Oct 26, 2026 earnings call — Launched AI products; strong profitability and margins
Management said they now expect approximately 50% growth in adjusted EBITDA in 2026.
Revenue $0.0B (est $0.0B) · EPS $0.30 (est $0.27) · Next-quarter revenue outlook $0.0B–$0.0B
Key quotes
"On October 8, we launched 2 new products: Agentic Audits and our SDK MCP."
"We are pleased to report that we continue to deliver against this aspirational target and now expect approximately 50% growth in adjusted EBITDA in 2026."
"Annual recurring revenue was $43.3 million as of September 30, 2026, up from $42.3 million as of June 30, 2026. Year-over-year, ARR grew 12%, driven by double-digit growth in both our partner and marketplace and enterprise channels."
Analyst Q&A 4
Customer reaction to new AI features
Q (Joshua Reilly · Needham & Company): The analyst asked how customers are reacting to the two new AI products and whether customers are asking for more AI or need education. He also asked how sustainable ARR growth is and what could drive Q4 ARR and 2027 performance.
A: Management said it is still early; the products were released a couple of weeks ago and beta customers gave very positive feedback. They said some customer education is needed but the products are powerful add-ons, especially for real time use or between audits, and they are excited about expansion opportunities. They noted about 12% year-over-year ARR growth and expect that momentum to continue into Q4 and that 2027 could see similar trends with new product accelerators and potential EU enforcement impacts.
"We had about 12% year-over-year ARR growth, which is good to see." — Kelly Georgevich (CEO)
Margins and AI cost savings
Q (George Sutton · Craig-Hallum Capital Group): The analyst asked why cost of goods sold stepped down and where AI efficiencies came from, and whether more margin improvement is possible. He also asked if the new AI products will raise revenue per customer.
A: Management said gross margin rose about 550 basis points, helped by growing ARR and their ability to scale, and they have a track record of lowering expenses. They expect to maintain the current margin rates and will keep looking for ways to expand margins further. On revenue per customer, they said it is too early to quantify but view the AI products as expansion opportunities that work between audits and with current services.
"Yes, so we saw a 550 basis point increase in margin, which was a really great improvement." — Matthew Domeyer (CFO)
Competition, automation, and cash
Q (Richard Baldry · ROTH Capital Partners): The analyst asked whether new competitors using large language models have entered the market. He also asked how much of prior manual audit work can be automated, how much internal automation can improve profitability, whether pipelines are expanding into 2027, and what cash level the company prefers and how it will use cash.
A: Management said they have not seen much new competition and emphasized their proprietary data set built over 10 years that others cannot replicate. They said audits still need a manual component, but the new Agentic Audits find about 50% more high-severity issues than their automation and are useful between audits and during code creation. They added they have ramped revenue without ramping expenses, that AI has improved efficiency across departments and they expect to continue finding efficiencies, that lead volume and new business are strong with litigation and regulation driving demand, and that they are comfortable with current cash levels, have a $3 million line of credit, and expect significant cash generation in Q4 and into 2027.
"We found that AI eventually had no impact when you instructed it to create a site that was accessible and our AI tools are powered with our proprietary data set." — Kelly Georgevich (CEO)
Product pricing, ARR drivers, buyback
Q (Scott Buck · Titan Partners): The analyst asked how the Agentic products are priced (stand-alone or bundled), what drove ARR growth (mix, pricing, upsells), and how quickly the company will execute the announced buyback and whether the credit agreement constrains it.
A: Management said the Agentic products can be bought either as stand-alone products or as add-ons to existing contract line items. They said ARR growth is broad-based, with double-digit growth in enterprise (new and expansion) and partner revenue, and that the business is operating on all cylinders. On the buyback, management said they view the stock as attractively valued, expect to deploy excess cash for shareholders, and do not see issues with their debt provider or the credit agreement.
"You can purchase those either, so you can purchase them as stand-alone and so like an add-on to your current line items on your contract or certain products, 1 of the 2 you can buy as a stand-alone product." — Kelly Georgevich (CEO)