The following is excerpted from the question-and-answer section of the transcript.
(Questions from industry analysts are provided in full, but answers are omitted - download the transcript to see the full question-and-answer session)
Question: Matthew Alan Stotler - William Blair & Company L.L.C., Research Division - Analyst
: Maybe just one, I would love to get maybe a little bit more color what you're seeing in terms of trends in some of the KPIs you discussed previously,
our customer revenue turn, maybe the trends you're seeing in average deal size ACV net retention. Some color there would be helpful.
Question: Matthew Alan Stotler - William Blair & Company L.L.C., Research Division - Analyst
: Got it. Understood. Maybe just one follow-up here. In terms of the integration of Net Fortress, I'd love to maybe get a little more color on how that
business performed in the quarter? And then the integration there and whether you're seeing the cross-sell of MSP services going at this point and
ethos like?
Question: David Kwan - TD Securities Equity Research - Analyst
: I was curious on the growth side, particularly on the services, you talked about this 10% annual growth target. I assume it's an aspiration to drive
that higher, but I was curious to what extent you're willing to invest more to get there?
Question: David Kwan - TD Securities Equity Research - Analyst
: So I guess maybe another way to ask the question is to get that growth into the teens, whether it's the low teens to mid-teens, would -- do you
think you have -- we'd see margins come in a bit to get to there? Or do you think you can get there with your existing cost structure?
Question: David Kwan - TD Securities Equity Research - Analyst
: No, that's helpful, Norm. On the gross margins, I think last quarter, you said that was -- I think, it was 6.9%. It was kind of the upper end of kind of
what you were expecting for this year and then you came in at 71% this quarter. I understand that some of that's coming from revenue mix or
whatnot, but just kind of get a better understanding of how we can be modeling out your gross margins I know you don't break it down at this
point, at least kind of product versus services gross margins. But if you make the assumption that services revenue kind of stays in the low 80s,
what is a reasonable gross margin assumption?
Question: David Kwan - TD Securities Equity Research - Analyst
: Okay. That's helpful, Larry. And just the last question. Just on the AI side, in particular generate AI. We've seen many of your carriers come out with
announcements about incorporating it into their platforms or solutions. So I was curious to what extent that's in your plans. I know in the past, it
sounds like you've been kind of dabbling in some stuff on the AI side, but especially given kind of the competitive dynamic. I'm curious to see any
of what you're doing and kind of what opportunities and risks you see with it.
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