Financial Data and Key Metrics Changes - Net revenues for Q3 2025 reached RMB 633 million, down slightly year-on-year but up sequentially, marking the second consecutive quarter of sequential growth [5][17] - Non-GAAP net income for Q3 2025 increased by over 50% year-on-year to RMB 229 million, reflecting improved profitability and margins [4][19] - For the first three quarters of 2025, non-GAAP net income totaled RMB 587 million, a 40.5% increase from the same period last year [6][16] - Operating profit for Q3 was RMB 172 million, with a margin of 27.2% [19] Business Line Data and Key Metrics Changes - Investment products accounted for approximately 28% of new revenue in Q3 2025, up from 18% a year ago, indicating a significant shift in revenue mix [5][10] - Net revenues from overseas wealth management business ARK were RMB 146 million, a year-on-year decrease of 22.7% but up 13% sequentially [7] - Domestic public securities business NOAH Upright saw net revenues of RMB 116 million, up 8.7% year-on-year [10] - Domestic insurance business GLORY reported net revenues of RMB 5 million, down 44.8% year-on-year, aligning with the planned consolidation and transformation [10] Market Data and Key Metrics Changes - By the end of Q3 2025, overseas assets under management (AUM) reached $5.9 billion, up 5.3% year-on-year [20] - Total assets under management stood at RMB 143.5 billion as of September 30, 2025 [21] - The number of registered overseas clients increased by 13.1% year-on-year, with active clients reaching 3,561 [20] Company Strategy and Development Direction - The company is focused on three core strategies: enhancing investment product capabilities, embedding AI into operations, and leveraging overseas booking centers for global service [13][14] - AI is viewed as a strategic growth driver, with ongoing implementation of AI-related projects to improve client engagement and operational efficiency [12][13] - The establishment of four overseas booking centers is aimed at providing a coordinated service platform for global Chinese clients [11][13] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing revenue pressure but expressed confidence in the transformation strategy and profitability improvements [4][19] - The company anticipates potential moderation in the fourth quarter due to evolving market conditions [20] - Management emphasized the importance of maintaining prudent operations and driving quality growth to enhance shareholder returns [14][21] Other Important Information - The company has established a U.S. broker-dealer license and is building its business in compliance with local regulations [11] - Cash and short-term investments totaled RMB 5.0 billion, with zero interest-bearing liabilities, indicating strong liquidity [21] Q&A Session Summary Question: What is the potential financial impact from the company's strategies on AI and booking centers? - Management indicated that the adoption of AI is expected to enhance client acquisition and operational efficiency, while the U.S. booking center will involve necessary infrastructure investments but not significantly impact operating expenses [27][32] Question: What measures are being taken to sustain investment product sales growth? - The company is focusing on products that combat inflation and technology-related investments, including AI and crypto, to meet client needs [50][51] Question: How will AI support client acquisition in overseas markets? - AI is expected to enhance service delivery and client engagement, allowing for quicker client onboarding and better relationship management [74][75]

Financial Data and Key Metrics Changes - Non-GAAP net income increased by over 50% year on year, reaching RMB229 million in Q3 2025, with a margin of 36.2% [7][19] - Total net revenues for Q3 2025 were RMB633 million, reflecting a slight year-on-year decline but marking the second consecutive quarter of sequential growth [8][20] - Year-to-date non-GAAP net income totaled RMB587 million, a 40.5% increase from the same period last year [19] Business Line Data and Key Metrics Changes - Investment products accounted for approximately 28% of new revenue, showing accelerated growth [8] - Net revenues from overseas wealth management business (ARC) were RMB146 million, down 22.7% year on year, but up 13% sequentially [10] - Domestic public securities business (Noah Upright) saw net revenues of RMB116 million, up 8.7% year on year [12] Market Data and Key Metrics Changes - Total transaction value remained high at RMB17 billion, rising 19.1% year on year [22] - Overseas assets under management (AUM) reached USD5.9 billion, up 5.3% year on year [27] - Active clients increased by 13.1% year on year, reaching 3,561 by the end of Q3 2025 [27] Company Strategy and Development Direction - The company is focusing on three core strategies: enhancing investment product capabilities, leveraging AI for operational efficiency, and expanding global service platforms through overseas booking centers [16][17] - AI is viewed as a strategic growth driver, with plans to integrate AI tools across various operational areas [15][16] - The establishment of four overseas booking centers is aimed at providing a coordinated service platform for global Chinese clients [14][16] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing revenue pressure but expressed confidence in profitability and margin improvements due to prudent investment strategies and cost controls [7][19] - The company anticipates a moderation in performance in Q4 2025 as market conditions evolve [26] - Management emphasized the importance of transitioning to an AUM-driven revenue model to enhance growth prospects [41][42] Other Important Information - The company remains debt-free with cash and short-term investments totaling RMB5.0 billion as of September 30, 2025 [28] - The company is committed to maintaining a strong balance sheet while investing in global growth and technology [29] Q&A Session Summary Question: Can you elaborate on the potential financial impact of the AI strategy? - Management indicated that AI investments are expected to enhance client acquisition and operational efficiency, with a focus on increasing the proportion of revenue from investment-related products [33][39] Question: What measures are being taken to sustain investment product sales growth? - The company is focusing on products that combat inflation and technology-related investments, including AI and crypto [54][55] Question: How will AI support client acquisition in overseas markets? - AI is expected to enhance service delivery and client engagement, allowing for quicker client onboarding and better relationship management [78][79]

Financial Data and Key Metrics Changes - The company reported Q2 revenue of $1.71 billion, an increase of 3% year-over-year, and 4% excluding the divested Spot business [5][18] - Non-GAAP earnings per share (EPS) was $2.05, reflecting a 10% year-over-year growth [20][23] - Gross margin reached a record 72.6%, exceeding guidance, with operating margin at 31.1%, up 2.4 percentage points year-over-year [20][23] - Cash flow from operations was $127 million, and free cash flow was $78 million [21] Business Line Data and Key Metrics Changes - Hybrid cloud revenue was $1.53 billion, up 3% year-over-year, with Keystone showing significant growth of 76% year-over-year [18][20] - Public cloud revenue increased by 2% year-over-year to $171 million, and 18% excluding the Spot business [18] - All-flash array revenue grew 9% year-over-year to $1 billion, with an annualized run rate of $4.1 billion [14] Market Data and Key Metrics Changes - The company experienced strong demand for AI solutions and cloud storage services, with approximately 200 AI infrastructure and data lake modernization deals closed in Q2 [9][19] - Revenue from first-party and marketplace cloud storage services increased by approximately 32% year-over-year [11][68] Company Strategy and Development Direction - The company is focused on expanding its presence in AI, hybrid cloud, and all-flash markets, aiming to leverage its unified data platform for operational efficiencies [7][16] - Innovations such as AFX and AIDE are designed to enhance AI workload capabilities and simplify data management [8][9] - The company is committed to maintaining operational discipline while driving growth in key areas [20][23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate the uncertain macro environment and capture market share despite near-term headwinds in the U.S. public sector [16][58] - The company anticipates a strong second half of the fiscal year, driven by growth in non-U.S. public sector segments and AI-related spending [57][58] Other Important Information - The company raised its fiscal year 2026 revenue guidance to between $6.625 billion and $6.875 billion, reflecting a 3% year-over-year growth [22][23] - Deferred revenue balance was $4.45 billion, up 8% year-over-year, indicating strong future revenue visibility [19] Q&A Session Summary Question: Component environment and pricing dynamics - Management indicated they have locked in prices for components and have visibility for a couple more quarters, expecting product margins to remain stable [26][28] Question: Drivers of product gross margin expansion - Product gross margin is driven by a combination of mix and pricing, with expectations to maintain current levels [36][40] Question: Trends in AI-related transactions - The company reported a stable mix of AI transactions, with significant interest in the AFX platform, although it is too early to quantify its impact [44][47] Question: Seasonal revenue guidance - Management noted that U.S. public sector headwinds are expected to impact seasonal growth, but they view this as temporary [50] Question: Demand drivers and inventory management - The company is optimistic about demand in the second half of the year and is prepared to secure supply as needed [56][59] Question: Opportunities with Sovereign clouds - The company is actively participating in Sovereign cloud initiatives and sees potential for growth in AI workloads [89][92] Question: AI's impact on storage revenue - Management believes that as AI adoption increases, particularly in inferencing, storage consumption will also rise [114]

Financial Data and Key Metrics Changes - The company reported Q2 revenue of $1.71 billion, up 3% year-over-year, and 4% excluding the divested Spot business [5][18] - Non-GAAP earnings per share (EPS) was $2.05, growing 10% year-over-year [20] - Gross margin for Q2 was 72.6%, above guidance, with operating margin at 31.1%, up 2.4 percentage points year-over-year [20][21] - Cash flow from operations was $127 million, and free cash flow was $78 million [21] Business Line Data and Key Metrics Changes - Hybrid cloud revenue was $1.53 billion, up 3% year-over-year, with Keystone showing 76% growth [18] - Public cloud revenue was $171 million, increasing by 2% year-over-year, and 18% excluding the Spot business [18] - All-flash array revenue grew 9% year-over-year to $1 billion, with an annualized run rate of $4.1 billion [14] Market Data and Key Metrics Changes - The company experienced strong demand for AI solutions and cloud storage services, with first-party and marketplace cloud storage services revenue increasing approximately 32% year-over-year [11][68] - Deferred revenue balance was $4.45 billion, up 8% year-over-year, indicating strong future revenue potential [19] Company Strategy and Development Direction - The company is focused on expanding its presence in AI, cloud, and all-flash markets, leveraging innovations like AFX and AIDE to enhance its offerings [7][9] - The strategy includes enhancing partnerships with hyperscalers and expanding capabilities in public cloud environments [10][11] - The company aims to capture market share by aligning with customer spending on AI and data infrastructure modernization [58] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate macroeconomic challenges and expects a recovery in the U.S. public sector business [16][50] - The company anticipates continued growth in the second half of the fiscal year, driven by strong demand in non-U.S. public sector segments and AI projects [57][58] - Management highlighted the importance of operational discipline and innovation in maintaining competitive advantages [16][20] Other Important Information - The company launched the NetApp Ransomware Resilience Service to enhance cyber resilience capabilities [14] - The company is committed to maintaining a strong balance sheet and securing supply commitments to mitigate potential risks [59][75] Q&A Session Summary Question: Component environment and pricing dynamics - Management indicated they have locked in prices for components and have visibility for a couple more quarters [27][28] Question: Drivers of product gross margin expansion - Management noted that product gross margin is driven by a mix of factors including pricing and product mix, with expectations for stability [39][41] Question: Trends in AI-related transactions - Management reported closing approximately 200 AI infrastructure deals, with a stable mix of transaction types [46][47] Question: Seasonal revenue guidance for Q3 - Management acknowledged potential headwinds in the U.S. public sector but views them as temporary [50] Question: Demand drivers and inventory management - Management expressed confidence in demand despite public sector challenges and indicated a proactive approach to securing supply [57][59] Question: Opportunities with Sovereign clouds - Management highlighted ongoing participation in Sovereign clouds and the introduction of AFX to enhance offerings [89][92] Question: Cash flow and pricing flexibility - Management noted seasonality in cash flow and emphasized the ability to adjust pricing based on commodity costs [125]

Financial Data and Key Metrics Changes - The company reported Q2 revenue of $1.71 billion, representing a 3% year-over-year increase. Excluding the divested Spot business, total revenue increased by 4% [4][15] - Non-GAAP earnings per share (EPS) was $2.05, reflecting a 10% year-over-year growth [17] - Gross margin for Q2 was 72.6%, exceeding guidance and up 1.5 percentage points sequentially [16][17] - Operating income was $530 million, up 12% compared to Q2 2025, with an operating margin of 31.1%, an increase of 2.4 percentage points year-over-year [17] Business Line Data and Key Metrics Changes - Hybrid cloud revenue reached $1.53 billion, up 3% year-over-year, driven by product, support, and Keystone services, which grew 76% year-over-year [15] - Public cloud revenue was $171 million, a 2% increase year-over-year, and up 18% excluding the Spot business [15][16] - All-flash array revenue grew 9% year-over-year to $1 billion, with an annualized run rate of $4.1 billion [12] Market Data and Key Metrics Changes - The company closed approximately 200 AI infrastructure and data lake modernization deals across various geographies and industries in Q2 [8] - The first-party and marketplace cloud storage services revenue increased approximately 32% year-over-year [10] Company Strategy and Development Direction - The company is focused on growing markets, particularly in all-flash, public cloud, and AI, which are expected to drive top-line growth [14] - Innovations such as AFX and AIDE are aimed at enhancing AI workload capabilities and improving data management [6][8] - The company is committed to leveraging its competitive advantages and aligning with customer data initiatives to capture additional market share [14][20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate the uncertain macro environment and expected growth in non-U.S. public sector segments [14][33] - The company anticipates a slight decline in U.S. public sector revenue due to recent shutdowns but expects recovery in the long term [31][34] - Management raised guidance for gross margin, operating margin, and EPS for the fiscal year based on strong Q2 performance [19][20] Other Important Information - Cash flow from operations was $127 million, and free cash flow was $78 million [18] - The company returned $353 million to shareholders through share repurchases and dividends [18] Q&A Session Summary Question: Component environment and pricing dynamics - Management indicated they have locked in prices for components and have visibility for a couple more quarters [21] - They expect product gross margin to remain stable through the rest of the year despite potential volatility in component pricing [22][24] Question: Drivers of product gross margin expansion - Product gross margin expansion is driven by a combination of mix and pricing, with a focus on maintaining operational discipline [27][28] Question: Trends in AI-related transactions - The company reported a stable mix of AI transactions, with a significant increase in the number of deals closed [29][30] Question: Seasonal growth expectations - Management noted that the U.S. public sector business is expected to be slightly below seasonal trends due to recent shutdowns, but they view this as temporary [31] Question: Demand drivers for the second half of the year - Despite U.S. public sector headwinds, management sees acceleration in non-U.S. public sector segments and strong demand for AI projects [33] Question: AI deal sizes and customer feedback - Deal sizes vary widely, and while there is strong interest in the AFX platform, it is still early to assess its impact on results [36] Question: Cash flow and seasonality - Q2 cash flow is typically lower due to seasonality and tax payments, but management expects improvement in the second half [55]

Financial Data and Key Metrics Changes - Total revenue in Q3 grew 18% as reported and in constant currency, with a contribution from the new transaction model of approximately $124 million [8][9] - Billings increased 21% as reported and 20% in constant currency, with a contribution from the new transaction model of approximately $135 million [9][10] - Third quarter GAAP and non-GAAP operating margins were 25% and 38% respectively, reflecting year-over-year increases of approximately 330 basis points and 120 basis points [10][14] - Free cash flow for Q3 was $430 million, benefiting from earlier timing of billings and lower cash tax payments [10][14] Business Line Data and Key Metrics Changes - Strength was observed in AECO (architecture, engineering, construction, and operations), driven by sustained investment in data centers, infrastructure, and industrial buildings [8][9] - The Autodesk Store and billing linearity during the quarter were stronger than expected, contributing to overall revenue growth [8][9] Market Data and Key Metrics Changes - RPO (Remaining Performance Obligations) of $7.4 billion and current RPO of $4.8 billion both grew 20%, benefiting from the new transaction model [9][10] - The macroeconomic environment appears broadly stable, but uncertainty remains elevated [12][14] Company Strategy and Development Direction - The company is focused on enhancing products with cloud-based platforms and capabilities, redefining its business model and go-to-market strategies [5][6] - Autodesk aims to capture shared value through subscription, consumption, and outcome-based business models that blend human and machine capabilities [6][22] - The strategy includes building a vibrant third-party ecosystem to enhance solution value and efficiency [6][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term value being created for customers and shareholders, despite geopolitical and macroeconomic uncertainties [5][6] - The company raised its full-year guidance for billings and revenue, reflecting current business momentum [13][14] - Management acknowledged potential disruptions in the sales and marketing optimization plan but remains focused on controllable factors driving revenue and margins [12][14] Other Important Information - The company plans to buy back approximately $1.3 billion of stock, a 50% increase compared to fiscal 2025 [14] - The transition to annual billing for most multi-year contracts is expected to significantly diminish tailwinds next year [10][12] Q&A Session Summary Question: Discussion on seats versus consumption AI monetization - Management highlighted the capacity challenge in industries served and the balance between human engagement and machine execution in future projects [26][28] Question: Insights on fiscal 2027 outlook - Management indicated that while the business is performing well, there are risks of disruption and macroeconomic uncertainty that will be considered in future guidance [30][31] Question: Autodesk Construction Cloud penetration - Management noted that there is still room for increased penetration within existing accounts and emphasized the unique value proposition of the Autodesk Construction Cloud [35][37] Question: PLM market opportunities - Management stated that many mid-market customers lack strong data management solutions and that Autodesk aims to provide them with modern, SaaS-based platforms [39][40] Question: Customer migration and packaging strategies - Management discussed efforts to ensure customers are not left behind during transitions and the importance of seamless integration between existing and new products [44][46] Question: Trends in usage telemetry - Management confirmed that momentum in Q3 was consistent with previous quarters, with no new emerging trends to highlight [48] Question: Billings growth mechanics - Management clarified that there was no unusual M&A activity affecting growth rates and attributed outperformance to strong execution and favorable macro conditions [51][62] Question: Customer spending plans for 2026 - Management reported that customers are maintaining their spending patterns and investing in digital infrastructure [58][59] Question: Fiscal 2027 growth expectations - Management emphasized the importance of considering macro risks and the performance of the underlying business when guiding for fiscal 2027 [84]

Financial Data and Key Metrics Changes - The company reported meaningful progress in Q3 2025, indicating a focus on business advancement and leadership transition [3] - Specific financial metrics and detailed results will be provided in the Q4 earnings update scheduled for early February 2026 [5] Business Line Data and Key Metrics Changes - The company is actively evaluating reinvestment opportunities in its core businesses, Domains and Wavelo, while managing the ongoing Ting process [4][5] - The outcome of the Ting process is expected to shape the company's flexibility to reinvest in its business segments [5] Market Data and Key Metrics Changes - The company anticipates that the resolution of the Ting process could take a couple of quarters, with full divestiture likely extending beyond that timeframe [4] - Increased interest in the core businesses has been noted as the company focuses on resolving the Ting situation [4] Company Strategy and Development Direction - Completing the Ting process is identified as the top priority for the company, which will guide the next phase of its growth strategy [5] - The board is engaged in transforming the company, with a focus on operational discipline, efficiency, and deleveraging [6][7] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the complexity of the Ting process and the need for ongoing communication with investors regarding material developments [4] - The new CEO emphasizes a clear focus on growth and strategic vision, with plans to share more details in upcoming quarters [5][7] Other Important Information - The new CEO's employment contract is a four-year fixed-term agreement, ensuring predictability and alignment with shareholder interests [5] - The company will disclose the full contract in its 10-K filing in March 2026 [5] Q&A Session Summary Question: What is the growth outlook for Domains and Wavelo during the Ting transition? - The company is looking at multiple paths to maximize shareholder value while focusing on resolving the Ting process [4] Question: When can investors expect guidance for 2026? - Guidance for each business segment will be provided in the Q4 earnings update in early February 2026 [5] Question: What is the strategic vision of the new CEO? - The CEO's focus is on completing the Ting process, which will influence future reinvestment opportunities [5]

Financial Data and Key Metrics Changes - Total revenues grew by 12%, reaching a record $1.5 billion for Q3 [6][4] - Net income increased by 13% to a new Q3 record of $116 million, or $1.28 per diluted share [6][8] - Gross profit dollars rose by 13% to $563 million, with a gross profit rate improvement of 31 basis points to 36.8% [7][8] - Operating income increased by over 12% to $144 million, maintaining the operating profit rate consistent with the prior year [8] Business Line Data and Key Metrics Changes - Free People brand revenue increased by 9%, driven by a 9% increase in retail segment sales and an 8% increase in wholesale segment revenues [9][10] - Urban Outfitters brand recorded a strong 13% global retail segment comp, with North America at 10% and Europe at 17% [11][12] - Nuuly brand revenue grew by 49%, driven by a 40% increase in average active subscribers [14][15] - Anthropologie Group achieved an 8% retail segment comparable sales increase, marking the 19th consecutive quarter of positive comparable sales [18][19] Market Data and Key Metrics Changes - All brands produced positive comps across all geographies, with Urban brand generating double-digit comps in North America and Europe [4][6] - The wholesale segment delivered an 8% increase in revenue, primarily from specialty store accounts [7] Company Strategy and Development Direction - The company is focused on scaling the Nuuly business and building brand awareness through investments in logistics and strategic marketing [15] - There is a commitment to maintaining opening price points and protecting the integrity of product pricing while managing costs [40][41] - The Anthropologie Group is modernizing its product assortment and investing in own brands to drive growth [20][25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving record sales and operating profit for the year, despite tariff headwinds [16][17] - The company anticipates a competitive holiday season but expects to maintain improved operating margins compared to the previous year [34] - November traffic and sales are running slightly ahead of the stated Q4 plan, indicating a positive outlook [33] Other Important Information - The company plans to open approximately 69 new stores and close about 17 this year, with significant growth expected from FP Movement, Free People, and Anthropologie [30] - Tariffs are expected to impact gross margin rates, with ongoing mitigation efforts in place [16][29] Q&A Session Summary Question: Follow-up on pricing strategy and customer reaction - Management indicated that small price increases have seen little to no resistance, with a focus on maintaining opening price points [39][40] Question: Own brand penetration and global footprint - Own brand penetration has increased significantly, with plans for continued growth and expansion in the U.K. and North America [47][48] Question: Urban Outfitters brand profitability - Urban Outfitters achieved profitability in Europe and reduced losses in North America, with potential for global profitability next year [55] Question: Drivers of business acceleration and holiday trends - Increased traffic in stores and online is driving sales growth, with expectations for a strong holiday season despite a more promotional environment [60][61] Question: Gross margins and promotional expectations - Management maintains guidance for gross profit margin improvement despite anticipated promotions during the holiday season [75] Question: Long-term EBIT margin targets - The company targets a long-term EBIT margin of 10%, with several growth opportunities identified across brands [78][79]

Financial Data and Key Metrics Changes - PagerDuty reported revenue of $125 million for Q3, representing a 5% year-over-year increase [3][20] - Non-GAAP operating margin was 29%, exceeding guidance and expanding 750 basis points year-over-year [3][22] - GAAP net income for Q3 was $160 million, including a one-time tax benefit of $154 million [20] - Annual recurring revenue (ARR) reached $497 million, reflecting a 3% year-over-year growth [3][20] - Gross margin was 87%, above the target range of 84%-86% [21][22] Business Line Data and Key Metrics Changes - New and expansion bookings were consistent with the first half of the year, but impacted by customers rightsizing seat licenses [3][5] - Customer retention efforts have stabilized, but seat license compression remains a significant challenge in large enterprises [5][6] - The number of customers spending over $100,000 annually increased by 5% year-over-year to 867 [21][12] - Total paid customers grew to 15,398, a 2% year-over-year increase [21] Market Data and Key Metrics Changes - International revenue increased by 7% year-over-year, contributing 29% of total revenue [20] - The company added 284 net new customers year-to-date, nearly four times the total in FY 2025 [10][11] - Total paid and free customers on the platform grew to over 34,000, an increase of approximately 13% compared to Q3 of last year [21] Company Strategy and Development Direction - The company is focused on three objectives: expanding operating and free cash flow margins, extending product advantage in AI operations, and scaling go-to-market transformation [3][4] - PagerDuty aims to transition from a single-year seat-based license model to a multi-year platform usage model [10] - The company is investing in operational efficiency and product innovation to maintain leadership in digital and AI operations [4][7] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges in customer retention due to budget caution and organizational changes [30][34] - The company is confident in long-term growth prospects, citing strong demand for its platform and improvements in customer usage metrics [34][56] - Management expects continued pressure on dollar-based net retention but is implementing changes to improve customer engagement and retention [24][45] Other Important Information - Howard Wilson, CFO, announced plans to retire in the next financial year after nine years with the company [16][17] - The company repurchased 2.4 million shares under its $200 million repurchase plan, with $162 million remaining available [22] Q&A Session Summary Question: Trends in dollar-based net retention and customer spending - Management noted that while logo retention improved, larger downgrades were tied to significant reorganizations, making it difficult to anticipate changes [32][33] Question: Sales maturity indicators and productivity - Management emphasized the importance of customer feedback and engagement, focusing on proactive support and understanding customer needs [37][39] Question: Opportunities to offer usage-based pricing to existing accounts - Management confirmed that longer-term agreements allow for proactive engagement with customers regarding new pricing and services [42][43] Question: Guidance assumptions regarding dollar-based churn - Management indicated that guidance reflects current visibility around renewals, expecting some seat-based pressure to continue [45] Question: Impact of reorganizations on customer spending - Management acknowledged that while some customers are downsizing, they are also seeking to improve operational resilience, leading to potential growth opportunities [65][66] Question: Momentum with new logo acquisitions - Management reported good new logo acquisition across all segments, with promising growth in both digital-first and go-to-market environments [96][97]

Financial Data and Key Metrics Changes - Revenue for Q3 2025 was $9.5 million, a decline of 2% compared to $9.7 million in Q3 2024, while year-to-date revenue increased by 8% [12][13] - Gross margin for Q3 2025 was 67.3%, slightly down from 68% in the previous year [15] - Operating income for Q3 2025 was $1.1 million, down 37% from $1.8 million in Q3 2024, with an operating margin of 12.1% compared to 18.8% in the prior year [16] - EBITDA for Q3 was $1.3 million, down from $2 million in the same quarter last year, with EBITDA margins contracting to 13.9% from 20.7% [17] Business Line Data and Key Metrics Changes - Revenue from core verticals increased by 12% year-over-year and 23% year-to-date, with notable strength in correction and energy verticals [4] - The U.S. market showed strong performance with a 22% increase in revenue for Q3, driven by corrections and energy verticals [7][13] - EMEA revenue declined by 10% in Q3 but increased by 15% year-to-date, while Asia-Pacific experienced a 14% decline due to the phase-out of a customer contract [13][14] Market Data and Key Metrics Changes - North America accounted for 51% of revenue in Q3 2025, up from 43% in the prior year, while EMEA's share decreased to 36% from 39% [15] - The Asia-Pacific region is stabilizing after a decline, with new wins in data centers, utilities, corrections, and logistics [8] Company Strategy and Development Direction - The company is focused on sustainable growth across core and emerging verticals, with investments in technological innovation to enhance competitive strength [4][6] - Strategic initiatives include targeting security for non-critical infrastructure such as hospitals and educational institutions [9][10] - The company aims to broaden its addressable market and deepen customer relationships through cross-selling [10] Management's Comments on Operating Environment and Future Outlook - Management highlighted the importance of adapting to changing market trends and the competitive nature of the security systems industry [3] - The company is committed to innovation and investing in next-generation security solutions to enhance its competitive position [11] - Management refrained from providing specific forward-looking statements but emphasized ongoing efforts to achieve sustainable growth [35][42] Other Important Information - The company has zero debt as of September 30, 2025, with cash and cash equivalents totaling $21.7 million [18] - A one-time government subsidy for an AI development initiative was awarded, validating the company's innovative technology solutions [16] Q&A Session Summary Question: Why did corporate expenses increase significantly? - Corporate expenses rose from $470,000 to $890,000 due to abnormal costs associated with consulting fees [22] Question: What is the company's approach to AI development? - The company is utilizing AI for data analysis from sensors, improving operational efficiency, and supporting the development of new data centers [25] Question: What verticals are most interested in the MultiSensor? - The MultiSensor is being tested across various verticals, including corrections, utilities, and logistics, with increasing interest [30] Question: Is the company expecting strong performance in Q4? - The company did not provide forward-looking statements but indicated that the team is working hard to deliver the best results possible [35] Question: What is the impact of the consulting fees on future growth? - The company hopes that the substantial investment in consulting will translate into future growth [50] Question: Are there specific regions or verticals targeted for growth? - The company aims for global growth by increasing market share in its core verticals and expanding into non-critical infrastructure [54]