Greetings, and welcome to the Sprinklr Q1 fiscal year 2027 earnings call. At this time, all participants are in listen-only mode. A question-and-answer session will follow the formal presentation. You may be placed in the question queue at any time by pressing star one on your telephone keypad, we ask you please limit yourselves to one question and one follow-up. As a reminder, this conference is being recorded. If anyone should require operator assistance, please press star zero. It's now my pleasure to turn the call over to Eric Scro, Head of Investor Relations. Eric, please go ahead. Ladies and gentlemen, I do apologize. I will now turn the call over to Head of Investor Relations, Eric Scro. Please go ahead. Thank you, operator, and welcome everyone to Sprinklr's first quarter fiscal year 2027 financial results call. Joining us today are Rory Read, Sprinklr's President and CEO, and Anthony Coletta, Sprinklr's Chief Financial Officer. We issued our earnings release a short time ago, filed the related Form 8-K with the SEC, and we've made them available on the investor relations section of our website, along with the supplementary investor presentation. Please note that on today's call, management will refer to certain non-GAAP financial measures. While the company believes these non-GAAP financial measures provide useful information for investors, the presentation of this information is not intended to be considered in isolation or as a substitute for financial information presented in accordance with GAAP. You are directed to our press release and supplementary investor presentation for a reconciliation of such measures to GAAP. In addition, during today's call, we'll be making some forward-looking statements about the business and about the financial results of Sprinklr that involve many assumptions, risks, and uncertainties, including our guidance for the second fiscal quarter and full fiscal year of 2027, the impact of our corporate strategies, the benefits of our platform, and our market opportunity. Our actual results might differ materially from such forward-looking statements. Any forward-looking statements that we make on this call are based on our beliefs and assumptions as of today. We disclaim any obligation to update them. For more details on the risks associated with these forward-looking statements, please refer to our filings with the SEC, also posted on our website. With that, I'll now turn it over to Rory. Thank you, Eric, and hello, everyone. It's great to be with you today. In the first quarter, total revenue grew 7% year-over-year to $219.5 million, and subscription revenue grew 6% to $194.8 million. We delivered $31.7 million in non-GAAP operating income, representing a 14% non-GAAP operating margin. I want to thank our global teams, customers, and partners for their trust and ongoing support. We are making meaningful progress in building a stronger, more customer-centric company, and actions we've taken since my arrival at Sprinklr are beginning to translate into meaningful and tangible momentum. While transformations of this scale take time, we remain on track with the milestones we've outlined and are confident in our trajectory toward driving durable long-term value creation. We are firmly in the second phase of our transformation, which we call transition and execution. This phase will continue through fiscal year 2027 and is focused on embedding the changes we put in place the last year to build a stronger foundation for scale, efficiency, and durable growth. As we successfully complete this transition, we expect to move to the third phase, acceleration, as we head into fiscal year 2028. This transformation is a deliberate multi-year journey, and we're increasingly confident in the direction we're headed. While we continue to clean up and improve previously challenged accounts, underlying trends are moving in the right direction. This is driven by our Project Bear Hug initiative with larger customers, a re-acceleration of our innovation, and paying down years of technical debt. Visibility began to improve in the second half of last year and continued into 1Q, where we achieved our best renewal rates since fiscal year 2024, reflecting sharper go-to-market execution and stronger customer engagement. While we saw some pressure in the Middle East during this quarter, overall demand remains healthy. We're seeing more customers commit to larger, multi-year agreements, reflecting growing confidence in our platform and long-term partnership. A clear example this quarter was the largest software deal in Sprinklr's history. A multi-year platform agreement with a leading global consumer electronics company signed in the first quarter. This win underscores our ability to deliver differentiated value at enterprise scale, reflecting strong execution by our team, and help push Total RPO past $1 billion, a key milestone that reinforces our position in a large and expanding market. We are also increasingly differentiated by our technology leadership. Sprinklr's unified AI-native platform connects insights into actions across customer feedback, service, brand intelligence, and marketing. In CFM, customer feedback management, the market is moving beyond surveys to a unified 360-degree view across surveys, social, contact centers, and reviews. We're seeing momentum here supported by analysts' recognition, a recent seven-figure displacement win that closed in four weeks, and a solid pipeline. Our platform's advantage is also driving traction in our agentic offerings, with outcomes improving as adoption scales. For example, one large customer is achieving a 90% containment rate with our AI agents, and customers with more than six months of full co-piloting deployment are seeing a 55% reduction in handling times on average, with some exceeding 70%. Lastly, another customer successfully automated over 85% of their pre-sales conversations across 11 markets, while improving CSAT, and AI-led engagements are delivering 4X higher conversion rates. Beyond the contact center, our upcoming summer release will bring LLM Insights to general availability, enabling brands to track their presence, sentiment, and citations across platforms like ChatGPT, Gemini, and Perplexity, and then act on those insights directly within our Sprinklr platform. This flywheel, powered by rich contextual data and spanned use cases from Copilot to full agentic, continues to drive traction. Our purpose-built AI SKUs are gaining momentum. With over 180 AI projects underway, we are deepening engagement and expanding our long-term opportunity with our customers. We recently announced the acquisition of the team and assets of ViralMoment, a leading AI-native video analytics company. As short-form video becomes a primary channel for brands' engagement and discovery, this product-focused acquisition strengthens our platform and accelerates our AI video capabilities. We will continue to pursue strategic opportunities to enhance our technical platform. Now, I'd like to share a couple examples of why we're winning and how iconic global brands are using Sprinklr. The first story is a key enterprise win that underscores our ability to execute at scale. We recently deployed one of the world's leading industrial companies through one of our most complex implementations to date, spanning multiple business units, nearly 3,000 users, and a broad product footprint. We replaced a highly fragmented stack with our unified platform, supported by deep partnership, hands-on enablement, and tailored training. The results have been strong, with multiple 10 out of 10 health scores, accelerating adoption, and growing confidence across senior stakeholders. This customer is now expanding into our marketing suite, reinforcing our ability to land, scale, and build durable enterprise relationships. Our second story highlights an expanded partnership with a leading multi-brand telecom and media provider, a big win that reflects both platform strength and improved execution. Over the past year, we've deepened executive engagement and demonstrated consistent value, earning trust as they defined their CX strategy. In a rapid three-week cycle, we replaced legacy survey tools with a unified AI-native approach, combining structured and unstructured customer signals in an enterprise-scale solution. What differentiated Sprinklr was our ability to deliver real-time, AI-driven insights across the full customer journey. This CFM win underscores a broader shift toward unified platforms and positions us for continued expansion as we scale additional use cases. In closing, we're making solid progress toward becoming a more customer-centric, execution-driven company, with momentum building each quarter as we move toward the acceleration phase of our strategy. Driven by our AI-native platform, we're seeing improving renewals, rising customer sentiment, and a strengthening pipeline. Clear signs our strategy is taking hold. Backed by a debt-free balance sheet and consistent free cash flow, we believe sustained execution over the coming quarters position us to enter the acceleration phase as we approach FY28, translating platform strength into measurable outcomes and building a foundation for durable growth. With that, I'll turn it over to Anthony for the financials. Anthony? Thank you, Rory, and good morning, everyone. First, I want to recognize the commitment and passion for our customer success of our teams across the company, the driving force behind our continued progress and growth. The quarter marks another step forward. Q1 results came ahead of expectations across the board. Let me turn to our financial performance. In Q1, total revenue was $419.5 million, up 7% year-over-year. Subscription revenue was $194.8 million, up 6% year-over-year. The outperformance in Q1 was driven by better linearity and improving renewals. Professional services revenue came in at $24.7 million. This was better than anticipated due to increased activity for completion of some of these large global projects that we've talked about for the past few quarters. Our subscription revenue-based net dollar expansion rate in the first quarter was 104%. After a few quarters of stabilizing net dollar expansion, this is the second consecutive quarter showing steady improvement. One comment I'd like to make on our $1 million customer cohort metric, our business has evolved through the years, and the shift to a product-based go-to-market structure changes how accounts are owned, expanded, and measured. Given this shift, coupled with the fact that it is not a focus internally, nor tied to sales incentives or our AI-driven growth strategy, we will no longer be disclosing this metric. I will note, however, that the net dollar expansion rate for the $1 million customer cohort remained at 115% in Q1, which we view as a better measure of increased share of wallet. More relevant to how we are transforming the business is our Project Bear Hug that has been yielding dividends. We believe this will continue to solidify our baseline and contribution from the top-tier enterprise customer base over time. For example, our Q1 renewal rate was the highest renewal rate in more than two years. A majority of our renewal dollars are multi-year deals, which is driving an increase in the average contract length for our overall customer base. We like to see such an uptick, as this will compound over time. Total RPO crossed the $1 billion mark in the quarter, reflecting the depth and quality of contracting demand and increasing visibility into the future. As Rory said, we remain focused on converting the backlog efficiently. At the end of Q1 FY 2027, total RPO was $1.04 billion, up 10% versus Q1 last year, and up 5% quarter-over-quarter. Current RPO was $627.1 million, up 5% year-over-year and up 1% quarter-over-quarter. Both of these metrics are at record levels for Sprinklr and pointing in the right direction. We consider RPO to be a leading indicator, and we typically pair it with other metrics to better appreciate underlying business momentum. Considering the current RPO growth and improvement in net dollar expansion, we see this as a green shoot. Regarding growth margins for the first quarter on a non-GAAP basis, our subscription growth margin was 74%, and the services growth margin was breakeven, resulting in a total non-GAAP growth margin of 66%. As noted in previous calls, we are experiencing higher data and hosting costs in response to business opportunities, especially in Sprinklr Service and our expanded AI capabilities. In particular, the ARR for our AI-native SKUs was up 47% year-over-year, and we are seeing outsized growth with our agentic contact center intelligence and Copilot products. We are prudently investing to capture this opportunity, and as we are seeing an increasing number of AI engagements in flight across the platform. Turning to profitability for the quarter. Non-GAAP operating income was $31.7 million, or a 14% margin, which drove non-GAAP net income of $0.11 per diluted share. We generated $65.8 million in free cash flow in Q1, representing a 30% free cash flow margin. The strong sequential improvement in free cash flow was driven by cost discipline, a quarterly record for cash collections, and improved cash conversion. Our balance sheet remains strong, with $442.8 million in cash equivalents, and marketable securities and no debt. During the quarter, we repurchased 70.1 million shares as part of our Accelerated Share Repurchase Program. As of May 29th, we have $75 million remaining in our $200 million Authorized Repurchase Program. As Rory noted, we're excited to welcome the ViralMoment team to Sprinklr. We believe the technology and the team will help accelerate our video intelligence offering. We paid for this acquisition with cash on-hand here in the second quarter and have included ViralMoment's financial impact in our guidance, which I'll discuss shortly. Even after completing the authorized repurchase and this acquisition, we remain well-capitalized to execute on our strategy and drive our growth agenda. Now I'd like to shift to our financial outlook for fiscal year 2027. As Rory shared in his remarks, we are in the second phase of our transformation and mindful of the current macro and geopolitical environment, which has caused a handful of deals to be delayed. Our expectations as of today regarding these dynamics are factored in the following guidance figures. We remain confident in our strategy and are excited about the medium and long-term trajectory that is forming for Sprinklr. For Q2, we expect total revenue to be in the range of $214 million-$215 million, representing 1% growth year-over-year at the midpoint. Within this, we expect subscription revenue to be in the range of $193.5 million-$194.5 million, representing 3% growth year-over-year at the midpoint. The Q2 guide implies $20.5 million in professional services revenue, which is down 13% year-over-year. The pro services line has been trending down as we've been making progress with previously challenged accounts and have completed some of the large projects we've referred to in recent quarters. We expect professional services gross margin to be - 10% in Q2 due to continued investment in Sprinklr Service delivery and the completion of some higher margin projects. We believe this is worthwhile, as these implementations will yield dividends in terms of increased consumption and customer satisfaction in the future. We expect non-GAAP operating income to be in the range of $29.5 million-$30.5 million, resulting in a non-GAAP net income per diluted share of approximately $0.10, assuming 241 million diluted weighted average shares outstanding. The sequential moderation in non-GAAP operating income is pressured by lower pro services revenue in Q2. More importantly, it's a structural shift for the long term. It reflects strong adoption of our AI products, which is driving higher cloud and data costs, as noted in prior quarters. We are also investing in future growth by expanding AI and R&D talent, particularly forward-deployed engineers in key regions. For the full year FY 2027, we are flowing through the subscription bit from Q1 and raising our subscription revenue guide to be in the range of $779.5 million-$781.5 million, representing 3% growth year-over-year at the midpoint. I'd note that we are seeing some downward pressure in the Middle East with certain deals being delayed. At this point, we feel it's more prudent to see how the situation plays out. We estimate that a sequential increase in quarterly subscription revenue will resume in Q3, given improving renewal rates and pipeline conversion compared to prior year. We now expect total revenue to be in the range of $866.5 million-$868.5 million, representing 1% growth year-over-year at the midpoint. This total revenue guide now assumes professional services revenue of $87 million. We expect pro services revenue to normalize now due to a successful completion of some Bear Hug projects. This new level of services is approximately 10% of total revenue, which is in line with the 23-year average. For the full year FY 2027, we now estimate non-GAAP operating income to be in the range of $139 million-$141 million, driving a 16% non-GAAP operating margin. This equates to non-GAAP net income per diluted share between $0.48 and $0.49, assuming 242 million diluted weighted average shares outstanding. This new range of non-GAAP operating income reflects our current assumption for services and incremental AI investment, including ViralMoment. We estimate non-GAAP operating income to improve gradually in the second half of the year as we expect some efficiency gains. In deriving the net income per share for modeling purposes, a total tax provision of approximately $42 million needs to be added to the non-GAAP profit before tax line. To get to non-GAAP profit before tax, start with the non-GAAP operating income ranges provided and add an estimated $20 million in other income for the full year, with $5 million of that to be earned here in Q2. This other income line primarily consists of interest income. We estimate a tax provision of approximately $9 million in Q2. This equates to approximately a 26% effective tax rate on our non-GAAP profit before tax for both the quarter and the year. We estimate we will generate full year free cash flow of $450 million, with about $10 million to come here in Q2. This is consistent with our free cash flow seasonality in prior years. In summary, Q1 was another step forward as we continue positioning the business for future acceleration. We are seeing positive signs in renewal rates, customer engagement, and overall execution, which we believe should progressively translate into improved profitability as we move to the latter portion of the year. Our fundamentals remain solid, with a healthy balance sheet, strong cash generation, and improving conversion. As we progress through this transition, we are building momentum with greater focus and operational discipline, supporting a more durable growth trajectory. We believe FY 2027 represents an inflection point driven by the expanding potential of our AI-native platform. And with that, we'll open the line for questions. Operator? Thank you. We'll now be conducting a question and answer session. If you'd like to be placed into question queue, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing star one, and we ask you please ask one question, one follow-up, then return to the queue. Our first question today is coming from Catharine Trebnick from Rosenblatt. Your line is now live. I'm looking for my. Oh, sorry. Hi, Catharine. How are you? I am fine. Can you hear me? Yes, I can, Catharine. Good to hear from you. Okay. I couldn't find No, no. I thought I was on mute. Okay. Could you unpack the Middle East for me a little bit more and give us more color on that? I just wanted to understand how that's impacting our revenue. Thanks. Yeah, sure, Catharine. When we did the look at the guidance at the beginning of the year, we took into consideration the macro environment. Middle East definitely had some challenges in terms of that pressure. I want to acknowledge, though, the team. Our team in the Middle East and our customers in the Middle East have been amazing. They've engaged in a very difficult and unsafe environment. They've all worked together. There were challenges that impacted some of the cloud delivery centers. We had to move 54 customers on the fly out of a damaged cloud infrastructure environment in the Middle East to Ireland. On the fly, 54 of them. The team rose to the occasion, the customers worked well, and that team really responded in a tough and dangerous environment. Good news is the environment's improving, so we're encouraged and we're hopeful. It's not over. There's still more concern. We saw about $3 million-$4 million of slipped deals that could have closed in the quarter that moved. We have a very healthy pipeline in the Middle East, Catharine. If you look at our 12 regions across three geographies, it's in the upper middle, and it's got a very healthy pipeline. There are several very large deals over the next two, three quarters in the region. I'm confident with the focus and the dedication, commitment of our teams there. The customers are very resilient. We're not out of this environment, this macro quite yet. Our thoughts and prayers are always with our team members' safety first. I think we're encouraged that the pipeline remains strong, the engagement of the customer is good. In the first quarter, we saw about $3 million-$4 million of slipped deals. Anything else you want to hit, Catharine? Yeah. I do want to hit Germany and the U.K. You had some really nice cloud contact center deals in those areas, and give us an update on how those are doing and then how you're focused on that particular product segment. Yeah. I think Central Europe and U.K. have been strong performers. Those are two of our other strong upper middle regions, no question. We've seen significant uptake in our CCaaS and our end-to-end platform solutions in the region. There were some challenged accounts there last year when I came in. We definitely have made significant progress across those customers. We kept them all. So far, knock on wood. Most all have already extended. Good news. We're seeing good ups. As you might have noticed, I mentioned over 180 AI customer engagements. We're seeing them on many of those base deals in Europe. I'm also encouraged in UKI. There are some very interesting opportunities here in the second quarter for us there in the region, and we've been building these deeper relationships around the platform play in the telco, the gaming space, and I see significant traction. I'm hopeful that we'll be able to talk about some of that in the next quarter or two's earning announcement. I like the progress there. Good demand, good uptake. We're seeing the engagement of customers across the planet increase. They see us as a relevant player, even in this world where there's kind of skinning down the number of IT providers, because of our broader platform play and our ability to do social, conversational commerce, customer feedback management, digital service, and then voice service. I think they see us really as a platform. With the improvements of Bear Hug, they're seeing a different Sprinklr, and we're seeing that in terms of improved renewal rates, and we're seeing it in terms of lengths of deals, and we're seeing it in terms of the engagement. We're in with these iconic brands, having important discussions about real transformation, real AI engagements on the agentic and Copilot side. Thanks. Okay, next question. Our next question today is coming from Jackson Ader from KeyBanc Capital Markets. Your line is now live. Great morning, guys. My first question is, Anthony, you mentioned that you expect a sequential build in the subscription revenue starting kind of in the back half or the third quarter, and part of that was based on pipeline compression. Just curious about what underpins your confidence that pipeline conversion is going to compress, and are there risks that it might not? Yeah, no, thanks for the question. It's a number of factors. First, we are building the subscription revenue, as you know, also on the back of strong renewals now over the past couple of quarters. This is a mixed effect also as we build up and we compound. I think on the pipeline, we have this kind of diffuse situation in the Middle East, as I highlighted. Overall, the pipe remains healthy on the back end of the year, we still have good conversion, and it's actually improving in terms of conversion if I look at the past couple of quarters. In terms of the build-up and why I'm confident now is that when I look at the net dollar expansion and the renewals pointing the right direction, you get a feel for that when you look at the Total RPO and cRPO direction. It's now adding and pointing the right direction for next year. I feel confident about the build-up. Obviously, we got some moderation this quarter, relatively speaking, in terms of the quarter-over-quarter development. I expect this to form and to continue to shape up on the back end of the year, which will lay out the foundation for next year. I think this is very consistent with what we have been seeing. The strong execution in Q1, both in terms of the pipe conversion, but also in terms of the renewals gives me confidence on the shape. Yeah. I just add a little bit to it, Jackson. From my perspective, I'm seeing a stronger base to work from and a much more predictable base. As we laid out the transformation, and we're midway through that second phase, we're looking to get acceleration phase, third phase, final phase toward the end of the year, beginning of next year. We knew these next couple of quarters are really about building that execution. The good news is we're seeing the continued bend up in the renewal rates. Quite interesting, where we've applied Bear Hug from our largest accounts now to $250K and above accounts, we've seen double-digit improvement into renewal rates or better in each of those cohorts. The last frontier now is the $250 and below accounts, and we're addressing them right now with a strategy we call Cornerstone, which we're seeing good indications. We're very interested to see how the next two, three quarters lay out, but I think we're on a stronger, more predictable foundation, and we're seeing better analytics and better customer engagement. If we continue to execute well, and remember, I'm from Missouri, so I want to see it. I'm really not from Missouri, you get the joke. The point is, let's get the next two, three quarters under our belts, and then we move to the next phase. Thanks, Jackson. Got it. Then a quick follow-up. I guess, just since you mentioned Project Bear Hug and kind of trying to get your arms around, right, to continue the bad jokes, around your largest customers, I'm surprised that the million-dollar customer count and kind of cohort is not a part of sales incentives, it's not a part of how you run the business and not going to be part of the disclosures going forward, because I think Project Bear Hug should be about maintaining and growing your largest customer cohort, and it seems like the disclosures are going the other way, so what am I missing? I think Project Bear Hug has been a tremendous success. There's no question whatsoever. If we squeeze them so tight that they can't talk to other competitors, that's a good place to be. We're engaging those customers 24/7. We're seeing it across the portfolio. What you should see is an expanding RPO and Total RPO. You should see a net dollar expansion expand down through the cohort. As I said, I've already seen the progress in terms of the 250,000 and above account all seeing double-digits or better improvements in renewal rates when they got Project Bear Hugged. Now we're going to address that last frontier, 250,000 and below. I think what we want to talk about is the overall trajectory of the business, how we're driving the AI expansion, how we're becoming a platform on broader, larger accounts, and we've got to continue to generate that combination of NAR and better renewal rate. That's going to ultimately, over the next three quarters, move us into the acceleration phase. Anything you want to add, Anthony, on that one? No, you said it very clear, and just to illustrate that, when you see the net dollar expansion at 115% and you see the share of wallet and the renewals, it's all heading in the right direction. We're just not driving this as a pure customer count per se internally, so that's not something we monitor or drive internally, and I think the reporting should reflect that. That doesn't mean that we are not focusing on the cohort. In the opposite, we keep focusing on that cohort and on the platform play and the share of wallet expansion. That will continue. That's the focus. Thank you. Our next question is coming from Patrick Walravens from Citizens JMP. Your line is now live. Oh, great. Thank you. Hey, Rory, can you talk about what your AI initiatives look like, both externally in terms of what you're planning to do with the products? You're not going to want to give too much away, but maybe give us some idea. Then internally, coding go-to-market, how are you improving the efficiency of this business? Yeah, absolutely, Pat. Great to talk to you. Let's do internals first. Internal, we're driving enablement across the entire company. This is a company for the last 10 years that has been leveraging AI and creating that capability because of the huge amount of unstructured data that flowed into this platform because of the big social channels. One of the reasons we've been so successful in customer feedback management, digital support, and even contact center work is because of the AI component. We bring a modern solution, and then the ability to link the customer contextual data across all those sources creates an unmatched view of the customer internally. Every Sprinklr team member must be fluent in AI. They must live it every day in terms of creating more efficiency from how they write contract, how they do support, how we leverage information and knowledge to speed our execution. On the engineering side, code development, test case development, all relevant. In terms of our ability to do technology patches, systems upgrades, releases. AI is one of the seven large technology waves I've seen in my four-decade technology career. It's a generational wave. It's a 25-year wave. Technology waves are built on top of each other. Every person in our company will become skilled in this space and bring that capability to bear. On the product side, the beauty of the vision that our founder, Ragy, and the team built was this scalable, unbelievably configurable platform with AI in its core. Now what we're doing is we're linking all that contextual data about the customer. That's why our largest deal ever was closed in the quarter with a huge global player that took us to 42 divisions around the world, the entire suite. That enables them to see that voice of the customer and engagement in a unified way with AI capability on top of it. Where we're going to double down is the ability to accelerate the 180 engagement. This is a must-win territory over the next 4-8 quarters. We have to continue to grow that engagement count and to drive that capability. That's how we ultimately win, and we're going to focus on agentic with forward-deployed engineers. We're already seeing a huge uptake with our existing customers, and that's enhancing the engagement. They don't see us as a spot little tower in one functional area. They see us as a platform with AI capabilities at our core, and they are starting to believe that we're getting to enterprise-grade execution. We do that over the next three quarters, that engagement goes up, and that opens the opportunity. Every bit of our focus has to be on paying down that technical debt that we've been doing the last year and a half, finishing that. Getting the maturation of our processes and becoming AI first, that leverages this amazing platform of capability and contextual customer data that gives the insights and actions to our customers to win. That's our destiny, that's our future, that's where we're going in an acceleration in FY 2028. Sorry, I got a little fired up there, Pat. Oh, it's good. Okay. Quick follow-up for Anthony. Anthony, what was just the overall NDR? I think last quarter was 103%. What was it this quarter? Did I miss that? 104%. 104. Great. Thank you. Great. Yeah. Again, as we bear hug and pull it down through the thing, I'm very interested over the next couple of quarters using our Cornerstone program to get those 250 and below accounts, then we'll have everybody bear-hugged, and that's definitely going to pay dividends. Next question, operator. Certainly. Our next question today is coming from Arjun Bhatia from William Blair. Your line is now live. Hi, team. I'm Willow on for Arjun Bhatia. Thanks for taking your question. I appreciate operating margin expansion will look different this year as the company balances investing and growth. Can you walk me through if anything changed quarter-to-quarter in terms of cost expectations? I'd like to better appreciate the revision and the operating income guide for the full year. Thank you. Hey, thanks, Willow. It's great to talk to you as always. I think one of the things that we're seeing is there's no question on the COGS side, we want to be smart on the expansion. It's a must-win battle in AI. We're seeing strong growth at 47% year-over-year in those SKUs, 180 engagements. We're not going to be wild on tokens. It almost is like a badge of courage. "I'm blowing out my token numbers." No. What we want to do is strategically advance the innovation and the insights and the actionability of our platform using this technology. To do that, we're going to continue to invest in some forward-deployed engineers. We're going to make sure that the infrastructure is redundant, that we have the ability to reach the key LLMs that our customers want to use. You may have noticed in my remarks that our LLM Insights innovations, a part of our innovation acceleration, are coming here this summer. That's going to give lots of insights to our customers on that space. I think it's really basically a prudent set of investments that continues to accelerate in that space, but we're making sure that we control it. I'll be tight on that as we go through the balance of the year, and we're trying to do it in a prudent, balanced way. Anthony, anything you want to add on color? Yeah. This moderation next quarter, I think it's temporary. We still have some higher data costs and some COGS that are still kind of up year-over-year. Obviously, there's a mix effect also. You have the professional services that is normalized this quarter, and this is also kind of heavy lifting on the margin side. We expect this to be negative territory temporarily. We will revert back to a normal kind of breakeven margin profile later on. There is also this ViralMoment impact that we have to capture in the short term. When you combine all those small effects, you have this kind of temporary mix in the quarter. I expect this to improve significantly in the upcoming quarters as we have a number of initiatives also internally to continue to reduce headcount, for example, so that you see that already slowing down. We continue also to be diligent in our approach, in our hiring, and making sure we have the right capacity in front of customers. As we will leverage some of these AI initiatives also internally, we expect further productivity gains. A few kind of things that are playing out temporarily in Q2, and there's a mix effect in that, but I expect this to improve on the back end of the year. Understood. Thank you for the details. Thanks, Willow. Thank you. Our next question today is coming from Raimo Lenschow from Barclays. Your line is now live. Yeah, perfect. Thank you. Congrats on the ongoing progress, team. If you think about the shift on the macro side that you kind of pointed out with the Middle East, et cetera, how quickly do they usually come back? If we kind of see a resolution of the events and let's hope it does happen at some point, how quickly do these kind of come back to you? I had one follow-up. No worries, Raimo. I think what we're seeing here in 2Q is a very good pipeline. 3Q and 4Q look good. It's a resilient set of cultures there, and our team is very impressive as I thank them for their work. I'm hopeful that we're going to see improvements here in the second quarter, and then I think that it can be back to normal or better in 3Q and 4Q. That's assuming that everything kind of stabilizes. It's bouncing around a little bit, but it's clearly better over the past 45 days than it was at the earlier onsets. I'm looking for progress this quarter, and I'm looking for progress. Remember, those are bookings, so they're going to translate into revenue over the next 1- 4 quarters. That's all about what's the key here. We're still dealing. Yeah Yeah, go ahead. What's your follow-up question? The follow-up question was on the $1 million disclosure. I hear you on the incentives structure internally, but it's also obviously a metrics we kind of will follow. The questions you could get is, are you taking it away because some customers on renewals are dropping below that? Can you maybe speak to that dynamic, please? Thank you. My only view on it is, I think as we're kind of looking at the overall mix here, I think what's really key is how we build the differentiation between renewal and NAR, and really creating that consistent growth rate. That's how you get the flywheel. That's what we're looking. As we've stabilized the base, and I think over the last three, four quarters and paid down some of that debt, I think we're much more predictable. I think we're on that base. I think in terms of how we're moving forward, I think there's no question that the next three quarters are key. You should be looking at that total RPO data. You should be looking at the renewal rate. We should start to see that translate as we've guided through this year, the transition at the end of the year, beginning of next year. The mix underneath it, the real key is how do we grow that whole base? Because I have my best renewal rates at $1 million above, I mean, in terms of renewal percentages. I already have that. The problem is, if I just focus on that, I've still got Now, as I've worked down with Project Bear Hug, 250 and below is underperforming. I have to fix that with Cornerstone, and I think I have line of sight. I've seen that 10+ percentage point improvement in every cohort I brought to it. I'll give you more data as we get along, and let's see how the next two, three quarters. As I said in my prepared remarks, I think it's going to schedule. Thank you. Our next question today is coming from Matt VanVliet from Cantor Fitzgerald. Your Your line is now live. Hey, good morning. Thanks for taking the question. Good to see the largest deal ever signed. Curious if that was an existing customer making an expansion or net new, more importantly, just like what other types of deals approaching that size are in the pipeline? How are you continuing to push to larger and larger scale on the large deals? Yeah. I love that question. That customer has been around for a number of years. They started on the social side. We expanded then into service, a digital service, a voice service in a geography. They liked the platform. They liked what we were able to do, and then they took it across the planet. 42 divisions everywhere around the world. It was a huge implementation. Right now, there's opportunity upsell in terms of the AI components, co-piloting, more agentic, the community space. I think there's more work to do there. When I look at the business and I think about NAR, one of the things over the last 18 months, I turned down the amount of new logos to about 20% of our volume. The reason I did that is I wanted to clean up the underlying execution. I'm seeing a better improvement, and as I've shared, I think we're a different company by the time we get to the latter part of this year. I'm looking to increase new logo participation back into the mid-30s range, right? I think I'm getting. I want to turn it on now, because if I've had three, six, nine-month sales cycles, I want to make sure I'm ready toward the end of the year to kind of accelerate in that space. The other thing, I get a general run rate of smaller deals and expansion. That's a lion's share of our NAR in a year. We get one of these very big deals usually each year. Then we get somewhere around 5-7 that are in the $3 million-$8 million a year range, kind of, even could be 10, they could be et cetera. Good news on that. I am seeing good numbers there. I am seeing the most of those over the next three, four quarters that I have seen in my time here. If I can convert that at even 50% or 45% or 40%, I can yield those six, seven key projects over the next three, four quarters. I think there is some large opportunities, probably somewhere in the range of 3-5 customers that could potentially be that next mega deal. They usually come from someone that is already in place, and then we expand, we get to the right level, and grow. Does that help, Matt? Yeah, very helpful. Then, obviously the acquisition of ViralMoment makes a ton of sense as short-form video takes off. As you look at your M&A strategy on a go-forward basis and balancing that with whether it's share repurchases or other capital allocation components. Was this just an opportunistic sort of gap in the product portfolio and we should think about share repo as maybe a more higher priority capital allocation? Where does M&A fit in over the next couple of years? Yeah, a couple of thoughts there. I love the balance sheet, right? Pristine. No debt whatsoever. We're free cash flow positive. Even with the share repurchases, we're going to be back approaching a half a billion dollars later in the year, beginning of next year. That's a good story. ViralMoment is part of our innovation acceleration. We want to make sure we're continuing to create new use cases and build out the platform. The opportunity long-term over the next two, three years, is us becoming the enterprise platform for unified customer experience. We do that, it's a very powerful story. I think by building out that capability and continuing to innovate makes us more and more relevant to the customer. I think ViralMoment is a good addition and in the right spot. I think there's small ones like that that we can continue to tuck in and add really interesting capability. If there is an opportunity in the AI side at the right prudent structure that accelerates our ability to do even more and increase the 180 engagements, enhance the number of our over 300, 350 AI engineers, I think all of those have to be considered as we go. If there's an opportunity where we continue to see the stock lagging what we think its ultimate value is, we'll continue to leverage some of those dollars where it makes sense and the board believes that we should acquire back. I think it's a combination, and it has to be balanced based on the return we see for our shareholders. Thanks, Matt. Thank you. Our next question today is coming from Elizabeth Porter from Morgan Stanley. Your line is now live. Hey, this is Jamie on for Elizabeth. Appreciate you taking the question. Vish, it's great to see another quarter strong growth in the AI SKUs ARR. Just curious how we should view sort of that base, the timeline for that to become big enough to more meaningfully contribute to acceleration and subscription revenue. As a follow-up, should we be viewing this quarter's gross margin level in subscription gross margins as kind of the trough, or should we kind of expect further declines through the rest of the year? Okay. The first question was on the AI SKUs. I think what you want to think about is the company had a huge execution issue over three and a half years, and that continued to manifest itself in kind of accelerated churn through the middle of last year. That takes three, four quarters to work out. While we've seen the bend, and the bend is firming nicely, and we had the best renewal rates in first quarter in over two years, and we are seeing Bear Hug pay dividends, we have to work through that hole in the boat that occurred last year because anything that happened takes four quarters to wash through. What you want to think about is, as we get toward the end of the year, and if we continue to execute nicely in terms of improving renewal rates, improving engagement with the customer in NAR, we get to that acceleration phase next year, and I think that gives us the stronger foundation. The AI work is the adder and the real differentiator. The fact that it's growing and it's material and there's 180 of these engagements are the reason that we're relevant to the customer. If we were just in one little tower, I wouldn't want to be that software company. I believe being a platform with a robust native AI capability to create action and insight gives us the foundation to win over time, two, three years out. If we do that, you'll see that benefit as we move into the acceleration phase at the end of this year and next, and AI is going to be forefront. It's going to be forefront for the next seven to 10 years. It is a transformational wave. I like how things are setting up. We still got to execute. That's where we are. Anthony, maybe you want to touch on for Jamie, the concept around gross margin. Yes, of course, and a great question. Yes, I expect this to be kind of the thought, so to say. As indicated, there is a margin mix effect, there is the impact of services also, but again, on the back end, we have a number of initiatives and safeguarding measures and actions that we have. We had to take also some AI investment and costs because of the traction we see there. We expect, let's say, other initiatives to offset that. I think on the subscription, gross margins will be pretty steady and overall as a mix, I expect this to improve sequentially in Q3 and again in Q4. That will be kind of the bottom from my perspective, based on what we are putting in place and also based on the normalized situation of services on the revenue side that will then be better on the gross margin side. If subscription holds and we increase on the revenue, which is the plan, then we should have a different kind of trajectory on the back end of the year. I expect this really to bounce back next quarter of 2022. Sorry, go ahead. I want to thank everyone for joining the call today. I appreciate your interest in the company. We're very interested to see our execution over the next two, three quarters as we move through the transition and execution phase two of our transformation. We're excited to the outlook of moving into acceleration at the end of the year, beginning of the year. These things take time. I think we're making good progress, and we're really on track to where I expect to be at this point. I hope you continue to look at what we're doing, and we're excited about the future. Thanks for joining us today, and have a wonderful day. Thank you. That does conclude today's teleconference and webcast. You may disconnect your line and have a wonderful day. 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