Sep 3, 2026 earnings call — AI-led automation and platform consolidation
ARR reached $1.938 billion, up 12% year-over-year.
Revenue $0.4B (est $0.4B) · EPS $0.15 (est $0.15) · Next-quarter revenue outlook $0.4B–$0.4B
Key quotes
"Use AI where intelligence creates value and deterministic automation where exactness matters that gives customers the benefits of AI without paying for AI reasoning at every step and ultimately better economics and better ROI at scale."
"Second quarter non-GAAP operating income was $89 million, representing a 22% margin, up over 400 basis points year-over-year and driven by our continued focus on operational efficiency."
"This quarter, we saw strong traction with customers, including a Fortune Global 500 manufacturer where we are modernizing their accounts payable operations with our office of the CFO invoice solution, automating roughly 700,000 invoices annually."
Analyst Q&A 11
audio check
Q (Sanjit Singh · Morgan Stanley): The analyst asked if the call audio could hear him.
A: Management replied that they could hear him clearly, then said "Now no."
"Loud and clear, Sanjit. Now no." — Ashim Gupta (COO)
FTE capacity and hiring
Q (Wells Fargo): How much more deployment capacity do coding agents give per FTE, and does that change hiring plans as demand scales?
A: Management said they are still in a proving stage to measure incremental value from coding agents with FTEs and initial results are encouraging. They said the focus is on accelerating customers' time to value rather than on how many FTEs to hire, and they will keep improving coding agent performance on the platform.
"Yes, we are in kind of proving stage at this point to understand how much incremental value we get from coding agents in conjunction with FTEs." — Daniel Dines (CEO)
AI product monetization
Q (Bryan Bergin · TD Cowen): How are you approaching monetization for agentic and AI solutions, and how do model costs affect contracting? Also, how much of net new ARR came from AI products and new clients versus expansions?
A: Management said customers want a platform that combines intelligence with exactness and that their platform is agnostic to agent frameworks and models. They said the platform provides the rails for running the business while customers choose the intelligence, and noted that AI was included in many large deals this quarter and is being considered in guidance decisions.
"We provide basically the rails for running the business, while they can choose the flavor of intelligence that they have to deliver." — Daniel Dines (CEO)
sales execution and NRR
Q (Scott Berg · Needham & Company): Are you back to the sales execution level you want, and can net revenue retention (NRR) move above 110% for an extended period?
A: Management said product innovation and clearer customer understanding of AI versus automation are helping sales. They view NRR as on an upward, stable trajectory, noted they ended last year at 106% and are up 3 points, and said they feel good about the trend though they do not forecast long-term for the metric.
"I think in a way, among our existing customers, we are seeing reduced confusion, if I can say, about AI." — Daniel Dines (CEO)
federal business and use cases
Q (Sanjit Singh · Morgan Stanley): How is the federal business pipeline shaping up as the fiscal year ends, and besides software testing, what use cases and industries are resonating?
A: Management said the federal business is doing exceptionally well and the team is close to agencies and partners, with a strong pipeline. They also said demand is growing for revenue cycle management, financial crimes, office of the CFO, and they launched a loan origination solution for financial services.
"So look, I think our federal business is doing a really exceptional job." — Ashim Gupta (COO)
sales adapting for AI
Q (Jacob Zerbib · William Blair): How is the sales team changing for the clearer AI market, especially for landing large new customers?
A: Management said they are educating the market on where AI is best and where exact execution is best, and they are shifting to more use-case-based selling. They started this approach in the U.S. and plan to roll it out across the go-to-market organization.
"I think we are doing a lot of education in the market of what is basically the seam between where AI is best and where exact execution is best." — Daniel Dines (CEO)
AI limits and revenue mix
Q (Raimo Lenschow · Barclays): With new powerful models emerging, how do you see AI handling workflows versus deterministic automation? And how should we think about subscription revenue versus ARR given accounting changes?
A: Management said AI cannot learn on the job like employees and enterprises will need a detailed map of work and an enterprise framework; they argued automation and orchestration should handle exact tasks while AI surrounds that framework and customers want workflows on their property. On revenue mix, management said 606 accounting and deal mix can shift license, subscription, and service revenue, and they are pleased with ARR acceleration this year.
"In my opinion, everything that can be done by automation and orchestration should be done by that because it's exact." — Daniel Dines (CEO)
deal impact and delivery wins
Q (Terrell Tillman · Truist): Were the AI-attach deals similar in initial impact and was outcome-based monetization used? Also, what near-term execution improvements are you focusing on?
A: Management said deals that include AI tend to be much larger and show excitement toward the platform. They added they are already seeing quick impact with faster pre-deal delivery, better coordination among partners, services and FTE teams, and stronger connection between product and delivery.
"Look, I think, especially kind of in terms of getting off to a fast start post sale, I've seen a really remarkable execution and turnaround from our teams." — Ashim Gupta (COO)
sales drivers and incentives
Q (Evercore): What specific factors are driving improved sales execution, and have you changed rep compensation to push AI product adoption?
A: Management said the main driver is strong leaders and teams on the ground across market units and better cross-functional connectivity between product, sales and marketing. They also said they use sales comp as a tool and selectively apply incentives like STIPs or uplifts when launching new products, and they are pleased with results so far.
"I think the first thing is it's really like the team on the ground." — Ashim Gupta (COO)
agentic pricing and ARR drivers
Q (Sanika Merchant · RBC Capital): How will you price agentic offerings as adoption scales, and what could drive you to the higher end of fiscal '27 ARR expectations?
A: Management said they are experimenting with pricing and introduced a transaction-based, all-inclusive process orchestration price and are moving more toward outcome-based pricing that includes tokens. They added the platform story—combining deterministic automation and agentic AI—is resonating and helping expand deal size, and that is included in their guidance.
"I would say that probably we are going more towards outcome-based pricing that would be inclusive of the tokens required to complete the transaction." — Daniel Dines (CEO)
governance vs orchestration urgency
Q (BMO): As customers move AI into production, do discussions start with governance needs or broader orchestration initiatives?
A: Management said customers want the breadth of the platform to get outcomes, run processes faster with fewer human errors and bring AI in a way that preserves intellectual property. They said customers are not necessarily buying orchestration alone but look for the best platform to deliver those results.
"I think in a way, our platform aligns very well with the Gartner Magic Quadrant that is called business orchestration and automation technology." — Daniel Dines (CEO)