Q1 2026 UiPath Inc Earnings Call
Greetings and welcome to the New Ipass first quarter 2026 earnings conference call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation.
Once you require operator assistance during the conference. Please press Star Zero on your telephone keypad. As a reminder, this conference is being recorded it is now my pleasure to introduce you to.
Alicia: Your host at least for a Lady Vice President of Investor Relations. Thank you Alicia you may begin.
Good afternoon, and thank you for joining us today to review U Ipass first quarter fiscal 2026 financial results, which we announced in our earnings press release issued after the close of the market today on.
On the call with me are Daniel <unk>, founder and Chief Executive Officer, and Ashish Gupta, Chief operating and financial officer to deliver our prepared comments and answer questions.
Alicia: Our earnings release and financial supplements all materials are posted on the <unk> Investor Relations website IR Dot you Ipass dotcom. These materials include GAAP to non-GAAP reconciliations, we will be discussing non-GAAP metrics on today's call.
Alicia: This afternoon's call includes forward looking statements regarding our financial guidance for the second quarter and full fiscal year, 2026, and our ability to drive and accelerate future growth and operational efficiency and grow our platforms product offerings and market opportunity.
Actual results may differ materially from those expressed in the forward looking statements due to many factors and therefore investors should not place undue reliance on these statements.
For a discussion of the material risks and uncertainties that could affect our actual results. Please refer to our annual report on Form 10-K for the year ended January 31st 2025, and in other filings and reports that we may file from time to time with the SEC.
Forward looking statements made on this call reflect our views as of today and we undertake no obligation to update them.
I'd like to highlight that this webcast is being accompanied by slides you'll posted slides in a copy of our prepared comments to our Investor Relations website immediately following the conclusion of this call. In addition, please note that Alton persons are year over year, unless otherwise indicated.
Daniel: Now I'd like to hand, the call over to Daniel.
Daniel: Thank you Elias.
Daniel: Good afternoon, everyone. Thanks for joining us before we dive into the results I want to take a moment to reflect on the momentum we are seeing across the business, especially around the launch of our agenda automation platform.
Daniel: This has been one of the most important and successful product introductions in our history.
Daniel: We've made is a testament to the relentless.
Daniel: The utilization of all of our teams the deep festival with customers and the strength of our partner ecosystem.
Daniel: We've started the promise of logistic automation.
Daniel: In reality and we are just getting started.
Daniel: Momentum following our launch has been exciting and was matched by strong first quarter financial performance.
Daniel: Thank you.
Daniel: Shifting our focus and what continues to be a variable microeconomic environment exceeding expectation on the top and bottom line, we believe our first quarter revenue.
Daniel: $157 million and ended the quarter with.
Daniel: Mm $1.693 billion.
Daniel: An increase of 12% year over year, our ongoing emphasis on operational efficiency drove strong bottom line results significantly improving our Gulf operating loss.
Daniel: $16 million compared to a loss of 49 million loss in the prior year.
Daniel: The non-GAAP basis, we achieved operating income of $17 million, representing a 20% margin an improvement of 450 basis points year over year.
Daniel: What's driving these results it's clear our end to end automation plus marine has sleep logistic autonation and agenda orchestration capabilities is resonating deeply with customers.
Daniel: Over the last several months I have spent considerable time deeply engaged in product sessions of customer conversations all centered around the genentech autonation, the energy and potential I'm, a singer palpable and I've never been more confident about the path we're on.
Daniel: So more energy has been reinforced by several high impact events this quarter, each amplifier and go with blockbuster potential and setting the stage for our next phase of growth.
Speaker Change: Our annual agenda Guy He's taught me and then I'll forget the Bull Defcon 2025 laid the foundation for the most significant product launch in the U I pass 20 year history.
Daniel: Over 50000 participants so did you start for dogs, and I Wanna Genting automation product.
Daniel: Witnesses firsthand, how you wipe off tons forms work by unifying agents robots and people into a single intelligence system.
Daniel: As we bring our adjunctive love for it to market. It's clear we are positioned to lead.
Daniel: Right to win is grounded in five powerful advantages.
Daniel: Our extensive installed base of robots.
Daniel: Capabilities already operating autonomously across more than 10000 customers gives us unparalleled insight into real enterprise processes doesn't waterfalls, where agents are a natural extension.
Daniel: Second we are unique for me bridge, deterministic automation or RPE, a probabilistic automation or genting.
Daniel: Allowing customers to extend automation into more complex adaptive workforce.
Daniel: Our vendor agnostic architecture enables seamless integration with any agent framework.
Daniel: The Pearl court or low cot, providing unmatched flexibility fourth.
Daniel: We've built a secure compliant and enterprise grade platform that meets the highest standards of golfers that's critical for enterprise tape automation and fifth our unified end to end platform architecture delivers a fully integrated experience from discovery to deployment Olga.
Ralph: Ralph we're centrally enabling customers to scale automation at least coffee nuts on control customers and partners across the industry to see our differentiation and are quickly embracing the transformative potential of our newly launched plus.
Ralph: Since launching agent buildup in preview. These January we've seen accelerating adoption with customers, creating thousands of almost agents and generating over 250000 agent neurons to date.
Ralph: Momentum is also building for maestro our agenda orchestration solution, which answer preview in March and has already powered more of them.
Ralph: 1000, <unk> processed instances highlighting strong early demand for coordinated Andrew.
Ralph: Enterprise grade agenda called donation to support this momentum we've introduced a monetization strategy designed to drive adoption featuring the new consumption based pricing issue.
Ralph: Let me share a few examples that reinforce the strength and differentiation of our platform organizations are under increasing pressure to accelerate digital transformation as they embrace AI the wall. They hear more from customers is trust.
Ralph: I want confidence in the agents, they deploy and that's where our platform stands out we offered the control golf with less predictability they need to automate complex end to end processes, which countries.
Ralph: A powerful example of this is a fortune 50 global Health company, where we are driving a genetic automation that's key in our first agenda deal since launching our products into general availability. They signed a multiyear multimillion dollar expansion to adopt you wipe off my <expletive>.
Ralph: So agent buildup to design deploy and manage agents across complex cross functional workflows.
Ralph: These capabilities enable them to integrate agents into real business processes with the governance scalability and human in the loop controls requires for enterprise adoption.
Ralph: We're also seeing a fundamental shift in how customers think about automation.
Ralph: It's no longer a bowl with isolated task, but the move towards the more intelligent and connected approach.
Ralph: This is where you I bought my stroke truly differentiates us our vendor agnostic architectures.
Ralph: It was seamless orchestration.
Ralph: Robots agents and people and unlocks complex cross functional workflows, the traditional automation couldn't address.
Ralph: Example, is a leading global apparel retailer using you wipe off my throat to orchestrate the end to end use.
Ralph: User query process with the muster support agent we've.
Ralph: With my Astral, they've automated the entire war flow from intelligent, thus crossing and ticket generation to resolution on closure, resulting in a streamlined highly efficient supports operation.
Ralph: By seamlessly connecting the robot's AI agents and systems, both inside and outside the U I Puff Maestro enables smooth coordination across multiple complex automated processes.
Ralph: Leaders across industries.
Ralph: C. A genetic automation is a key to expanding AI subtle from supporting operations to actively guiding them and they increasingly recognize the needs for both deterministic and probably at least to automation.
Ralph: Our platform approach uniquely addresses this demand and is helping us win new customers, including a competitive displacement this quarter with the global health care Technology company.
Ralph: After selecting you a path to consolidate on a single platform with deep expertise in both the genetic hope donation that at a P. A.
Ralph: They are planning to migrate all of their existing automation is too old platform at.
Ralph: Our designing a solution to automate the complex inbound sales order process by integrating agents autopilot on RP, a we've been expecting.
Ralph: The reduction in processing time of 25%.
Speaker Change: The leadership of UA Baas platform is also validated by industry analyst I'm really proud to see continued recognition and intelligent document processing for the third year in a row you wipe off was named the leader in the Everest group's I V probe.
Ralph: Duct peak matrix assessment 2025 another.
Ralph: Another strong validation of our innovation performance and industry impact.
Ralph: But we are not standing still this quarter, we introduced our next generation IDP solution intelligent extraction processing, where I actually.
Ralph: Ex patrons forms how enterprises handle complex unstructured content far beyond the limits of traditional IBP, enabling faster processing, a smoother user experience and less friction in even the most challenging workflows.
Ralph: Hobby International is a great example of the value I still leave us with multiple use cases already in development and production.
Ralph: They are leveraging I speak to efficiently extract both structured and unstructured data from documents. Our IX based solution also enables seamless data explore shown across various carrier fives supporting the financial reconciliation processes and establishing a scalable sogou.
Ralph: So that can be extended to similar use cases across other business units.
Ralph: The breadth of the UA bus platform continues to drive adoption across high impact use cases, one of the most exciting being a genetic testing.
Ralph: Customers are responding enthusiastically fleets ability to combine a powered automation with.
Ralph: Houstonia, well agents, enabling faster smarter.
Ralph: This thing across the wide range of enterprise applications, but a great example is a competitive win with continental resources, we expanded in the quarter by adopting our agenda testing solutions.
Ralph: They chose you a path for our plus four same thing approach and industry, leading capabilities and plan to leverage our testing technology to automate key processes in well operations and support for that upcoming S. A P migration.
Ralph: As we continue expanding the rollover here across the plus four auto pilot remains a core driver of productivity and continues to gain strong traction across our customer base with monthly engage users up over 60% sequentially and then 86% increase in <unk>.
Ralph: Actual stake.
Ralph: Great example is the global financial and mobility services provider after standardizing on the UA Puff plus form they deployed autopilot and the banking services Department, where hundreds of employees have realized significant time savings by leveraging it for claims management processes.
Ralph: Building on this success they are preparing to scale autopilot to over 5000 employees across all financial services departments.
Ralph: As we continue to build our.
Ralph: All with the unique horizontal capabilities of the UI Buffalo genetic automation platform.
Ralph: We're also focused on delivering industry specific solutions that accelerate adoption solving.
Ralph: Solving complex problems and driving measurable outcomes.
Ralph: In line with that strategy, our integration of peak, which was announced last quarter is progressing well and gaining momentum among our customer base.
Ralph: We're encouraged by early customer feedback, particularly as they leverage peaks inventory pricing capabilities.
Ralph: Which are proving even more valuable in today's macroeconomic environment, especially as companies navigate studies.
Ralph: This quarter, we announced a strategic partnership with Google Cloud.
Ralph: The aim that transforming health care operations through one of our UA path medical record some modernization agent leveraging google's cloud vertex AI and Jimmy nine muscles. This solution is designed to dramatically improve efficiency and it seemed like critical medical waterfalls.
Ralph: With the potential to reduce prior authorization times by up to 50%.
Ralph: A game changer for both health care providers and the patients they serve.
Ralph: And this is just the beginning we're committed to continuing to do to develop targeted vertical solutions.
Ralph: Let's do the slippage is deep.
Ralph: Focus collaboration with strategic partners, what do we have able to co create solutions that accelerated customer value and drive measurable outcomes at scale.
Ralph: The Great example is our continued partnership with Deloitte, including our recently completed customer Zero initiative, which led the UA puffs internal migration to S. E. P. S for Honeywell.
Ralph: Working with Deloitte and leveraging our own automation capabilities, we really meet the entire process and pioneer and automation first gen. Thank you gotta be approach.
Ralph: That now serves as a model for the market.
Ralph: As a result more than 200 automation will deliver across core processes like quote to cash and treasury with nearly 60% of this cases automated significantly reducing the load on business users and accelerating delivery timeline.
Ralph: With our internal implementation life. We are now focused on the next phase embedding agenda gay capabilities into the ERP environment powered by you wipe off my throat. This next generation architecture will enable smart their agents to handle decision making.
Ralph: Identify exceptions and orchestrate across S. P. A non S C P obligations.
Ralph: But we are already replicating this we've joined customers, including a recent win with a fortune 20 oil and gas company and one of the love just ACP implementations to date.
Ralph: They will be leveraging UA puff in the Lloyd's automation playbook to significantly reduce implementation time and expect to automate 70% of all manual test.
Ralph: As we scale, our gentex solutions across our customer base technical partnerships remain a key priority playing a critical role in enabling seamless integrations and driving automation at scale. This quarter, we took another big step forward by expanding our call.
Ralph: Aberration with Microsoft for New bidirectional integration with Microsoft Co pilot studio.
Ralph: This integration enables developers to embed you like buff automation and AI agents directly into co pilot studio and brings copilot agents into UA puffs studio unlocking powerful new use cases, and making cross border for collaboration or reality.
Ralph: A great example is a global diversified technology and industrial company that is currently implementing UA bus agents to work in conjunction with Microsoft Copilot to support the customer invoicing workflow, enabling an end to end touchless approach this process.
Ralph: We also teamed up with lunching to give developers even more flexibility on par with no U I pause developers can bring long graph built agents right into their workflows and long enough developers can deploy their agents on our secure enterprise.
Ralph: Great blocks for giving them the confidence to scale with compliance reliability is built in.
Speaker Change: Oh, well the end to end automation plus four.
Speaker Change: Sets us apart continues to earn third party recognition.
Ralph: We're humbled to be named a leader in the first ever I D. C markets Cape worldwide business automation plots for 2025 vendor assessment, which we believe is a testament to the strength of our technology our customer first.
Ralph: Mindset, and our proven ability to deliver meaningful ROI escape.
Ralph: Lastly, I'd like to provide a quick update on our U S public sector vertical.
Ralph: We're encouraged by the progress we're seeing in our public sector business as we support federal customers through the transition.
Ralph: A highlight this quarter was our annual public sector on tour event.
Ralph: Which brought together.
Ralph: Senior leaders from the Navy Air Force D. L E N V H S to share their vision for the future, but gently autonation and underscore our growing role in helping federal agencies mothers nice and scale automation across their organizations.
Ralph: An example is a deal this quarter with the United States Air Force to accelerate digital transformation suites of genetic adamant initiative.
Ralph: Building on the successful all create foundation.
Ralph: The initiative integrates you a puff intelligent digital agents advanced decision, making capabilities and Theyre driven insights and is designed to reduce operational inefficiencies enhance mission readiness and standardized automation at scale across seven.
Ralph: <unk> thousand plus admin and Guardians.
Ralph: Looking forward, we'll continue building on our conversations we love administration officials, United by a shared goal of transforming the government.
Ralph: At the same time, we recognize that this transition is still evolving and we remain prudent in our guidance for the remainder of the year.
Ralph: Before I hand, it over to Ashish I liked we invite you to join a virtual fireside chat I'm product demonstration.
Speaker Change: Seven a M. Eastern time on June 18th well I'll be joined by our Chief product Officer, Graeme show them to showcase the powerful capabilities of our latest agenda gay products. Please.
Ralph: Please reach out to our Investor relations team for more information with that.
Ralph: The call over to washing.
Speaker Change: Thank you Daniel and good afternoon, everyone I'd like to begin by providing an update on the key operating priorities, we have been focused on.
Ralph: First we've made meaningful progress in connecting and strengthening our partner ecosystem, which continues to play a central role in driving adoption and accelerating you I'd pass strategy in the market.
Ralph: This quarter, we officially launched our new partner program, which has been well received and places a strong emphasis on enabling our partners in conjunction with the Egencia lunch. This collaborative approach is becoming a powerful engine for shared customer success at our gets kind of done in late April for other leading Gsi's accenture.
Ralph: Eli cognizant and CGI showcase live a gentle customer use cases that brought our platform's potential to life in this quarter more than 40 partners, including GSI is like Deloitte and Pwc as well as regional partners like like Dona Tiki late and accelerate completed our <unk>.
Ralph: <unk> SaaS track program.
Ralph: Hands on immersive training energetic automation and a clear reflection of how invested our partners are and driving the agenda era for it for our customers.
Ralph: A great example is a leading GSI is close really close partnership with Sonic automotive following last year's expansion, our I V P and testing solutions Sonic expanded in the quarter to purchase our agenda capabilities and they work to transform their enterprise with AI working it with E Y It will begin identify.
Ralph: Use cases across their enterprise and finance supply chain shared services and customer service and Shilton partner.
Ralph: An early adopter of our Genentech automation solutions, which support from Kronos automation, one of our platinum and SaaS track partners, they're implementing two high impact of Genentech use cases, one automates the extraction and matching of company data from incoming documents cutting down on manual research.
Ralph: The other uses multiple agents to analyze client self disclosures and generate tailored central settlement offers enabling faster and more consistent decision making at scale.
Ralph: We are also pleased with the progress we're making in driving customer adoption supported by tighter cross functional alignment proactive engagement and clearer accountability and focus this coordination is feeling real momentum and there's a strong sense of energy and focus as we bring our gentex automation solutions to more customers.
Ralph: Finally, we have substantially completed the overall transformation, which has yielded significant operating leverage as seen in our results. Looking ahead. We are also focused on driving internal adoption of our platform to unlock the next wave of operational efficiency as we scale.
Ralph: By agenda defying our internal processes with you I'd have maestro and our new agenda capabilities alongside our existing RP a automation, we're setting a powerful example of how our platform can streamline work and deliver measurable value.
Ralph: Turning to the quarter.
Ralph: Unless otherwise indicated I will be discussing results on a non-GAAP basis, and all growth rates are year over year. I also wanted to note that since we price in selling local currency fluctuations in FX rates resolved impacts results.
Ralph: We had a solid start to the year with first quarter revenue growing to $357 million an increase of 6%.
Ralph: <unk> totaled $1 $693 billion, an increase of 12% driven by first quarter net new <unk> of $27 million, we continue to be successful in signing valuable new enterprise logos that align with our strategy for targeting long term customers with the propensity to invest including.
Ralph: New logos like Mclaren Health Pelosity Norwegian cruise line, and then a competitive displacement this quarter Delta Airlines, who will be migrating their current automation is to you at that and adopting our full suite of capabilities.
Ralph: Our seamless ability to deliver in the cloud and leading a gentex automation capabilities were key in choosing <unk> as their automation partner.
Ralph: We ended the quarter with approximately 10750 customers as with prior quarters. The vast majority of customer attrition continues to be at the lower end.
Ralph: Customers with $100000 or more in <unk> increased to 2000, and 365 customers with $1 million or more in AOR increased to 316.
Ralph: Moving on dollar base gross retention of 97% continues to be best in class and our dollar based net retention rate as of the first quarter was 108%.
Ralph: Remaining performance obligations increased to one point to three $1 billion up 12%.
Ralph: Current RPI increased $776 million up 14%.
Ralph: Turning to expenses first quarter overall gross margin was 84% and software gross margin was 90%.
Ralph: First quarter operating expenses were $231 million.
Ralph: First quarter GAAP operating loss of $16 million included $76 million of stock based compensation expense.
Ralph: non-GAAP operating income in the first quarter was $70 million, representing a 20% margin an improvement of 450 basis points year over year, and a testament to our ongoing focus on operational discipline and efficiency.
Ralph: Our first quarter non-GAAP adjusted free cash flow generation was $117 million, representing a 33% margin up over 250 basis points year over year.
Ralph: We ended the quarter with a healthy balance sheet, consisting of $1 $6 billion in cash cash equivalents and marketable securities and no debt.
Ralph: This quarter, we repurchased a significant number of shares reflecting our current our continued commitment to delivering value to shareholders. Repurchasing 21, 9 million shares of our class a common stock at an average price of $10 40.
Ralph: Now turning to guidance, we are pleased with the team's execution in a variable macroeconomic environment that is similar to the first quarter. We continue to guide to what's in front of us and therefore have updated our revenue linearity based on the favorable timing and mix of deals between second and third quarter.
Ralph: We are encouraged by early traction with our newly agenda newly launched a gentex solutions. However, however adoption is still in its early seasons and as such we don't expect a material revenue contribution in fiscal 2026.
Ralph: We are approaching the year with strong energy and focus partnering closely with customers to lay the groundwork through pilots proof of concepts and early deployments.
Ralph: We view fiscal 2026 is a foundational year and will position us to drive meaningful new revenue streams in fiscal 2027 and beyond as a gentle automation scales more broadly across our customer base.
Ralph: Turning to the specifics of our guide for the second fiscal quarter 2026, we expect revenue in the range of $345 million to $350 million.
Ralph: Or are in the range of $1.715 billion to $1 72 zero billion.
Ralph: non-GAAP operating income of approximately $40 million.
Ralph: And we expect second quarter basic share count to be approximately 537 million shares.
Ralph: For the fiscal full year of 2026, we expect revenue in the range of 1.5 $49 billion to $1.554 billion.
Ralph: Are are in the range of $1.820 billion to $1 $85 billion.
Ralph: non-GAAP operating income of approximately $305 million.
Ralph: And finally, we continue to expect fiscal year 2026, non-GAAP adjusted free cash flow of approximately $370 million and non-GAAP gross margin to be approximately 85%.
Ralph: For joining us today, and we look forward to speaking with many of you during the quarter with that I will now turn the call over to the operator operator, please poll for questions.
Ralph: Thank you we will now be conducting a question and answer session.
Ralph: He would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue.
Ralph: Press Star two if you would like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star T cell.
Ralph: Although we may address questions from as many participants as possible. We ask that you limit yourself to one question and one follow up if you have additional questions you may be cute and time permitting those questions will be addressed one moment. Please while we poll for questions.
Ralph: Yeah.
Ralph: Okay.
Ralph: Yeah.
Raimo: Thank you My first question comes from the line of Raimo <unk> with Barclays.
Ralph: Yeah.
Sheldon McMeans: This is Sheldon mcmeans on for Raimo, Thanks for taking the question.
Speaker Change: When do you reported in March it did seem like we are at near peak levels of uncertainty and you prudently factored that into your guidance. It does seem like some of the uncertainty has decreased and and and so we would love to hear what you're a little bit more on what you're seeing how you factor that in and then if I could tie in.
Ralph: Second part here, we have seen some dollar weakening since you last reported Blumberg dollar spot index down about 4% since mid March and if you could flesh out the FX impact in the quarter and then the potential tailwind to the full year guide them that would be great.
Speaker Change: Yes, great question Sheldon good good good to hear from you. So look I think that in many ways.
Ralph: The macroeconomic environment is still variable I think when you talk to customers, even when you read the news right everyday there's you know there's an evolving.
Ralph: Set of set of facts and set of circumstances. So we look at the environment as variable I think we're pleased with how we executed threat in the first quarter. We have good line of sight in terms of our second quarter and therefore, we kind of adjusted our linearity as such which you know for me as a favorable favorable move from a revenue standpoint.
Ralph: I think when you look at the overall year I think there's still uncertainty in variable and we continue to have a prudent economic environment from that standpoint, the second thing from an FX standpoint, it really it was pretty minimal we actually you know specifically looked at the exact that factory FX rates at the time. It was you know within Q3.
Ralph: Per cent, so to speak and I think FX fluctuations are pretty high meaning you know they can shift up and down very you know pretty significantly depending on the day of the month. So we we've maintained our FX assumptions materially to have no impact really for the for for the year at this point theres nothing significant or material.
Ralph: We would factor in.
Speaker Change: Understood Great and a quick follow up it was great to see the several new solutions around AI agents are coming out and then the new monetization strategy there what's been the customer feedback of the unified pricing model and the platform unit. So thank you.
Speaker Change: Well, we have a experienced already with the concept of yeah units and and pricing or more traditional IDP solution and.
Ralph: It's it's a bit early to tell but the initial reaction is positive because the new pricing model is it started closer to two the adoption.
Ralph: Of the software.
Ralph: Sure.
Ralph: Yeah, we we went tool.
Ralph: A long way to simplify the model the makes it easier to like create a business model then to understand especially in this new world of Virgin because this is one of the most interesting challenge too. So how can you how kidney price.
Ralph: Use case, and we are working closely with customers and.
Ralph: And and making them really understand better how pricing works and how it's tied to the use cases.
Ralph: Thank you.
Mark Murphy: Our next question comes from the line of Mark Murphy with J P. Morgan. Please proceed.
Speaker Change: Thank you very much and congrats on a on reaching all the targets and exceeding them.
Speaker Change: Daniel I wanted to ask you regarding public sector and U S. Federal you said your encourage you close the deal with the U S Air Force.
Speaker Change: You recognized that the transition is is still evolving.
Speaker Change: Could you just help us understand how did your U S. Federal business perform you know did it grow faster or slower than the broader business. As you know did you did you exceed or Miss Hum bookings targets and and what is I think what I'm trying to understand is do you think that.
Speaker Change: Public sector is already through the worst of the.
Speaker Change: You know pressure washing of the budgets or do you think that where.
Speaker Change: Do you think that that trough is still out there on the horizon.
Ralph: Yeah, So I, let I shouldn't comment more on the impact on the quarter, but I Wouldnt know I wanted to give you.
Ralph: So my perspective seeing the single event, so I was there.
Ralph: In D. C. I think that there is a really enthusiastic about what the agenda automation can bring tool.
Ralph: To bring efficiency into the federal government.
Ralph: And.
Ralph: Yes, the deal with the U S Air Force's bidding is very encouraging it's they are they come with this initiative called agenda.
Ralph: Element that is very ambitious and it aims to.
Ralph: Through our broader transformation across the.
Ralph: The business I think at the same time, we same continue they continue to be in the transition when renewals are progressing well.
Speaker Change: There is continued pressure on the new budgets being finalized I shouldn't you know I think Daniel said it well so like one I just I'll reemphasize, just super Kudos and thanks to our federal team I think they just they've done a fantastic job of keeping us surprised and connecting with customers and really managing the enthusiasm that.
Speaker Change: We have from our federal customers in terms of the exact numbers Mark. We don't you know, we obviously don't disclose segment information on a quarterly basis. So.
Speaker Change: So I I clearly can't do that here I would reemphasize I think the renewals were on track as Daniel said and I think it depends on the agency. Some agencies I feel like you know performed better than we expected and some of the moratoriums are lifted policy wise and then some of those moratoriums, where also while they're lifted policy wise there.
Ralph: Gil finalizing their current procurement routines and you see you know some of the same slowdown that we saw that's there. So on balance I would say you know there are in transition and we are going to continue to have a prudent approach as we navigate the year, even though we're in okay.
Ralph: Yeah.
Speaker Change: Encourage okay got it. Thank you very much and then just as a quick follow up here you commented positively on linearity.
Ralph: <unk>, which is great to hear.
Ralph: In terms of what's happening currently how do you feel about the quality and depth of the pipeline you know that you did sitting out there towards the end of the year and I'm curious if you think you can avoid some of the challenges that you might see you know from time to time coming off of Q3 or.
Ralph: Or coming off of Q4, which then I think it would be it would be a function of the pipeline and you know how it closes then.
Ralph: Yeah, I feel really good I, just you know a shout out to Mark gives our sales leaders I think they do a good job of not just looking at current quarter, but you know moving ahead and really taking a good look at our pipeline as our sales ops function does as well.
Ralph: We feel good about the quality and I would say beyond it being kind of like a blanket statement I think what we are.
Ralph: Where what bolsters that confidence is just the activity that we have on the agenda front.
Ralph: So you know several of the customer conversations you know they've solidified that they feel very good about our niche in their long term architecture or our place in their long term architecture and they're doing a lot of the egencia exploration pilots in T. O sees when you couple that with what we're seeing in the pipeline it means that the qual.
Ralph: What he feels good you know it's not just things that are in there, but it's in there with real new commercial activity as well and that you know that honestly is generated a lot of excitement a lot of work for us, but a lot of excitement for the business.
Ralph: Okay, that's great to hear thank you so much.
Speaker Change: Thank you. Our next question comes from the line of deep Blue Bird with William Blair. Please proceed.
Speaker Change: Yeah, Thanks for taking the questions and congrats on the solid results.
Speaker Change: For a commentary on the demand you're seeing for some of your new AI solution, just specifically on my throat. We're obviously hearing about a lot of different agent orchestration solutions in the market you called out some solid metrics on that front. So can you talk about what you're hearing from customers as to why Maestro is it's kind of the best compared to some of the other solutions in the.
Speaker Change: Market.
Speaker Change: Yeah.
Speaker Change: Well I think what we need to clarify one thing what many companies want to speak about orchestration they are.
Ralph: Men, mostly an agent to agent orchestration men the capability of managing the swarm of agents. Our maestro is more ambitious in the way, we connect agents, we've robots and people and and and.
Ralph: It is our ability to deliver fixed workflows at the enterprise level that can be executed and then autonomous way. It makes it a very powerful proposition in the market we lease.
Ralph: Then.
Ralph: A lot of time.
Ralph: In order to create better analytics to understand better.
Ralph: No.
Ralph: How you're all coal to see to get.
Speaker Change: Get great insights into your workforce how are your agents operates all your robots operate what's the human impact we even combined process mining data into these insights. So this in itself. It's a very unique proposition in the market.
Ralph: So overall I think that's our agenda orchestration is built on a very new modern technology. It has all the we saw some barrels of modern workflow technology philosophy with amazing insights into your operational data. So I think it's pretty.
Ralph: The unique offering in the market.
Speaker Change: Okay. That's helpful. And then just on the go to market and operational changes you've made over the past year do you feel like things are kind of stable at this point or are there any other things that you're looking to tweak in the model. It this year.
Speaker Change: So I think I want to be clear on it I think things are stable like I look at our leadership I look at our our core teams I look at the motions I look at even some of the supporting functions. We feel really good about the leaders that are in place their tenure with you I pass them as well as the structure. So we are substantially complete.
Ralph: Are there tweaks that we will make I think you know the activity and the energy around the new Gen. Six platform is really you know it's it's real so I think we're always going to be looking for ways to go faster be more focused and address the needs of our customers, but nothing that I see as disruptive I actually think it's gonna be more about coping with.
Ralph: The opportunity in front of us.
Ralph: Thank you.
Ralph: Next question comes from the line of <unk> Singh.
Ralph: King.
Speaker Change: Morgan Stanley. Please proceed.
Speaker Change: Hey, everyone. Thanks for taking the question. This is Ryan on for Sanjay.
Speaker Change: I'm just curious any additional color you can provide around the trends you're seeing in retention.
Ralph: Just with some continued pressure there in the quarter and maybe how should we think about the trajectory of retention going forward. Thank you.
Ralph: You know I think we've always talked about you know one law of large numbers, but second I think first quarter and a lot of the transition that we were seeing in the disruption of the macro and you know and of course you know this.
Ralph: Some of the some of the transition within the federal government that that explains as we did in the first quarter the trend around the expansion rate look what we feel positive about is two things I think first.
Ralph: You look at the energy that we have around the agenda. If you look at them.
Ralph: As we continue to beat our first quarter estimates we are execution is strengthening so from our perspective I think we are where we're really reaching at a point, where we feel like we can continue to scale, our biggest customers I would point to our customers greater than $100000 growing 13% year over year. So those are the key trends.
Ralph: I think the pressure points are more related right now to macro and federal the way we've talked about it.
Ralph: And you know, we're hoping that those things stabilize as everybody else does and at the same time, we've been prudent in our guidance as we go forward as we mentioned.
Ralph: Thank you.
Speaker Change: Our next question comes from the line of Bryan Bergin Cowen.
Speaker Change: Kelly please.
Speaker Change: Please proceed.
Speaker Change: Hey, guys. Good afternoon, and thank you so as it relates to the fiscal 'twenty six growth outlook can you just unpack. The comments you made on the favorable timing and mix of deals between the second and third quarter. It sounded like some things shifted around in there versus the prior plan.
Speaker Change: Curious is there just better sales cycles, and so on and so our clients are or other factors driving that.
Speaker Change: No I think it's just the mix of deals and Brian and when you look at it you know when we were guiding in the first quarter. We obviously had tremendous uncertainty we got it in front of what was in front of US I think as we get to the second quarter I think the shift in the deal mix is favorable and so we wanted to reflect that in our numbers, it's really that simple and we're encouraged by.
Speaker Change: By you know the activity of what's moving into second quarter, particularly around some of the larger deals you know that with 606, obviously drives the favorable revenue recognition.
Speaker Change: Okay, Okay, and then as it relates to the margin outperformance he had pretty notable leverage on us and am year over year can you just talk about where you're being more disciplined to drive that and are you at an optimized level to allow for a growth acceleration there I'm really just thinking about the trade off of optimization of Amsterdam versus you know growth potential.
Speaker Change: I think we're continuing to invest to be very clear you know like we did complete our the substantial portion of our restructuring where we to our minds.
Speaker Change: Moved a lot of or got efficiency from non customer facing functions I'll, let Daniel comment a little bit on the activity and you know and investment but you know we are we are investing in key areas key markets, but.
Speaker Change: But I think there's you know there's enough efficiency that we can self fund some of that but we're not afraid also to double down where we need to to capture the opportunity.
Daniel: I think the fact that we've brought to market and basically in the last three quarters five new product shows our commitment to invest in growth.
Daniel: Innovation and certainly we are we think of ourselves as a company that can grow faster and the agenda is a great opportunity for us and we will continue to focus you know agenda automation.
Daniel: Our top priority as a company.
Daniel: Alright, thank you.
Daniel: Yeah.
Speaker Change: Thank you. Okay. This question comes from the line of Terry Tillman with Cuba Securities. Please proceed.
Speaker Change: Yeah. Good afternoon, Daniel assignment of lease up at two questions a question a follow up.
Speaker Change: I heard it several times and I was thinking of a relatively good listener a replacement. So I heard a large airlines global airline I think there was another one I'm curious as agenda and other things are evolving is this creating a kind of go back and look at our existing vendor base and thinking about maybe if we consolidate with vendors that are further along on our agenda or am I reading too much into.
Speaker Change: Two the word replacement because I heard a couple of times and then I had a follow up.
Speaker Change: Yeah.
Speaker Change: There are traditional ERP vendors that are <unk>.
Speaker Change: Ken will keep the pace with the innovation and the nature of the some of our customers I'm looking into the portfolio and they wanted to consolidate that there is a tremendous benefits of combining agents with robots and when you'll go and decide on.
Speaker Change: The.
Speaker Change: I I adjourn to Oakland.
Speaker Change: Nation, plus four it's it's a nature of the way to think maybe we should bring the robots into the same thoughtful again the bell.
Speaker Change: And if it's from the security and governance perspective, and having agents and robots and managing two months also in the same plus one are tremendous so yeah replacements will come more naturally into the picture.
Speaker Change: Yeah. Thanks for that and just a follow up question. You know you all have kind of redesigned and evolve the partner program I'm curious and it does like you said include regional partners large GSI is et cetera, and even Isps.
Speaker Change: Going forward, maybe three to four quarters will we see more probably in getting more from your existing customers. Whether it's 100 K is the 1 million. So the five millions or is there something that could be more incremental one just bringing new quality customers in the boat just trying to understand maybe kind of the relative importance. There. Thank you.
Speaker Change: On the partner program I think one is it's super important that our partners are high quality and and you know properly incentivize because they are they are often very close to our key customers, especially you know that mid tier customers. So if I look at that $100000 plus customers base, yes.
Speaker Change: We want our rsi has to be growing that base and engaging and driving consumption and adoption and so we look at everything that partners do as net positive do we have a specific transfer function between the partner program and the dynamics of those customer cohorts no I don't think there's anything that we.
Speaker Change: Would fully disclose in terms of a.
Speaker Change: Specific transfer function, but it is very important that customers, who are working with our partners. There on the same playing field with us in terms of our agenda capabilities and have the right incentives.
Speaker Change: Thank you. Our next question comes from the line Uh Huh.
Speaker Change: With Evercore ISI. Please proceed.
Speaker Change: Hi, This is where I'll go on for Kirk. Thanks, So much for taking the question.
Speaker Change: And <unk> and congratulations on the results.
Speaker Change: Can you talk more about the DCP partnership the partnership with Microsoft Co pilot studio in terms of how the economics on something like that would work for you.
Speaker Change: Other opportunities to develop additional vertical solutions.
Speaker Change: But you've talked about thank you yes.
Speaker Change: Well, let me start with the vertical solutions. It was way up we believe that and.
Speaker Change: And this oh early adoption phase of Virgin think AI is becoming critical tool solution is our offering.
Speaker Change: Was always to build a horizontal plus four they both are the building blocks to build you know more dedicated solutions.
Speaker Change: Uh huh.
Speaker Change: Well. This is one of the reason we bought the peak because they offer a great vertical agents for inventory and pricing.
Speaker Change: And where where we're leveraging that expertise and building vertical solutions into other domains.
Speaker Change: And.
Speaker Change: Yeah, and this is oh, so at times to the partnership with G. C P, which basically it helps combining our forces to build the vertical solution on the medical some modernization field.
Speaker Change: With Microsoft.
Speaker Change: Actually a more broader horizontal integration between our technologies.
Speaker Change: And.
Speaker Change: And then the way we always said we are an open platform and we want to be a good citizen. So if our customers want to use Microsoft copilot agents and combined with our robots. That's a that's a great way to.
Speaker Change: To integrate and this points without war reciprocal connectors and it's it's kind of the same we can use our video is Microsoft.
Speaker Change: Technologies and agents from our master orchestration technology.
Speaker Change: Thank you our next.
Speaker Change: Question comes from.
Speaker Change: Hum.
Speaker Change: With Mizuho Securities.
Speaker Change: I see.
Speaker Change: Thank you. Thanks for taking my question, Jim just wanted to ask on that Nick.
Speaker Change: And all are well.
Speaker Change: As 108% slightly down from last quarter I understand there's a lot of trailing 12 month, but are you are investing in this new platform launch when do you think we should start seeing some kind of tabulation I'm Diana last night.
Speaker Change: Yeah, I think you know, we've obviously given our guidance for the year from our standpoint, though we will as we talked about I think this year, we see POC is particularly on the a gentex side and no material impact to revenue. So I would I think that's something that a discussion we can have in there.
Speaker Change: Second half of the year as we progress with our Gen take lunch and going into next year.
Speaker Change: From that standpoint.
Speaker Change: Okay, and then a quick follow up to your.
Speaker Change: Comment on the FX I guess he said it was immaterial so I assume that net new and FX.
Speaker Change: FX had just had this is probably Sam is 27.
Speaker Change: And what sort of jumps in terms of FX impact for your fiscal year guidance.
Speaker Change: We use the most recent FX rates like over the last couple of days. That's you know over the last week, that's typically what we do.
Speaker Change: Thank you.
Speaker Change: Thank you. Our next question comes from the line of Alex Zukin with Wolfe Research. Please proceed.
Speaker Change: Yeah, Hey, guys. So maybe a lot of my questions have been asked but just was just maybe double down on what drove so much of the license outperformance in the quarter or was there any inorganic contribution.
Speaker Change: Was there kind of FX, helping that number I know, we've talked about it a little bit on the call, but just trying to really understand.
Speaker Change: Where what drove that.
Speaker Change: Were there pull ins from from prior quarters or push outs.
Speaker Change: No I think it's just the mix of deals for them again with revenue. We have 606 accounting. So just the mix of deals in terms of both duration as well as deployment method. There's nothing frankly unusual to comment on we were happy with you know overall you know the overall mix of deals and.
Speaker Change: The balance of a duration et cetera.
Speaker Change: But nothing nothing consequential that drove that specifically.
Speaker Change: Okay, and then maybe just back to the city's question, but I'll ask it a little differently should we continue to see it in our trend down from the current level as we get through the year and then.
Speaker Change: <unk> and start to rebound potentially as you start selling a new solution.
Speaker Change: At trough that went away.
Speaker Change: And then just maybe anything.
Speaker Change: In terms of the.
Speaker Change: Any further operational adjustments or efficiencies from a go to market perspective, it looked like there was a.
Speaker Change: A little bit of restructuring.
Speaker Change: And that hit this quarter that maybe gives you the opportunity to further reinvest.
Speaker Change: Yeah. So the first one I feel like I answered the dollar based net retention rate and you know I think it's embedded within our guidance, we don't see a meaningful shift between expansion and new logos for Syn <unk>.
Speaker Change: Versus historical mix. So I think that calculation. If you can can you know as is easily and vegetable as you go forward.
Speaker Change: As we talk it out you know we're very bullish in terms of the early activity on a gentex.
Speaker Change: And we'll revisit the conversation as we get further into that launch but for this year, there's no material impact but of course, you know stabilization and acceleration is what we're all playing for so we'll update on the timing.
Speaker Change: Of that in terms of the reinvestment of our go to market.
Speaker Change: You know as we said and we've been very transparent we finished our go to market them restructuring in the first quarter and we feel very good about the stability of the teams that are there we are investing in specific pockets, so where we see opportunity in the largest opportunities. We are doing that I think we want to hold ourselves to a discipline.
Speaker Change: As any investor would want us to be investing in the highest return segments.
Speaker Change: And really making sure that we have a clear focus and accountability and they were areas that we are investing so is there opportunity to reinvest with go to market. Yes. We have then we will continue to do so but we still you know overall, we'll always look for ways to become more efficient.
Speaker Change: Got it thank you guys congrats.
Speaker Change: Thanks.
Speaker Change: Thank you. Our next question comes from the line of Goldman with Scotiabank.
Speaker Change: Yeah.
Speaker Change: Awesome. Thanks, guys.
Speaker Change:
Speaker Change: In the prepared remarks, you guys noted how the agenda automation capabilities are actually driving some net new customers to the platform. You also talked about some competitive displacement. So just in regards to the pipeline how should we think about the mix of net new a C V maybe changing in helping a little.
Speaker Change: More towards net new customers versus expansion.
Speaker Change: Yeah, I don't I don't honestly don't see that makes us there I think we like we we definitely want to get examples of the various dynamics, but I don't see a disproportionate amount of replacements coming in I think we've always expanded beyond our P. A with I D. P test document.
Speaker Change: <unk> mining et cetera process discovery that many traditional RPI vendors did not happen. So I think that is just a constant consistent flow. That's their agenda is just a further differentiation like.
Speaker Change: Putting space in between there. So at this time I would I think the mix is the same but it is exciting the discussions whether new or an expansion that agenda is giving to us and that is really what our aim wasn't highlighting that.
Speaker Change: Thank you.
Speaker Change: That does conclude.
Speaker Change: Q&A session I would like to turn the floor back over to management for closing remarks.
Speaker Change: Thank you so much for all the questions and we are looking forward to meeting most of you throughout the quarter. Thank you.
Speaker Change: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
Speaker Change: [music].