Intapp, Inc.

Hello and welcome everyone to the Intap Fiscal First Quarter 2026 Earnings Webcast. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. Please be advised that this conference is being recorded. Now, it is my pleasure to turn the call over to the Senior Vice President, Investor Relations, David Trone. The floor is yours.

Thank you. Welcome to NTAP's fiscal first quarter financial results. On the call with me today are John Hall, Chairman and CEO of NTAP, and David Morton, Chief Financial Officer. During the course of this conference call, we may make forward-looking statements regarding trends, strategies, and the anticipated performance of our business, including guidance provided for our fiscal second quarter and full year 2026. These forward-looking statements are based on management's current views and expectations entail certain assumptions made as of today's date and are subject to various risks and uncertainties, including those described in our SEC filings and other publicly available documents that are difficult to predict and could cause actual results to differ materially from those expressed or implied by such forward-looking statements. INTAP disclaims any obligation to update or revise any forward-looking statements except as required by law. Further on today's call, we will also discuss certain non-GAAP metrics that we believe aid in the understanding of our financial results, including non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income, non-GAAP diluted net income per share, and free cash flow. Our GAAP financial results, along with the reconciliation of GAAP to non-GAAP financial measures, can be found in today's earnings release and its supplemental financial tables, which is available on our website and as an exhibit to the Form 8K furnished with the SEC prior to this call, or a supplemental financial presentation, which is available on our website. With that, I'll hand the conversation over to John. Thank you, David. Good afternoon, everyone.

Thank you for joining us today as we share the results of our fiscal first quarter. Now starting our fifth year as a public company, I'm pleased to share that once again, we've achieved strong quarterly results supported by cloud ARR growth, new products, new partnerships, new logos, and expanded client accounts around the world. We added new applied AI capabilities to our platform, furthered our strategic partnership with Microsoft, and migrated more clients to the cloud. I'll share details on these and other select growth drivers throughout this call. In Q1, our cloud ARR grew to $401 million, up 30% year over year. Cloud now represents 80% of our total ARR of 504 million. In the quarter, we earned SAS revenue of 98 million, up 27% year over year. and total revenue of $139 million, up 17% year over year. Now, I'd like to share some highlights from our fiscal first quarter. We continue to execute on our vertical AI roadmap, specifically through applied AI innovation and growing client adoption. For a bit of context, Our industry specific AI solutions do automate rote manual tasks. But more importantly, they deliver actionable insights drawn from a firm's proprietary data, knowledge and relationships, which are unified and enriched with our own industry graph data model and trusted third party sources. Critically, our solutions do all this while helping firms maintain compliance with the industry's most complex regulations. These advanced, tailored compliance capabilities are what set Intap apart and why firm leadership continues to invest in our technology. Which brings me to my first example. we announced a significant new release of Intact Time, which delivers faster, easier, more accurate timekeeping powered by major new AI features. Built on our secure cloud foundation, the new Intact Time offers gen AI capabilities that monitor users' workdays to find and capture billable activities, to validate entries against client guidelines to suggest corrections when needed, and to answer questions about entries and unreleased time via an AI chat experience. The response has been very enthusiastic, reflecting that we're tapping into real need with our thoughtfully designed vertical AI. More than 100 clients and prospects attended our introductory webinar, And we booked over 200 meetings in the six weeks following its launch. Ryan Donato, CIO at Voorhees, who participated in our early adopter program, said, the in-tap time release is very intuitive and won't require us to retrain our lawyers. Our users really like the quick add functionality. the ability to use AI to create narratives, and the ability to group activities in the activity stream. Additionally, this quarter, Starwood Capital Group, a leading real estate investment firm with over $120 billion in capital deployed globally and a leader in technology adoption, added Intap's agentic AI capability to its deal cloud deployment. The agentic capability will give Starwood's investment professionals a 360-degree view of the firm's investments and portfolio, all enabled and orchestrated in a modern AI chat interface. And third, Alpaca Real Estate. is showcasing its use of DealCloud as a differentiator to its clients and prospects. At a recent client retreat, the firm shared how its modern tech stack gives them a competitive advantage among real assets investors and highlighted DealCloud as an integral part of their evolution toward AI, powering their workflows, analytics, and data.

Now let's turn to our expansive partner network.

We continue to grow our high-impact partner ecosystem anchored by Microsoft and a strategic set of 145 curated data, technology, and services partners. It's one of the most powerful vertical ecosystems in our industry. And its real differentiator is how deeply our partners are integrated into our commercial operations. They're strategic amplifiers of our business. enabling us to pursue larger opportunities, execute faster, and scale more efficiently without a proportional increase in internal costs.

To name just one example, in Q1, Lexsoft joined our network to help drive growth

in our legal vertical in Latin America and other Spanish-speaking markets. And as in previous quarters, Microsoft continues to be a major growth driver for us. Of our 10 largest Q1 wins, more than half were jointly executed with Microsoft. In several of those, Microsoft fronted Azure investment dollars to help accelerate the deals. I'll share more specifics as we turn now our attention to notable wins from the quarter.

Our growth was empowered by adding new clients, expanding within existing clients,

and migrating clients to the cloud. We also continue to make traction in new markets, spanning across our verticals, products, and global locations. This quarter, we saw three notable trends driving wins in our legal vertical.

The largest law firms continue to consolidate.

In other words, the big firms keep getting bigger. They're taking a bigger share of the growing legal market, and they're going to continue to need an enterprise class technology partner that can scale with them.

To cite an example,

One of the 95 AMLO 100 firms we count as the client increased their contract for intact conflicts, intake, terms, time, walls, and collaboration this quarter to accommodate its growing size. Second, Our clients are adding additional in-tap solutions, including AI, when they migrate to the cloud. For example, another AMLA 100 client started moving its intake and conflict solutions to the cloud while also augmenting its portfolio of in-tap solutions by upgrading to the newly released in-tap time with GenAI on the Azure marketplace. And, an NLUG 200 firm chose to move all of its in-tap solutions to the cloud, starting with compliance.

They purchased add Gen-AI capabilities to its time, terms, and field cloud solutions.

The firm completed the purchase via the Azure Marketplace using their existing MAC agreement. And third, current cloud clients are also growing their intact footprint. For example, Ryan K. Leighton Paisner bought Buildstream and added Intac Assist to its time contract, expanding their existing product portfolio of Intac compliance and collaboration solutions. One of our Intac-time Gen AI early adopters, also added intact terms with assist to enable comprehensive compliant time recording. These solutions add to the UK law firm's existing portfolio of intact compliance solutions. In our accounting and consulting vertical, We saw continued modernization of compliance and timekeeping practices, with many adding new products to their existing in-tapping investments. I'll share a couple of examples. One of the largest providers of tax, accounting, and advisory services purchase intact employee compliance to complement its existing instances of intake and conflicts. And SEA Limited, a leading consulting firm in forensics analysis and investigations, added the new intact time to its portfolio that includes dual-stream conflicts and intakes. In our financial services verticals, firms continue to choose our purpose-built solutions for their industry-specific capabilities. Here are some examples. A leading bulge bracket investment bank chose to replace a homegrown system with deals filed for AI-enabled client coverage and deal execution that are attuned to the complexities of a multinational bank with complex clients. A mid-market PE firm moved from its legacy horizontal CRM to deal cloud with Intap Assist, as part of its AI first approach to deal origination, deal sourcing, and business development. Compass Capital chose DealCloud for AI-driven marketing, deal origination, and relationship management capabilities. The firm is replacing disparate legacy systems with a unified solution designed for PE workflows. And the global investor and manager focused on real assets, focused on Deals Cloud for its ability to improve investment process efficiency and manage complex transactions. In conclusion, we're proud of our strong performance in our first quarter and we're optimistic about our continued growth opportunities. As our Q1 performance has shown, we continue to grow by adding new capabilities to our platform and increasing our global and enterprise go-to-market reach. We see continued opportunity both to add new clients across a broad TAM and to deliver greater value by expanding within our existing client base. We're serving a durable end market with our subscription revenue model, industry-specific cloud platform, and applied AI and compliance capabilities. we have a great growth opportunity to drive AI, cloud adoption, and modernization across all the industries we serve. As always, I'd like to thank our clients, our partners, our investors, our board, and our global Intac team for their teamwork and dedication. Thank you all very much. Okay, David, over to you.

Thank you, John, and thanks to everyone for joining us today. I'm pleased to report a solid start to fiscal 2026 with our first quarter performance. These results underscore the opportunity ahead as we prudently invest and execute against key market tailwinds, digitalization, cloud forward adoption, and compliance-driven demand. Our Q1 execution reflects these dynamics and reinforces our confidence in driving sustained profitable growth this fiscal year and beyond. Cloud annual recurring revenue surpassed $400 million in Q1, a 30% year-over-year increase as we expanded enterprise wallet share across our vertical markets. We excelled on both upsell and cross-sell activity this quarter while continuing to transition client spend to the cloud. We're also seeing strong progress in executing our vertical applied AI strategy with absolute growth in AI skew ACD dollars and attach rates, while maintaining discipline in our operating model, proving that efficiency and leverage are tenable. Let's begin with our fiscal Q1 results. SAS revenue was $97.5 million, up 27% year-over-year, driven by new client acquisitions, contract expansions, and ongoing migrations from on-premise products to the cloud. Cloud's positive mix progression continued, with SAS now contributing 70% of total revenue, up more than five points year-over-year. License revenue totaled $29.29 million, up 2% year-over-year. The on-premise portion of our business continued to migrate toward cloud offerings, while legal client growth remained steady and in line with firm expansion. Professional services revenue was $12.3 million. down 8% year-to-year. Our partner ecosystem continues to help us prioritize long-term cloud growth by focusing on co-sell execution, client satisfaction, and efficient implementation practices. Total revenue was $139 million, up 17% year-over-year, driven primarily by strong demand for cloud solutions. Turning to our capital allocation, as announced in August, our board authorized a $150 million share repurchase program. During the first quarter, we repurchased $50 million, or approximately 1.1 million shares, reflecting our confidence and long-term value of the business while maintaining a strong balance sheet. Our partner ecosystem continues to deepen its role in the go-to-market execution and client delivery. Partners are facilitating complex deals, opening new geographic opportunities, accelerating value realization and promoting platform adoption and retention. Our FY26 sales kickoff included a dedicated in-person partner track for the first time, a reflection of the expanding network opportunity. Year-over-year, co-seller growth in Q1 was strong, and we feel well-positioned for even greater partner-driven contribution in FY26 and beyond. As we continue to focus on margins and operational efficiency, Q1 non-GAAP gross margin was 77.7% up from 76.3% a year ago, reflecting continued mix shift in cloud efficiency gains. Non-GAAP operating expenses were $87.1 million compared to $75.6 million in the prior year period, largely reflecting go-to-market spend related to sales kickoff and targeting marketing initiatives as we entered the fiscal year, as well as ongoing investments in our product-led growth strategy. Non-GAAP operating income was $20.9 million, up from $15.1 million in Q1 of last year. Non-GAAP diluted EPS was $0.24, compared to $0.21 in the prior year period. Free cash flow was $13.2 million for the quarter, defined as cash flow from operations less capital expenditures. Our cash-to-cash equivalence balance at the end of the quarter was $273.4 million, reflecting our $50 million share repurchase. Turning to our key metrics, cloud ARR increased 30% year-over-year, while total ARR grew 21% over the same period. Total remaining performance obligations, RPO, was $715.2 million, up 30% year-over-year. Our increasingly enterprise-focused go-to-market motion showed continued progress in Q1, yielding a quarter-end 813 clients with ARR of at least 100,000, up from 707 in the previous year. Our 100K plus ARR clients now comprise approximately 30% of our total clients of 2,750. Our cloud net revenue retention rate was 121% in the first quarter, demonstrating continued strong retention and strong upsell and cross-sell expansion among existing cloud clients. Now turning to our outlook, for the second quarter of fiscal 2026, we expect staff revenue between 100 and 101 million. Total revenue in the range of 137.6.

Clients, you know, as you've kind of started on the journey, have you seen any changes in behavioral around that where they're consuming maybe more, maybe less, or... you know, shifts in terms of how you're charging just to, you know, based on any behavioral changes from your client perspective and the numbers. I don't suggest that at all. If anything, it seems they get better, but just anything to help us, you know, kind of answer that question that we've gotten from our clients.

Thanks, Kevin. This is John. So... We're big believers in what this generation of AI is going to bring to this end market. There's an incredible opportunity for these firms who are very knowledge oriented in the way that they create value, either as investors or as advisors. And so we're putting a huge program behind extending our traditional machine learning generation AI with this GenAI generation technology. We have a lot of expertise in the business to continue to do that, and you've seen a series of announcements from us over the past 18, 24 months of a sequential expansion of the GenAI generation throughout the platform at the time of release, which has been very well received. It's interesting to get the feedback from the clients. A lot of them are trying a lot of the different tools. We had an advisory board with our COOs and one of the leaders told me that she had nine different AI startup tools that they were trying. So that into the workflows, we call it vertical AI, and really differentiate from a lot of the more general horizontal systems that are being offered out there from some of the larger companies, but also in the integrated workflow that differentiates from some of the smaller companies that are working on more of a point solution approach. And that's been very positively received from our advisory boards and our early adopters. I gave some examples of how our adoption is working. And this is historically how we have grown the company. We've had many years working with these firms. and the advisory board system that helped build the company as a bootstrap business. And we're doing the same thing with this Gen AI generation. So it's a very deliberate strategy to look for the key value propositions that will enable us to roll Gen AI out and monetize it. your question about charging. We have said that we have in our contracts the ability to meter in different ways. We already have revenue that comes both from a per user basis and from a firm size basis. And we are working with some of the early adopters on some other models that we'll hear more about as this year rolls on. But I think there's a real opportunity And the firms are pretty excited to pay for it, given some of the ROI that we can show. So we're optimistic about how this goes.

Makes a lot of sense. Thank you.

Our next question comes from the line of Alexey Gogolev with J.P. Morgan. Your line is open.

Thank you. Hi, John. Hi, Dave. Hello. That's the internal enterprise sales build-out for the T&T Group.

Thank you, Alexi. I think it is the combination of several of those trends. So there's definitely a set of trends in each of the industries that is helping us at the enterprise level. As I mentioned, the law firms have a consolidation trend going on. In the accounting industry, there is a trend where the private equity firms are coming in and investing. in the mid-sized accounting firms and basically rolling them up. So they're becoming more enterprise class pretty quickly. And they have a strong technology need and, in particular, a strong compliance need because now you have, for the first time, private equity owners of these professional firms. So the compliance issues are very meaningful there. So that's helping us. There are a couple of regulatory things that are happening. I mentioned on an earlier call what's happening in places like Australia with some of the AML regulations. And then the private equity industry is continuing its secular growth. So the firms are getting bigger. They're raising larger funds. And they're taking a transformation trend that you all have studied in a lot of the other markets for a long time. It was slower to come to this market. And we're benefiting from the fact that these firms are really committed now to getting to the cloud, particularly after COVID. And you hear us give examples of that accelerating. So we're excited about that for us. And then finally, this AI conversation that we just talked about is definitely exciting. causing people to take a new look at their IT portfolio and how are they going to position themselves to make sure they compete in this era when AI is going to play a meaningful role in the operation of the firms. So there are several overall drivers, I think, that are supporting that NRR and ARR growth.

Considering the strong dynamic for ARR, do you feel like the guidance that you've given is somewhat conservative? It looks like you've raised four-year outlook by less than the Q1 beat. Can you maybe elaborate on that?

We're always going to show a series of prudence here as we exit not only this year, but then going into next year. So that's one.

Two, we're definitely cloud focused. Thank you.

Next question comes from the line of Parker Lane with TFL. Caroline, he's open.

Hey, guys. Thanks for taking the question. John, clearly showing a lot of progress here in the percentage of business from a cloud, from an ARR perspective. For those holdouts that you're seeing today with the amount of innovation you're delivering from an AI perspective, what are the common reasons that people are continuing to stick on-premise? And do you think AI is becoming that tipping point that can perhaps accelerate their decision-making to move to cloud more quickly? Thanks, Parker. I do think The trend is strong and accelerating because a lot of the traditional impediments that held back this industry have kind of been tackled. There were some regulatory requirements that people needed, but a lot of the capabilities of our partner, Microsoft, now to meet the different hosting requirements in each of the jurisdictions have been solved. Most of the firms that we serve, certainly the enterprise class firms, are operating in more than one regulatory jurisdiction. So that was an important part. I think the Microsoft partnership overall has really helped us in that regard at the larger end of the market. I think now AI has absolutely captured the attention of the firms, but they really have a lot of importance to each of them. to a regulatory point of view around how do you manage MMPI inside these large firms and make sure that it doesn't get accidentally shared, overshared inside the firm. And then how do you make sure that the firm's intellectual property, its history of knowledge and experience, which is really what forms the basis of these firms' ability to compete and differentiate themselves, how do you make sure that that is something that you can manage and use for the firm's needs? proprietary advantage going forward. These are all key issues for these firms as they look at a lot of these solutions. And we've been very focused on continuing our strong position in compliance and information governance and confidentiality as the key partner to enable them to deploy AI in a trusted way to really get the value of it and in a way that's consistent with the obligations that they have from regulations, but also from their professional obligations. And that's playing well. So I think that we have a great opportunity to continue to pull people to the cloud now. The final piece is just the IT budget and projects that they're doing this year. It's become less and less of a argument against as much as a practical how do we plan for this. And so we're working with each of our clients with our account plans and our teams to make sure that we have a more moderated pace of professional services revenue growth Would you expect that trend to continue here in fiscal 2026? And given that, would the somewhat of a pressure that we saw in gross parts of professional services also come with that? Or do you expect utilization rates to sort of normalize here?

So on the margin pressure, we expect that to moderate here, you know, through the back half of the year. So plenty of planning and activity there. You know, with respect to revenue, you know, we're always playing in the trade-offs of the ecosystem as well as, you know, what gets delivered without... you know, the aspect of the customer first. And so that's always going to be, you know, relatively a tricky balance that we're trying to, you know, make game day decisions on.

And then with respect to the margins that follow. And so, yeah.

Next question comes from the line of Koji Aikido with Bank of America. Your line is open.

Yeah, hey, guys. Thanks so much for taking the questions. Maybe the first one on AI and looking at your two target verticals, the financial services and professional services. Of the two, which are more open to adopting AI tools today? And for the other one that maybe is less open, what do you think is the catalyst or trigger within this specific vertical category? to drive more AI adoption?

Thanks, Koji. The market generally is super excited about the AI opportunity, particularly because so much of what these folks do is in the style of research. And a lot of the first tools that have come out have helped people to look into the outside world and research what's available on the internet and take a point of view on that. It's very familiar to a lot of the work that a lot of the folks inside these organizations do. So there's a lot of enthusiasm for what it can do to help them. As they try to bring those experiences and integrate them into the overall management workflows of the firm, They're needing to integrate more and more with the purposes of the firm, with the financial management, operational management requirements of the firm. And I think this is what's pulling us in at the top of the leadership group to say, how can we help them orchestrate the role of AI across the various activities that people are trying inside the firm and do so in a compliant way and in a governed way? You know, we make this distinction, which is kind of a classic distinction between the practice of law and the business of law. Historically, Intac has been very much helping the firms as a whole orchestrate their business. And so that sort of angle inside that firm is. An analogous case, though, on the financial services side, where firms are really focused on the process of sourcing and origination of business, which is completely analogous to what we're doing in professional services. So I think rather than contrast the two, I would say it's more about the vertical AI solutions, the category solutions, and how are the firms going to think about AI overall as a program of improving productivity in a compliant way for all of the players inside the organization. That's our focus.

Got it. Now, that's super helpful. And a follow-up here for David. I focus a lot, we focus a lot on ARR and great to see the acceleration there. But I can't help look at my model and notice billings. You're just looking at kind of mid-high teens growth in total billings, but also a lot of volatility in that quarterly billings, the calculated billings metrics. Maybe help us understand some of the puts and takes there and

Is there the potential for buildings to start to smooth out here through some of these licenses, which you get half up front at times with ASC 606?

And so as those things transition, so too will the noise. You also have to, just with respect to Q1 of 26, if you look at the DPRs, right, going from the deferred revenue of almost an all-time high, or actually an all-time high in Q4 of 25, coming down to Q1 of 26, you know, 259 down to 239. But then if you look at that year-over-year, you know, the 239 up over the 205. I mean, you are seeing pure growth within that number. And so we think it's on the right trajectory. Thank you.

Next question comes from the line of Terry Tillman with Truist. Your line is open.

Hi, this is Dominique Lansala on for Terry. Thanks for taking my question. So considering Cisco Q2 and Q4 tend to be the stronger AR quarters with the high fiscal cycles and the renewal base, as your mix shifts more into enterprise with the new enterprise sales group, do you expect that seasonality to intensify or maybe flatten a bit as you deal with how this grows?

I was trying to get my phone off mute.

No, we view the same seasonal patterns with both of our, you know, whether it be mid-market or enterprise, it just lands naturally with our end clients year-end.

And so where you see some of the incremental could be, you know,

to a lot of these larger enterprise accounts, but now we're just doing it more formally. And so, yeah, we'll continue to maintain that asymptote.

Got it. And then just as a follow-up, now that Intel has surpassed $500 million in revenues, entering this next phase of evolution, looking toward the billion-dollar revenue narrative, what are the one or two most important execution levers that kind of move the company toward that next major scale milestone? I guess I'm thinking maybe deeper product attach, quicker partner leverage, or maybe continued vertical expansion.

Yeah, so we have a couple ways to win here. On one hand, we have enough clients today. We talked about this a little bit on our investor day, that if we just sold through a percentage of what we have on offer today, we could get the company to a billion dollars and much more. And alternatively, it's a large underserved TAM and we're landing new clients each quarter and each year. Very interesting because it's 3% of the global economy and has traditionally been overlooked by the horizontal players. So the vertical strategy is, across the technology generation has been a key angle for us and a lot of the capabilities that we've developed, like the compliance might transcend each of the technology generations. And now we're doing it with vertical AI. So I think there's a great opportunity for us to grow to that number. I think some of the execution levers include the continued success of our clients and the cross-sell and the up-sell. continued landing of new clients based on our strong reputation and continued innovation it's a huge opportunity it's historically for us been very client driven we're a bootstrapped company we have an advisory board systems people help us understand what it is that if we build for them, they will pay for. And that relationship goes back 15 to 20 years in some firms. They really do trust us to be the people to bring them to the AI generation.

So executing on that, continuing that, themselves to really bring the expertise.

It's a unique group that we've assembled that really understands how to bring this next generation of technology to this specialized market. So those are some of the key points.

Great. Thank you. Next question comes from the line of Alex Klar with Raymond James. Your line is open.

Great, thank you.

John, on the international opportunities and the commentary around expanding global reach, you've got the partner in Microsoft globally. What's the opportunity to see internationally broadly versus what's been a string of really strong quarters in the U.S.? And maybe for Dave. How much investment do you think is needed either from a product standpoint or going to the market side, given some of the partners you already have in place for that opportunity?

Thanks. Thanks, Alex.

About 30%. So a third of our business has been international historically. That has been a growing footprint around the world. We have a strong business in the UK, obviously, Australia, New Zealand, where we started, Canada, where we started. But increasingly, a good footprint in kind of a lot recently, we opened a Singapore office last year. The team there, I just visited them this past quarter. Fantastic group of people that have brought on some incredible clients. A huge opportunity there. I mentioned in our partner ecosystem, we've added more and more partners that help us reach into parts of the world that we haven't. set ourselves up yet. The one we talked about here was a group that's helping us

Yeah, and then with respect to the incremental investment, Alex, it's been pretty nominal thus far. We don't need to get into things as localization or any arduous local statutorys from where a lot of our clients serve. And so it's just a matter of... If anything, just the opportunity cost of us, you know, addressing so many respective opportunities with our SAM and TAM. So it's just a matter of pacing and planning.

Okay, great color. Maybe just following up in terms of direct sales hiring, you talked about some of the partner opportunities, but you talked about putting more wood behind the fire this year after some of the structural changes last year. Can you just help frame like the magnitude of hiring plans this year versus maybe what you did last year? Where are those sales resources going and then any color on kind of timing of the hiring plans this year? Sure, we are focused on growing the enterprise group that we, and that's the beginning of 25, the organization there that's really against some of these really vast institutions. We are adding some capacity. continuing to do that during fiscal 25, I'm sorry, during fiscal 26 leading into fiscal 27. So there's still an opportunity for us to continue to grow that footprint. We think that there is a large enterprise class set of firms. And as I mentioned earlier in the call, they themselves are scaling. through M&A or through hiring or in a very leveraged way through growth of revenue or assets under management. And there's a real opportunity for us to be the strategic, vertical, specific, compliant, AI generation technology partner for these growing enterprise class firms. So you're just going to hear more and more about what we're doing in that direction.

Okay, great. Thank you both.

Next question comes from the line of Steve Anders with Citi. Your line is open.

Okay, great. Thanks for... I'm just taking the questions here.

I want to ask on the Microsoft partnership and the large deal contribution, but I guess with Microsoft, maybe how are the deals that are coming through that partnership, how are they different? Are they creating or unearthing newer opportunities that You weren't in before. Are they bigger? Are they coming in faster? How do we kind of think about how Microsoft maybe changed the market?

They have a very strong relationship with IT, and a lot of the firms have committed to Azure as, if not the core pillar of their cloud strategy. We have a relationship with Microsoft on multiple levels. There's a technology relationship, strong in AI and a lot of the collaboration capabilities that we brought to market over the past couple of years. We have a strong marketing relationship where we work with them and co-present and co-market to all of the clients in the marketplace that really helps us. and then we have a co-selling relationship. There's a lot of components to that. One of them is that all of our offerings are available on the Azure Marketplace, so the firms can buy all of Intep's platform through the Azure Marketplace. That has benefits for them under their Microsoft agreement. If they have a minimum Azure service, contract, spend agreement. They can burn that down by buying Intep's software through their MAC agreement. That helps us take the budget issue off the table in our sales because they're already committed to spending X amount with the firms every year. We also are working side of the hip and a lot of these key technology areas that the firms need to integrate. And so that's helped us. And then the field, the Microsoft field gets quota relief when Intac sells its products. So we have a growing person-to-person relationship across the Intac field and the Microsoft field when calling on these accounts. To your question, sometimes we are getting leads from those sellers at Microsoft. We're very Excited about that. Sometimes we find the opportunity with our direct force, but we can call the Microsoft seller and they will come in and endorse us and co-sell with us. So it works in both directions. But overall, it's become a very collaborative process and we're very excited about the influence that that's having on the funnel in terms of size and speed and deal size and win rate. It's great.

Okay, that's great to hear. Maybe just follow up just in terms of, you know, I guess margin. I mean, good to see the operating margin beat this quarter, but it doesn't look like it's, you know, not much is falling through to the full year guide. Do you ever think there are, like, factors that are being included in there with some investments maybe getting pushed out this year?

We're continuing to invest in, you know, respectfully our product innovation and go-to-market. We had a really good, strong FQ4.

We articulated that we were going to be a little bit front-end loaded with some specific markets.

Next question comes from the line of Sackett Caldia with Barclays. Your line is open.

Okay, great. Hey guys, thanks for taking my questions and putting me in here. David, maybe for you, great to see the growth in CloudNet New ARR. Can you just talk about how much the on-prem conversions are maybe contributing to that? And from the conversions that you have seen, what's the typical uplift that you've been getting on those?

Yeah, so we're seeing about a 20 to 30% uplift just through more seats and or the opportunities to continue to cross out. So once we get that moved over and. contract compliance and all of that other dynamics settle in. And obviously we're delivering, you know, true value for that as well, because they are getting an inherent different code set that offers a lot more public attribute. So that's one. On the respectful cloud net AR from this past quarter, You know, I think we're going to start seeing more as we continue on through this year. John talked about our time being here for the last two quarters, so we'll see a little bit of an acceleration there. You know, it is a heavy – well, I should say it's a subcomponent of some of our respective sales teams. to continue to move in that direction. And so we're really enticing the whole market to move in that direction.

Got it.

Actually, that's a great segue into my follow-up for you, John.

Progress in the time component of our platform has been awesome. There's a lot of enthusiasm. This is one of the areas, you know, as we've mentioned on the previous calls, most of our on-prem business is illegal because that's where the company started and that's when... we were still doing some on-prem offerings with them. So that's really the focus of this migration program and time is a key part of that. So we're really excited to see the progress in time. This year, we've also kicked off a parallel project for all of the compliance capabilities that exist still on-prem in some parts of the legal market. So we've learned a lot of great stuff about how to get folks there successfully and really what are the AI capabilities that will get them to make the move and what style of ROI and what style of licensing and how do you get the upsell. All those lessons we've kind of developed And we're bringing that to the compliance thing in time because there's so much opportunity in AI of various capabilities, generative AI, agentic AI. There's a lot of opportunity to bring real value to some of these core processes in our traditional compliance business, which is really a stronghold of the company and is so important

Thanks.

And our last question comes from the line of Brian Schwartz with Oppenheimer. Your line is open.

Hi, this is Camden Levy sitting in for Brian Schwartz. Thank you for taking our question. If you think about the cloud NRR of 121% and the customer expansion motion that you guys are seeing, have you seen the of the growth algorithm that's coming from product versus the growth versus pricing change over the last couple of quarters. And from your perspective in F1Q, did any one or two products outperform the plan, maybe outside of core deal cloud or in Texas that were big drivers of the fast speed? Thank you.

Hi. Yeah, just circling back and I think even intimating on the first question we had, if you think about the NRR, probably the biggest change over the last three to four quarters with our enterprise motion has definitely been the cross-sell motion.

We've always been doing very well on the upsell one to note on that.

Thank you. And then maybe just from a product perspective in F1Q, did anything dramatically outperform the plan or were larger drivers of the software? Thank you for taking our questions.

You know, we've had good uptake across the board, the generic features in the cloud have been pulling the platform. And as we've brought the capabilities out, obviously it's been a sequence over time. So we have more out there with deal cloud, which was the first one that we launched, but we are very excited about the uptake around assist for terms and this new time horizon release with GenAI. So there's a sequence there. So you can see the pattern is pretty consistent with that. As we get more people up and the references run, we get more and more folks excited about doing it. And you'll continue to see that roll through the platform as we bring out more capabilities. Really looking forward to continuing this year. There's a lot of good progress happening, as you can see in the results. So we appreciate your time, and we're looking forward to talking to you again next quarter.

Ladies and gentlemen, that concludes today's call. Thank you all for joining, and you may now disconnect.