predict.

Dan Dan: Looking back on Q4 revenue from unbundled SaaS renewals came in as expected.

Dan Dan: The entire revenue shortfall was due to bookings of a few new deals in the unbundled SaaS model that did not materialize in the quarter.

Dan: In contrast, the revenue.

Dan: <unk> presents a ratable view of both unbundled and bundled models, providing consistent and meaningful trends period over period.

Dan Dan: These deals were from existing customers not competitive and we expect these customers to continue to expand over time.

Dan: Looking back in fiscal 'twenty five.

<unk> growth accelerated each quarter, reflecting the true growth and trajectory of the business, while revenue trends fluctuated due to timing of unbundled SaaS revenue.

Dan Dan: Even with a few unbundle deals not materializing within the quarter Q4 was still a record bookings quarter.

Dan Dan: Even with our record quarter, though our bookings mix drove unbundled SaaS revenue below our expectations.

Dan: In Q4 revenue came in at $254 million versus our guidance of $277 million.

Dan Dan: As a reminder, the mix of unbundled and bundled SaaS bookings does not change the IRR view, which is ratable for all deals.

Dan: All revenue streams came in as expected.

Speaker Change: Four unbundled SaaS.

Speaker Change: As you know our unbundled SaaS stream includes revenue from both renewals of multiyear contracts and bookings of new deals.

Dan Dan: In fiscal 'twenty six the unbundled booking mix will also be difficult to predict and we will therefore take a different approach to revenue guidance. This year guiding with the wider range.

Speaker Change: Looking back on Q4 revenue from unbundled SaaS renewals came in as expected.

Dan Dan: Also similar to fiscal 'twenty five we did not expect quarterly revenue trends to be meaningful due to the timing of unbundled SaaS revenue.

Speaker Change: The entire revenue shortfall was due to bookings of a few new deals in the unbundled SaaS model that did not materialize in the quarter.

Dan Dan: Now turning to guidance, we are providing guidance in two ways.

Speaker Change: These deals were from existing customers not competitive and we expect these customers to continue to expand over time.

Dan Dan: First guidance for a ratable view of the business as measured by subscription IRR cash generation and cash contribution.

Speaker Change: Even with a few unbundle deals not materializing within the quarter Q4 was still a record bookings quarter.

Dan Dan: Our ratable guidance will be provided with a narrow range of plus or minus 1%.

Speaker Change: Even with our record quarter, though our bookings mix drove unbundled SaaS revenue below our expectations.

Dan Dan: Second we will continue to provide guidance for revenue and non-GAAP diluted EPS as we always have but revenue will be provided with a wider range of plus or minus 3%.

As a reminder, the mix of unbundled and bundled SaaS bookings does not change the IRR view, which is ratable for all deals.

Dan Dan: We're a ratable metrics our guidance is as follows.

Speaker Change: With fiscal 'twenty six the unbundled booking mix will also be difficult to predict and we will therefore take a different approach to revenue guidance. This year guiding with the wider range.

Dan Dan: We are increasing our outlook for <unk> in Q4, 2006 from $760 million to 768 million plus or minus 1%, reflecting approximately 8% growth year over year.

Speaker Change: Also similar to fiscal 'twenty five we did not expect quarterly revenue trends to be meaningful due to the timing of unbundled SaaS revenue.

Dan Dan: And we are targeting $960 million for cash generation with a range of plus or minus 1%.

Speaker Change: Now turning to guidance, we are providing guidance in two ways.

Dan Dan: At the midpoint of our cash generation guidance, we expect around $245 million of cash contribution.

Speaker Change: First guidance for a ratable view of the business as measured by subscription IRR cash generation and cash contribution.

Dan Dan: For revenue and non-GAAP diluted EPS, our guidance is as follows.

Our ratable guidance will be provided with a narrow range of plus or minus 1%.

Dan Dan: We are targeting $960 million of revenue with a range of plus or minus 3%.

Speaker Change: Second we will continue to provide guidance for revenue and non-GAAP diluted EPS as we always have but revenue will be provided with a wider range of plus or minus 3%.

Dan Dan: Driving non-GAAP diluted EPS of $2 93 at the midpoint.

Dan Dan: Also at the midpoint of our revenue guidance, we expect gross margin of around 73% with another year of operating margin expansion.

Speaker Change: We're a ratable metrics our guidance is as follows.

Speaker Change: We are increasing our outlook for <unk> in Q4, 26 from $760 million to 768 million plus or minus 1%, reflecting approximately 8% growth year over year.

Dan Dan: Regarding below the line assumptions for the full year, we expect interest and other expense net of approximately $7 million.

Dan Dan: Net income from Noncontrolling interest of around $1 million.

Speaker Change: And we are targeting $960 million for cash generation with a range of plus or minus 1%.

Dan Dan: A cash tax rate of around 11%.

Dan Dan: Approximately $72 2 million fully diluted shares reflecting our buybacks to date.

Speaker Change: At the midpoint of our cash generation guidance, we expect around $245 million of cash contribution.

Dan Dan: Now, let me give you a bit more color on our outlook for Q1 of fiscal 'twenty six.

Speaker Change: For revenue and non-GAAP diluted EPS, our guidance is as follows.

Dan Dan: For modeling purposes.

Dan Dan: For <unk> year over year growth will accelerate to 6% in Q1.

Speaker Change: We are targeting $960 million of revenue with a range of plus or minus 3%.

Dan Dan: For the sequential trend keep in mind that seasonality typically drives higher usage of our software in Q4 compared to Q1.

Speaker Change: Driving non-GAAP diluted EPS of $2 93 at the midpoint.

Speaker Change: Also at the midpoint of our revenue guidance, we expect gross margin of around 73% with another year of operating margin expansion.

Dan Dan: For revenue, we expect a range of between $190 million to $200 million.

Dan Dan: Our range reflects another quarter of strong year over year bundled SaaS revenue growth of more than 17% and lower unbundled SaaS revenue year over year.

Speaker Change: Regarding below the line assumptions for the full year, we expect interest and other expense net of approximately $7 million.

Speaker Change: Net income from Noncontrolling interest of around $1 million.

Dan Dan: As we've discussed in the past unbundled SaaS multiyear renewals vary by quarter, and we expect the unbundled SaaS revenue in Q1 to be lower compared to Q1 last year.

Speaker Change: A cash tax rate of around 11%.

Speaker Change: And approximately $72 2 million fully diluted shares reflecting our buybacks to date.

Dan Dan: At the midpoint of our revenue range, we expect driving non-GAAP diluted EPS the 13th.

Speaker Change: Now, let me give you a bit more color on our outlook for Q1 of fiscal 'twenty six.

Dan Dan: In Q1.

Dan Dan: Turning to our balance sheet, we continue to be in a very good financial position.

Speaker Change: For modeling purposes.

Speaker Change: For <unk> year over year growth will accelerate to 6% in Q1.

Dan Dan: Our net debt remains well under one times last 12 month EBITDA and is further supported by our strong cash flow.

Speaker Change: For the sequential trend keep in mind that seasonality typically drives higher usage of our software in Q4 compared to Q1.

Dan Dan: With regard to capital allocation.

Dan Dan: We expect the largest use of our free cash flow to be buybacks.

Speaker Change: For revenue, we expect a range of between 190 million to $200 million.

Dan Dan: As a reminder, we started a new 200 million stock buyback program in September.

Speaker Change: Our range reflects another quarter of strong year over year bundled SaaS revenue growth of more than 17% and lower unbundled SaaS revenue year over year.

Dan Dan: I would also like to mention that we recently increased the size of our revolver to 500 million and extended the term to 2030.

Speaker Change: As we've discussed in the past unbundled SaaS multiyear renewals vary by quarter, and we expect the unbundled SaaS revenue in Q1 to be lower compared to Q1 last year.

This new revolver can be used to pay down our existing convertible notes upon maturity as we are not currently planning to issue a new convertible.

Dan Dan: We can also use the revolver for other purposes, including the potentially accelerate our stock buyback program.

Speaker Change: At the midpoint of our revenue range, we expect driving non-GAAP diluted EPS the 13th.

Dan Dan: In summary, we.

Speaker Change: In Q1.

Dan Dan: We are pleased with our strong AI and momentum.

Speaker Change: Turning to our balance sheet, we continue to be in a very good financial position.

Dan Dan: Throughout fiscal 'twenty, five AOR growth accelerated and we over achieved our Q4 <unk> of our guidance.

Speaker Change: Our net debt remains well under one times last 12 months EBITDA and is further supported by our strong cash flow.

Dan Dan: We expect this momentum to continue and we are raising our outlook for the current year.

Speaker Change: With regard to capital allocation.

Dan Dan: In fiscal 'twenty six to help investors better understand the trends of our business. In addition to providing guidance for revenue and non-GAAP diluted EPS with a wide range, we will provide guidance on a ratable basis for cash.

Speaker Change: We expect the largest use of our free cash flow to be buybacks.

Speaker Change: As a reminder, we started a new 200 million stock buyback program in September.

Speaker Change: I would also like to mention that we recently increased the size of our revolver to $500 million and extended the term to 2030.

Dan Dan: Cash generation and cash contribution with a narrow range.

Dan Dan: We believe a ratable view as a better way to understand the underlying growth trends in our business.

Speaker Change: This new revolver can be used to pay down our existing convertible notes upon maturity as we are not currently planning to issue a new convertible.

Dan Dan: With that operator, please open the line for questions.

Dan Dan: Thank you as a reminder, if you would like to ask a question. Please press star one on your telephone we will ask that you wait for your name and company to be announced before you proceed with your question one moment, while we take the first question.

Speaker Change: We can also use the revolver for other purposes, including the potentially accelerate our stock buyback program.

Speaker Change: In summary.

Speaker Change: We are pleased with our strong AI and momentum.

Speaker Change: And our first question will be coming from the line of Joshua Reilly.

Speaker Change: Throughout fiscal 'twenty, five AOR growth accelerated and we overachieve, our Q4 <unk> of our guidance.

Dan Dan: And company your line is open.

Speaker Change: We expect this momentum to continue and we are raising our outlook for the current year.

Speaker Change: Alright, well thanks for taking my questions here. So if we look at the macro I guess one of the items, we were hoping to dissipate once the AI paralysis impacting contact center spending and then it seemed giving the bundled momentum that you have here. That's playing out can you just speak to the customer confidence in buying solutions now and whether they really are.

Speaker Change: In fiscal 'twenty six to help investors better understand the trends of our business. In addition to providing guidance for revenue and non-GAAP diluted EPS with a wide range, we will provide guidance on a ratable basis for cash generation.

Speaker Change: Taking this land small approach or are some customers also going for larger deals in the current environment.

Speaker Change: <unk> and cash contribution with a narrow range.

Speaker Change: We believe a ratable view as a better way to understand the underlying growth trends in our business.

Speaker Change: Yes. Thank you.

Speaker Change: We do have now a very strong quarter in bundle revenue.

Speaker Change: With that operator, please open the line for questions.

Speaker Change: Growing 23%, but.

Speaker Change: This has been improving throughout the year and I believe Varian is very helpful to customers to stop the paralysis was the stronger and faster AD business outcomes.

Speaker Change: Thank you as a reminder, if you would like to ask a question. Please press star one on your telephone so ask that you wait for your name and company to be announced before you proceed with your question one moment, while we take the first question.

Speaker Change: And we do see customers are evolving from just doing AI experiments, which is small scale to actually AI deployments at scale.

Speaker Change: And our first question will be coming from the line of Joshua Reilly of Needham and company. Your line is open.

Speaker Change: So let me give you an example.

Joshua Reilly: Alright, well thanks for taking my questions here. So if we look at the macro I guess one of the items, we were hoping to dissipate once the AI paralysis impacting contact center spending in it it seemed giving the bundled momentum that you have here. That's playing out can you just speak to the customer confidence in buying solutions now and whether they really are.

Speaker Change: Pfizer.

Speaker Change: It's a leading Fintech company.

Speaker Change: And they reported a variant quality box is doing the work of 1200 supervisors.

Speaker Change: So this is very gentle <unk> automating CX workflows.

Speaker Change: And in <unk> case.

Joshua Reilly: Taking this land small approach or some customers also going for larger deals in the current environment.

Speaker Change: This is automating our financial compliance work so the various agenda is.

Speaker Change: Automating, our micro electro was into compliance workflow and.

Joshua Reilly: Yes. Thank you, yes, we do have now a very strong quarter in bundle such revenue.

Speaker Change: And increasing the capacity of the compliance team.

Speaker Change: Increasing it by various Michigan matter. So these kind of examples and companies who are willing to share. The success stories publicly is very helpful.

Joshua Reilly: Growing 23%, but.

Joshua Reilly: This has been improving throughout the year.

And I believe Varian is very helpful to customers to stop the paralysis was the stronger and faster AD business outcomes.

Speaker Change: And then obviously, there's the economics so for me.

Speaker Change: Point of view of the of the brand.

Joshua Reilly: We do see customers are evolving from just doing AI experiments, which is small scale to actually AI deployments at scale.

Speaker Change: On average to replace a seat with AI.

Speaker Change: The brand will need to invest $2000 in.

Speaker Change: AI software.

Joshua Reilly: So let me give you an example.

Speaker Change: But they say $40000 on labor.

Joshua Reilly: Pfizer.

Speaker Change: This is the <unk> alloy and once customers see that kind of strong outcome obviously.

Joshua Reilly: As a leading Fintech company.

Joshua Reilly: And they reported a variant quality box is doing the work of 1200 supervisors.

Speaker Change: They move away from the paralysis.

Joshua Reilly: So this is very <unk> automating CX workflows.

Speaker Change: At the same time for variance this $2000 revenue.

Speaker Change: From selling the automation software.

Joshua Reilly: And in <unk> case.

Speaker Change: It's much better than the loss of the software revenue from the from the reduced seats.

Joshua Reilly: This is automating our financial compliance work so the various agenda gay ice automating micro electro was into compliance workflow and.

Speaker Change: Which is only $200 so.

Joshua Reilly: And increasing the capacity of the compliance team so increasing it by a very significant matter.

Speaker Change: We.

Speaker Change: We swapped 200 dollar license for $2000 AI license.

Joshua Reilly: This kind of examples and companies who are willing to share the success stories publicly.

And of course that benefits very informing Nymex increase in revenue.

Speaker Change: This is a win win and we.

Joshua Reilly: It's very helpful.

Joshua Reilly: And then obviously, there's the economics so for.

Speaker Change: We are helping customers to actually see it.

Speaker Change: The benefits and it.

Joshua Reilly: Point of view of the all of the brand.

Speaker Change: It makes it it's no brainer to invest.

Joshua Reilly: On average to replace a seat with AI.

Speaker Change: I would say that the big bottlenecks that we saw last year.

<unk> will need to invest $2000 in AR and AI software.

Speaker Change: Are dissipating.

Speaker Change: One was the customer have that perception.

Joshua Reilly: But they say $40000 on labor.

Speaker Change: In order to get outcomes they need to.

Joshua Reilly: Is the 20, <unk> alloy and once customers see that kind of strong outcome, obviously, they move away from the paralysis.

Speaker Change: Change the infrastructure.

Speaker Change: And of course was a hybrid cloud as we educated the market that that's not necessary.

Joshua Reilly: At the same time for variance this $2000 revenue from selling the automation software.

Speaker Change: Because you can layer the AI bots, one variant on top of your existing infrastructure. So there was a big objection.

Joshua Reilly: Much better than the loss of the software revenue from the from the reduced seats.

Speaker Change: Objection that now customers say that it's not a real objection.

Speaker Change: And the other objection was mostly from where.

Joshua Reilly: There's only $200 so are we.

Speaker Change: Were they were skeptical about AI.

We swapped 200 dollar license for $2000 AI license.

Speaker Change: And they they wanted to do AI experiments before they allow AI into in the in the enterprise.

Joshua Reilly: And of course net beneficiary from a Nymex increase in revenue.

Speaker Change: And now of course the strong.

Joshua Reilly: So this is a win win and.

Speaker Change: Outcomes.

Speaker Change: Outcomes reported by their peers, they started to see well, it's real and of course was hybrid cloud that can start small and they can actually start small into own production environment, It's not 11 environment and when they see the results in their own production environment. There is no objection and they would like to scale quickly.

Joshua Reilly: We are helping customers to actually see the.

Joshua Reilly: The benefits and.

Joshua Reilly: It makes it it's no brainer to invest.

Joshua Reilly: I would say that the big.

Joshua Reilly: <unk> that we saw last year.

Joshua Reilly: Are dissipating.

Joshua Reilly: One was the customer have that perception that in order to get outcomes they need to.

Speaker Change: And we saw many examples before of customers that more than doubled.

Joshua Reilly: Change the infrastructure.

Speaker Change: There are <unk>.

Joshua Reilly: And of course, there's a hybrid cloud as we educated the market that that's not necessary because you can layer. The AI bots, one variant on top of your existing infrastructure. So there was a big.

Speaker Change: Basically the cap there.

Speaker Change: Non bundled SaaS.

Speaker Change: L. A was more stable, sometimes growing sector is declining a little bit, but a lot of the gross debt.

Speaker Change: Just before was actually adding AI and Larry layering that AI AI on top of their existing.

Joshua Reilly: Objection that now customers see that it's not a real objection.

Joshua Reilly: And the other objection was mostly from I T.

Joshua Reilly: They were skeptical about AI and they wanted to do AI experiments before they allow AI.

Speaker Change: Solutions for variant and from other vendors.

Speaker Change: Got it thanks, and then if you look at the FY 'twenty six guidance.

Joshua Reilly: In the enterprise.

Joshua Reilly: And now of course the strong.

Speaker Change: Are you assuming that any of the 20 million and kind of pushed unbundled revenue that.

Joshua Reilly: Outcomes.

Joshua Reilly: Outcomes reported by their peers, they started to see well in Israel and of course was hybrid clouds that can start small.

Speaker Change: It didn't come in in the fourth quarter closes or have you kind of taken that assumption on the 20 million there out of the full year guidance, including the plus or minus 3%.

Joshua Reilly: You start small and corn production environments, it's not 11 environment.

Joshua Reilly: And when they see the results in their own production environment. There is no objection and they would like to scale quickly so and we saw many examples before.

Speaker Change: Assumption there.

Speaker Change: Yes.

Speaker Change: We are.

Speaker Change: Im talking about.

Speaker Change: Couple of deals that are from existing customers that have a ongoing rollout of very.

Joshua Reilly: Customers that more than doubles there.

Joshua Reilly: And basically they kept there.

Speaker Change: Software into larger operations.

Joshua Reilly: Non bundled SaaS.

Speaker Change: In one case, it's a deal that the customer was in the middle of a rollout to more business units.

Joshua Reilly: L. A was more stable, sometimes lawn tractor is declining a little bit, but a lot of the gross debt.

Joshua Reilly: Ill discuss before was actually adding NII and learning layering that AI AI on top of their existing.

Speaker Change: And we expect them to continue the rollout timeline the customers have.

Speaker Change: Changes obviously.

Speaker Change: We see customers actually prefer to invest our budget dollars NII, rather than rolling out infrastructure changes across there.

Joshua Reilly: Solutions will variant and from other vendors.

Joshua Reilly: Got it thanks, and then if you look at the FY 'twenty guidance.

Speaker Change: Operation.

Speaker Change: But we believe that.

Joshua Reilly: Are you assuming that any of the 20 million and kind of pushed unbundled revenue that.

Speaker Change: We have a very large.

Speaker Change: Range of outcomes when it comes to unbundled SaaS.

Joshua Reilly: It didn't come in in the fourth quarter closes or have you kind of taken that assumption on the 20 million there out of the full year guidance, including the plus or minus 3%.

Speaker Change: And Thats why were guiding revenue is plus minus 3%.

Speaker Change: But from an IRR perspective.

Speaker Change: Everything is ratable and unbundle bundled booking basically I'm, not making any impact on the AOR. So.

Joshua Reilly: Assumption there.

Joshua Reilly: Yeah no we.

Joshua Reilly: We are.

Joshua Reilly: Im talking about.

Speaker Change: When we guide to the 8% growth in fiscal 'twenty six.

Speaker Change: Couple of deals that are all from existing customers that have a ongoing rollout.

Speaker Change: Just regarding the impact of any booking mix.

Joshua Reilly: Very software into our larger operations.

Joshua Reilly: In one case, it's a deal that the customer was in the middle of a rollout to more business units.

Speaker Change: And you know when you look at.

Speaker Change: Q4, which we just finished.

Speaker Change: Booking mix.

Joshua Reilly: And we expect it to continue to rollout the timeline the customers have.

Speaker Change: We actually assumed in booking in Q4 that we will have.

Speaker Change: $25 million of new seismic survey.

Joshua Reilly: Changes obviously.

Joshua Reilly: We see customers actually prefer to invest our budget dollars NII, rather than rolling out infrastructure changes across there.

Speaker Change: And then it was a good number right this will be a 20% growth year over year.

Speaker Change: Actually we had a record booking on 32 million. So we came with 30% growth even without those unbundle deals.

Joshua Reilly: Operation.

Joshua Reilly: But we believe that.

Joshua Reilly: We have a very large room.

Speaker Change: That will be now pushed into the future.

Joshua Reilly: Range of outcomes when it comes to Unbundle SaaS.

Joshua Reilly: Right and Thats why were guiding revenue is plus minus 3%.

Speaker Change: If we had those.

Speaker Change: A few deals that slipped we would be at $40 million, which is even more than 40% growth.

Joshua Reilly: But from an air our perspective.

Joshua Reilly: Everything is ratable and unbundle bundled booking basically are not making any impact on the AOR. So.

Speaker Change: But 30% growth really is great because it's in AI. We saw customers are preferring to put their budget to work to increase the.

Joshua Reilly: When we guide to the 8% growth in fiscal 'twenty six.

Speaker Change: The economic benefits that they get from AI and they are sometimes deferring their infrastructure change.

Joshua Reilly: This regarding the impact of any booking mix.

Speaker Change: It's kind of split it overtime.

Joshua Reilly: And you know when you look at.

Joshua Reilly: Q4, which we just finished.

Speaker Change: Got it last question for me is if you look at the fourth quarter. There you did outperform on total <unk> with 5% growth you know my estimate here that you lost $8 million to $10 million from one of those large unbundle deals that pushed I guess in terms of making up for that $8 million to $10 million and what they are you know they'll be.

Joshua Reilly: Booking mix.

Joshua Reilly: We actually assumed in booking in Q4 that we will have.

Joshua Reilly: $25 million of new seismic survey.

Joshua Reilly: And that was a good number I believe this will be a 20% growth year over year.

Joshua Reilly: Actually we had a record booking of 32 million. So we came with 30% growth.

Speaker Change: On a net basis with 5% growth was at a series of smaller bundled deals or was there a few large bundled deals that kind of came in the corner there that outperformed relative to your expectations. Thanks guys.

Joshua Reilly: Even without those unbundle deals.

Joshua Reilly: That will be now pushed into the future.

Joshua Reilly: So if we had those.

Speaker Change: Yes, no. Thank you for that so we do see larger deals now form.

Joshua Reilly: A few deals that slipped we would be at $40 million, which is even more than 40% growth, but 30% growth really is great. Because it's in AI. We saw customers are preferring to put their budget to work to increase the.

Speaker Change: Uh huh.

Speaker Change: One of the two deals that I highlighted the there was a Q4 win was a $10 million.

Speaker Change: Typically order that was.

Speaker Change: For new Bot.

Joshua Reilly: The economic benefits that they get from AI and they are sometimes deferring their infrastructure change.

Speaker Change: But interesting we mentioned that we have been seeding the market for quite some time and I.

Joshua Reilly: And kind of split it over time.

Speaker Change: Earlier discussed four different examples of customer debt increased significantly over the last year.

Joshua Reilly: Got it last question for me is if you look at the fourth quarter. There you did outperform on total <unk> with 5% growth you know my estimate here that you lost $8 million to $10 million from one of those large unbundle deals that pushed I guess in terms of making up for that $8 million to $10 million and what they are but you know.

Speaker Change: When we look at the different cohorts.

Speaker Change: And how customers behave.

Speaker Change: First I've mentioned that.

Speaker Change: We're looking at a fortune 500 companies the leading brands in the World and we only do have 90 of the Fortune 500.

Speaker Change: Beating on a net basis with 5% growth was at a series of smaller bundled deals or when there are few large bundled deal that kind of came in the corner there that outperformed relative to your expectation. Thanks guys.

Speaker Change: Our.

Speaker Change: Using AI, so thats, obviously, a great because these are.

Speaker Change: Market Influencer and Theres a lot of potential in large companies.

Speaker Change: When I looked at a different cohort, which is what is the variance top 100 customers.

Speaker Change: Yes, no. Thank you for that so we do see larger deals now form.

Speaker Change: And in the very top 100, each customer on average is like a 3 million daus IRR.

Speaker Change: Uh huh.

Speaker Change: One of the two deals that I highlighted there was a Q4 win was a $10 million.

Speaker Change: So these are large customers. This cohort actually grew last year Q4, <unk> the growth was 17%.

Speaker Change: Typically order that was for.

Speaker Change: For new box.

Speaker Change: Right.

Speaker Change: But interesting you know we mentioned that we've been seeding the market for quite some time and.

Speaker Change: 5% is our overall <unk> growth.

Speaker Change: But in the top 100, we grew 17%.

Speaker Change: I earlier discussed four different examples of customer debt increased significantly over the last year.

Speaker Change: And when you look at even a smaller universe the cohort of our top 25 customer, which they have on average $6 million for customary IRR.

Speaker Change: So when we look at the different cohorts and how customers behave.

Speaker Change: These customers actually grew 24% in Q4.

Speaker Change: First I've mentioned that you know when we were looking at a fortune 500 companies that the leading brands in the world and we only do have 90 of the fortune 500 that are.

Speaker Change: Versus the four 5% so what we see now is that our largest customers I'm actually growing much faster than the overall universe and it's not a coincidence because.

Speaker Change: Using Jonathan AI, So that's obviously.

Speaker Change: Great because these are.

Speaker Change: When we were.

Speaker Change: Market Influencer and there's a lot of potential in large companies.

Speaker Change: Introducing innovative AI and strong outcomes to the market, we decided to actually go top down because we have thousands of customers that we can focus on educating all of them.

Speaker Change: When I looked at it a different cohort, which is what is the variant top 100 customers.

Speaker Change: And in the very top 100, each customer on average is like a 3 million daus IRR.

Speaker Change: So our decision was to educate our customer base took down.

Speaker Change: So these are large customers. This cohort actually grew last year, while Q4 <unk> the growth was 17%.

Speaker Change: And we see big success with the top 25 in the top 100.

Speaker Change: We spent a lot of time educating and showing them in their own production environment, what they can achieve and then obviously buying now bigger and bigger. So it is not small deals we have bigger deals.

Speaker Change: Right.

Speaker Change: 5% is our overall <unk> growth.

Speaker Change: But in the top 100, we grew 17%.

And when you look at even a smaller universe the cohort of our top 25 customer, which they have on average $6 million for customary IRR.

Speaker Change: Yes.

Speaker Change: And also in fiscal 'twenty six all.

Speaker Change: All this sitting work we did with the large customers. We think will continue to benefit us because they are continuing to expand the high consumption, but we have now the bandwidth to focus on the next 100 and the next 100 and go down the costs.

Speaker Change: These customers actually grew 24% in Q4.

Speaker Change: Versus the four 5%.

Speaker Change: So what we see now is that our largest customers I'm actually growing much faster than the overall universe and it's not a coincidence because when we were.

Speaker Change: From a base and of course, we see also acceleration from this effort.

Speaker Change: No.

Speaker Change: As you as you mentioned in your first question.

Speaker Change: Introducing this innovative AI and strong outcomes to the market, we decided to actually go top down.

Speaker Change: There was a big paralysis in the market.

Speaker Change: We're breaking through that paralysis, and we're seeing the results now not just in terms of potential but also we see very tangible results in our top customer cohorts.

Speaker Change: Because we have thousands of customers that we can focus on educating all of them. So our decision was to educate our customer base took down.

Speaker Change: Thank you.

Speaker Change: And we see big success with the top 25, and it took 100.

Speaker Change: Thank you and one moment, while we prepare for the next question.

Speaker Change: Because we spent a lot of time educating and showing them in their own production environment. What they can achieve and then obviously buying now bigger and bigger so it's not small dams, we have bigger deals.

Speaker Change: And our next question is going to come from the line of Peter Levine of Evercore. Your line is open.

Peter Levine: Great. Thank you for taking my question.

Speaker Change: A question and.

Speaker Change: And also in fiscal 'twenty six.

Speaker Change: I think it's clear you guys have demonstrated or at least trying to relay the message of <unk>.

Speaker Change: All this sitting work we did with the large customers. We think will continue to benefit us because they are continuing to expand the high consumption, but we have now the bandwidth to focus on the next 100 and the next 100 and go down.

Speaker Change: Alright, I'm not sure I can picture, they're the only company going through the dynamics of term and subscription, but if you look at the dynamics of these customers can you maybe just share with us your confidence that these customers that pushed their unbundle deals into fiscal 'twenty six like what percentage of those are actually do you feel confident going to close.

Speaker Change: From a base and of course, we see also acceleration from this effort.

Speaker Change: No.

Speaker Change: As you as you mentioned in your first question you know.

Speaker Change: And second are there any other dynamics dynamics that happened with these deals or is it the macro was a budgeting anything else that kind of played into them pushing out.

Speaker Change: There was a big paralysis in the markets.

Speaker Change: We're breaking through that paralysis, and we're seeing the results now not just in terms of potential but also we see very tangible results in our top customer cohorts.

Speaker Change: Okay.

Speaker Change: I don't think that there are some macro issues I think that's actually customers are looking to spend their budgets, where they get tangible results.

Speaker Change: Thank you.

Speaker Change: Thank you and one moment, while we prepare for the next question.

Speaker Change: I think there is now in this environment is even more scrutiny on you know are we just doing experiments or are we going to see business outcomes now so that that actually works well for various because we're not advocating that you need to do a long term investment you can start small.

Speaker Change: And our next question is going to come from the line of Peter Levine of Evercore. Your line is open.

Peter Levine: Great. Thanks for taking my question.

Speaker Change: Yeah, I think it's clear you guys have demonstrated or at least trying to relay. The message of <unk> is the right metric in a picture there the only company going through the dynamics of term.

Speaker Change: And prove it and scale only when you see the outcomes.

Speaker Change: I don't think it's a budget issue.

Speaker Change: Subscription, but if you look at the dynamics of these customers can you maybe just share with us your confidence that these customers that pushed their unbundle deals into fiscal 'twenty six like what percentage of those are actually do you feel confident going to close.

Speaker Change: They all are so significant that the disc.

Speaker Change: Solutions actually pay for themselves.

Speaker Change: So in terms of the mix of bundled and unbundled into 26, what will be the mix that we assume.

Speaker Change: First the good news is that the mix doesn't matter to our.

Speaker Change: And second are there any other dynamics dynamics that happened with these deals or is it the macro was a budgeting anything else that kind of played into them pushing out.

Speaker Change: Guidance, because it doesn't matter.

Speaker Change: All games and they are a ratable.

Speaker Change: Okay.

Speaker Change: Now of course, we know that it and LR and revenue are the same thing.

Speaker Change: I don't think that there is some macro issues I think that's actually customers are looking to spend their budgets, where they get tangible results.

Speaker Change: And if it's a million dollar deal it will drive their hard drive revenue $4 million. So it's just a matter of timing.

Speaker Change: I think there is now in the in this environment is even more scrutiny on you know are we just doing experiments or are we going to see business outcomes now.

Speaker Change: And because we take all dealers is notable.

Speaker Change: We basically are indifferent to the mix on our guidance and this is why we guided for 8% growth was plus minus 1% range.

Speaker Change: So that actually works well for variant because we're not advocating that you need to do a long term investment you can.

Speaker Change: Paul and prove it and scale only when you see the outcome. So I don't think it's a budget issue.

Speaker Change: Now the mix will make a different store revenue.

Speaker Change: As we all know because of the impact of <unk>.

Speaker Change: 606 on unbundle SaaS, so different mix.

Speaker Change: All are so significant.

Speaker Change: The solution is actually pay for themselves.

Speaker Change: We'll create different results and this is why we are guiding for plus minus 3%.

Speaker Change: So in terms of the mix of bundled and unbundled into 26, what will be the mix that we assume.

Speaker Change: <unk> minus $30 million, which is a broad range, but it does reflect the reality.

Speaker Change: First the good news is that the mix doesn't matter to our.

Speaker Change: Is that it's difficult for us to predict.

Speaker Change: Our guidance because it doesn't matter at all games and they are all available.

Speaker Change: Because the customers now have the flexibility to change their mind like hybrid cloud.

Speaker Change: Now of course, we know that and LR and revenue are the same thing.

Speaker Change: Brings a lot of benefits to the customer and one of them is.

Speaker Change: They don't have to make the decision what they need to do first.

Speaker Change: The deal if it's a million dollar deal. It will drive there are dry revenue $4 million. So it's just a matter of timing.

Speaker Change: Normally in software or you you would think I have to change my infrastructure and then I can layer on the AI applications and get the benefits.

Speaker Change: And because we take all doing is is notable.

Speaker Change: We basically are indifferent to the mix.

Speaker Change: It came with a very differentiated approach you do not need to change or infrastructure.

Speaker Change: Our guidance and this is why we guided for 8% growth was plus minus 1% range.

Speaker Change: So we're not forcing our customers to continue to.

Speaker Change: Converts their premises to the cloud or whether they need to expand in on premises before they can go to the cloud with AI and it gives them the flexibility to actually decide sometimes in the very last minute.

Speaker Change: Now the mix will make a difference to our revenue.

Speaker Change: As we all know because of the impact of.

Speaker Change: 606 on unbundle SaaS, so different mix.

Speaker Change: We're creating results and this is why we are guiding for plus minus 3%.

Yes, we're going to spend was very $5 million, but rather than spending it on SaaS.

Speaker Change: <unk> minus $30 million, which is a broad range, but does reflect the reality.

Speaker Change: Unbundle SaaS, we're going to spend on bundles us.

Speaker Change: Is that is it's difficult for us to predict.

Speaker Change: And what we're going to do is we're going to see great let's do.

Speaker Change: Because the customers now have the flexibility to change their mind hybrid cloud.

Speaker Change: That's where the bundles thats 5 million, that's going to be more AI more consumption that brings us faster to where actually we want to be as a company we want to be the company that basically leads the market.

Speaker Change: It brings a lot of benefits to the customer and one of them is they.

Speaker Change: They don't have to make that decision what they need to do first.

Speaker Change: With saving more and more customers and getting bigger consumption in AI and that's all in the various cloud hosted an event in cloud.

Speaker Change: Now normally in software you you would think I have to change my infrastructure and then I can layer on the AI applications and get the benefits.

Speaker Change: So we're not pushing our customers to do more unbundle the unbundled.

Speaker Change: It came with a very differentiated approach you do not need to change or infrastructure.

Speaker Change: Unbundle SaaS deals.

Speaker Change: So we're not forcing our customers to continue to.

Speaker Change: It just falls, where it falls in and Thats why we gave a broader range of outcomes for revenue and a very narrow range for <unk>.

Speaker Change: Converts their premises to the cloud or whether they need to expand in on premises before they can go to the cloud with AI and it gives them the flexibility to actually decide sometimes in the very last minute.

Speaker Change: Well. Thank you for the color maybe one for you Greg can you help us understand explained.

Speaker Change: The customers unbundled customers that pushed with these all renewals with any of these net new net new customer and then as a percentage.

Speaker Change: Yes, we're going to spend was very $5 million, but rather than spending it on us.

Speaker Change: One of our larger customers, maybe just talk about sure leader no. Thank you for that and it's important to note. So these were all existing customers and the deals that we were highlighting none of them were renewal oriented. So in fact in Q4 all of our revenue streams came in on track or.

Speaker Change: Unbundle SaaS, we're going to spend on bundles us.

Speaker Change: And what we're gonna do is we're going to see great let's do.

Speaker Change: That's where the bundles thats 5 million, that's going to be more and more end consumption that brings us faster to where actually we want to be as a company. We want to be the company that basically leads the market with shifting more and more customers and getting bigger consumption in AI and that's all aimed at Varian cloud hosted in Havana Club.

Speaker Change: Our bundled SaaS as Dan mentioned was slightly ahead and that included the unbundled renewals. They all came in exactly as expected and on time. So this dynamic that Dan the sharing simply related to an expansion with some existing customers and as the highlighted it.

Speaker Change: So we're not pushing our customers to do more unbundled.

Speaker Change: Unbundle SaaS deals.

Speaker Change: It just falls, where it falls and that's why we gave a broader range of outcomes for revenue and a very narrow range for error.

Speaker Change: Was that we're planning a rollout just some additional business units.

Speaker Change: Well. Thank you for the color maybe one for you Greg can you help us understand or explain.

Speaker Change: Some of that software and the timeline for that changed and you know, we do expect that to materialize.

Greg: The customers unbundled customers that pushed with east all renewals with any of these net new net new customer and then as a percentage.

Speaker Change: Much of it as we go throughout fiscal 'twenty six.

Speaker Change: Thank you very much for the color.

Speaker Change: What was your customer maybe just talk about sure leader no. Thank you for that and it's important to note. So these were all existing customers and the deals that we were highlighting none of them were renewal oriented. So in fact in Q4 all of our revenue streams came in on track or.

Speaker Change: Thank you as a reminder, if you'd like to ask a question. Please press star one on your telephone.

Speaker Change: And one moment for the next questions.

Speaker Change: Our next question will be coming from the line of Timothy Herin.

Timothy Herin: Of Oppenheimer. Your line is open.

Speaker Change: Thanks, guys.

Speaker Change: Or bundled SaaS as Dan mentioned was slightly ahead and that included the unbundled renewals. They all came in exactly as expected and on time. So this dynamic that damaged sharing simply related to an expansion with some existing customers and as the highlighted it.

Speaker Change: Can you talk about the channel mix a little bit.

Speaker Change: Senator revenue and more importantly, where you expect it to go and within the channel are you seeing certain areas of growth versus other areas.

Speaker Change: I guess related to this what makes you think you have the best AI products and services out there out there now are you hearing that back from from channel partners as well as your large customers. Thank you.

Speaker Change: Was there were planning a rollout to some additional business units some of that software and the timeline for that changed and you know we do expect that to materialize.

Speaker Change: Yes.

Speaker Change: So.

Speaker Change: I'll start with how do we go to market with channels.

Speaker Change: Much of it as we go throughout fiscal 'twenty six.

Speaker Change: We have very little.

Speaker Change: Bookings and revenue from channels that are completely autonomous.

Speaker Change: Thank you very much for the color.

Speaker Change: Most of our channels actually not expert in AI.

Speaker Change: Thank you as a reminder, if you'd like to ask a question. Please press star one on your telephone.

Speaker Change: And are they rely on the varying salesforce and pre sales and product experts.

Speaker Change: And one moment for the next questions.

Speaker Change: To go deep dive with customers to demonstrate.

Speaker Change: Our next question will be coming from the line of Timothy Herin.

Speaker Change: Of Oppenheimer. Your line is open.

Speaker Change: The the outcomes and so on so.

Speaker Change: Thanks, guys.

Speaker Change: We're now in a in a.

Speaker Change: Can you talk about the channel mix a little bit.

Speaker Change: Cross selling model.

Speaker Change: Senator revenue and more importantly, where you expect it to go and within the channel are you seeing certain areas of growth versus.

Speaker Change: Most of our most of our channel partners now, we do see and expect that some of them are going to pick up.

Speaker Change: Other areas.

Speaker Change: You know I guess related to this what makes you think you have the best AI products and services out there out there now are you hearing that back from from channel partners, So as well as your large customers. Thank you.

Speaker Change: Some of that knowledge and we see some partners you know that we have more than 50 boss and so each block is automating.

Speaker Change: Micro <unk> and.

Speaker Change: We don't expect just to kind of master all of these different we're closely we automating, but we do see partners that are trying to package and become better at selling maybe three or four or five so they are starting to get more capable in in dilip.

Speaker Change: Yes.

Speaker Change: So I'll.

Speaker Change: I'll start with you know how do we go to market with channels.

Speaker Change: We have very little.

Speaker Change: Kings and revenue from channels that are completely autonomous.

Speaker Change: Most of our channels actually not expert in AI.

Speaker Change: Delivering the message to customers and in a credible way.

Speaker Change: Of course, what we hear from channels all the time is.

Speaker Change: And are they rely on the varying salesforce and pre sales and product experts.

Speaker Change: The kind of.

Speaker Change: Our customer reported AI business outcomes, we don't hear from anyone else.

Speaker Change: To go deep dive with customers to demonstrate this.

Speaker Change: The the outcomes and so on.

Speaker Change: That really helps the confidence not just with the end customer, but also with our channel partners. They exceeded what we say we can do and what we do really resonates well with customers. So look partners are looking to make it easier for them to sell and the easier it gets.

Speaker Change: No.

Speaker Change: We're now in a in a.

Speaker Change: Cross selling model with.

Speaker Change: Most of our most of our channel partners now, we do see and expect that some of them.

Speaker Change: Demonstrating outcomes.

Speaker Change: Going to pick up.

Speaker Change: Some of that knowledge and we see some partners you know that we have more than 50 boss and so each block is automating.

Speaker Change: The more they're going to invest in learning the variant platform and an actively selling it.

Speaker Change: So in 'twenty six we baked in.

Speaker Change: Micro <unk>.

Speaker Change: And.

Speaker Change: We don't expect just to kind of master all of these different workflows, we automating, but we do see partners that are trying to package and become better at selling maybe three or four or five so they are starting to get more capable in in deliver.

Speaker Change: Obviously another year of.

Speaker Change: Growth.

Speaker Change: Exploration in AR, which was driven by <unk>.

Speaker Change: Booking growth.

Speaker Change: And we we do dial in some better contribution from channel partners.

Speaker Change: But we think that over the next few years Theres a lot of leverage.

Speaker Change: Delivering the message to customers.

Speaker Change: A credible way.

Speaker Change: Many many relationship that will just be growing.

Speaker Change: Of course, what we hear from channels all the time is.

Speaker Change: What we did in the last couple of years as we couldn't wait for the channel partner to lead. So we were leading more of as our direct sales force, but definitely we are as always we've been very open to our partners. We are very supportive to partners and we're looking for partners to be more successful and I think it.

Speaker Change: The kind of.

Speaker Change: Our customer reported AI business outcomes, we don't hear from anyone else.

Speaker Change: That really helps the confidence not just with the end customer, but also with our channel partners. They exceeded what we say we can do and what we do really resonates well with customers. So look partners are looking to make it easier for them to sell and the easier it gets there.

Speaker Change: Will happen over the next few years.

Speaker Change: Great and then just on.

Speaker Change: Demonstrating outcomes.

Speaker Change: On the macro side are.

Speaker Change: The more they're going to invest in learning the variant platform and an actively selling it.

Speaker Change: Are you seeing any concerns from your customers that you know on macro in.

Speaker Change: So in 'twenty six we baked in.

Speaker Change: We think its macro is slowing.

It should actually benefit you guys. Because you can obviously reduce our expenses quite a bit of an improved productivity, but any thoughts around both would be great.

Speaker Change: Obviously, another year of growth.

Speaker Change: <unk>.

Speaker Change: Generation in <unk>, which is driven by bookings growth.

Speaker Change: Yeah, No I think you're absolutely right I think that.

Speaker Change: We do we do dial in some better contribution from channel partners.

Speaker Change: <unk> really.

Speaker Change: I won't hesitate to do infrastructure projects.

Speaker Change: But we think that over the next few years Theres a lot of leverage.

Speaker Change: Because the infrastructure change doesn't really create great ROI and takes a long time and it's disruptive.

Speaker Change: Many many relationship that will just be growing.

Speaker Change: But our message now is resonating a bit better than before which is.

Speaker Change: And what we did in the last couple of years is we couldn't wait for the channel partner.

Speaker Change: No need for infrastructure change no need for upfront commitment start small look some of the big customers that I discussed before I'll give you an example.

Speaker Change: So we were leading more of as our direct sales force.

Speaker Change: But definitely we are as always we've been very open to our partners. We are very supportive to partners and we're looking for partners to be more successful and I think it will happen over the next few years.

Speaker Change: That started just release.

Speaker Change: Copilot bots.

Speaker Change: And they wanted to just assist our 300 agents and see.

Speaker Change: Great and then just on <unk>.

Speaker Change: How it goes.

Speaker Change: On the macro side.

Speaker Change: <unk>.

Speaker Change: In a few weeks they saw the results in a few months the expanded from three 300 agents or 30000 agents.

Speaker Change: Are you seeing any concerns from your customers that you know on macro and.

Speaker Change: We think its macro is slowing.

Speaker Change: And we reported before $70 million was there.

Speaker Change: It should actually benefit you guys. Because you can obviously reduce our expenses quite a bit and improve productivity, but any thoughts around both would be great.

Speaker Change: Increasing agent capacity.

Speaker Change: So they were very skeptical at the beginning.

Speaker Change: Yeah, No I think you're absolutely right I think that our customers really.

Speaker Change: The same time. The other example, I gave was which was the 10 million <unk> order in Q4.

Speaker Change: I won't hesitate to do infrastructure projects.

Speaker Change: Because infrastructure change doesn't really create great ROI and takes a long time and it's disruptive.

Speaker Change: This was already our initial order for 5000 to six 5000 agents with a co pilot.

Speaker Change: But our message now is resonating a bit better than before which is.

Speaker Change: So the pricing is also another thing which helps customer because the way we price our AI software is very aligned to creating value.

Speaker Change: No need for infrastructure change no need for upfront commitment start small look some of the big customers that I discussed before I'll give you an example.

Speaker Change: They have this completely flex complete flexibility.

Speaker Change: Customer that started just with.

Speaker Change: How much consumption they.

Speaker Change: Copilot box.

Speaker Change: They desire and that consumption is directly related to the value. So that the unit of measure is directly related to the value that they create so one for bots for example is.

Speaker Change: And they wanted to just assist our 300 agents and see.

Speaker Change: You know how it goes.

Speaker Change: And <unk>.

Speaker Change: Few weeks they saw the results in a few months they expanded from 300 agents to 30000 agents.

Speaker Change: Price based on the number of minutes that.

Speaker Change: And we reported before $17 million was there.

Speaker Change: The customer decided to allocate to the box and our customers may have 5 million minutes that they need to respond to and they say well the body's gonna do you know.

Increasing agent capacity.

Speaker Change: So they were very skeptical at the beginning.

Speaker Change: 100000 minutes and then the rest $4 9 million will be by people.

Speaker Change: Same time. The other example, I gave was which was the $10 billion <unk> order in Q4.

Speaker Change: As they see the boss actually creating good outcomes. They can shift more minutes to the board, which will be more revenue to variant, but obviously that investments in variant will be with the 20 X.

Speaker Change: This was already in.

Speaker Change: Initial order for a 5000 to six 5000 agents with a copilot.

Speaker Change: So the pricing is also another thing which helps customer because the way we price our AI software is.

Speaker Change: Ray relative to investments in labor.

Speaker Change: And they have the flexibility to shift back and forth if they see the bond is not working well.

Speaker Change: Very aligned to creating value you know they they have this completely flex complete flexibility.

Speaker Change: They know they can take it away.

Speaker Change: In reality, they don't because the box actually is improving performance over time, because our boss learned from data one of the.

Speaker Change: How much consumption they.

Speaker Change: They desire and that consumption is directly related to the value. So that the unit of measure is directly related to the value that they create so one for bots for example is <unk>.

Speaker Change: The differentiation part of our platform is that we're not just using AD models.

Speaker Change: The data on our platform, which is behavioral data and are the various AI powered bots are using hundreds of different of models.

Speaker Change: Price based on the number of minutes.

Speaker Change: The customer decided to allocate to the box and our customers may have 5 million minutes that they need to respond to and they say well the body's gonna do you know 100000 minutes and then the rest $4 9 million will be by people.

Speaker Change: We picked the right model for the for the for the task, which is depends on what.

Speaker Change: Which micro excellent we're automating, but then we also trained that bought all the time on fresh data and what cash actually better.

Speaker Change: As they see the boss actually creating good outcomes. They can shift more minutes for the Bath, which would be more revenue to variant, but obviously that investment can variant will be with the 20 X-ray relative to investments in labor.

And then customers will consume more time was that box several minutes to the box, which will increase our revenue and grit.

Speaker Change: <unk> for customers so that dynamics when you look when you think about the macroeconomic trends you know what happens with the economy.

Speaker Change: And we have the flexibility to shift back and forth if they see the bond is not working well they can you know.

Speaker Change: The message is you know.

Speaker Change: They know they can take it away.

Speaker Change: In reality, they don't because the boss actually is improving performance over time, because our boss learn from data one of the.

Speaker Change: Don't have a big weekend depressed project. It takes two years and you don't know what's going to be at the end.

Speaker Change: If you could take a completely different approach.

Speaker Change: And you can start to measure those tangible outcomes in your own environment, and then scale and it's it's very quickly to scale because all of these bots are running at a very cloud and basically it's just very.

Speaker Change: The differentiation part of our platform is that we're not just using AD models.

Speaker Change: We have the data in our platform, which is behavioral data and are the various AI powered bots are using hundreds of different of models.

Speaker Change: Giving more entitlement to customer to use more the bulk of the scaling is not also not disruptive.

Speaker Change: We picked the right model for the for the for the task, which is depends on what which micro excellent. We're automating. But then we also trained that bought all the time on fresh data and both cash actually better and.

Speaker Change: I think we have a very compelling and differentiated approach with hybrid cloud and we're starting to see that was accelerating.

Speaker Change: And then customers will consume more time was that box several minutes to the box, which will increase our revenue and grit.

Speaker Change: Thank you.

Speaker Change: Thank you one moment for the next question.

Speaker Change: And our next question will be coming from the line of Shaul Eyal.

Speaker Change: Huge ROI for customers so that.

Speaker Change: <unk> dynamics.

Speaker Change: P D. Cowen your line is open.

Speaker Change: When you think about the macroeconomic trends you know what happens with the economy.

Speaker Change: Thank you hi, good afternoon guys.

Speaker Change: The message is you know.

Speaker Change: Dan I would grant.

Speaker Change: Don.

Speaker Change: These handful of slip deals.

Speaker Change: Don't have a big weekend place project. It takes two years and you don't know what's going to be at the edge.

Speaker Change: U S or internationally driven.

Speaker Change: With various you could take a completely different approach and you can start to measure those tangible outcomes in your own environment, and then scale and it's very accretive to scale because all of these boats are running at a very cloud and basically it's just very giving more entitlement to customer to use more of the boss of the scale.

Speaker Change: They were basically there was one large two large deals that predominantly are.

Speaker Change: The the total amount that was slipped and they were the bulk of U S law.

Speaker Change: Very large U S companies financial services companies.

Speaker Change: Understood. Thank you for that and from a competitive market dynamics and do you think youre gaining market share.

<unk> is not also not disrupted.

Speaker Change: I think we have a very compelling and differentiated approach with hybrid cloud and we're starting to see that was accelerating.

Speaker Change: Driven by the book strategy.

Speaker Change: Over the course of the past few quarters.

Speaker Change: Thank you.

Speaker Change: We're not aware of any other vendor that has that scale of AI deployments with us today.

Speaker Change: Thank you one moment for the next question.

Speaker Change: And our next question will be coming from the line of Shaul Eyal.

Speaker Change: Actually if you look at.

Speaker Change: Ill.

Speaker Change: F P D. Cowen your line is open.

Speaker Change: At our customer base right now.

Speaker Change: Thank you hi, good afternoon guys.

Speaker Change: Or are customers that are.

Speaker Change: Running in a very cloud if some AI entitlements.

Speaker Change: Dan will grant.

Speaker Change: There's a handful of deals are the U S or internationally driven.

Speaker Change: Which brings our.

Speaker Change: <unk>.

Speaker Change: Over $300 million of total IRR for customers that are actually using various workflows with some level of inflammation.

Speaker Change: They were basically there was one large two large deals that predominantly are.

Speaker Change: The.

Speaker Change: Assisted by AI.

Speaker Change: And.

Speaker Change: The total amount that was slipped and they were both U S. A lot very large U S companies financial services companies.

Speaker Change: That's a pretty large number.

Speaker Change: And as I mentioned before our top customers the top 25 customers are growing.

Speaker Change: Understood. Thank you for that and from a competitive market dynamics and do you think youre gaining market share.

Speaker Change: 2024%.

Speaker Change: Year over year and as you saw in the examples before.

Speaker Change: Driven by the <unk> strategy.

Speaker Change: All the growth is coming from investing in AI in us keeping the keeping.

Speaker Change: Over the course of the past few quarters.

The.

Speaker Change: We're not aware of any other vendor that has that scale of AI deployments with us today.

Speaker Change: Legacy siliceous ovarian the Wi Fi solutions to keeping them on plan and they are adding.

Speaker Change: More and more AI.

Speaker Change: Actually if you look at.

Speaker Change: And different levels of consumption for different box, some adding seven Boston meeting 10 Bucks. So yeah, I think we are creating a very of.

Speaker Change: At our customer base right now.

Speaker Change: Or are customers that are.

Speaker Change: Running in a very cloud if some AI entitlements.

Speaker Change: Nice market share with leadership position in the CX automation market.

Speaker Change: Which brings our.

Speaker Change: And we are totally agnostic to infrastructure. So the customer decision on sic us on CRM on on even on their vendors.

Speaker Change: Toy R R.

Speaker Change: Over $300 million of total air are for customers that are actually using various workflows with some level of inflammation.

Speaker Change: We are totally agnostic.

Speaker Change: Assisted by AI.

Speaker Change: We'll work with any vendor of choice and.

Speaker Change: And.

Speaker Change: And we can take different inland models, obviously, we have many different.

Speaker Change: That's a pretty large number.

Speaker Change: And as I mentioned before our top customers our top 25 customers are growing.

Speaker Change: And I'll, let models when we test in our labs, and we recommend to customers.

Speaker Change: 2024%.

Speaker Change: What will give them the best cost performance, but we also very agnostic so.

Speaker Change: Year over year and as you saw in the examples before.

Speaker Change: All the growth is coming from investing in AI in us keeping the keeping.

In CX automation, which as you know we defined it is very simply automating CX workflows.

Speaker Change: The legacy siliceous ovarian the Wi Fi solutions to keeping them on plan and they are adding.

Speaker Change: I believe that we are the market leader and we're taking market share.

Speaker Change: More and more AI.

Speaker Change: Thank you so much.

Speaker Change: And different levels of consumption for different box, some adding seven Boston meeting 10 Bucks.

Speaker Change: Yeah.

Speaker Change: Thank you and this does conclude today's Q&A session I would like to go ahead and turn the call back over to Matthew Frankel for closing remarks. Please go ahead. Thanks.

Speaker Change: Yeah, I think we are creating a very.

Speaker Change: Nice market share with leadership position in the CX automation market.

Speaker Change: Lisa Thank you everyone for joining us today as always please feel free to reach out with any further questions. You have and we look forward to speaking to you again soon have a good night take care.

And we are totally agnostic to infrastructure. So the customer decision on sic us on CRM on even on their vendors.

Speaker Change: Thank you for joining today's conference call. This does conclude today's conference you all have a great evening.

Speaker Change: We are totally agnostic.

Speaker Change: We will work with any vendor of choice.

Speaker Change: And we can take different models.

Speaker Change: Obviously, we have many different.

Speaker Change: In all our models when we test in our labs, and we recommend to customers.

Speaker Change: What will give them the best cost performance, but we also very agnostic so.

Speaker Change: In CX automation, which as you know we defined it is very simply automating workflows.

Speaker Change: I believe that we are the market leader and we're taking market share.

Speaker Change: Thank you so much.

Speaker Change: Okay.

Speaker Change: Thank you and this does conclude today's Q&A session I would like to go ahead and turn the call back over to Matthew Frankel for closing remarks. Please go ahead. Thanks.

Speaker Change: Lisa Thank you everyone for joining us today as always please feel free to reach out with any further questions. You have and we look forward to speaking to you again soon have a good night take care.

Speaker Change: Thank you for joining today's conference call. This does conclude today's conference you all have a great evening.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Yeah.

Speaker Change: [music].

Speaker Change: Mhm.

Speaker Change:

Speaker Change: [music].

Speaker Change: Yes.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Yeah.

Speaker Change: [music].

Speaker Change: Yes.

Speaker Change: [music].

Speaker Change: Yes.

Speaker Change: [music].

Speaker Change: Yeah.

Speaker Change: [music].

Speaker Change: Yes.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: [music].

Speaker Change: Yes.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Yes.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Right.

Speaker Change: [music].

Speaker Change: Yes.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Yes.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Yes.

Speaker Change: Yes.

Speaker Change: Yes.

Speaker Change: [music] okay.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Yes.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Yes.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Yes.

Speaker Change: Yes.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: [music].

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Yes.

Speaker Change: Thanks.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Yes.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Hum.

Speaker Change: [music].

Yes.

Speaker Change: Okay.

Speaker Change: [music].

Yes.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: <unk>.

[music].

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Good day and thank you for standing by welcome to <unk> Systems, Inc. Fourth I'm, Sorry, Q4, 2025 earnings conference call. At this time, all participants in a listen only mode. After the speaker's presentation there'll be a question and answer session to ask a question. During the session you will need to press star one on your telephone.

Speaker Change: You will then hear an automated message advising your hand is right to withdraw your question. Please press star. One again, please be advised that today's conference is being recorded I would now like to turn the conference over to your speaker for today Matthew Frankel. Please go ahead.

Speaker Change: Thank you operator, good afternoon, and thank you for joining our conference call today.

Speaker Change: Dan Bodner, <unk>, CEO Grand Islander, CFO, and Alan Roden, Burns Chief Corporate development Officer.

Speaker Change: <unk> started I would like to mention that accompanying our call today as a slide presentation, if you'd like to view. These slides in real time during the call. Please visit the IR section of our website at <unk> Dot com click on the Investor Relations Tab, and then click on webcast Mike is what today's conference call.

Speaker Change: I'd also like to draw your attention to the fact that certain matters discussed in this call may contain forward looking statements within the meaning of the private Securities Litigation Reform Act of 95.

Speaker Change: Other provisions of the federal Securities laws.

Speaker Change: Forward looking statements are based on management's current expectations are not guarantees of future performance actual results could differ materially from those expressed in or implied by these forward looking statements before looking statements are made as of the date of this call and except as required by law Vernon assumes no obligation to update or revise them.

Speaker Change: Investors are cautioned not to place undue reliance on these forward looking statements.

Speaker Change: For more detailed discussion of how these and other risks and uncertainties could cause actual results to differ materially from those indicated in these forward looking statements. Please see our Form 10-K for the fiscal year ended June 31, 2005, one filed and other filings we make with the SEC.

Speaker Change: The financial measures discussed today include non-GAAP measures and certain operating metrics as we believe investors focus on those measures and comparing results between periods and among our peer companies.

Speaker Change: Revenue in AOR growth, which are adjusted for the divestiture, we effectuate. It on January 31, 'twenty 'twenty four we see today's slide presentation, our earnings release and Investor relation section of our website at <unk> Dot com for a reconciliation of non-GAAP financial measures to GAAP measures as well as for more information about our key operating metrics non.

Speaker Change: non-GAAP financial information should not be considered in isolation from as a substitute for or superior to GAAP financial information.

Speaker Change: It is included because management believes provides meaningful supplemental information regarding our operating results when assessing our business and is useful to investors for informational and comparative purposes.

Speaker Change: The non-GAAP financial measures. The company uses have limitations and may differ from those used by other companies.

Dan: I'd like to turn the call over to Dan Dan.

Dan: Thank you Matt.

Dan: Let me begin with <unk>.

Dan: Our growth trends.

Dan: In Q4 are stronger momentum continued.

Dan: Driving our AOR growth to 5%.

Dan: Ahead of our guidance of 4%.

Dan: I'm pleased to report that AOR growth accelerated every corner last year.

Dan: Customers expanded their AI deployments.

Dan: More and more customers are recognizing the strong AI business outcomes that variant delivers.

Dan: And are progressing from initial AI experiments.

Dan: AI adoption at scale.

Dan: We expect this AI momentum to continue in the current quarter and throughout the year.

Dan: And we forecast another year of AOR growth acceleration.

Dan: For Q4 26.

Dan: Raising our outlook for.

Dan: Our prior guidance of $760 million.

Dan: $768 million.

Dan: Reflecting 8% growth.

Dan: Let's take a closer look at the key drivers behind our AI momentum.

Dan: There are three key drivers behind the acceleration last year.

Dan: Which we believe will drive further exploration in fiscal 'twenty six.

Dan: The first driver is <unk> ability to deliver strong and differentiated AI business outcomes.

Dan: Many of our customers started to deploy various box over the last several years.

Dan: Now reporting strong AI business outcomes with.

Dan: Which clearly differentiates variant <unk> market.

Dan: There are many CX vendors talk about AI technology.

Dan: But are unable to walk the talk and demonstrate tangible business outcomes like we do.

Dan: The second driver is our ability to deliver AI business outcomes faster than any other CX vendor and without customer disruption.

Dan: With various differentiated hybrid cloud.

Dan: Customers are able to start their AI journey small.

Dan: Prove the desired outcomes in their own production environment.

Dan: And then quickly scale with various AI deployments in our cloud.

Dan: And the third driver is our success in <unk> many customers with initial bought deployments in prior years.

Dan: And we expect that this year. These customers will continue to accelerate Garrett AI consumption.

Dan: Let me elaborate on these three key growth drivers.

Dan: And gave a few customer examples.

Dan: Starting with the first growth driver, our strong and differentiated AI business outcomes.

Dan: <unk> customer reported AI business outcomes.

Dan: A healthcare insurer.

Dan: Florida variant copilot box and.

Dan: And reported around the 32nd reduction in average call time.

Dan: We have 30000 agents at 30 seconds handling time reduction.

Dan: Is equivalent to $70 million of agents capacity.

Dan: The second example is a telecom company.

Dan: Also with 30000 agents.

Dan: These customer deployed at various copilot box and achieved a 5% increase in agent productivity.

Dan: Which is equivalent to $45 million of agents capacity.

Dan: In this case.

Dan: The various coaching bought not only increased the customer productivity, but in addition, this customer reported increased revenue.

Dan: By improving the performance of their sales agents.

Dan: Customers are reporting stronger AI business outcomes from variant.

Dan: Than from any other CX vendor.

Dan: There's a lot of noise and high in the markets as all CX vendors are today, telling and AI technology story.

Dan: But our competitors cannot report strong ROI case studies like we do.

Dan: Today Geron stands out in the <unk> market.

Dan: It is a highly differentiated vendor.

Dan: Because our customers are reporting very strong AIG business outcomes.

Dan: And we are excited that many of them are we.

Dan: Willing to publicly share their success stories.

Dan: These customer references.

Dan: A really helpful to variance.

Dan: As there are building confidence with other customers.

Dan: Because they can hear directly from their peers.

Dan: Now, let's discuss the second growth driver.

Dan: In addition to delivering stronger AIG business outcomes than other vendors.

Dan: We are also delivering strong outcomes faster than any other six vendor and.

Dan: And without disrupting the customer's operation or ecosystem.

Dan: Various CX automation platform can be deployed in a hybrid cloud to deliver foster AI outcomes.

Dan: So why is hybrid cloud so important to our customers.

Dan: Brands have many different CX workflows, which are mostly manual and require a large expensive human workforce to operate.

Automating this CX workflows is an increasingly important priority for brands.

Dan: Over.

Dan: We are looking to achieve this automation.

Dan: Without embarking on big Rip and replace infrastructure projects.

Dan: It can take years to deploy and which do not guarantee AI business outcomes at the end.

Dan: The first harvest cloud approach to automating CX workflows.

Dan: Here's what the market is looking for.

Dan: And is resonating well with customers.

Dan: With variants that can quickly automate existing workflows without disruption.

Dan: They are able to start their journey with a small initial deployment.

Dan: Prove the desired outcomes.

Dan: And then quickly scale and benefits from a large alloy.

Dan: Also customer gets peace of mind that they can keep their existing technology assistance on premises or in the cloud.

Dan: And there are various thoughts on top quickly.

Dan: This means that customers can continue to work with their existing AI CRM and communications vendors as they did before.

Dan: And at various hybrid cloud and talk.

Dan: To automate their CX workflows now.

Dan: Let's look at various hybrid cloud in action.

Dan: Throughout fiscal 'twenty five.

Dan: Many brands deployed very box in hybrid cloud model.

Dan: Starting small and then growing usage as they approve the desired business outcomes.

Dan: For example.

Dan: A leading financial services company has expanded into various platform with hybrid cloud in fiscal 'twenty five.

Dan: They added seven boss and.

Dan: And increase their usage over time.

Dan: <unk> and <unk> more than doubling.

Dan: The $1 6 million in Q4 24.

Dan: The $3 5 million in Q4 'twenty five.

Dan: Another example is a leading telecom company.

Dan: Spending their various platform with hybrid cloud.

Dan: They added three copilot box.

Dan: Their existing variant on premises solutions.

Dan: Resulting in are all growing from $1 4 million in Q4 24.

Dan: $4 1 million in Q4 'twenty five.

Dan: And the third example is a leading insurance company that expanded their usage of ovarian block, resulting in are all growing from $2 3 million in Q4, 24 to $4 3 million in Q4 'twenty five.

Dan: These are three examples for customers achieving fast AI outcomes with hybrid cloud.

Dan: Without long and expensive rip and replace projects.

Dan: These are also good examples of customers that we ceded was initial AI deployments last year and.

Dan: And we expect these customers to increase their usage and expand with additional boss overtime.

Dan: Yeah.

Dan: The third key driver for our growth acceleration.

Dan: Is there customer AIC thing that we started in prior years.

Dan: Let's look at our customers' journey over multiple years.

Dan: These telecom customer started their AI journey was burning through fiscal 'twenty three.

Dan: And over a two year period added 10 boss.

Dan: Growing air or from a few hundred thousand dollars in fiscal 'twenty three.

Dan: The $2 1 million in fiscal 'twenty, four and then accelerated to around $8 5 million in fiscal 'twenty five.

Dan: Customers are increasing consumption of our boss overtime.

Dan: The economics are very favorable with significant all ROI.

Dan: The fixed market is in an early stage of adoption.

Dan: And we are considering our customer base with AI.

Dan: We're pleased that today more than 90 of the Fortune 500 largest brands in the world are already using various AI powered box.

Dan: To automate their CX workflows.

Dan: These are leading brands.

Dan: And we expect it to scale.

Dan: To serve a strong reference customers.

Dan: Influence adoption in the rest of the market.

Dan: Now, let's take a look at Q4 bookings and key customer wins.

Dan: In Q4, we delivered record SUS ACB bookings for new deals.

Dan: With 30% growth year over year.

Dan: Our record bookings and key wins were driven by customers reporting strong and fast AI outcomes and sharing their success stories with other customers.

Dan: Here are examples of two large Q4 wins.

Dan: At $27 million PCV order.

From an insurance company for renewal and usage extension of the various platform.

Dan: And the 10 million daus.

Dan: <unk> order from a telecom company to automate CX workflows and increased agent capacity.

Speaker Change: There are two main reasons behind this large competitive wins.

Dan: First.

Dan: More and more brands are fatigue by the AI noise.

Dan: And I'm looking for vendors that can deliver proven tangible and strong AI business outcomes now.

Dan: And second.

Dan: Brands are looking for vendors was hybrid cloud that can deploy AI solutions with no disruption and was a show me first approach.

Dan: In summary.

Dan: We experienced strong early momentum throughout last year.

Dan: We finished fiscal 'twenty five with record bookings and a all our growth acceleration and are raising the outlook for the current year, two 8% AOR growth.

Dan: We deliver stronger and faster aib's outcomes.

Dan: Better than any other vendor in the <unk> market.

Dan: And behind the growth outlook is the proven value that we create for our customers.

Dan: We believe the customer AI seeding that we did in prior years will benefit us in fiscal 'twenty six and beyond.

Dan: Our proven differentiation.

Dan: It makes us a CX automation category leader and well positioned for double digit AOR growth longer term.

Dan: And now.

Grant: Let me turn it over to grant.

Dan: Grant.

Dan: Thanks, Dan Good afternoon, everyone.

Dan: Our discussion today will include non-GAAP financial measures a reconciliation between our GAAP and non-GAAP financial measures is available as Matt mentioned in our earnings release, and then the IR section of our website.

Dan: Differences between our GAAP and non-GAAP financial measures include adjustments related to acquisitions and divestitures, including fair value revenue adjustments amortization of acquisition related intangibles certain other acquisition and divestiture related expenses stock based compensation expenses.

Dan: <unk> lease costs.

Dan: Facilities and infrastructure realignment as well as certain other items that can vary significantly in tomorrow and frequency from period to period.

Dan: Let me start today with subscription and <unk>.

Dan: As Dan mentioned earlier variants CX automation platform delivers AI business outcomes faster and stronger than any other vendor in the market, but we are seeing growing adoption of our AI solutions from our base as well as from new customers.

Dan: This growing AI adoption is translating into passenger growth.

Dan: I am pleased to report that our subscription <unk> year over year growth rate accelerated every quarter last year and we finished the year strong.

Dan: In Q4.

Dan: <unk> came in at $712 million.

Dan: Up 5% year over year ahead of our 4% guidance adjusted for the divestiture.

Dan: Looking forward, we expect our AOR growth to continue to accelerate.

And for the year, we are raising our outlook to 768 million of <unk>, representing 8% growth.

Dan: Behind our AOR growth is strong bookings.

Dan: In Q4, SaaS ACB bookings from new deals increased 30% year over year to $32 million.

Dan: I would like to highlight that $32 million was a quarterly record and follows three quarters of strong year over year bookings growth from new deals with 34% growth in Q1.

Dan: 9% growth in Q2.

Dan: And 37% growth in Q3.

Dan: For the full year SaaS ACB bookings from new deals increased 33%.

Dan: As a reminder, customer conversions from on premise applications to the cloud were minimal in fiscal 'twenty five.

Dan: We also expect minimal conversion bookings in fiscal 'twenty six as customers continue to take advantage of our hybrid model to add AI without disruptive rip and replace programs.

Dan: Looking ahead, we expect another year of strong new deal bookings growth driven by customers, adding new parent AI bots and increased usage.

Dan: As Dan mentioned earlier in fiscal 'twenty five we seeded many customers with initial AI deployments, which we expect will increase usage in fiscal 'twenty six.

Dan: Turning to bundled SaaS revenue, we are pleased with our acceleration from 9% growth in Q1 to 23% growth in Q4.

Dan: Which was also ahead of our guidance.

Dan: For the year bundled SaaS revenue grew 17% year over year.

Dan: Bundled SaaS <unk> showed similar trends throughout the year also with 17% growth at year end.

Dan: As a reminder.

Dan: <unk> AI solutions are only offered in the cloud and therefore bundled SaaS IRR is a good proxy for our AI growth.

Dan: Dan shared earlier, several examples of customers, increasing AI consumption and growing <unk>.

Dan: We are pleased with this AI consumption growth trends, which represents more customers evolving from initial AI experiments to deploying AI at scale.

Dan: At our Investor Day, we discussed our plan to begin reporting cash generation and cash contribution to help investors understand <unk> growth on a ratable basis.

Dan: I am pleased to report fiscal 'twenty five cash generation came in 8 million ahead of guidance.

Dan: And our cash contribution came in 16 million ahead of guidance.

Dan: Cash contributions for fiscal 'twenty five came in at $228 million, an increase of 2% year over year.

And drove a 4% increase in free cash flow year over year.

Dan: To bridge from cash contribution to free cash flow, we subtract capex cash taxes interest expense as well as adjusted for the timing of collections and payables and other changes in working capital.

Dan: Turning to revenue.

Dan: As Dan discussed earlier customers are embracing our hybrid cloud approach to adopt AI without disruption.

Dan: Which means they continue to purchase our software in both unbundled and bundled SaaS models.

Dan: From a revenue perspective revenue accounting for our bundled SaaS model is ratable and revenue accounting for our unbundled SaaS model is not ratable.

Dan: Therefore, the timing and term length of unbundle deals to make year over year and sequential trend not meaningful and difficult to predict.

Dan: In contrast, the revenue.

Dan: <unk> presents a ratable view of both unbundled and bundled models, providing consistent and meaningful trends period over period.

Dan: Looking back in fiscal 'twenty five.

Dan: <unk> growth accelerated each quarter, reflecting the true growth and trajectory of the business, while revenue trends fluctuated due to timing of unbundled SaaS revenue.

Dan: In Q4 revenue came in at $254 million versus our guidance of $277 million.

Speaker Change: All revenue streams came in as expected.

Dan: Four unbundled SaaS.

As you know our unbundled SaaS stream includes revenue from both renewals of multiyear contracts and bookings of new deals.

Dan: Looking back on Q4 revenue from unbundled SaaS renewals came in as expected.

Dan: The entire revenue shortfall was due to bookings of a few new deals in the unbundled SaaS model did not materialize in the quarter.

Dan: These deals were from existing customers not competitive and we expect these customers to continue to expand over time.

Dan: Even with a few unbundle deals not materializing within the quarter Q4 was still a record bookings quarter.

Dan: Even with our record quarter, though our bookings mix drove unbundled SaaS revenue below our expectations.

Dan: As a reminder, the mix of unbundled and bundled SaaS bookings does not change the IRR view, which is ratable for all deals.

Dan: In fiscal 'twenty six the unbundled booking mix will also be difficult to predict and we will therefore take a different approach to revenue guidance. This year guiding with the wider range.

Dan: Also similar to fiscal 'twenty five we did not expect quarterly revenue trends to be meaningful due to the timing of unbundled SaaS revenue.

Dan: Now turning to guidance.

Dan: We are providing guidance in two ways.

Dan: First guidance for a ratable view of the business as measured by subscription IRR cash generation and cash contribution.

Dan: Our ratable guidance will be provided with a narrow range of plus or minus 1%.

Dan: Second we will continue to provide guidance for revenue and non-GAAP diluted EPS as we always have but revenue will be provided with a wider range of plus or minus 3%.

Dan: We're a ratable metrics our guidance is as follows.

Dan: We are increasing our outlook for <unk> in Q4 dollars 26 from $760 million to 768 million plus or minus 1%, reflecting approximately 8% growth year over year.

Dan: And we are targeting $960 million for cash generation with a range of plus or minus 1%.

At the midpoint of our cash generation guidance, we expect around $245 million of cash contribution.

Dan: For revenue and non-GAAP diluted EPS, our guidance is as follows.

Dan: We are targeting $960 million of revenue with a range of plus or minus 3%.

Dan: Driving non-GAAP diluted EPS of $2 93 at the midpoint.

Dan: Also at the midpoint of our revenue guidance, we expect gross margin of around 73% with another year of operating margin expansion.

Regarding below the line assumptions for the full year, we expect interest and other expense net of approximately $7 million.

Dan: Net income from Noncontrolling interest of around $1 million.

Dan: A cash tax rate of around 11%.

Dan: And approximately $72 2 million fully diluted shares reflecting our buybacks to date.

Dan: Now, let me give you a bit more color on our outlook for Q1 of fiscal 'twenty six.

Dan: For modeling purposes.

Dan: For <unk> year over year growth will accelerate to 6% in Q1.

Dan: For the sequential trend keep in mind that seasonality typically drives higher usage of our software in Q4 compared to Q1.

Dan: For revenue, we expect a range of between 190 million to $200 million.

Dan: Our range reflects another quarter of strong year over year bundled SaaS revenue growth of more than 17% and lower unbundled SaaS revenue year over year.

Dan: As we've discussed in the past unbundled SaaS multiyear renewals vary by quarter, and we expect the unbundled SaaS revenue in Q1 to be lower compared to Q1 last year.

Dan: At the midpoint of our revenue range, we expect driving non-GAAP diluted EPS the 13th.

Dan: In Q1.

Dan: Turning to our balance sheet, we continue to be in a very good financial position.

Dan: Our net debt remains well under one times last 12 month EBITDA and is further supported by our strong cash flow.

Dan: With regard to capital allocation, we expect the largest use of our free cash flow to be buybacks.

Dan: As a reminder, we started a new $200 million stock buyback program in September.

Dan: I would also like to mentioned that we recently increased the size of our revolver to $500 million and extended the term to 2030.

Dan: This new revolver can be used to pay down our existing convertible notes upon maturity as we are not currently planning to issue a new convertible.

Dan: We can also use the revolver for other purposes, including the potentially accelerate our stock buyback program.

Dan: In summary.

Dan: We are pleased with our strong AI and momentum.

Dan: Throughout fiscal 'twenty, five AOR growth accelerated and we over achieved our Q4 <unk> of our guidance.

Dan: We expect this momentum to continue and we are raising our outlook for the current year.

Dan: In fiscal 'twenty six to help investors better understand the trends of our business. In addition to providing guidance for revenue and non-GAAP diluted EPS with a wide range, we will provide guidance on a ratable basis for cash generation and cash contribution with a narrow range.

Dan: We believe a ratable view as a better way to understand the underlying growth trends in our business.

Dan: With that operator, please open the line for questions.

Speaker Change: Thank you as a reminder, if you would like to ask a question. Please press star one on your telephone.

Speaker Change: I ask that you wait for your name and company to be announced before you proceed with your question one moment, while we take the first question.

Speaker Change: And our first question will be coming from the line of Joshua Reilly of Needham and company. Your line is open.

Joshua Reilly: Alright, well thanks for taking my questions here. So if we look at the macro I guess one of the items, we were hoping to dissipate once the AI paralysis impacting contact center spending in it it seemed giving the bundled momentum that you have here. That's playing out can you just speak to the customer confidence in buying solutions now and whether they really.

Speaker Change: We are taking this land small approach or some customers also going for larger deals in the current environment.

Speaker Change: Yes. Thank you, yes, we do have now a very strong quarter in bundle such revenue.

Speaker Change: Growing 23%, but.

Speaker Change: This has been improving all throughout the year.

Speaker Change: And I believe variant is very helpful to customers to stop the paralysis.

Speaker Change: With the stronger and faster AD business outcomes and.

Speaker Change: And we do see customers are evolving from just doing AI experiments, which is small scale to actually AI deployments at scale.

Speaker Change: So let me give you an example.

Speaker Change: Pfizer is the leading Fintech company.

Speaker Change: And they reported a variant quality box is doing the work of 1200 supervisors.

Speaker Change: So this is very gently chaos that day's automating CX workflows.

Speaker Change: And in <unk> case.

Speaker Change: This is automating our financial compliance work.

Speaker Change: So the various agenda gay ice.

Speaker Change: Automating, our micro workflow within the compliance workflow and.

Speaker Change: And increasing the capacity of the compliance team.

Speaker Change: Increasing it by a very significant manner. So this kind of examples and companies who are willing to share the success stories publicly.

Speaker Change: It's very helpful.

Speaker Change: And then obviously, there's the economics so.

Speaker Change: Hey.

Speaker Change: Quite a few of the of the brand.

Speaker Change: On average to replace a seat with AI.

Speaker Change: <unk> will need to invest $2000 in AR and AI software.

Speaker Change: But they say $40000 on labor.

Speaker Change: Is the 20, <unk> alloy and once customers see that kind of strong outcome, obviously, they move away from the paralysis.

Speaker Change: At the same time for variance this $2000 revenue from selling the automation software.

Speaker Change: Much better than the loss of the software revenue from the from the reduced seats.

Speaker Change: There's only $200 so.

Speaker Change: We.

Speaker Change: We swapped 200 dollar license for $2000 AI license.

Speaker Change: And of course net beneficiary from a Nymex increase in revenue.

Speaker Change: So this is a win win and we.

Speaker Change: We are helping customers to actually see it.

Speaker Change: The benefits and it.

Speaker Change: It makes it it's no brainer to invest.

Speaker Change: I would say that the big bottlenecks that we saw last year.

Speaker Change: Are dissipating.

Speaker Change: One was the customer have that perception.

Speaker Change: In order to get AI outcomes they need to.

Speaker Change: Change the infrastructure.

Speaker Change: And of course was a hybrid cloud as we educated the market that that's not necessary.

Speaker Change: Because you can layer the AI bots from variant on top of your existing infrastructure. So there was a big.

Speaker Change: Objection that now customers see that it's not a real objection.

Speaker Change: And the other objection was mostly from where.

Speaker Change: Were they were skeptical about.

Speaker Change: And they they wanted to do AI experiments before they allow AI in the in the in the enterprise.

Speaker Change: And now of course the strong.

Speaker Change: Outcomes.

Speaker Change: Outcomes reported by their peers, they started to see well, it's REO and of course was hybrid clouds. They can start small because usually start small in their own production environment, It's not 11 environment and when they see the results in their own production environments. There is no objection and they would like to scale quickly.

Speaker Change: And we saw many examples before of customers that more than doubled.

Speaker Change: They are.

Speaker Change: And basically they kept there.

Speaker Change: Non bundled SaaS.

Speaker Change: L. A was more stable sometimes go on tractor is declining a little bit, but a lot of the growth that I discussed before was actually adding AI and learning layering that AI AI on top of their existing.

Speaker Change: Solutions for variant and from other vendors.

Speaker Change: Got it thanks, and then if you look at the FY 'twenty six guidance or.

Speaker Change: Are you assuming that any of the 20 million and kind of pushed unbundled revenue that.

Speaker Change: It didn't come in in the fourth quarter closes or have you kind of taken that assumption on the 20 million there out of the full year guidance, including the plus or minus 3% our assumption there.

Speaker Change: Yeah, No we are talking.

Speaker Change: Talking about a couple of deals that are from existing customers that have a ongoing rollout.

Speaker Change: Very.

Speaker Change: Software into larger operations.

Speaker Change: In one case, it's a deal that the customer was in the middle of a rollout to more business units.

Speaker Change: And we expect them to continue to roll out the timeline the customers have.

Speaker Change: Changes obviously.

Speaker Change: We see customers actually prefer to invest their budget dollars in AI and rather than rolling out infrastructure changes across there.

Speaker Change: Operation.

Speaker Change: But you know we believe that.

Speaker Change: We have a very.

Speaker Change: Very large.

Speaker Change: The range of outcomes when it comes to unbundled SaaS.

Speaker Change: And Thats why were guiding revenue is plus minus 3%.

Speaker Change: But from an air our perspective.

Speaker Change: Everything is ratable.

Speaker Change: And unbundle bundled booking basically are not making any impact on the AOR. So.

Speaker Change: When we guide you to 8% growth in fiscal 'twenty six it's really this regarding the impact of any booking mix.

Speaker Change: No.

Speaker Change: And you know when you look at.

Speaker Change: Q4, which we just finished.

Speaker Change: Booking mix.

Speaker Change: We actually assumed in booking in Q4 that we will have to.

Speaker Change: $25 million of news such as Chile.

Speaker Change: And that it was a good number right this will be a 20% growth year over year.

Speaker Change: Actually we had a record booking on 32 million. So we came with 30% growth.

Speaker Change: Even without those unbundle deals.

Speaker Change: That will be now pushed into the future.

Speaker Change: So if we had those.

Speaker Change: A few deals that slipped we would be at $40 million, which is even more than 40% growth, but 30% growth really is great. Because it's in AI. We saw customers are preferring to put their budget to work to increase the.

Speaker Change: The economic benefits that they get from AI and they are sometimes deferring their infrastructure change.

Speaker Change: It's kind of split it overtime.

Speaker Change: Got it last question for me is if you look at the fourth quarter. There you did outperform on total ear with 5% growth. My estimate here that you lost $8 million to $10 million from one of those large unbundled deals that pushed I guess in terms of making up for that $8 million to $10 million in lost they are you know.

Beating on a net basis about 5% growth was at a series of smaller bundled deals or was there a few large bundled deal that kind of came in the corner there that outperformed relative to your expectation. Thanks guys.

Speaker Change: Yes, no. Thank you for that so we do see larger deals now form.

Speaker Change: Uh huh.

Speaker Change: One of the two deals that I highlighted the there was a Q4 win was a 10 million dollar TCG order that was for.

Speaker Change: For new Bot.

Speaker Change: But interesting.

Speaker Change: Mentioned that we've been seeding the market for quite some time and I I earlier discussed four different examples of customer debt increased significantly over the last year.

Speaker Change: So when we look at the different cohorts and how customers behave.

Speaker Change: First I mentioned that you know when we were looking at the Fortune 500 companies that the leading brands in the world and we only do have 90 of the fortune 500 that are.

Speaker Change: Using Janet AI. So that's obviously a great because these are.

Speaker Change: Market Influencer and Theres a lot of potential in large companies.

Speaker Change: When I looked at a different cohort, which is what is the variance top 100 customers.

Speaker Change: And in the very top 100, each customer on average is like a $3 million or.

Speaker Change: So these are large customers. This cohort actually grew last year for.

Speaker Change: Q4, <unk> the growth was 17%.

Speaker Change: Alright, so five percentage of our overall <unk> growth.

Speaker Change: But in the top 100, we grew 17%.

Speaker Change: And when you look at even a smaller universe the cohort of our top 25 customer, which they have on average $6 million for customary IRR.

Speaker Change: These customers actually grew 24% in Q4.

Speaker Change: <unk>, 5%, so what we see now is that our largest customers I'm actually growing much faster than the overall universe and it's not a coincidence because we.

Speaker Change: When we were.

Speaker Change: Introducing innovative AI and strong outcomes to the market, we decided to actually go top down because we have thousands of customers and we can focus on educating all of them. So our decision was to educate our customer base dropped down.

Speaker Change: And we see big success with the <unk>.

Speaker Change: 25, and the top 100.

Speaker Change: We spent a lot of time educating and showing them in their own production environment, what they can achieve and then obviously buying now bigger and bigger so it's not small dams, we have bigger deals.

Speaker Change: Yes.

Speaker Change: And also in fiscal 'twenty six.

Speaker Change: All this sitting work we did with the large customers. We think we will continue to benefit us because they are continuing to expand the high consumption, but we have now the bandwidth to focus on the next 100 and the next 100 and go down.

Speaker Change: From a base and of course, we see also acceleration from this effort.

Speaker Change: As you as you mentioned in your first question you know.

Speaker Change: There was a big paralysis in the market.

Speaker Change: We're breaking through that paralysis, and we're seeing the results now not just in terms of potential but also we see very tangible results in our top customer cohorts.

Speaker Change: Thank you.

Speaker Change: Thank you and one moment, while we prepare for the next question.

Speaker Change: And our next question is going to come from the line of Peter Levine of Evercore. Your line is open.

Speaker Change: Great. Thank you for taking my question.

Speaker Change: I think it's clear you guys have demonstrated or at least trying to relay the message of <unk> is the right metric.

Speaker Change: They're the only company going through the dynamics of term.

Speaker Change: Subscription, but if you look at the dynamics of these customers can you maybe just share with us your confidence that these customers that pushed their unbundle deals into fiscal 'twenty six like what percentage of those are actually do you feel confident going to close.

Speaker Change: And then second are there any other dynamics dynamics that happened with these deals or is it the macro with the budgeting anything else that kind of played into them pushing out.

Speaker Change: Okay.

I don't think that there is some macro issues I think that's actually customers are looking to spend their budgets, where they get tangible results.

Speaker Change: I think there is now in this environment is even more scrutiny on you know are we just doing experiments or are we going to see business outcomes now so that that actually works well for various because we're not advocating that you need to do a long term investment you can start small and prove it and scale only when you see the <unk>.

Speaker Change: Outcomes. So I don't think it's a budget issue. They all are so significant that the.

Speaker Change: It distinguishes actually pay for themselves.

Speaker Change: So in terms of the mix of bundled and unbundled into 26, what will be the mix that we assume.

Speaker Change: First the good news is that the mix doesn't matter to our.

Speaker Change: Guidance, because it doesn't matter.

Speaker Change: All games and they are all ratable.

Speaker Change: Now of course, we know that it and LR and revenue are the same thing.

Speaker Change: And if it's a million dollar deal it will drive their hard drive revenue $4 million. So it's just a matter of timing.

Speaker Change: And because we take all doing is accountable.

Speaker Change: We basically are indifferent to the mix on our guidance and this is why we guided to four 8% growth was plus minus 1% range.

Speaker Change: Now the mix will make a difference to our revenue.

Speaker Change: As we all know because of the impact of <unk>.

Speaker Change: 606 on unbundle SaaS, so different mix.

We'll create different results and this is why we are guiding for plus minus 3%.

Speaker Change: <unk> minus $30 million, which is a broad range, but does reflect the reality.

Speaker Change: Is that it's difficult for us to predict.

Because the customers now have the flexibility to change their mind like hybrid cloud.

Speaker Change: Brings a lot of benefits to the customer and one of them is.

Speaker Change: They don't have to make the decision what they need to do first.

Speaker Change: Normally in software you you would think I have to change my infrastructure and then I can layer on the AI applications and get the benefits.

Speaker Change: It came with a very differentiated approach you do not need to change or infrastructure.

Speaker Change: So we're not forcing our customers to continue to.

Speaker Change: Converts their premises to the cloud or whether they need to expand in on premises before they can go to the cloud with AI and it gives them the flexibility to actually decide sometimes in the very last minute.

Speaker Change: Yes, we're going to spend was very $5 million, but rather than spending it on us.

Speaker Change: Unbundle SaaS, we gotta spend on bundles us.

Speaker Change: And what we're gonna do is we're going to see great let's do.

Speaker Change: Let's do the bundles Thats 5 million, that's going to be more and more consumption that brings us faster to where actually we want to be as a company. We want to be the company that basically leads the market with shifting more and more customers and getting bigger consumption in AI and Thats all aimed to varian cloud hosted an event in cloud.

Speaker Change: So we're not pushing our customers to do more unbundle the.

Speaker Change: Unbundled SaaS deals.

Speaker Change: It just falls, where it falls and that's why we gave a broader range of outcomes for revenue in a very narrow range for arrow.

Speaker Change: Well. Thank you for the color maybe one for you Greg can you help us understand or explain.

Speaker Change: The customers unbundled customers that course with these all renewals with any of these net new net new customer and then as a percentage.

Speaker Change: What are your customers, maybe just talk about sure leader no. Thank you for that and it's important to note. So these were all existing customers and the deals that we were highlighting none of them were renewal oriented. So in fact in Q4 all of our revenue streams came in on track or.

Speaker Change: Or bundled SaaS as Dan mentioned was slightly ahead and that included the unbundled renewals. They all came in exactly as expected and on time. So this dynamic that Dan the sharing simply related to an expansion with some existing customers and as the highlighted it.

Speaker Change: Was that we're planning a rollout to some additional business units.

Speaker Change: Some of that software and the timeline for that changed and you know, we do expect that to materialize.

Speaker Change: Much of it as we go throughout fiscal 'twenty six.

Speaker Change: Thank you very much for the color.

Speaker Change: Thank you.

Speaker Change: Mind, if he would like to ask a question. Please press star one on your telephone.

And one moment for the next question.

Speaker Change: Our next question will be coming from the line of Timothy Herin.

Speaker Change: Of Oppenheimer. Your line is open.

Speaker Change: Thanks, guys.

Speaker Change: Can you talk about the channel mix a little bit.

Speaker Change: Senator revenue and more importantly, where you expect it to go and within the channel are you seeing certain areas of growth versus.

Speaker Change: Other areas.

Speaker Change: You know I guess related to this what makes you think you have the best AI products and services out there out there now are you hearing that back from from channel partners as well as your large customers. Thank you.

Speaker Change: Yes.

Speaker Change: So.

Speaker Change: I'll start with you know how do we go to market with channels.

Speaker Change: We have very little.

Speaker Change: Bookings and revenue from from channels that are completely autonomous.

Speaker Change: Most of our channels actually not expert in AI.

Speaker Change: And are they rely on the varying salesforce and pre sales and product experts.

Speaker Change: To go deep dive with customers to demonstrate this.

Speaker Change: The the outcomes and so on.

Speaker Change: So are we now in a in a.

Speaker Change: Our cross selling model with.

Speaker Change: Most of our most of our channel partners now, we do see and expect that some of them.

Speaker Change: Going to pick up.

Speaker Change: Some of that knowledge and we see some partners you know that we have more than 50 boss and so each box is automating our CX micro wrecked flow.

Speaker Change: And.

Speaker Change: We don't expect channels to kind of master all of these different we're closely we automating, but we do see partners that are trying to package and become better at selling maybe three or four or five so they are starting to get more capable in delivery.

Speaker Change: Delivering the message to customers.

Speaker Change: A credible way.

Speaker Change: Of course, what we hear from channels all the time is.

Speaker Change: The kind of.

Speaker Change: Customer reported AI business outcomes, we don't hear from anyone else.

Speaker Change: That really helps the confidence not just with the end customer, but also with our channel partners. They exceeded what we say we can do and what we do really resonates well with customers. So look partners are looking to make it easier for them to sell and the easier it gets.

Speaker Change: Demonstrating outcomes.

Speaker Change: The more they're going to invest in learning the variant platform and are actively selling it.

Speaker Change: So in 'twenty six we baked in.

Speaker Change: Obviously, another year of growth.

Speaker Change: <unk>.

Speaker Change: Generation in <unk>, which is driven by <unk>.

Speaker Change: Booking growth.

Speaker Change: And we do we do dial in some better contribution from channel partners.

Speaker Change: But we think that over the next few years, there's a lot of leverage.

Speaker Change: In our many many relationship that will just be growing.

Speaker Change: And what we did in the last couple of years is we couldn't wait for the channel partner.

Speaker Change: You need to so we were leading more without a direct sales force, but definitely we are as always we've been very open to our partners were very supportive to partners and we're looking for partners to be more successful and I think it will happen over the next few years.

Speaker Change: Great and then just on <unk>.

Speaker Change: On the macro side are.

Speaker Change: Are you seeing any concerns from your customers that you know on macro and.

Speaker Change: We think its macro is slowing.

Speaker Change: It should actually benefit you guys. Because you can obviously reduce our expenses quite a bit and improve productivity, but any thoughts around both would be great.

Speaker Change: Yeah, No I think you're absolutely right I think that our customers really.

Speaker Change: Our board hesitating to do infrastructure projects.

Speaker Change: Because the infrastructure change doesn't really create greater ROI and takes a long time and it's disruptive.

But our message now is resonating even better than before which is.

Speaker Change: No need for infrastructure change no need for upfront commitment start small look some of the big customers that I discussed before I'll give you an example, custer.

Speaker Change: Customer that started.

Speaker Change: We as a copilot box.

Speaker Change: And they wanted to just assist our 300 agents and see.

Speaker Change: How it goes.

Speaker Change: And.

Speaker Change: In a few weeks they saw the results in few months they expanded from 300 agents to 30000 agents.

Speaker Change: And we reported before $70 million was there.

Speaker Change: Increase in agent capacity.

Speaker Change: So they were very skeptical at the beginning.

Speaker Change: The same time. The other example, I gave was which was the $10 billion to survey order in Q4.

Speaker Change: This was already our initial order for a 5000 to assess 5000 agents was a copilot.

Speaker Change: So the pricing is also another thing which helps customer because the way we price our AI software is very aligned to creating value.

Speaker Change: They have this completely flex complete flexibility.

Speaker Change: How much consumption they they they.

Speaker Change: They desire and that consumption is directly related to the values of the <unk>.

Speaker Change: Unit of measure is directly related to the value that it creates so one for Bosch for example is.

Speaker Change: Price based on the number of minutes that.

Speaker Change: The customer decided to allocate to the box and our customers may have.

Speaker Change: 5 million minutes that they need to respond to and they say well the board is going to do.

Speaker Change: 100000 minutes and then the rest $4 9 million would be by people.

Speaker Change: As they see the boss actually creating good outcomes. They can shift more minutes for the boss, which will be more revenue to variant, but obviously that investment can variant will be with the 20 X-ray relative to investments in labor.

And they have the flexibility to shift back and forth if they see the board does not working well.

Speaker Change: They know they can take it away.

Speaker Change: In reality, they don't because the boss actually is improving performance over time, because our boss learn from data.

Speaker Change: The differentiation part of our platform is that we're not just using Iot modules.

Speaker Change: The data in our platform, which is behavioral data and are the various AI powered bots are using hundreds of different models.

Speaker Change: We pick the right model for the for the for the tasks, which depends on what which micro excellent automating. But then we also trained that bought all the time on fresh data and both cash actually better.

And then customers will consume more time was that March several minutes to the box, which will increase our revenue and grit UGI.

Speaker Change: Joey for customers so.

Speaker Change: That dynamics you know when you look when you think about the macroeconomic trends you know what happens with the economy.

Speaker Change: The message is you know.

Speaker Change: Don.

Speaker Change: Don't have a big weekend refresh project. It takes two years and you don't know what's going to be at the edge.

Speaker Change: Various you could take a completely different approach and you can start to measure those tangible outcomes in your own environment, and then scale and it's very quickly to scale because.

Speaker Change: All of these boats are running at a very cloud and basically it's just a.

Speaker Change: Various giving more entitlement to customer to use more mobile deposit the scaling is not also not disrupted.

Speaker Change: I think we have a very compelling and differentiated approach with hybrid cloud and we're starting to see that was accelerating.

Speaker Change: Thank you.

Speaker Change: Thank you one moment for the next question.

Speaker Change: And our next question will be coming from the line of Shaul Eyal.

Shaul Eyal: T D. Cowen your line is open.

Speaker Change: Thank you hi, good afternoon guys.

Speaker Change: Dan It warm grant.

Speaker Change: These handful of slip deals are the U S or internationally driven.

Speaker Change: They were basically there was one large two large deals that predominantly are.

Speaker Change: The.

Speaker Change: The total amount that was slipped and they were both U S. A lot very large U S companies financial services companies.

Speaker Change: Understood. Thank you for that and from a competitive market dynamics and do you think you're gaining market share.

Speaker Change: Driven by the both strategy.

Speaker Change: Over the course of the past few quarters.

Speaker Change: We're not aware of any other vendor that has that scale of AI deployments with us today.

Speaker Change: Actually if you look at our at our customer base right now.

Speaker Change: All customers that are.

Speaker Change: Running in a very cloud if some AI entitlements.

Speaker Change: Which brings our.

Speaker Change: L R.

Speaker Change: Over $300 million of color here are for customers that are actually using various workflows with some level of inflammation.

Speaker Change: Assisted by AI.

Speaker Change: And.

Speaker Change: That's a pretty large number.

Speaker Change: And as I mentioned before our top customers our top 25 customers are growing.

Speaker Change: 2024%.

Speaker Change: Year over year and as you saw in the examples before.

Speaker Change: The growth is coming from investing in AI in us keeping the keeping.

Speaker Change: The.

Speaker Change: The legacy siliceous, Larry in the Wi Fi solutions to keeping them on prem and they're adding more.

Speaker Change: More and more AI and.

Speaker Change: And different levels of consumption for different box, some adding seven Boston I think 10 box. So yeah, I think we are creating a very.

Speaker Change: Nice market share with leadership position in the CX automation market.

Speaker Change: And we are totally agnostic to infrastructure. So the customer decision on sic us on CRM on on even on their vendors.

Speaker Change: We are totally agnostic.

Speaker Change: We will work with any vendor of choice.

And we can take different models.

Speaker Change: Obviously, we have many different.

Speaker Change: In all our models when we test in our labs, and we recommend to customers.

Speaker Change: What will give them the best cost performance, but we also very agnostic so.

Speaker Change: In CX automation, which as you know we defined it is very simply automating CX workflows.

Speaker Change: I believe that we are the market leader and we're taking market share.

Speaker Change: Thank you so much.

Speaker Change: Okay.

Speaker Change: Thank you and this does conclude today's Q&A session I would like to go ahead and turn the call back over to Matthew Frankel for closing remarks. Please go ahead. Thanks.

Matthew Frankel: Thanks, Lisa and thank you everyone for joining us today as always please feel free to reach out with any further questions. You have and we look forward to speaking to you again soon have a good night take care.

Matthew Frankel: Thank you for joining today's conference call. This does conclude today's conference you all have a great evening.