Today, and thank you for standing by. Welcome to the Verint Systems Inc Q1 2026 earnings conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you'll need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I will now like to turn the conference over to your speaker for today, Matthew Frankel. Please go ahead. Thank you, Operator. Good afternoon, and thank you for joining our conference call today. I'm here with Dan Bodner, Verint CEO; Grant Highlander, Verint CFO; and Alan Rhoad, Verint Chief Corporate Development Officer. Before getting started, I'd like to mention that accompanying our call today is a slide presentation. If you'd like to view these slides in real time during the call, please visit the IR section of our website at verint.com, click on the Investor Relations tab, then click on the webcast link, and select today's conference call. I'd also like to draw your attention to the fact that certain matters discussed in this call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other provisions of the federal securities laws. These forward-looking statements are based on management's current expectations and are not guarantees of future performance. Actual results could differ materially from those expressed in or implied by these forward-looking statements. The forward-looking statements are made at the date of this call and, as excepted as required by law, Verint assumes no obligation to update or revise them. Investors are cautioned not to place undue reliance on these forward-looking statements. For a more detailed discussion of how these and other risks and uncertainties could cause Verint's actual results to differ materially from those indicated in these forward-looking statements, please see our Form 10-K for the Fiscal Year ended January 31st 2025, our Form 10-Q for the quarter ended April 30th 2025, when filed, and other filings we make with the SEC. The financial measures discussed today include non-GAAP measures and certain operating metrics, as we believe investors focus on those measures in comparing results between periods and among our peer companies. These include revenue and ARR growth, which are adjusted for the divestiture we effectuated on January 31st 2024. Please see today's slide presentation, our earnings release, and the Investor Relations section of our website at verint.com for a reconciliation of non-GAAP financial measures to GAAP measures, as well as for more information about our key operating metrics. Non-GAAP financial information should not be considered in isolation from, as a substitute for, or superior to GAAP financial information. It is included because management believes it provides meaningful supplemental information regarding our operating results when assessing our business and is useful to investors for informational and comparative purposes. The non-GAAP financial measures the company uses have limitations and may differ from those used by other companies. Now, I'd like to turn the call over to Dan. Dan? Thank you, Matt. I'm pleased to report that we started the year with a strong first quarter and are on track to achieve our annual targets. In Q1, ARR growth accelerated to 6%, reflecting our continued AI momentum. Both revenue and diluted EPS came ahead of guidance. Behind our strong momentum are two key differentiators. First, our ability to transform the latest AI technology into strong, tangible AI business outcomes, delivering customer value better than any other CX vendor. Second, our ability to deploy AI in a hybrid cloud model, layering our AI-powered bots on top of existing customer environments. With Verint, customers can benefit from AI value now. They can start small with quick AI deployments in real production environments. Once they prove the value, they can quickly scale with the Verint platform. ARR growth accelerated every quarter over the last year. This growth is driven by more and more of our customers increasing usage of Verint AI-powered bots that they've already deployed, as well as customers adding new bots from our CX automation platform. Today, our platform delivers more than 50 bots, each designed to automate a specific manual CX workflow and quickly create significant value. The combination of a strong first quarter and a growing pipeline for our AI solutions gives us confidence in our annual growth targets, and we look to exit the year with 8% year-over-year growth in ARR. During Q1, we continued to win large deals, including a $13 million TCV order from a leading insurance company. This large multi-year commitment was driven by the customer's goal of automating workflows to increase workforce capacity. We expect the insurer to use the Verint AI-powered bots to increase supervisor capacity by more than 50% and agent capacity by more than 25%, resulting in significant value creation and delivering an over 10X return on their investment. The second eight-figure deal is a $14 million TCV order from a leading healthcare company. Let's take a closer look at the AI journey of this customer. Over the last year, our ARR from this healthcare customer nearly doubled from $8 million to $15.6 million as the customer added multiple Verint AI bots to automate manual CX workflows. As discussed on our prior calls, Verint customers can get access to AI-powered bots hosted in the Verint Cloud. Also, with Verint's unique hybrid cloud design, customers can choose to maintain their existing Verint solutions on-prem or in a partner cloud while adding new AI-powered solutions in the Verint Cloud. This large healthcare customer is a great example of the hybrid cloud model benefits, driving faster AI adoption as customers do not need to rip and replace their existing solutions to take advantage of the new Verint CX automation capabilities now. The blue color on the chart represents the portion of our ARR with this customer that is derived from solutions that include AI capabilities. The gray color represents the portion of our ARR that does not include AI capabilities. You can see that the vast majority of the growth from this customer over the past year has been driven by their adoption of our AI-powered bots. On our website, you can find many examples of customers reporting strong AI business outcomes from the Verint platform. Today, Verint is a pure-play CX automation company with a focus on helping brands automate their manual CX workflows. Our platform differentiation stems from many years of experience working with the largest brands in the world on CX initiatives. As our customer base increases adoption of Verint AI-powered bots, we benefit from working closely with leading brands to innovate even faster, and we are introducing new cutting-edge AI solutions at a rapid pace. In summary, we deliver AI business outcomes stronger and faster than any other CX vendor in the market, and behind our AI momentum is the proven value we create for our customers. We kicked off the year strong, expect our AI momentum to continue, and are targeting exiting the year with 8% ARR growth and double-digit free cash flow growth. Let me turn the call over to Grant. Grant? Thanks, Dan. Good afternoon, everyone. Our discussion today will include non-GAAP financial measures. A reconciliation between our GAAP and non-GAAP financial measures is available, as Matt mentioned, in our earnings release and in the IR section of our website. Differences between our GAAP and non-GAAP financial measures include adjustments related to acquisitions and divestitures, including amortization of acquisition-related intangibles, certain other acquisition and divestiture-related expenses, stock-based compensation expenses, restructuring expenses, as well as certain other items that can vary significantly in amount and frequency from period to period. As Dan highlighted, we started the year strong. ARR growth accelerated to 6% year-over-year, and we overachieved our revenue and non-GAAP diluted EPS guidance. We believe that ARR is the best metric to track our growth, and I'm very pleased with another quarter of acceleration. Revenue came in at $208 million, and non-GAAP diluted EPS came in at $0.29. Our revenue overachievement was primarily due to the timing of two large unbundled SaaS deals and therefore do not impact our revenue and diluted EPS outlook for the year. As we discussed on our last conference call, given our unbundled SaaS revenue volatility associated with ASC 606 accounting, we are providing guidance and tracking our results in two ways. The first way is a ratable view of the business via a cash generation model, and the second way is a traditional P&L model. Now, here is the guidance we introduced last quarter for our cash generation model. As a reminder, our cash generation model starts with ARR and ends with free cash flow. With respect to our outlook for ARR, we expect our momentum to continue with sequential dollar increases every quarter this year. For Q2, we expect ARR to increase to approximately $720 million, and we expect to exit the year with around $768 million of ARR, plus or minus 1%, reflecting 8% year-over-year growth. With respect to free cash flow, we expect our 8% ARR growth, combined with cash contribution margin expansion, to drive an approximate 12% increase in free cash flow to $145 million for the full year. I'd like to note that our rolling four-quarter SaaS pipeline has increased more than 30% year-over-year, reflecting strong demand for AI. Our growing pipeline, combined with our strong Q1 results, gives us confidence in achieving our fiscal 2026 ARR outlook. Now, I'd like to double-click on how AI is driving our ARR growth. This chart shows our AI ARR performance. We define AI ARR as the portion of ARR that is derived from solutions that include AI functionality and represents the annualized quarterly run rate value of the associated active or signed SaaS agreements as of the end of a period. As you can see from the chart, our AI ARR growth has been steadily accelerating. In Q1, AI ARR increased 24% year-over-year, reaching $354 million. We are pleased with this acceleration, and I'd like to mention that AI ARR now represents close to 50% of our subscription ARR. For the year, we expect AI ARR to continue to grow more than 20%, an acceleration from last year as customers increase usage and adopt additional bots from our CX automation platform. Turning to our P&L outlook, we are maintaining our annual guidance as follows. We are targeting $960 million of revenue with a range of plus or minus 3%, driving non-GAAP diluted EPS of $2.93 at the midpoint. For modeling purposes, I would like to give you a bit more color on our expectations for Q2. As we have discussed in the past, our quarterly revenue is heavily influenced by the timing of unbundled SaaS renewals. Based on this timing, we expect around $200 million of revenue in Q2. With respect to diluted EPS, we expect $0.26 in Q2. Turning to our balance sheet, we continue to be in a very good financial position. Our net debt of one times last 12-month EBITDA is further supported by our strong cash flow. With regard to capital allocation, we expect the largest use of our free cash flow to be stock buybacks. During the quarter, we bought back approximately 2.5 million common shares. As we mentioned on our last call, during Q1, we increased the size of our revolver to $500 million and extended the term to 2030. This new revolver can be used to pay down our existing convertible notes upon maturity, as we are not currently planning to issue a new convertible note. In summary, we are pleased with our strong start to the year and our ARR acceleration driven by growing AI adoption. We began to provide a cash generation model to help investors better understand the strong underlying growth trends in our business and to look through the unbundled SaaS revenue volatility. Finally, we expect our 8% ARR growth to drive double-digit free cash flow growth this year. With that, operator, please open the line for questions. As a reminder, if you would like to ask a question, please press star on one of your telephones. You'll hear an automated message advising your hand is raised. We also ask that you please wait for your name and company to be announced before proceeding with your question. One moment for the first question. The first question will be coming from the line of Joshua Reilly of Needham. Your line is open. All right. Thanks for taking my questions. Maybe just starting off, you know there's a lot of AI noise right now in your space. Can you help explain how Verint differentiates given all of that noise? What are you seeing in terms of just growing AI voice chatbot usage, particularly in customer support, as a tailwind for your business and maybe the overall industry? Sure. Thank you, Josh. First, you know the customer sentiment for investing in AI is very positive. At the same time, customers are very cautious. That is due to the noise and hypes that exist by many vendors. Also, quite frankly, some very bad experiences that customers had with bots they purchased. They looked good in a demo, in a lab environment, but did not deliver any value in production. Given that situation we have in the market, Verint differentiates from all this noise with two simple and, quite frankly, common-sense principles. The first principle is proven AI outcomes that are reported by leading brands around the world. Do not trust what we say. Just see what other customers are able to deliver in terms of value and tangible AI business outcomes. The second principle is about the hybrid cloud benefits, which is delivering AI value now. There is a lot of noise about you have to change your infrastructure. You have to change things in your environment before you can get AI to work. Our message is, no, you can layer AI-powered bots on your existing infrastructure. You can start now. Even more important, customers can start small. They do not have to invest big money. They do not have to invest big resources. Once they prove the value in their own production environments, they can quickly scale in the cloud. These are quite strong differentiators that work. They drove our 24% growth in AI ARR in Q1. I believe the market's adoption of AI is really, this year, only in the first inning, where last year, I would call it customers were more exploring. They were fascinated by the promise of AI, but they were exploring. They did a lot of lab experiments. This year, it's the beginning of customers actually willing to spend money, but also they want to make sure that they are investing in the right platform. Because customers are not looking to invest in AI technology, not in this space, not in the CX space. It's not about technology. They want to invest in a platform that transforms the latest AI technology into strong and tangible AI business outcomes. I think that's kind of our any follow-up on that, Josh? Yeah. Kind of the follow-up is, you've been kind of pursuing this strategy of smaller lands with the opportunity to upsell. Is there examples that you can provide that demonstrate that that's been a successful strategy thus far of moving to much larger deals from these kind of smaller lands? Yeah. Yeah. I can definitely give you examples. I believe I mentioned last quarter that we had a healthcare company expanding with 18 bots. They purchased those 18 different bots, but each one was purchased in a different consumption level. They were actually increasing the consumption of each bot as they proven the value. Exactly the story that we're now telling the market. This customer, when you look at their journey, as they were increasing the consumption over time, they reached ARR. Our ARR from this customer for Verint is $13 million. That's compared to only $5 million that they were two years ago. They saw value, and we saw an increase in consumption, which drove AI ARR growth. To give you more examples, an insurance company, they increased AI consumption. In this case, from $2 million in Q1 last year to $5 million ARR in Q1 now. We have a large media company that increased AI consumption. They grew from $3 million ARR to $9 million in Q1 now. The formula is very clear. Once customers prove the AI outcomes in their own environment, they see that the ARR is very compelling. It is almost like the solution then sells itself because they want to expand. It is about, how can I capture the full value of what I started in a small scale? Of course, because our AI is available in the Verint Cloud, we have built a platform that is easily scalable for our customers. They can turn the consumption level up on very short notice. Got it. Maybe just one last quick follow-up from me is, from the work that I've been doing in the industry, it seems that the adoption of AI voice chatbots is accelerating maybe more than people would have expected entering the year. What is the implication for some of your WFM seat renewals that you're seeing with some of the larger customers? Are they renewing at a lower level than you would have expected entering the year, or has it been pretty consistent with what you would have expected in terms of the long-term trajectory of the decline? Thanks. Yes. I think that the success of the voice bots is very clear. I think also, it's quite easy compared to the good old IVR that was not really providing much of responses, but it was just a way to interact and allow customers to choose menu options and so on. A lot of these basic IVRs are being replaced by voice bots. I think that today, the voice bots are starting to contain in self-service and get more intelligent responses than what IVR could do. Verint is one of the leading voice bots in the market. If you check with industry analysts, Verint is leading the market in this area. If you look at the customer-reported AI business outcomes that Verint is putting on our website, you'll see a lot of chatbots and voice bot success stories where we contained 60% and 80% of interactions with our voice bots. Obviously, as the technology improves over time and AI is moving very fast, I expect, like the rest of the market, that the chatbots and voice bots will become more capable. At the same time, to be really successful with this kind of bots, you need to make them part of a platform. You can't just throw a point solution self-service because all these bots eventually need to work together with the workforce. What we do in our platform is we provide those chatbots and voice bots together with automating manual CX workflows for the workforce. We do all that with orchestrating the work of bots and humans in a way that increases workforce capacity. Yes, we see some customers are starting to reduce the number of agents. We do see that. It's not everywhere because, again, AI is in the first inning. When I look at our total number of seats under management, which we told the market is 4 million, it's still about the same. It's still about 4 million agents today. Obviously, we see some customers that are using AI and starting to get capacity. Either they reduce agents or they use agents for upselling and increasing revenue or different ways to use the capacity. At the same time, we also see some expansion in the number of agents in other accounts that maybe are not yet caught up to the AI. Overall, we have about the same number of agents today, 4 million. We see now a very clear transition in our ARR base, right? We talked about 50% of our ARR now is AI, and it's growing at 24%. We're not really relying anymore on any growth in the non-AI business, which obviously we don't expect any expansion of licenses. We see 24% growth in our AI, and that's 50% of our business. Obviously, that's the engine that drives the overall growth of Verint. We believe that that will continue. When we replace, as we discussed many times before on calls, when we replace for our customers, when we replace seats with AI, we increase our revenue substantially. That's what you see now in our numbers, where the AI engine basically drives the overall growth of the company. Awesome. Thanks, guys. Thank you. One moment for the next question. Our next question will be coming from the line of Shaul Eyal of TD Cowen, and your line is open. Thank you so much, guys. Congrats on a solid start to the year. Apologies for a little bit of some background noise. Dan, where do you think we are from an adoption curve? Are we at an inflection point as it relates to AI-driven voice bots? Where are we from an inning viewpoint? Maybe just as a follow-up, what internal steps are you guys taking to assure a more consistent execution? Thanks, Grant, for the color on the entire dynamics between ARR and cash flow. Thanks. Yes. I think it's a very good question. As I mentioned before, I think last year, it was really difficult for customers to move outside of their lab experiments. They had a lot of interest in AI, but it was more show me in the lab. Relatively few number of customers were willing to actually move it to production, and they did it on a small scale. Lots of IT organizations have been playing with AI models that they purchase and they try to find use cases. That's kind of the industry last year. When I look at Q1, it's starting to change. It's very difficult to say what will be the pace of the change. It's clearly changing toward its time. It's time to do something with AI. is a lot of pressure by boards and CEOs on the management team to show value from AI because people think there is a lot of potential, and they are a little tired of the experiments. They want to see real value. I think that is what I refer to as the first inning, where customers are willing to invest real money. We obviously talk about some eight-figure deals that were predominantly driven by adoption of bots beyond just initial scale. I do not think we can predict the pace other than to say with good confidence that it is accelerating. I would not call it an inflection point at this point because, again, there are too many situations that customers have adopted the voice bots and saw very, very poor results to the point that they stopped using them because they annoyed customers and they created no value or negative value in terms of customer retention. As much as we hear about the good stories, I think we hear less about some very bad stories with AI. That is what is causing the market to be a little bit more cautious. What we did, and it was a strategy we talked to the market about more than a year ago, is that we are going to introduce AI first to our top accounts. Last quarter, we talked about 90 of the Fortune 500 companies already have some AI from Verint. Our strategy was, let's start with the leaders in the market, the largest brands in the world across many sectors. We now have AI in financial services, in insurance, in healthcare, in telco, in retail. We kind of targeted large accounts, which on one hand are obviously more difficult because they are large and complex. On the other hand, once they adopt AI, not only can they scale, but also they influence the rest of the market. I think the more success stories we can tell from our customers, we will be able to get more acceleration of AI adoption in the overall market. We have our engaged customer conference coming up in September in Orlando. We are inviting many customers actually to tell their success stories to other customers. It is not just Verint telling stories, but I think it is going to be one of the leading events in the industry in terms of what really has been accomplished with AI beyond just the hype of what can be done, but what is working today and what value it is bringing, not just cool technology. I think that this kind of progress, Charles, is going to accelerate the adoption. There is no lack of interest from customers. Every customer that we contact and say, "Let me tell you our AI story," they are definitely now interested in learning more. Great color. Thank you so much. Thank you. One moment for the next question. The next question will be coming from the line of Peter Levine of Evercore. Your line is open. Great. Thank you very much for taking my questions. Maybe I'll start with Grant. Can you maybe share with us kind of the conviction or your confidence in the second half, Grant, for ARR? If I look at your guidance, I believe it's $768 million plus or minus $1 million, so call it plus 8% exiting Q4. Looks like there is a significant ramp here in the second half. Maybe just walk us through the seasonality and then the conviction or confidence that you see today that will kind of help you hit those targets. Yeah, sure, Peter. As I mentioned, we came in, accelerated growth here in the first quarter, 6%. We guided that $710 million. We'll go up to $720 million in Q2 in the guidance. In the second half, right, as we'll bridge it, Q3, we'll help to bridge that gap and ending with the 8% or $768 million. What we have out there in terms of, again, the ARR metric is a signal of the overall growth, right? At the end of the day, it's a combination of the new bookings as well as offset from just overall attrition. That's the driver of the growth. Within the overall growth to get to that 8% ARR, we only need 12% or so bookings. As Dan mentioned, that's total growth. As Dan mentioned, we see the pipeline for our overall business, the SaaS ACV rolling fourth quarter, it's up greater than 30% year over year. We got off to a good start here in Q1. I would highlight that anytime you look at the Q4 to Q1 dynamics in terms of overall aggregate ARR, Peter, we often have the seasonality in the fourth quarter where usage over and above our fixed contracts is higher. That tends to occur every fourth quarter. We see some of that acceleration. As we look at the sequencing across the year, looking at the pipeline, looking at how we got off to a good start in the first quarter, I think the combination of those things gives us confidence that we're on track to the 8% just based on the factors. I guess if you can share, are there any metrics that you can give us around even with your AI ARR, AI—I'm sorry, a lot of acronyms here—AI, ARR, net retention, either on the subscription ARR or the AI ARR? Is there a metric you can share with us in terms of what upsells look like at renewal? We'd love to know what that looks like on the software side. Sure. We have obviously a lot of metrics that we provided in the past and try to balance. Actually, some of the feedback, Peter, that we've gotten is that we've provided too many in the past that oftentimes it isn't as clear on the drivers of growth, etc. In order to be responsive, right, we've tried to provide just that. Focus on the ones that are most important to us, which is the aggregate measure of our total business will be the subscription ARR growth, which we highlighted. That AI ARR is really the measure of our key driver of that growth, which will be the AI adoption. With the AI adoption and that metric growing 24% overall, you can imagine that obviously that's where we have the combination of very strong new bookings. That's what the customers are prioritizing their budgets around, the dollars. Within that, obviously, the retentions are very high. Aggregate business, we've seen actually improvements across last year in terms of each of the four quarters, the total ARR acceleration. I can tell you that the GRR has improved each quarter throughout the course of the last year as well. The signaling for the 8% ARR growth is obviously an NRR that's well above the 100 mark. Perfect. Maybe just one last one for Dan. We did not talk much about macro. Maybe can you share with us kind of what you saw transpire maybe in the month of April, even in May too? Just would love to hear some of your commentary from customers and how they are thinking about the environment and moving forward. Obviously, your report and I think the numbers you gave us today indicate things are looking pretty healthy. Would love to know, was there any impact? Is there any impact to the guide? Would just love to hear kind of what customers are saying in today's environment. Thank you. Yeah, that's a good question. Obviously, the results speak for strong Q1. It's not just the reported results, but also the pipeline growth, 30% represents strong demand. If you're looking for extra color, I would say that each and every conversation with a customer is now focused on value and ROI that is measured in less than six months. People are much less interested in the multi-year projects where you move to the cloud and change your entire contact center infrastructure, and it's going to take you two years, and maybe then you're in the cloud, so you're going to be getting some ROI. That is much less of an interest now. It's shifting to discussion about value. One of the things that we actually improved during Q1, given the focus on value, is we improved the way we explain value to our customers. We came up with some clear metrics on these are the things that we will measure for you after you deploy. Of course, you can measure many other things, but we're going to measure for you these metrics, and you'll be able to track on an ongoing basis how much value you're creating based on this value model. I think that's been increasingly important for customers to see that there is a value model. Having said that, they still, in most cases, started on a small scale. Even if they were impressed by the PowerPoint and they looked at the value and said, "That's impressive value," in most cases, yeah, we had some large deals, but we had also many deals where they're starting small. You mentioned in your prior question to Grant something about expansion upon renewal. We see AI investments disconnected from renewal, right? Because, again, it's not necessarily big deals. We encourage customers, there's no disruption with the hybrid cloud design. They can just layer bots on top of whatever they have. They don't have to wait for renewal with Verint. They will start small. Upon renewal, sometimes they just increase the scale because it's a good time when you renew contract also to expand into the new AI areas. It's always based on first, let me prove that the value that you show me on PowerPoint is actually something I'm seeing in my own environment. I'm not saying it's completely new. We added last year as well, but perhaps this was because of the overall macro in Q1. It was even more focused on value selling. Perfect. No, I appreciate the color. Thank you very much. Thank you. As a reminder, if you'd like to ask a question, please press star 11 on your telephone. One moment for the next question. The next question will come from the line of Samad Samana of Jefferies. Your line is open. Hey, guys. This is Billy Fitzsimmons on for Samad. Dan, maybe for you, as we think about the new AI ARR growth and disclosures and the acceleration in year-over-year bundled SaaS revenue, I want to get your view on how we should think about Verint's differentiation in an AI world, whether that's for agent-assist tools, text-based chatbots, voice bots. I think one of the core questions right now is that large well-funded software players are kind of investing in some seemingly in some similar opportunities, whether that's transcription, summarization chatbots, IVRs. We've also seen the emergence of some well-funded startups who seem to be targeting a similar opportunity. Obviously, Verint's been doing this a long time, has a large install base, decades of voice data. Curious how we should think about differentiation and how the competitive landscape has maybe changed in recent quarters. Yes, good question. Look, first, the fact that a lot of new players are attracted to this market is positive. It's positive because it's creating more demand in the market. I believe that the opportunity for our customers to save a lot of money by shifting their budgets from human workforce to AI is obviously a very compelling ROI opportunity for customers. There is going to be an increase in technology spend. Verint is not going to take 100% market share. The new entrants to the market are actually creating a more robust market, and I think will accelerate AI adoption. I believe, as we see now, 24% growth in AI, and we're looking to have more than 20% growth also as we exit the year. The AI will continue through the year to be the engine to get to the 8% total ARR growth. We're taking a good market share of what is now becoming a new market. I think we have very strong differentiation today, both against startups as well as against larger companies who are showing cool demos, but quite frankly, we don't see reported outcomes from customers yet. I can be talking with strong conviction about we are differentiated today. We are providing value to our customers today. I think your question is, how are we going to maintain our differentiation over time? It comes from, I would say, three main areas. One is that we are working with the leading brands in the world, and they're pushing us. They're pushing us really, really hard. There's nothing better for a company to continue to innovate than to work with the most difficult customers in the world that push you hard. You can see that with the pace of innovation that we are showing over the last eight quarters since we introduced the new platform seven quarters ago, right? It was the combination of three years in the work and obviously two decades of experience. We launched it seven quarters ago. Now I have really large customers that are reporting good outcomes, and they continue to push us to innovate. The second reason is that we have a platformatic view on how to use AI and CX. It's not just about the one-point solution, one chatbot that does one thing, because you need to orchestrate all these different bots and humans to work together. Eventually, the more trivial conversation will move to AI, and the more complex conversation will remain with humans. The need to maintain relationships in some industries is very important for our customers, actually, for humans to talk to humans, because that's how they retain relationships. That's how they upsell. Like in insurance, there's nothing insurance companies love more than to talk to the customer when they call, because it's an opportunity to show them some new products. The human workforce is not going anywhere. There are going to be changes, but the way we originally designed this platform with hybrid cloud, allowing our customers to move forward with AI in an evolutionary way, not throw away everything and start over again, which doesn't work, is a big advantage. Those startups just don't have the platform. I think the third area that we have designed in the platform that will maintain our differentiation is the fact that we have an open Da Vinci AI. In the same platform, we are running many, many different AI models from many different vendors. Because we are open and we're taking the latest AI technology and obviously training it on data and embedding it into real solutions. Many of these startups just take one Gen AI model from somewhere, and they just use Gen AI to develop something. It's cool, but it's not going to be the best AI model forever. The pace of AI changes is quick. We are future-proofing the AI investment for our customers by actually allowing them to use any LLMs, incorporate many different AI approaches, and also bring the best tools in the market and change them all the time. Different bots require different AI models. We have more than 50 bots. Each one is designed to automate a different workflow because there are many, many different workflows, not just chatbots. We have all these different models living in one platform. These are big advantages that are very core to the approach we have. At the end of the day, we are the only $1 billion pure-play CX automation company. There are a lot of companies who are trying to add CX automation to what they do. I think we have it at scale. That's all we do. As we move forward, we expect that we'll continue to do it better than others. Helpful. Thanks, Dan. Maybe one for Grant. Obviously, the AI ARR metric, the new metric, you talked about it in the prepared remarks, but I want to double-click because it's important. First, can you just recap for us what's included in that metric, assuming it's committed spend for your 50-plus bots, but any other products from your portfolio that are in that number that we should be aware of? Second, I know you have minimum commitments for some of your bots, and then there's the potential for overages from a customer usage or volume above expectation. Does that AI ARR number just capture the committed minimum spend, and there's actually potential for upside on the rev line due to overages? I want to understand how that can kind of impact ARR versus the rev number. Sure. Thank you. Let me start with that definition, right? The AI ARR is all of the ARR derived from our solutions that include the AI functionality, okay? It represents the quarterly run rate value of both active or the newly signed SaaS agreements that we have at the end of the period. It is that combination consistent with our subscription ARR, but it is specifically segmenting that subscription ARR and looking at any solutions that today include that AI functionality. Now, in terms of how we look at these solutions, right, in terms of the fixed, it does include all of the fixed-term agreements that we have. Again, that is providing that quarterly annualized run rate of those. In a given quarter, if we do have overages, then it is going to go ahead and pick up that. Usage related above the fixed commitments, it's capturing that as well. Understood. Super helpful. Thank you. Thank you. One moment for the next question. The next question will be coming from the line of Timothy Horan of Oppenheimer. Your line is open. Oh, thank you. Sorry, I just missed that. Can you talk about which bots are working well? Your analysts stayed in Orlando last September. Their ROI was amazing, and a bunch of the bots looked like they were working well. Can you talk about just what's been the customer main reticent to adoption? I mean, when they can save $10 or $20 for every dollar they're spending with you, and how are you overcoming that? Yeah. I would say overall, we're getting very positive feedback from customers on all our bots. There are bots with the sales channels. Sales channel likes certain bots more because they require very short sales cycles. For example, we have a bot we call the Jini bot. This is a quick add-on the customers can add to their business analytics solution. What it does, it kind of supercharges analysts and immediately increases analyst capacity for those business analysts. It's one that I would say sales love because it's so compelling and so easy. There are others that require the customers to change human behavior, so they need to enable their employees, and that takes some time. For example, our copilot coaching bot is one that will provide real-time next best action suggestions to agents. That bot requires some enablement. Some users love it. Some users less because they feel like they already have the answers. There's another copilot which provides real-time CX scores to supervisors. During the call, supervisors can get alerts on is the sentiment on the call going up or down. They can see whether the sentiment is because of customer sentiment or employee sentiment. Sometimes the employee gets tired during the day, and the supervisor can just suggest, "Hey, you should go on a coffee break for 15 minutes because you are tired." They can, in real time, react to the changing sentiments during the call. Obviously, they love that. I would say that the reaction is overall very positive to all of them. Like any new technology that you introduce into a workforce, some customers have unions. They need to sell it into the union. There's a lot of complexity in changing the market from being 100% manual to automation. We're not part of the design of our platform. We did not underestimate these challenges. I think that's why overall we have great customer-reported outcomes because we're not just showing a nice lab demo. We actually are encouraging our customers, "Let's go to production right away. Let's skip the lab experiment." When you're in production, you find things like this. I think we are dealing with this objection to AI very well, and we'll continue to improve. We'll continue to improve because it's part of what the transition that the whole market needs to make. Look, we believe that eventually the AI, which is first, it's inevitable, but it's also going to be good for the workforce because it provides the workforce opportunities to do a better job, really delight customers. They can give the bots the more mundane jobs and have more time to develop relationships and deal with more complex issues. It is not that it is creating negative impact with workforce, but definitely we see from customers that they need to make those changes in behavioral changes in their workforce. I think that is part of why the industry is moving at the pace they are moving. It is not something we can trivialize. Grant, can you talk about working capital? How should that trend over the next few years as you get a lot more bundled SaaS? What levers can you pull to improve that? Yeah, sure. The way I would look at it, right, is as our cash generation, the ARR grows 8% exiting this year, and we have it modeled with revenue being very similar to the cash generation model that will generate, we won't have a lot of working capital burn, right? As I've talked about before, the cash gen is going to drive the free cash flow growth. That's throughout the whole model. The reason that we're providing this guidance in both ways, we know that the mix of our bookings, etc., come in different than that could have a little different impact on the revenue, but no change whatsoever on the free cash flow. That's where you get into some of the differences on working capital overall, change in working capital. Right now, we are projecting the year to be similar between the two models. As I just point to the model going forward, as the overall ARR and cash gen grows, you will see the free cash flow continue to grow at that faster pace and double-digit periods. Thank you. Thank you. That concludes today's Q&A session. I would like to turn the call back over to Matthew Frankel for closing remarks. Please go ahead. Thanks, Lisa. Thanks everyone for joining us today. As always, please feel free to reach out with any questions you have, and we look forward to speaking to you again soon. This does conclude today's conference call. You may now disconnect.