Financial Data and Key Metrics Changes - Revenue for Q1 2025 increased by 11% year over year to $72 million, marking the third consecutive quarter of double-digit revenue growth [4][16] - Non-GAAP earnings per share rose by 60% to $0.27, indicating high leverage in the business model [4] - Cash flow from operations reached $22.4 million, compared to $21.1 million in the same period last year [22] - Net income increased by 73% year over year to $11.8 million [21] Business Line Data and Key Metrics Changes - Cloud Security ARR grew by 19% year over year to $80 million, driven by a significant increase in new cloud application security bookings [5][17] - Total ARR increased by 9% year over year to $230 million, with recurring revenues now accounting for 82% of total revenue [17] Market Data and Key Metrics Changes - Revenue from the Americas increased by 1% year over year to $27.4 million, accounting for 38% of total revenue [17] - EMEA revenue grew by 25% year over year to $28.4 million, representing 39% of total revenue [18] - APAC revenue increased by 7% year over year to $16.3 million, contributing 23% of total revenue [19] Company Strategy and Development Direction - The company aims to win significant market share in cloud security, lead through AI innovation and automation, and enhance its go-to-market footprint [5][14] - Plans to expand cloud security infrastructure include new service centers in Peru, India, and Kenya, with a total of over 50 cloud security service centers worldwide [6][14] - The company is focusing on increasing investments in sales, marketing, and R&D to support growth in cloud security and AI-driven innovation [12][20] Management's Comments on Operating Environment and Future Outlook - Management noted no significant changes in customer buying behavior and expects stable conditions moving into Q2 2025 [25][26] - The leadership team is confident in their ability to drive productivity and growth, with no anticipated disruptions from recent changes [28][29] - The company expects total revenue for Q2 2025 to be in the range of $73 million to $74 million [23] Other Important Information - Gross margin for Q1 2025 was 82.1%, a slight increase from the previous year [19] - The company is proactively adjusting its supply chain in response to recently announced tariffs, expecting minimal impact on operations [22] Q&A Session Summary Question: Did you see any changes in buying behavior from your customers? How was April? - Management indicated no noticeable changes in buying behavior and that conditions remained stable [25][26] Question: Is there any major change in process needed in the US market, and is that accounted for in the Q2 guidance? - Management confirmed that major changes were already implemented and productivity is expected to ramp up without disruption [27][29]

Financial Data and Key Metrics Changes - Overall revenue growth of 2% year over year, marking the third consecutive quarter of growth [8][26] - Non-GAAP earnings per share of $0.74, slightly above the midpoint of guidance [9][28] - Gross margin decreased to 21% year over year due to increased commodity costs [27][28] Business Line Data and Key Metrics Changes - Personal Systems revenue increased by 5% year over year, driven by commercial growth [17][29] - Print revenue declined by 1% in constant currency year over year, in line with expectations [20][31] - Consumer subscriptions revenue grew with a milestone of 1,000,000 instant paper subscribers [20][100] Market Data and Key Metrics Changes - APJ region grew by 5%, Americas by 3%, and EMEA by 2% in constant currency [27] - Worldwide PC commercial revenue grew by 10% year over year, fueled by AI PC adoption and Windows 11 refresh [18][29] - Competitive pricing market in office and weak demand in China impacted overall performance [19][31] Company Strategy and Development Direction - Focus on leading the future of work with investments in AI and software capabilities [10][11] - Realignment of key growth areas to include AI PCs and advanced compute solutions, while gaming will be managed as part of the core portfolio [11][12] - Plans to deliver $1,900,000,000 in gross annual run rate structural savings by the end of fiscal year 2025 [24][33] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the full year outlook despite geopolitical uncertainties and tariff impacts [24][36] - Anticipated stronger EPS in the second half of the year due to seasonal strength and ongoing cost management efforts [37][40] - Continued focus on profitable growth and strategic investments to navigate macroeconomic challenges [40][41] Other Important Information - Acquisition of strategic assets from Humane to enhance AI capabilities and build an intelligent ecosystem [10][82] - Commitment to return approximately 100% of free cash flow to shareholders over time [39] Q&A Session Summary Question: Impact of China tariffs on guidance - Management included known impacts of current tariffs in guidance, primarily affecting the Personal Systems business [44][45] Question: Drivers of Personal Systems growth - Key drivers include aging installed base, Windows 11 refresh, and penetration of AI PCs [51][52] Question: Windows end of life and device refresh confidence - There is an acceleration in Windows 11 refresh, with customers more aware and ready to drive the refresh [55][56] Question: Customer adoption of AI PCs - Expected penetration of AI PCs to be around 25% by year-end, with continued projections for future growth [58] Question: Competitive environment for print in China - Competitive environment remains stable, with no radical changes in supplies competitive perspective [92] Question: Inventory growth implications - Increased finished goods inventories in the U.S. to mitigate tariff impacts, but not necessarily implying further growth in inventory [94][95]

Financial Data and Key Metrics Changes - The company reported Q4 revenue from its core platform, including services, at $36 million, a decrease of 6% year-over-year, while total revenue, including Virtual Conference, was $36.7 million [39] - Total ARR at the end of Q4 was $129.7 million, with core platform ARR at $127.3 million, reflecting a decrease of approximately $2.3 million from Q3 [41] - Non-GAAP gross margin improved from 75% in 2023 to 77% in 2024, and adjusted EBITDA margin improved by almost 200 basis points year-over-year [11][51] Business Line Data and Key Metrics Changes - The percentage of customers using two or more products reached an all-time high of 39% at the end of 2024, up from 17% in 2019 [48] - ARR from multi-year deals increased to 51%, up over 20 points since the end of 2019 [47] - Professional services revenue was $3.1 million in Q4, a decrease of 13% year-over-year [40] Market Data and Key Metrics Changes - The company noted improvements in gross retention rates, with Q4 gross retention consistent with the highest levels seen in 2024, up by mid-single-digits from 2023 [44] - The dollar-based net retention (NRR) for Enterprise customers was 91%, a mid-single-digit improvement from 2023 [44] - The company observed stabilization in the marketing budget environment, with some green shoots in the technology vertical [78] Company Strategy and Development Direction - The company is focused on platform innovation, particularly through the AI-powered ACE product, which accounted for over 20% of growth ARR bookings in Q4 [8][20] - The strategic emphasis is on regulated industries and digital transformation use cases, with continued strength in life sciences and financial services [24] - The company aims to return to double-digit top-line revenue growth and double-digit EBITDA margins in the long term [16][68] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the marketing budget environment, noting that while 2024 was challenging, there are signs of recovery in 2025 [80] - The company expects to return to positive ARR growth in 2025, driven by improvements in customer retention and spending initiatives [64][66] - Management highlighted the importance of AI tools and innovations in driving future growth [33][61] Other Important Information - The company achieved positive free cash flow of $2.6 million in 2024, a significant improvement from negative $14.4 million in 2023 [60] - The company ended Q4 with $182.7 million in cash, cash equivalents, and marketable securities, maintaining a strong balance sheet [57] - A new $25 million share repurchase program was announced, with $23.6 million utilized to date [58] Q&A Session Summary Question: Overview of the marketing budget environment - Management noted that 2024 was one of the toughest years for marketing budgets, but there are signs of recovery in 2025, particularly in the technology vertical [76][78] Question: Guidance on operating margins and expense structure - Management indicated a balanced approach to returning to growth while maintaining profitability, with selected investments in product innovation and go-to-market strategies [81][84] Question: Expectation of free cash flow positivity in 2025 - Management expects to be free cash flow positive in 2025, aligning with EPS profitability [88]