Navan Inc Class A Aktie

Welcome to Navan Inc.'s First Quarter Fiscal 2027 Earnings Call. [Operator Instructions] As a reminder, today's program is being recorded.

And now I'd like to introduce your host for today's program, Aurelien Nolf, Chief Financial Officer. Please go ahead, sir.

Thank you, operator. Good afternoon, everyone, and welcome to Navan's First Quarter Fiscal 2027 Earnings Conference Call. With me today on the call are Ariel Cohen, our Chief Executive Officer and Co-Founder; and Michael Sindicich, our President. Ryan could not join us today, so I will get us started with our safe harbor statement.

During the course of today's call, we may make forward-looking statements within the meaning of federal securities laws. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially, including the risks and uncertainties described in our earnings press release, our annual report on Form 10-K filed with the SEC on April 2, 2026, and our other filings with the SEC.

In addition, on today's call, we will refer to non-GAAP income and loss from operations, non-GAAP operating margin, non-GAAP gross margin and free cash flow, which are non-GAAP financial measures that provide useful information for investors. Reconciliations of these non-GAAP financial measures to their corresponding GAAP financial measures to the extent reasonably available can be found in our earnings press release. As a reminder, we published detailed prepared remarks on our IR website, so you can read them out there.

So with that behind us, it's my pleasure to turn the call over to Navan CEO and Co-Founder, Ariel Cohen.

Welcome, everyone, and thank you for joining us today. I really hope that you had the opportunity to review our prepared remarks. This was an amazing quarter for us across the board. As you can see in our results, we delivered on every business metric. But more importantly, we continue to innovate, continue to execute our vision of defining the future of travel.

The second thing that I want to highlight is our go-to-market across the board, on every segment, on every activity we overdelivered. And lastly, I'm going to talk about our AI leadership and our platform. And the most important thing, we are doing all of this. We are winning while innovating and the entire team is having fun while doing so.

So first, I will talk about our go-to-market. So we accelerated our go-to-market, both in our sales-led growth motion and in our product-led growth motion. We've done an exceptional quarter in every geography, in every industry and in every company size. And this is a continued momentum that has been around in Navan for quite some time. In addition, as we've discussed in the past, we are now using our strong balance sheet to accelerate our travel payments business. The attachment rates in this business have been growing, including on every customer base. And this actually emphasizes how strong the value of the integrated platform. Our goal there is to be the best partner for our customers when it comes to travel and to travel payments, and now we can actually do that.

In addition to this, there is another thing that drove us forward, and this is really the consolidation in the market. As you know, and you can see -- read through the news, a lot of our competitors are consolidating, changing their position, which actually drives our -- all of the customers out there to reevaluate their solutions to include us in a lot of RFPs. We reported it in the past that we see a massive growth in the RFPs and eventually, to actually move to Navan. They are seeking to a better performance from the system and to get an integrated solution that covers their entire travel payment and expense needs.

And the last thing that drives our go-to-market is actually AI. Every company right now, every serious enterprise, every serious company in the world is having an AI initiative. This is driven from the top. It's a mandate that is coming from the C-level, usually from the CEO. And the CEO is expecting to see more and more initiative in the company. This actually means that Navan is one of the only AI vendors that is leading on an enterprise scale in the market. This makes us being included in the RFPs, and we are also winning. And we can see that more and more customers are just choosing to migrate to our platform. In the product-led growth, we also saw AI pushing us forward because it makes our marketing significantly more efficient. It actually allows us to scale faster. And because of it, we are actually accelerating our customer acquisition there while staying efficient.

Now I want to talk about our platform, our product and our leadership around AI. So first of all, I want to remind you how complex the connectivity to the travel industry and the fintech industry is. To build the global travel, fintech solution, this is super, super, super complex. And Navan is the leader in that. As you can see across the quarter, we've announced more direct connects, NDCs to many more airlines to many more hotels and many vendors that is out there. And this actually improved the customer experience on the system.

The second thing, as we've explained in the previous call, we are an agentic platform. It means that we can reuse the same capability, the same connectivity to the travel industry, the same wisdom, the same knowledge of everything that we've gathered over the years, and we can deliver it through an AI agent across our platforms and across many other platforms. The last thing I wanted to mention in the context of AI is really our platform. We are the only ones that are actually doing an orchestration between AI agents and live people, live agents. This creates the best service that is out there, the best capabilities around personalizing whatever you need as a traveler, as a CFO, as an executive assistant, as a procurement leader, as an accountant, everybody that are participating in this fairly complex travel and expense execution.

And the thing is that we are now doing it more and more using our own model. This is a Navan model that is based on millions of interactions that we've gathered over the years. And recently, we grew our usage of our own model to 30% from 20%, and this has happened in a few weeks. What it gives us, it is way more accurate, which means that actually our customers are happier. It also improves the efficiency, which means that gross margins are better, and it allows us to grow much faster with AI use cases. So using our own model allows us to do that. And the most -- probably one of the benefits that it's actually cheaper than the frontier model.

So the combination of real-time connectivity to a world that is super complex, that the infrastructure is extremely fragmented with the Navan AI technology allows us to define the future of business travel while accelerating our market penetration globally.

I want to take this opportunity in this call really to thank the Navan team. The Navan team is really focusing on innovation, execution and making sure that our customers are super successful. I also want to thank our customers, our partners, our investors that are continuing to support us in this mission to make travel amazing for every frequent traveler. And this was actually a great time to spend time with everybody in Navigate 2026, where we have the opportunity to bring everybody together and really share our vision with you. So together, we are not simply building a better travel company. We are defining the future of the travel industry.

So thank you. And with that, I will turn it over to our CFO, Aurelien, who will provide more details on our financial results and our outlook.

Many thanks, Ariel. It's great to be here. Thank you all for joining us. As Ariel just mentioned, we really had an incredible start of the year. In just 3 months here, I've been so impressed by the execution from the team, but also very impressed by the feedback that I'm receiving from our customers. I already had a chance to meet many of them, and it's really great to see all the feedback that they are providing. They really care about the products that we are providing to them and the experience. And that's obviously our top priority to make sure they are always super happy with the experience on the platform.

All right. Looking at the numbers. In Q1, gross bookings reached $3.1 billion, which was up 50% year-over-year, and revenue was $220 million, up 40% year-over-year. This acceleration in our business was driven by a super robust and resilient corporate travel environment, the ongoing strength of our PLG sales, the momentum we are seeing in our SLG sales motion as well in the past quarters and all the new customers that have been ramping on the platform during the quarter. We had a non-GAAP operating margin of 11%, which was up 900 basis points compared to Q1 of last year, another quarter of significant margin expansion.

We are driving leverage across our P&L even as we invest and deliver amazing product innovation and focus on our very strong go-to-market strategy. We also ended the year with a very strong balance sheet with $681 million in cash and short-term investments and a much improved free cash flow year-over-year, with $2 million for the last 12 months versus a free cash flow burn of $52.4 million last year. So with that, we expect this great momentum to continue for the rest of the year, and we are raising our expectations.

For the full year fiscal '27, we now expect revenue between $907 million and $913 million or a 30% growth at the midpoint. Non-GAAP operating profit will be between $76 million and $80 million, a 9% margin at the midpoint. This guidance raise reflects really our strong performance in Q1, the momentum we are seeing in our go-to-market motions today and our high confidence and visibility into continued growth and profitability through the remainder of the year. For Q2 fiscal '27 specifically, we expect revenue between $219 million and $221 million, which represents 28% growth as we head into a seasonally slightly weaker summer season. And non-GAAP operating profit should be in the range of $13.5 million to $14.5 million.

We are seeing a great momentum across the platform. And just to give you an example, global enterprises are leaning in very heavily into the upcoming World Cup in the U.S. We are seeing right now hotels and flight bookings for business travel to the U.S. World Cup host cities being up 46% year-over-year.

So in closing, fiscal '27 is off to a very fast start, and we believe we are very well positioned to continue to drive momentum in this business. We are delivering what we think is a rare combination of growth acceleration at a very large scale and operating leverage at the same time while we invest in our growth. And with that, we're going to open it for questions. I'm particularly excited this quarter that we are opening the opportunity to individual investors to ask their questions directly to the management team. And so we will keep some time at the end of this session to answer the most upvoted questions.

And with that, operator, we are ready for the questions.

[Operator Instructions] Our first question comes from the line of Chris Quintero from Morgan Stanley.

Congrats on a really solid quarter. I wanted to ask about cognition and what you've built here with this orchestration layer. Clearly, it seems like there's some special sauce in there. And so I'm curious like how you thought about potentially selling that to other players in this space, given all the investments you've made into that layer to ultimately help your business?

Yes. That's a really good question. Thank you. This is Ariel, by the way. So first of all, I think that from an AI perspective, the idea of combining what people can contribute, which is a certain type of wisdom, intuition, experience that we all have, judgment, all of these things are super, super important and only people can provide it. Now AI agents can do a lot of things and very effectively. We are coming out of the quarter with a lot of storms, TSA interruptions, war in the Middle East, all of these things can create a lot of calls, a lot of interaction with our support, with our travel agency. So you can actually ending up waiting for hours when you are calling us.

What we've done with Cognition, we perfectly orchestrated when a human needs to speak with you and when an AI agent needs to speak with you. And sometimes it is a combination of both, and you would not even know you can talk with an AI agent and a human will intervene in the background and we will do something. So we realize that the best way to serve our customers on something that is very complex business travel, complex travel, frequent travel is very complex. When you are going to a business trip, when the entire New York area is getting shut down for a storm, the ability to combine the 2 perfectly is really the Navan secret sauce, and that's why we are growing so fast. This is why our NPS is at 45. This is why CSAT is at 97% (sic) [ 96% ] . This is the reason for that.

Now to your question, so can we take this technology further and provide it to others? This is really what Navan Anywhere is all about. We've announced yesterday an integration to Google Gemini. I'm actually very excited. I've been using it, the ability to chat with Gemini and actually book a trip, support myself, combining it in a discussion is so powerful. And as of now, all of Navan customers that are using Google Gemini for enterprise can actually book Navan from our app. They can use Gemini. They can basically use us from the -- anywhere that they want to. So this is the first integration. This is the first time that we are doing it, but many more will come, and this is really using the Cognition platform behind the scenes.

And our next question comes from the line of Jeremy Sahler from Jefferies.

This is Jeremy on for Samad Samana. As we think about the transition of customers from the legacy Reed & Mackay platform on to Navan, how should we think about, I guess, both the margin expansion and the yield pressure that you called out, how much of that is already being realized in the quarter? And I guess maybe you can give an update on what you're seeing in terms of customer retention and maybe the time frame for the customers will be -- the transition will be fully complete?

Jeremy, this is Aurelien. Your line was cutting a little bit, but I think your question is about the Reed & Mackay customer transition and the impact on our gross margin. So what I can tell you is we are -- this transition is all about what our customers want us to do, right? They are craving for the great platform we've been developing on Navan. And so we -- this is a process that's going to happen in the next couple of years. So not something that had a meaningful impact to our gross margin expansion in the first quarter. This is going to happen over probably the next couple of years.

But we -- I can tell you that we already migrated some customers in the first quarter, and this is going pretty well. One of them even upsell, and we've been able to upsell and expand their usage of the platform to more products. So we are very excited about that. And I think if I -- longer term, you're absolutely right, Reed & Mackay, just because they have a lot of human agents that is providing support and basic needs to our customers has a lower gross margin profile. So this is absolutely going to contribute and be a tailwind down the road.

And our next question comes from the line of Noah Naparst from Goldman Sachs.

On the point of go-to-market and sales productivity, we're curious what levers you can pull to keep the pipeline high. I mean the RFP stats that you've been disclosing with these triple-digit growth rates, we're wondering how do we interpret those in the context of GBV?

Yes. This is Michael Sindicich. Thanks for the question. So first of all, a couple of ways. So we did announce that our RFP volume was up more than 200% year-over-year again for Q1. So we're really excited to see that momentum continues to be drawn to us. I mean I would say we've built a killer go-to-market engine, and I've been here for 10 years. It really starts to feel like more and more customers are actually running to us versus us needing to spend a lot of time pushing. And I think that will continue to grow, right?

So we want to deliver time savings, money savings. And more and more these days, people realize that they need to deliver good user and support experiences to their employees who travel and generate revenues for the company. And to what Ariel said earlier, I think we're one of the few companies, especially at an enterprise grade and scale that can actually demonstrate real AI use cases that the second you launch us, you start seeing.

So you see savings, you see booking times less than 7 minutes compared to 45. And that level of support that's available 24/7, 365 in a bunch of different languages around the world to help you with your travel and your expenses. So I think that message is landing really, really well. And as long as we can continue to build a great product to have happy customers that keep singing our praises, we hope to see continued acceleration in our go-to-market.

And what I would add to that from a gross bookings perspective, just as a reminder, as I unpack how things are working with customer on the SLG motion, we usually need a couple of months after we sign a deal to see the first bookings flowing through the platform and then a few months before the customers are fully ramped. So what gives us a lot of confidence in our go-forward outlook is exactly that, like everything that Michael and his team are selling now, we're going to see the bookings impact on the platform down the road.

So we are doing a much better job. We are accelerating and reducing that lag between the contract signature and the ramp. That's part of the reason why we overperformed in Q1, like we are being pretty effective there, but it's still a lag. And so this is great because this is what's going to fuel the growth going forward.

And our next question comes from the line of Patrick Walravens from Citizens.

Great. And as you can hear from the background noise, I've been using your app on this trip. So look, my experience is just that this is such a superior experience as a business traveler than Concur and American Express Global Travel. What is -- I don't understand why every Global 2000 company isn't using it, and you'll get there. But Michael, I guess, what are the things that block you? Like it's a no-brainer in terms of the solution. What makes it hard to convert a big Fortune 500 company to Navan?

Pat, we're hiring on the sales team -- before. So I'm just kidding. But really, thank you. Thank you so much for using our product and singing our praisers. And I absolutely love, love, love the question. That same confidence that you have as an end user is what we bring into our sales. And it's I guess a couple of the stats that we talk about. So we now have 45 of the Fortune 500. It's up from, I believe, 28 a year ago. So we see us getting into more and more bigger deals and winning RFPs. And these RFPs, by the way, take a long time, right? You need to build a relationship. You need to answer the questions, you need to talk through all the change management and the global scoping.

But I think we see good acceleration into closing larger and larger big customers. We do conferences like Navigate and customer advisory boards where we really understand our customers, and we work with them to build the best solutions possible and they go sing our praises with our prospects. So we love that acceleration in that flywheel. And I think in general, it just takes time. Like if you sign an RFP or if you sign a contract for a couple of years, we can't get every customer to do an RFP immediately, though we try. And then those cycles take quite a while. And then you also have to talk about the change management and the implementation.

So I agree with you. We think that we should take more market share. We think that we should take it faster, and we think we're ready to scale further and further upmarket. And hopefully, this more than 200% increase in the RFPs, we can actually convert them and win more. And we see our ASPs and our win rates increasing year-over-year. So we see great signs, and we're excited. But there's no -- unfortunately, no magic wand to just rip out and replace really quickly. It takes work and justification and proof points and joint evaluation plans as we usher people through the sale.

What I would add to that is the incredible momentum in our PLG business as well, right, which is directly addressing the unmanaged part of the business. And we grew revenue -- we doubled the revenue in Q1 again year-over-year. So very, very good momentum there. And what's awesome is the go-to-market, like the lag between the moment when we start interacting with the customer and when they start booking is very, very short. And so it's a different kind of customers, but that's also -- we also see our share growing there. So that's very exciting.

And maybe one stat to add, sorry, but the companies you mentioned around Amex, we actually saw in Q1, 38% of our customer wins came from their cohort of companies. And so we do see ourselves accelerating further upmarket and taking market share from more of the legacy enterprise players.

And our next question comes from the line of [ George Konateala ] from Citi.

I'm on for Steve Enders. I wanted to ask about the revenue guidance raise for the full year, a really impressive increase there. Maybe you could just unpack the drivers and assumptions. I think you called out 3 points of the tailwind to GBV in the quarter from price inflation -- travel price inflation. Is that about similar to what's baked into the guide here? Just any help in unpacking some of the changes in the assumptions?

Yes. Thank you, George, for the question. So we are obviously very, very excited about the momentum we're seeing in the business, right? And that's what informed directly our guidance going to 30% from 24% year-over-year growth previously. The reason is it's -- there's like many reasons to it. The first one is, obviously, Q1 performance was really great. We saw a lot of activity on the platform from existing customers, but also from those new customers that have been ramping pretty fast with us. So great execution there.

On top of that, we see the demand being very resilient, right? Like the demand has been really high. People are traveling, companies are really -- people are leveraging business travel to generate revenue for their own business by meeting with their customers, by making sure their teams have in-person interactions. And so we believe this trend is going to continue for the remainder of the year.

And then to address your question directly on inflation. So we wanted to disclose the impact of inflation on our bookings, not on our revenue in Q1, and that was 3% out of the 50% year-over-year growth. So I would say it's meaningful, but obviously a small part of the reason why we are growing that fast. We are prudent. It's very hard to forecast inflation. A lot of this inflation is coming from jet fuel cost and things like that.

And so that's obviously very uncertain. We see prices being fairly stable in Q2 versus where they were at the end of the first quarter. And then beyond that, we assume some stability there. But we will keep you updated on the way as we see new data. But for now, this is what is included in our 30% year-over-year revenue guidance.

I will add one thing to this that gives me actually a lot of confidence, which this Q1 was very unique. For me, it was the first time that I've seen so much travel disruption. I kind of talked about it earlier, but there was a major TSA shutdown. There were pretty big storms in the eastern part of the U.S. There are some airline strikes in Europe. Dubai is a huge hub. And obviously, [indiscernible] over there. So we really saw how much business travel is important for our customers.

We didn't see any spike of cancellation. We did see some people changing the day of the trip, which, by the way, this is again where AI and Ava, our chatbot are so important because if I can change my trip easily, I can actually very easily book another trip. So I'm maintaining the trips on the system. So seeing a quarter like this with so many interruptions and obviously providing this result gave us a lot of confidence regarding our guidance.

Excellent. That's excellent color. I also wanted to follow up on the calculated yield number came down a little bit. I know in the past, that had been primarily driven by product mix. Just any commentary on what drove it in the quarter and how we should think about modeling that into -- through the rest of the year?

Yes. So the yield is a direct output of everything we just discussed, right, which is the fact that our strategy is to aggressively gain share in this huge addressable market. And I think the pace of our bookings growth in Q1 is demonstrating that we are very successful there. So that's -- the higher the mix of enterprise customer in our mix of revenue, that impacts the yield. But there's no changes within the different cohorts of customers or the different segments of customers, and we are not growing by giving more discounts or anything like that. This is, again, just a mix play.

Why do we love that to happen to us? And why do we love that strategy is because our enterprise customers are larger. They are very sticky customers, and they give us the opportunity to, over time, upsell and attach more products as well. So really, you should expect us to keep being very focused on growing our share over there.

So that said, I shared some color commentary earlier this year about where we think yield is going to go. I'm not expecting any significant changes to what we've shared in the past. But the yield is very complex and is an output of many, many different puts and takes. And I can give you a couple of examples of what will impact the yield one way or the other, right? So first of all, our enterprise business, if we keep accelerating the momentum there, we could see some yield shift as well, again, I mean, more or less depending on the -- how fast we ramp those new customers.

I would also mention our payment business. You've seen very, very strong payment volume growth in Q1, up 29% year-over-year. So clearly an acceleration versus what we've seen in the past. And here, we are also paying with rebates that we can give to our customers. So depending on how we construct our commercial relationship with our customers, there could be an impact on yield as well, up or down. And then lastly, I would mention the Reed & Mackay customers migration and the pace of that migration will have an impact on yield, but also will be very beneficial for our gross margin.

So in summary, we are very, very pleased with what we are seeing right now, very fast market share gains. That has an impact on yield. But overall, what we are doing as a management team and as a company is clearly driving a bigger, stronger and a more profitable business model over time.

And our next question comes from the line of Siti Panigrahi from Mizuho.

This is Chad Tevebaugh on here for Siti. I wanted to talk about sort of the operating margin raise for the full year, really strong now at 9%. I guess taking a step back, given the really strong top line momentum that you guys have seen over the last few quarters, how are you thinking about the balance of sort of ramping OpEx investments more aggressively to capture this demand that you're seeing versus passing it on to the bottom line?

Yes, this is a great question. Thank you. This is actually a debate we have every week, every day, every month as a management team, right? This is very, very important because we are very focused on growing the business and making sure more and more customers can put their hands on our platform, which we see very, very good results there. And to be able to do that, we are investing, right? And we are investing. You can see that we are investing in our marketing and sales motions with very, very attractive payback, something that I really like to see and we discuss again all the time.

Having said that, we are also committed to expanding our margins, which I think we've been very successful over the last couple of years at demonstrating that we have this ability, which I think is pretty unique to grow the business very fast, but at the same time, being very, very disciplined. So the way we are achieving that is we look at our OpEx envelope and then we allocate our resources wherever it makes sense. And so we are seeing efficiencies in our research and development costs that a lot of that is driven by AI and our team being very, very efficient at releasing new products. You've seen the velocity of the new product release increase significantly.

So we're very, very proud of that, and we are generating efficiencies there, which is also the case on G&A where we are very, very disciplined. So I'm very, very excited to be able to expand margin, raise our guidance for operating margin going forward. But also, we are very focused on our #1 goal, which is to keep gaining share and grow this business very, very fast. So very pleased to be able to achieve both at the same time.

And our next question comes from the line of Jed Kelly from Oppenheimer.

I guess I'll ask a more travel-focused one. It seems like you're having good momentum with NDC, announced a partnership with SAS, and it seems like it's going well. So just how should we think about NDC? And then just further, if I kind of look at your growth and where you are, it seems like in the last 10 years, it's you and Airbnb are the 2 most successful new travel companies over the last decade. So how should we think about Navan potentially expanding into other travel verticals, potentially leisure?

Yes. Thank you for this question. So first of all, the way that we look at every decision that it comes to the actual product and service, we always, always, always start with the customer. We are always asking what is the best thing for our customers. And the reason that the Navan platform is connecting really to everything through everything. So it means to everything, it means every airline, low-cost airlines, regular airlines, every hotel, every hotel chain, every aggregator that is out there, every GDS that is out there, and we are doing it globally.

The reason that we are doing it is that we know that our travelers, the EA, everybody that are using the system want to make sure that they can trust this system. On the Navan system, you don't have this thing that you will search a Navan and then you will Google it and you'll find something cheaper outside. It's actually the opposite. So it is very, very important for us to make sure that we are connected to everything. NDC connecting directly to airlines is something that allows us to make sure that we have the right prices in the system, but also it allows us to merchandise. It allows us to sometimes combine your Wi-Fi and your cloud access and your flight, obviously, in the time of booking.

And this is unique to Navan. It allows us to have information that usually you don't get on a platform that they book your trip such as are you likely to have a flight delay and information like that. So it is a very powerful technology, but our approach is to just connect to everything that provide really good services for our customers. Now when you provide this infrastructure with everything that I've mentioned earlier about AI, you are creating something really, really powerful for our customers.

And our next question comes from the line of Jared Levine from TD Cowen.

To start, can you talk about some of the traction you've seen so far with Navan Edge and how that's contributing to growth so far this year?

Yes, definitely. So let me share with you what I'm focusing on and I'm looking at Navan Edge. First of all, it's actually a product on the early stages of development. So I'm really monitoring the pace of innovation. I'm monitoring if every week, this product is becoming better and better and better. By the way, everybody on this call can download the product, so you can actually try it out. And if you are looking at it, you could see that a month ago, we didn't have flights there. And now we have flights in a really very powerful way. So now you can actually use the entire use case, which includes flights, hotels, cars, restaurants, everything, events, everything that you want.

So first of all, it's the product. That's the first thing that I'm focused on. The second thing is acquisition. Are we bringing users to the system, and we see the trends there better than what we were expecting. But then comes the next thing, are we converting them? And the most important thing, are they coming again? So all of our internal stats are ahead of our plan for Navan Edge. So we are very, very happy of what we see them. And I'm just looking forward in the future to start to show some Navan Edge numbers. But right now, it's -- we are still keeping it internally.

Great. And then the key question we've gotten from investors is in terms of the healthy large enterprise signings that you did in the second half of last year, how those are going to layer into GBV growth this year? Any color you can kind of provide in terms of thinking about that growth impact this year from those signings?

Yes. So what I would say -- so what -- generally speaking, what we've explained, again, is 2 months delay between the signature of the contract and the first booking and then anywhere between 5 and 6 months to get to a full ramp for enterprise customers. Recently, we had a lot of success with very big accounts that have been able to ramp much faster than that. So what I would say here is it's hard for me to give you an exact number. And the reason is every customer is different. And obviously, the larger the organization, the longer time it's taking for them to fully ramp. They have adoption programs, like we run a lot of -- we do a lot of work with them.

What I've been very impressed is by our ability to learn from those very large launches, and we are getting better, right? Like the team now has a very structured program to accelerate these ramps. And this will fuel the growth going forward. But again, every customer is different. Some of them are very large. And so if we are able to ramp them up quickly, then there's a pretty fast impact on our top line.

And our next question comes from the line of Blair Abernethy from Rosenblatt Securities.

Congrats on the great quarter, guys. Just wanted to understand the -- you called out this largest ACV deal in the company history. And I wonder if you could provide any other color around that. Is it a long-standing customer or a relatively new customer. And just in terms of the average new customer land size deal sizes, is that -- how has that been trending this year?

Yes, great question. First of all, happy to say that it was not a customer of any of our products before they signed on with us. So this was an end-to-end, as we call internally customer, where we sold travel, payments and expense management. And what I can say about that is we're growing our payments and expense business and capabilities upmarket very quickly. We get current customers to learn from that we can continue to work with and build our products.

And as we sell to larger and larger customers, the requirements are more unique, right? So if I have travelers in Poland, there's Polish per diems, which are different. If my car in Austria weighs more than 2 kilos, I get a different reimbursement rate than less. And so there are very, very, like, fine differences in different markets around the world that we are continuing to scale with our customers in, which lets us land larger and larger customers at the point of sale, but also when we go and upsell them afterwards. And it's been great to see. So what we say and what we see is our ASPs.

So when you think about ASPs, we're essentially taking in all the various revenue components from the products that we're selling that customer. They are increasing year-over-year really nicely. It also adds a stickier product. So we have more things to offer, more things to basically work with the customer to provide more value, and we think that, that's stickier. And our products are getting more and more mature very fast on both the travel, the expense and the payment side. So yes, that's all I can say about that. Just really excited to see the momentum, and we hope to keep selling small customers all the way up to very large ones.

And our next question comes from the line of Nafeesa Gupta from BofA Securities.

So you've highlighted both PLG revenue doubling Y-o-Y and enterprise SLG momentum. Where among the 2, are you seeing the strongest ROI today, if you can break that down?

Sorry, we had -- I think the line cut. I could not catch the question. Do you mind repeating the question?

Yes, yes. So my question is that you highlighted both PLG momentum with revenue doubling year-on-year and then enterprise SLG momentum as well. And so among these, where are you seeing the strongest ROI?

Yes. So very, very good question. And we actually see a very high return on both motions, right? They are -- those customers have different characteristics, obviously, on the PLG side, so we doubled the revenue in Q1 year-over-year again. And what we are seeing there is a very -- we have a very effective way to market and spend marketing dollars. I think Ariel mentioned that we're also leveraging AI to do that in a very, very effective way. So the payback is going to be pretty fast, right? We see faster payback there.

However, on the SLG motion, we invest more upfront because we have a sales team and we pay commissions whenever we sign the deal, but those customers are going to be larger and more sticky. And so the payback is going to be a little bit longer, but still very, very attractive because those customers are going to be very sticky and we have the opportunity to upsell over time. So what I would say is really, we are focusing on growing both. And so we're not going to choose between the 2. Again, different characteristics, different speed to market, different return rate, but both being very, very attractive.

Got it. And if I can squeeze another one. So you guided Q2 to slightly slower growth, 28% growth Y-o-Y. How much is that -- how much of that is purely seasonality versus building in any conservatism on the demand aspect?

Yes. So on Q2, I mean, we are still guiding to a very great growth. Obviously, we are a usage-based business. I mean we discussed about the dynamics around the macro and the demand and inflation, which are -- things that are very hard for us to forecast. I mean, so far, it's been very strong, but those are the kind of things we are considering when we set guidance. My goal is to always provide a guidance where we have a good confidence that we can achieve. But yes, we are very, very pleased with the growth rate for Q2 and the rest of the year.

And our next question comes from the line of Andrew DeGasperi from BNP.

I just wanted to ask first, the 20% to 30% path in terms of the AI calls going to your models is pretty impressive in a matter of weeks. And I just wanted to touch on -- you mentioned you can get to be the majority of one point. I was just wondering how long would it take to get there? And do you think that's something that could be measured in a matter of months? Or do you think it would take longer than that?

Yes, that's a really good question. And in a way, it's actually related to the previous question about the PLG and SLG because what really allows us to improve the unit economics and the gross margin is this model, right? So as this model accelerates, our economics are getting better. That's why we are actually happy with both motions. So in terms of how fast we can go to more and more coverage by ourselves, we are seeing really good results as we are pushing the model more and more.

The reason is really all of these endless millions of discussions that have been doing -- we were doing in the last 10 years with our customers. We are using this data. And this data is so tuned to travel that it actually has significantly less parameters than the parameters that you would see on a frontier model. So it's actually faster when you chat with us, for example, with Ava or Navan Edge, it is significantly faster results than what we're going to see if we are connecting to a Frontier model. So that's one thing.

It is significantly more accurate. It creates a better CSAT, customer satisfaction with our customers. But when we also combine it with other components of our AI platform such as memory, memory is the ability to know you personally to try to understand what do you need from us. So we combine the 2, it makes the platform super, super powerful. So I will not give you guidance on how fast can we grow to a better coverage, but I can definitely tell you that it's an area of focus for our AI team. And we are actually very, very bullish on our capabilities there.

That's very helpful. And then I'm only mentioning this because on the -- this was mentioned earlier in the call. And the question is about the World Cup. You did mention that it drove travel like in terms of flight and hotel bookings up significantly. And the reason I'm asking this is like when we think about our model for next year, I just want to make sure, is there -- is this like a pretty significant bump in the revenue tied to the World Cup and maybe even the Olympics in the first quarter? Because I would have thought that it's more like leisure related as opposed to corporate travel, but just making sure if there was any benefit.

No, I would not think about this as a very significant driver. I think the reason why we wanted to share those data points is because we wanted to highlight the resiliency in the business travel, like people are really, really focused on getting together. I'm assuming a lot of those trips are customer invitations. And so our customers really want in-person interactions. And for us, it's a great sign, and we are seeing this activity on the platform. But given the number of games and the number of cities, when you think about our more than $3 billion bookings in Q1, for example, that would not be a significant driver.

I'd now like to hand the program back to Aurelien Nolf, Chief Financial Officer.

Yes. Thank you. So for the first time this quarter, we are very, very excited to be able to receive questions from our individual investors. So by the way, highly -- we're going to do that going forward, highly encourage all of you to just use the platform and ask your questions.

So I think the first one is for you, Ariel. It's coming from [ Victor S. ], who's asking what does the present market consistently misunderstand about Navan? And what does Navan look like in 10 years if everything goes right?

Yes. When I'm thinking about this answer, it's really, I would say, in the root of everything that we are thinking about when we are thinking about Navan because you really need to ask yourself the question in this era, right, in the next 10 years, what's going to happen. And of course, everybody are talking about AI. I think there is also always a political uncertainty.

There are a lot of things. And our point of view regarding to this is that all of this makes human connections more important. The power of being there, the power of meeting you in person, the power of understanding your culture, all of these are very, very, very important. We also believe that it might be that people will have more time. So all of these things means that travel will become bigger and bigger and bigger in the next -- in the years to come. And I think that's the first thing that maybe there is an underestimation of the size of the TAM in this unique era.

The second thing is our leadership, the stuff that we have developed, the infrastructure to connect to everything that is out there, but to deeply embed it with AI gives Navan really powerful platform to take the entire market. So we believe that the market is going to a certain direction that will make travel very, very important. And we believe that we are -- we will be the leaders in this.

So how powerful the platform is super important to understand. And I would say the last thing, probably people need to understand how strong the Navan team is, how resilient we are and how much we are having fun doing that. And I think this is what makes us so successful.

Great. Thank you. Very exciting vision. So next question is from [ Terence S. ] for you, Michael. And Terence is asking us, does Navan look to acquire or partner with any companies in the near future?

Yes. Great question. So first of all, I want to say we have a strong track record of successful acquisitions around the globe. We acquired from Comtravo in the DACH region, Reed & Mackay in U.K. and other places around the world, Tripeur in India, Resia in Sweden, another one in Italy and on and on. So we're always looking at evaluating opportunities for growth. What I'll say is the bar for M&A is really high. We see acquisitions as a tool, not as our growth strategy. And you can see that in our 50% year-over-year GBV growth, which is not based on acquisitions. So we really like our organic growth.

And so when I think about who we're looking to acquire, what opportunities to go after, it's about accelerating our go-to-market strategy or the company vision. It's about extending the platform and offering really travel adjacent categories such as meetings and events or VIP services. And of course, the most obvious one is expanding our service and operations and licenses globally as we sell and keep working with more and more global and larger customers.

When it comes to partnerships, by the way, so we have many, many partners across the payment space, the expense space and the travel supplier space. And really, really excited about the new partnership we talked about yesterday, which is the integration into Gemini. And that's all about allowing our customers to be able to access the Navan infrastructure from whatever UI or interface they're working in today. So I think that that's going to be great, and we hope to do many more of them. So that was that one.

Now I'll ask you this one, Aurelien. But this is from [ Anna F. ], who said, what are your long-term plans for the company that would bring some dividends to your investors?

Yes. Awesome question. I think this question is really about when are we going to be GAAP profitable, right? And so what I would say is we have not shared any time line for this as a company. However, we've been discussing on this call that we are very focused on margin expansion overall. And so I'm assuming -- I'm expecting GAAP profitability to come naturally at some point.

But really right now, what we are focused on is finding the right balance between growth and investing in that growth. We are -- I'm very excited to be able to raise our non-GAAP operating margin guidance to 9% for the year. And that's exactly what we are doing, being very focused on coming up with new innovation, investing in our go-to-market engine and fueling growth. So over time, as our business is going to mature, we will see even more operating leverage, right, that is going to come from AI-driven automation from our models, from the Reed & Mackay migration from the growth of the business overall.

So all those growth and margin expansion drivers that we've been discussing. And I'm very pleased that we've been free cash flow positive for the first time in fiscal 2026, which was a huge milestone for the company, and we are expecting to do that again in fiscal '27. So yes, very -- I think we are on a great trajectory. But again, no time line has been shared so far.

Great. So I think with that, we are ready to close this session. I really want to thank you all for listening and for your interest and support in Navan.

Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.

Ladies and gentlemen, please welcome to the stage, Navan's Vice President of Investor Relations, Ryan Burkart.

Hello, everyone. Good afternoon. My name is Ryan, Vice President of Investor Relations. And it is my pleasure to welcome you to Navigate. Thank you so much for taking the time to be here with us today in person and thank all of you who are joining us on the webcast.

Today is all about giving you a glimpse into the future of where Navan is going, why we are positioned to win and how we are driving durable and profitable growth. You're going to hear from 3 of our leaders today, beginning with Ariel, who's going to share our vision and why AI is accelerating that vision. Then we're going to hear from our President, Michael Sindicich, who will take us through our go-to-market motion and all of the amazing momentum we have there. And then finally, we'll hear from our CFO, Aurélien, who's going to wrap up with some financials and how our model is durable and high return. We'll finish off the day with about 25 minutes of Q&A. The entire executive team, Ilan is going to join us for Q&A, and it's going to be a great day.

But before we get into it, I have to draw your attention to our safe harbor statement and let you know that we will be making some non-GAAP statements today, which are reconciled at the back of this deck, which you can find on our IR website posted shortly after this event.

And now without further ado, I want to introduce you to our CEO and Co-Founder, Ariel Cohen.

So, so, so exciting to have you here. And the main reason we met a lot of you in the past, NDR roadshows, post kind of NDRs, but you never had the opportunity to see our community. And this is really all of these customers and prospects and suppliers and our team that are out there. So this is actually special for us. This is us really showing you what Navan is really all about. So that's exciting. And the other thing that is exciting, we're going to go way more under the hood today. So you're going to get to know our business better than probably we've explained it in the past. So I'm excited about that.

But I always like to talk about this kind of statement when it rains, Navan shines. And this quarter, besides COVID, I'm putting COVID on the side because this was off the charts, was the quarter with most interruptions that I've ever experienced since I started to be in this business. We had TSA shutdown. We had 2 major, major storms in the U.S., Lufthansa strike and then Dubai airport (sic) [ Dubai International Airport ] going down, which it's a major, major hub.

And with all of these interruptions, the first thing, we didn't see any decline in business travel. So we didn't see a spike in cancellations. We didn't see actually changes to what we are expecting to see from a numbers perspective. But we think that this is unique for Navan, and we think that there is a reason for that. We know how to support it. The orchestration between Ava, this is our entire AI framework. the ability to take more than 55% of the interactions with AI, but then combining it with human agent, you cannot solve everything through AI.

So combining it perfectly, orchestrating it with the human agents creates a situation that our travelers are staying happy while they are in the middle of New York, where all of the flights got canceled. And what do they do? They are not canceling their trip, they are rebooking it. You cannot do that if you're waiting 3 hours in the line waiting for the airline to pick it up. But if we solve issues within minutes, you're going to stay with us, you're going to rebook your trip, you're going to continue. You're going to be happy and you're going to bring more customers in that will tell the story.

Business travel is so, so, so important, and we are able to support it no matter what is going on there in the world, which leads to our mission. Our mission is really to make travel easy for every traveler by being the best travel agency on the planet. This is what we are building. We are really at the beginning when we are talking about the best travel agency on the planet. And you're going to see us delivering more and more and more services to this industry everywhere.

So you can see this is our previous quarter. So the team needs to kind of train me to remember the previous quarter numbers because obviously, we are about to announce our new quarter. But really amazing numbers, and I'm always pointing out to CSAT and NPS. This is what drives everything. When our travelers, when our customers are happy, we see more bookings. Therefore, we see more revenue. You can see that we added a significant amount of customers last year. GBV got to $9 billion, and we are growing extremely fast, and you're going to continue to see this coming from us.

And why is it? We talked about it in the past, but it is very, very simple. First of all, we think about our customers. Our customers think about where their employees are. They think about compliance. They think about policy. And the icing on the cake, we are saving them money. We are saving them on average 15% on their entire travel budget.

And just to give it in perspective, a company in the enterprise space that is spending $100 million on travel will save $15 million from their OpEx on travel. This is not by giving them some discount, by giving different booking fees. This is real money that their employees will spend less when they are using Navan. It is extremely significant for our customers.

But the users, the travelers, the EAs that are so important on the actual thing on being here in person, they love it because they participate in the savings. It takes no time to book your personal trip, 7 minutes on average and minutes or seconds to get support when something happens. Just to give you an idea, in 30% of the cases, a trip will get changed. And you don't want to spend days and hours of changing these trips. With Navan, you go, you start to talk with Ava, you're quickly changing it.

And the last thing, suppliers, and you're going to see a lot of them here in the conference. Suppliers in the travel industry, usually, you have this flight, Google it, you're going to see endless amount of flights. In the case of Navan, really deep supplier relationship, and there is a reason for that.

First of all, we have access to the best users for these suppliers. They love business travelers. That's the first thing. The second thing, we know them. We don't have just a connection to these suppliers. We know them. We know them at scale. We know them online, digitally. This is super, super important for airlines, hotels, rental car companies and so many other suppliers. So this win-win-win. This drives this entire platform, and that's the main reason that we are growing so fast.

So I know that AI is a big thing. So we've decided to actually drill down a little bit more to AI because I know that all of you and definitely the market wants to better understand it. So we, in the past, took a lot of time to explain our connectivity. This is how we are connected to everything. If it is out there, Navan is connected to this. Now we are connected to this in real time online, which means that we don't have agents that are calling an airline in Brazil to get the right price. What we do, we are connected to this online. It allows us to later apply AI to this.

The second thing, we are connected to the entire fintech layer. So it means that we are connected to banks, we are connected to aggregators. We are connected to the ability to run payments for travel at scale in the smoothest way possible, which allows our customers to get the best automated reconciliation, removing a lot of mess from them. So this is just the bottom, the thing down there that, by the way, it took us more than 10 years to create, and we are still creating it. So it's a never-ending story.

But that comes our entire layer that allows us to create that service, the 7 minutes that I was talking about, it takes no time to book -- sorry, to rebook you and many more applications that you're going to see us releasing soon. It starts with our own model. Today, 30% of our calls are actually running on our own model. A month ago, it was 20%. So grew 50% in 1 month. But it gives us way better service, which means that you're going to see it in more deflection. Later, you're going to see it in gross margins. So as we are using our own model, you're going to see us becoming more and more efficient, and more and more relevant. But another important thing, it will be cheaper, right? And you're going to see us over the years going directly to our own model.

The second thing, Navan now, and it was a 3-year experience, is a complete agentic platform. When you are booking a flight, you are using our flight agent. When you are booking hotels, the same. When we've developed our restaurant capability, which is new, completely agentic. And on top of all of this, if you look at Ava, Ava is kind of an example of kind of a super agent that supports all of these other agents and know when to call an agent. But where this is very important, and this is cognition, the ability to know seamlessly when we are using a human agent, when we are using somebody that walks in operations, when we are using an AI agent and make it seamless to the user, that's the entire magic here in this platform.

So the orchestration layer, I would argue that's actually the magic of everything because creating agents, a lot of people can create it. Creating a model, this is very unique to us because we have our own data. Connecting to all of this, nobody is doing it and super, super hard to do. The orchestration for all of this, this is the secret sauce.

And how do we present it? We present it in something that now we call Navan Classic. This is the Navan that most of our customers are using. There are agents that are already introduced there through a functionality that we call Book with AI. But the place that we are really showing off with these agents is in Navan Edge. I will, for the first time, show you a demo of Navan Edge. And very soon, you're going to see it in new products.

One of them is Headless TMC. Headless TMC is us delivering us everywhere, no matter how you want to consume it. This is not some -- I know that a lot are talking in the industry about headless. This is not some theoretical project. This comes from our customers and partners. Some of our customers, definitely the more cutting edge, would like us to deliver Navan not through AI, but through an headless functionality, same as partner. And really, I would say, the future, and we are really at the beginning there. And Ilan and I keep having this debate if it's the future or if it's ready like in a week, so we will continue to have this debate. I think it's in 5 years. Ilan think it's in 5 days, but really TravelClaw, which is basically an agent that will just figure out everything for you automatically. And all of this together, this is really Navan in a nutshell.

So what does it give us? First of all, the ability to accelerate, to accelerate sales because of our AI functionality, more and more customers in an accelerated pace are joining us. You saw we said last -- in Q4, we told you that we grew GBV by more than 50%. And we think that this kind of momentum will continue, supporting with Ava and continue to raise the towards the 60%, the 65%, the 70%. That's something that you'll see from us. This, alongside the conversion of Reed & Mackay into the platform will show you a completely different gross margin profile from Navan.

And then the delivery. I've mentioned it in the last call that AI accelerates us. As a tech company, we can now develop more faster, releasing more stuff things that were in our road map for the next 5, 6 years are on this slide. We talked about Headless TMC forever. It's now on the slide. We talked about Navan Edge. It's now on the slide. And you're going to see so many things coming from us because you can actually develop stuff faster. And when you do it on our platform, you get this entire travel agency delivered through so many things. So we are definitely, definitely excited about that.

And now probably the most exciting thing, I like to do demos, but this is a recorded demo. Maybe next time I will do a real one. So I'm going to actually show you what Navan Edge is all about. I know that I shouldn't have clicked on it, right? Okay. Okay.

So this is actually Navan Edge. And here, I'm actually booking the trip to this place to Navigate. And what you're going to see is that the system figuring me out, they know that I like United. They know about the conference, the dates, everything. They know the destination of the conference, and they are allowing to orchestrate the entire trip. Book my flight. The system will tune to United because I'm a United Global Service. Navan Edge is automatically connected to a wallet that we are creating automatically. So we knew that you are United Global Service. We know that you are Marriott Gold. We know all of this automatically. And the trip will completely align to this, to your past trips to everything that we know about you in our memory. So super, super easy to book.

And what you can see is this combination of a ChatGPT kind of experience with real-life things that you need, for example, selecting your seat, for example, selecting the right flight for you. So I actually think that we are the first one to figure out how to combine chat with real-life objects to actually do something that makes sense for you.

So this is actually an example of a flight and how we're going to see hotels. The system will recommend the 5 hotels that are relevant for me based on what I care about. I care about loyalty. But based on this location, it will even highlight the fact that there are events right now in New York, so book it fast. We'll give you your Marriott points. We'll give you Navan points, basically really, really driving loyalty here. And I think where it comes super, super cool. You'll see it in a second.

I had an extra day last night, and that was something that I planned last week. So I'm asking what can I do? I have a free evening on the 12. What can I do? And the system will actually -- now you can see that we recorded it last week. We recommend to go to the next game, but the next game didn't happen because we won last week. So of course, no 5 game. But you can see the point that it will know the events, it will suggest to book them. Instead I actually want to go for a restaurant, it will book the restaurant that is relevant for me in this area, in the location of the hotel based on the type of restaurants that I'm booking, all of this in my face.

And the last thing, proactive, summarizes everything the day before the trip. This is my trip. This is my loyalty. This is how long it will take me to get to the airport. This is everything that I need to know about this trip, and it will keep updating me. Keep updating me means that if something has changed about the flight, it will not be a flight notification. Ilan and I used to call it f*** you notifications. Basically, your flight got canceled and then what? It will be -- this is the notification. This is what you need to do about it. This is how we're going to change your flight. This is how long it will take you to be on the TSA line, everything that you need to know.

So this is really Navan Edge. It's cutting edge. It's something that we are super excited about, released it 3 months ago, see good traction there and so many good things are going to come there, which eventually brings me to what we are trying to do. We're going to be everywhere -- we're going to do everything. We're going to do it globally. And if you want to be there, and it's important for you, we're going to be the agency for you.

So with that, I'm going to invite Michael, who will actually explain to you how do we sell Navan. So thank you.

Great. Great to see a lot of you guys again and for the people on video, hello. I'm Michael. I'm the President here at Navan. I've been at the company for a little over 10 years now since we are a little less than 10 people. So I've been along the journey for a while and kind of know a lot about the inner workings of how we do things. I'm responsible for basically how we go-to-market at the company these days, changes every once in a while. But as the team has mentioned, and we all know this, it's a massive TAM and a big opportunity for us to take that we are at the early stages. So what the team asked me to do today is walk you through a little bit about how we go-to-market and how we think about continuing to penetrate into the industry.

You've probably seen this before, but as we kind of talk about how we attack customers, right, we really think about it in 2 different segments. So there's what we call managed business travel, so companies that have a solution today and unmanaged business travel. And the way that we think about this is typically, the larger the company, the more likely it is that they have a managed travel solution today. The smaller the company, the more likely it is that they don't use something today.

And so when we attack managed business travel, typically, it's through our go-to-market channel called SLG or sales-led growth. Today, that's for companies that are more than 300 employees. So we deploy a salesperson. We've got 3 different segments: commercial, mid-market and enterprise. And we'll get into how we distribute the sales team across the world.

When we think about unmanaged business travel, sometimes it's sold by sales-led growth because we have that 300 employee and above goes through SLG, and we might find a company that has something but doesn't really use it or doesn't have anything at all. That's kind of the DIY, and we do see mid-market and commercial companies sometimes that have just scaled really fast and didn't have a solution in place.

And then when we think about the SMB or companies that are below 300 employees, typically unmanaged, and we attack that through our PLG motion or our product-led growth motion. So sales-led growth is a more traditional top-down approach. We go deploy a salesperson, do some account-based marketing. We go target the CFO, sell the CFO or the travel manager or the expense manager and then they deploy our products throughout their employee base. On the PLG side, it's more performance marketing ads, TikTok, Instagram, targeting admins who will sign up, create a policy, self-serve and start using our product to manage their travel, and we'll get into that as well.

Edge, obviously, which Ariel talked about is much newer. That's our way to get to frequent travelers. They might have -- they might be at a big enterprise company and hate their solution, so they can come and use our product. They might be at an unmanaged small company and need something to help with their business travel.

When we think about how we separate the teams or how we go to market across the globe, we've got these major offices. So San Francisco, Austin, New York City, Paris, London, Berlin. Boston was a new office that we added earlier this year. And that one, we see really exciting things coming for that office, and we'll keep -- continue to scale it. And the breakdown the sales team or the go-to-market team is above. So I don't think -- sometimes I get questions about how do you distribute the teams, what positions.

So we wanted to give a bit of a breakdown here. There's acronyms, by the way. So it's typical of a traditional kind of software sales team where you have an SDR, sales development rep. The AE is the account executive that's actually doing the demoing and the selling. We have solutions architects, when you need to get into the details of ERP integrations and really complex travel nuances.

On the marketing side, right, we do field demand gen, product marketing and brand. On the operations side, this is really revenue or go-to-market operations, so you can see the functions here. And then in account management, the main functions are customer success, so managing and implementing that customer after it's been sold. And then consultants or solutions consultants that also have specialization in the various products that we sell, so that they can implement and get into the details there.

One really cool thing that we've been doing is product-led growth allows us to scale globally and test out how our products resonate in the market. So it's as simple as saying, okay, let's translate the product. Let's make sure it works for that market. Let's go deploy performance marketing ads. And if we see a lot of success there, great. Now let's go put a top-down sales team in that region and continue to grow. So we expect to continue to scale globally. PLG is kind of everywhere and attacking different markets all over the world.

When we think about the sales-led growth sales process, Grant's here, Grant is our CRO. He's done an incredible job to build a repeatable sales process across the globe in all the various offices that we operate from. And so I can talk to a rep in Paris and say, where are we with this deal? And if they say we're in CI, I know we're identifying a champion. I know we're doing disco meetings. I know we're starting to do demos to various folks.

But the essence of this is basically we have stages for every single sales process. The larger the customer, typically the longer the sales process is. The smaller the customer, typically the faster, and we can get through these gates really quickly. So our sales cycle on the SLG side is roughly 2 to 9 months, depending on, again, size. Once we sell that customer and sign the customer, then what we do is we start launching and implementing that customer. We launch it and then they ramp up until they get to full ramp or terminal velocity.

And then during that launch process, whatever we haven't sold them during the sales process, we start the upselling motion. So maybe they bought travel, hey, you're implementing, why wouldn't you just use our travel payments or they bought travel and travel payments, why wouldn't you use expense? And also, hey, let's talk about our VIP services. By the way, now that we're working with your team, do you do meetings and events, and we can align with that schedule and start selling our meetings and events services. So that's kind of the sales-led growth approach.

The interesting thing is what we invest in sales and marketing today takes time to show up in the actual financials because we need to sell, launch, ramp that customer until they get to terminal velocity. So I think Aurélien will talk through some of that as well.

When it comes to PLG, product-led growth, think about that similar type of sales process, but things happen in days or hours and not actually weeks or months. And it's very, very AI-based. So it's all performance marketing ads. It's not field events. It's all lead targeting, it's GEO, it's SEO. And it's really smart, personalized onboarding for the types of people that are signing up for the product. So we know your field, we can organize the product in a specific way. We can handhold you through our AI help to be able to onboard your company, create your policies, we'll suggest policies for you, add your users, integrate your HR system, turn on your SSO and really be on your way ramping.

And we've talked about a few case studies or stories where a company like Anthropic might have signed up through our PLG motion. And what happens is as they scale, we then graduate them to our sales-led growth account management to then work on continuing to manage the program and upsell more and more products to them. So it's a beautiful motion actually for the company to capture these fast-growing companies that then we can bring on to more managed services.

And I think one thing that we talked a lot about during the last earnings call is our RFP volume. So typically, a mid-market or an enterprise company will likely do an RFP, a request for proposal, where every couple of years, they reach out to a bunch of companies and say, hey, tell me about what you do. I'm going to learn about this space, because I'm in procurement. I don't study travel all day long, and I want to see what else is out there and if I can make improvements to my program.

So we get these RFPs. And sometimes companies are doing it, because they might want to negotiate a better fee with their incumbent. They don't have a real reason to switch or it wasn't in their head that they were going to switch. But a lot of times it is we're going to make a change, and we need to see what else is there. This is a very, very interesting leading indicator to see if there's more activity and more sales that we can be driving by the growth in RFPs.

And I think over the years, as we've continued to scale globally to go upmarket, to create more buzz about the company and have more active champions, more people are reaching out to us to understand what we do, which gives us more at-bats to go and sell them.

Why are we getting so much more RFP volume these days? I kind of break it down into a few reasons. Number one, we are the AI-led T&E platform in the space. And all travel managers, expense managers are getting orders from their leadership to start leveraging AI to be able to drive more efficiency in their operations. And that means that you must look at Navan. We see a lot of consolidation in the space. You guys obviously study the industry. I don't need to tell you what it is, but there's a lot of consolidation, which then means, okay, I need to see what else is out there, because I don't want to go with whoever just got bought or this or that. So when there's changes in the space, usually people are opening up to see new solutions. I talked about our support and product continue to improve and move us upmarket.

For those of you who are on video, you probably don't see this. And for you guys here, hopefully, you do see it. But we do really interesting events like this. So today, we have customers here, 320 at Navigate 2026, 320 customers that spent last year $2 billion of GBV on our platform. We have 120-plus prospects that are here with these 320 customers that are talking, having drinks, doing breakout sessions with us, sharing about their program.

We had on stage earlier, Ofer, our COO, was meeting with -- or had an open conversation with the travel managers at GE Healthcare, DoorDash and MUFG, talking about the success that they've had with their programs. And when the people who are prospects that we're trying to sell to are sitting there eating this up, talking about how amazing Navan is and how great it is, that just helps us sell more. And so we see that word of mouth really, really getting out there, which then kind of goes to the integrated marketing that we're doing. And I definitely think that there was an IPO and a brand effect on our name, which got more people to pay attention to us, which was a great branding event and something I'm really happy that we did.

If you look at our customer base, you guys have seen the slides, but relatively diverse across the industries. We'll break it out for you, I think, for the first time in a very -- ever probably. 38% of our revenue comes from outside of the U.S. So international customers, so good diversity there. No single customer makes more than 2% of our platform revenue. So there's a good distribution there.

This is the breakdown of our revenue from the customers from different industries. So tech was the big one. If you were to ask me 5 years ago, I think the tech portion would be pretty big because new start-ups buy from tech companies and they buy from each other. But you can see we're expanding quite a lot more into professional services, manufacturing, finance, media and all other industries. And that will continue to diversify as we go and as I look at the pipeline coming up.

So the other piece is, and Ariel mentioned this, but we are becoming more efficient. One of the biggest metrics that Grant and I and Erika are always looking at is how much sales and revenue does a salesperson generate now versus some time ago. And it's called productivity of an account executive. So if I sold $1 of revenue last year, how much do I sell this year? That year-over-year AE productivity is up 50%, which it's hard that no one can plan for that or it's really interesting to see such a big increase in productivity.

And so why is that happening? Again, we are investing more and more in the enterprise segment, so moving upmarket, which has very strong momentum, and it has a very high return for us. We expand more efficiently. So I don't need to send -- start a big office and get a bunch of salespeople and management layers and SDRs and open up a region. I can test it first with the PLG motion and then decide if it's a good place for us to go.

We're leveraging more and more partnerships. So in a lot of our sales today, it's not just our salesperson selling. We actually involve the ecosystem to be more efficient and to be able to penetrate into the account. And we talked about the brand impacts. And the other thing that we're spending a lot of time doing is actually setting up the deal so that it can launch and ramp faster. So what we do is we start bringing in account management earlier in the deal cycle to make sure that the customer is ready to go. We've aligned everything because the faster that we can launch the account, the faster we can get revenue onto the platform.

So in the end of the day, we have all these inputs. We've shared a few things. Ariel mentioned this, but in Q4 year-over-year, we sold new GBV more than 50% than we did the year prior, which we think is a very, very good sign. We see the explosive RFP growth. We said 200% plus. Our average deal size and our win rates are increasing year-over-year, which is great. And when it comes to the PLG side, our revenue more than doubled in FY '26, which is a really good sign. We're on to something here, and we'll keep on scaling and investing in those products on top of the launch of Navan Edge. So we think all of these things create a really nice flywheel effect for us to continue to scale quickly and grow our revenue.

So with that, I think I'll pass it to Aurélien to get into the numbers. Thank you.

Hi, everyone. Very glad to be here. I'm Aurélien Nolf, the new CFO of Navan. I joined the company 2.5 months ago, not 10 years ago, like Michael. And I've been like amazed by the pace and the momentum, the energy of the team, like so far, it's been a really amazing journey here. So we are hosting this amazing event for our customers today. And I thought it was a great opportunity to also bring the investor community to the table to just see this momentum and give us a chance to also elaborate on our story and our business and how we are making money, right? At the end of the day, this is why we're here just to tell our story and explain you what Navan has made of, and why we are confident in our future and in our growth.

So I'm going to start with the very basic, like the model itself, how do we make money as a company. It's a very simple equation when you think about it. We have gross bookings volume, so people booking on our platform, and that was a record high of $9 billion in fiscal '26. We have a usage yield, 7% in fiscal '26, and that gives us a usage revenue. And on top of that, you can layer on some subscription revenue. That gives us those $700 million, another record high in fiscal '26.

What's really great is we are monetizing across the board from our customers, from our suppliers, from our payment providers across travel, payments and subscription. So a very, very diverse model. But what I think is not really well understood is the fact that most of this revenue is usage-based. And that's very important because what's at play here is not a SaaS efficiency model, right? The revenue we are generating is going to scale with the activity of our customers. And that's very important, because that's what incentivizes us to keep innovating, coming up with the best platform and the best experience for our customers so that they book more travel on our platform, more and more customers are joining the platform, and we essentially make more revenue at the end of the day as a company. So that's really what helps us protect our moat in our business.

So looking at the way we generate that revenue, I don't think it's also very well understood. And I wanted to take a minute here to really explain that. What's super important is, and you can see here in this dark blue part of the pie chart is the supplier revenue. That's actually the largest part of our revenue. That's how we make the most money as a company. Think about this as all the commissions we are getting from our suppliers, our partners, airlines, hotels, every time we generate some bookings on the platform, we get some revenue from our suppliers. And that, again, is the largest part of our revenue.

Then obviously, we are monetizing our customers as well through trip fees and platform access fees. We are also generating some subscription revenue, mainly on our expense business, and that would be on a per seat basis on an annual basis, depending on the customer. And then lastly, we make revenue on our credit card payment business by getting some interchange revenue, net of the rebates. So I think really the point I wanted to make here on this slide, the most important takeaway is that the majority of the revenue comes from our suppliers, not from our customers. And that's why it becomes very interesting.

It becomes very interesting because not only our revenue is diverse and we're very strong, we also have a very high visibility, which also is something I don't think is well understood. When we start the year, we have roughly 90% visibility on the revenue we're going to generate during the coming year. And there is a very easy reason for that, like 3 buckets of revenue for FY '27 fiscal year for the guidance we just shared with you.

The first one is the installed base. We have a very strong installed base, thousands of customers that have joined the platform over the years and that are very predictable, repeatable patterns from a usage perspective. We see their bookings coming at a very, very consistent rate. And the reason is corporate travel has been very resilient over the years. Like companies need their teams to get together. They need to get to the sales meeting. They need to close the deal and people are just traveling a lot.

And I mean, Ariel mentioned, even in the moments when we see a lot of disruption in the world, corporate travel has been very resilient. So that's just the installed base alone that gives us a very, very high visibility on the revenue we're going to get during the year.

And on top of that, we add the customer we signed in fiscal '26, right? So those large customers that have been signing a contract with Navan, this SLG population of customers, we know how fast they're going to ramp, and I'm going to come back to this in a second. But that gets us to the 90% visibility on the revenue. And then on top of that, the sales team is going out there, and we keep adding more and welcoming more customers to the platform, but most of that revenue is going to show up in the future on our P&L. So again, 90% of predictability, that's why this usage-based model is so powerful.

So now let me show you how that compounds over the year. What I think is very interesting on this slide is to look at the different cohorts, depending on when those customers join the platform. What's really amazing is to see that the difference between the cohort when they join the first year and the second year is 3 to 5x from a revenue perspective. So the customers are ramping through the sales motion. They are ramping up through the year. And again, in year 2, their revenue is going to be 3 to 5x higher than in year 1.

And so you see those lines that are stacking up here year after year after year, and that's where the model becomes very, very interesting. We are lifting every cohort ahead of -- above the last cohort. And the reason is we are signing more and more of those very important enterprise customers that have very large T&E budget and generate a lot of revenue. Adding on top of that, our net revenue retention of 107% in fiscal '26 is adding to the flywheel and keeps improving the revenue for every cohort. So that's why we are very excited about seeing those new customers joining the platform because that gives us this huge amount of compounding revenue on our P&L.

Now going to the gross margin. So we are already operating with best-in-class gross margin, 73% in fiscal '27. That's more than 1,000 basis points of margin expansion over the last couple of years, which clearly is coming from our technology leadership. Ariel described how Ava has been making us very, very efficient in terms of supporting our customer, and that's very efficient from a P&L perspective as those gross margin rates are showing here.

But this is not a ceiling. Like we are not done. We see a lot of room for gross margin expansion in the coming years. There are 3 main reasons for that. The first one is we're going to keep leaning into AI for support and for -- with Ava, right? So we are automating the support service. We get great CSAT results every time Ava is jumping in to help our travelers. And so that's going to keep us being very, very efficient as we provide support to our customers.

Then Ariel also mentioned the proprietary models we are using from an AI perspective. And that's very powerful because today, 30% of the volume is coming through those models. I think he also mentioned that it was just 20% a couple of months ago. So you see the adoption rate of our proprietary model jumping very, very fast. And the reason why that's very interesting, not only from a customer perspective because they get faster and more accurate results, it's also very interesting financially, because the cost is way less than paying tokens to frontier models. And then the last input to this equation is the migration of our Reed & Mackay customers from their first-hand platform to the new Navan platform, which is going to increase our gross margin going forward.

And that gives me a natural transition to the way our channel mix works here. So we've been -- on the last earnings call, we've been able to report amazing growth rate on the Navan core platform from an SLG and PLG model. We reported 40% growth year-over-year of the SLG revenue, 100% growth of our PLG motion. So we've doubled the revenue on the PLG. But we also reported that the Reed & Mackay customers, this revenue base is only growing in the low single digit. And what's great is we expect that to keep being the case in fiscal '27 and beyond, which is going to give us further tailwind from a gross margin perspective. So the durability of our top line growth and the margin trajectory here gives us a lot of confidence in our future.

Okay. So now let's look at our sales and marketing expenses and why we are very, very pleased with the payback we are seeing every time we deploy $1 of money in our sales and marketing motion. I mean if you're here in the room today, you can see the excitement from our customers here. That's what we do with our marketing expense. But what's really important for you to understand is the disconnect between the moment when we spend the money, and the moment when the revenue is showing up on the platform.

So Michael mentioned that most of the spend from a sales and marketing perspective actually is incurred around the time when we sign -- around or before the time when we sign a new contract with a customer on the SLG motion, right? When you think about it, we send our SDR or AEs to sell our product, then we pay a commission when the deal is logged, but we won't see any bookings on the platform usually before 2 months after they sign the contract, right? So there's already this natural gap of 2 months.

And then after that, as I mentioned, customers need time to ramp and book all of their trips on our platform. And that's usually something that takes anywhere between 5 and 6 months. So I mean, the underlying unit economics we are seeing once the customer is fully ramped are really amazing, and they are very strong. And that's why we see this revenue compounding over time and those cohorts of customers stacking up every year.

The same is true with our PLG motion, right? It's the exact same process, but the time line are compressed. It's way faster, right? So between the time when a customer is hearing from us on our marketing channels, there's only 7 week -- 7 weeks, sorry, before they are fully ramped. And so this is a very short payback that makes this sales motion very, very attractive from a financial perspective.

So in summary, from a sales and marketing perspective, we have a lot of front-loaded cost. The revenue is compounding over time, and we are getting more and more efficient as we are scaling that business.

Now let me touch briefly on our research and development expenses. How do we spend money? How do we create this amazing platform that is in Navan because here, the productivity also matters. I know Michael walk us through the productivity of our sales team, but the same is very true with our R&D team. Our incredible team has been delivering more than 450 products last year, products and new features that have been launched across our travel, our payments and our expense business. And we're doing that with a very disciplined budget 14% of our revenue was spent on research and development, which is really cutting edge from an R&D perspective and new products.

We've been releasing a lot of new features and a lot of new breakthrough products, inclusive of Navan Edge. It was very fun to see the demo from Ariel earlier today, the Expense Chat agent. We had a team here on stage this morning showing to our customers how this can really transform the way people process expenses, TravelClaw, also our Audit Agent.

So I'm trying here to put it all together, right? What are the 5 compounding levers that are going to help us really grow our -- grow our business, expand our profitability and grow our free cash flow over time. So first of all, our ability to upsell and increase the attach rate of new products. When you think about products like Navan Pro, our VIP service, meetings and events, the payments and expense business or bleisure, all of that are not necessarily something that our customers are using from day 1, but that's something we usually upsell over time and is an ability for us to increase our margin from those customers.

I've discussed about how confident I am in our ability to expand our gross margin as well through the usage of AI and through Ava, our chat and support bot. And then from an OpEx perspective, operating expense perspective, I also see a lot of opportunities for us to generate some leverage over time. So how are we going to do that? Well, we are seeing a lot of momentum from a sales and marketing perspective. And so we expect to see a lot of efficiencies there and keep landing more and more of those very significant enterprise deals with those customers that have very sizable T&E budgets.

We're going to deliver some G&A leverage, right, through our infrastructure that is fixed. We have done a lot of investments to become a public company in the last couple of years. So that's something we expect is going to generate efficiencies going forward. And then I just mentioned our disciplined approach to research and development and how AI is going to help us doing that in a very, very efficient way.

So just to be clear, those 5 different levers are all additive, right? It's not like we're not going to select between one of them. That's what is going to make our path to margin expansion and free cash flow generation very durable. That gives us a clear path to the future of Navan.

And so here, before we start the Q&A, I just wanted to bring everything together from the beginning of this presentation to the end. What are our goals? What are our mission here, right? First, Ariel mentioned, very important. We are a travel agency, and we want to provide the best travel experience to our users, to our travelers anywhere in the world, everywhere they are. Super important to us. That's number one mission. You have to know that every time we have a conversation as a management team, we start with our NPS and our CSAT score. That's number one, very core to the mission of this company.

Number two, we have a huge opportunity, a huge market. Michael mentioned this $185 billion addressable market. That's the size of the pie. And obviously, as a business, we are only scratching the surface today. And how do we do that? Well, we have multiple revenue streams that are driving this durable growth with a high visibility into our revenue for the years to come. And then lastly, we're going to do that very efficiently through a very, very efficient and high-return go-to-market engine that has very attractive paybacks.

So I'm very excited to be here. Again, it's been an amazing journey for me over the last 2 months that I've been the CFO of this company, but I'm really looking forward to everything that's ahead of us. So thank you for your time.

And with that, I will ask the management team to join me on stage for some Q&A.

Okay. We're going to jump right into Q&A here in a second. A couple of ground rules. We're just going to take questions from folks in the room. We have a couple of mic runners on either side of the room. So just raise your hand and you have a question and say your name and where you're from for the benefit of the folks on the webcast. While everyone is compiling their questions, I am going to get us started here with a question for Ilan. It's the first time we've got Ilan on stage. So welcome. So excited to have you here.

This is a question I get all the time from investors at conferences, on calls. And it is, what is it about Navan's infrastructure and technology that is really unique, really proprietary and that acts as a moat versus existing competitors and would be competitors that are thinking about coming into this space?

Can you hear me? Cool. I think to answer the question, it actually first starts with just in our back end. Ariel spoke about it earlier. Agents can do nothing without tools. And -- okay, there is some operation going here...

Sorry. I need some water.

[indiscernible].

Excuse me.

Ariel is an MCP. Yes, but it really starts with what we've been working on for more than 11 years now. Now we did not plan to serve our agents...

We get some echo probably because of the mic.

Yes. There's some echo. Okay. So I get distracted very easily, I guess. We spent 11 years building a lot of tools. And as soon as the ChatGPT came out, we jumped into it really, really quickly. And in 2003 -- so 2022, November is when ChatGPT came out. In March was the first time that we had a proof of concept of an agentic framework that we built internally. We built it because nothing else existed back then, we called it Cognition. And it allowed us to deploy agents in a mission-critical area like booking flights, upgrading your seats, talking to you about the refund. So areas where the cost of an error is huge, huge. And the only way to do it was in a reliable way.

And LLMs are definitely back then had so many hallucinations. It was so inconsistent. It was biased and then so we built this agentic solution. And fast forward to today, we are in a very unique position because we have been having agents, having conversations with users, real conversations about travel with tool usage since May of 2023. We today have a very, very unique data set that no one else has, but we use this data set to train our own models to deliver a more accurate experience because it is focused just on booking a flight or just on booking a hotel or just on determining whether the answer that Ava now gave is within our SOP, standard operating procedures or not. And this is really important. If we have employees or agents that provide answers that violate our SOPs, we fire them. So it's really, really critical.

It's amazing because now that we have the data, we train the model, we get something that is largely 6x faster than the frontier model, and we still are learning and seeing and we improve it. It is much lower latency, as I said, much higher accuracy and definitely much, much, much cheaper. It's also -- I would just give you like and something to think about. But now that we have our own model, it opens the door to even further enhancements and optimizations in the world of interpretability, which is something that we are investing now in, and it will allow us to fine-tune the models to perfection. We can talk more about it in some other conversation maybe, but super, super exciting. All of this together, I think, is...

Super, super helpful, Ilan. Thank you. And I would just note that Ilan is doing his AI keynote right after this. So if you can, I would highly, highly recommend sticking around for that.

All right. So let's go to the audience. First question over here from Samad.

It's Samad Samana from Jefferies. Great to see all of you in person. I think a lot of the analysts in the room can definitely relate to all the travel. And I think Navan Edge is really cool as you think about it as a user experience, we all take a lot of the same trips every year and to be able to build that knowledge and be able to easily ask based on preferences really resonates with me as a business traveler.

And so I understand the value of the experience and how it differentiates you from a user experience standpoint. How should we think about what the opportunity there is from a monetization standpoint, right? Is it just that it increases either the velocity of GBV? Is it something that allows new monetization opportunities with suppliers where you get a different profile of the type of customer? Just help us think through what the value there is.

Okay. I think, first of all, the first target of Navan Edge is this frequent traveler that tends to go rogue. People that have United GS, Delta 360, all of this. We have Shai here that used run Virgin and he knows this better, has this tendency to do whatever they wanted. So they can be in a managed environment, but they'll go rogue. They'll go and book somewhere. And Navan generally, what we call Navan Classic is pretty good on capturing them, but not all the time.

Our competitors never capture them. So we think that there is a great opportunity to hyper, hyper service them to really get to know them on the level of loyalty, on the level of their behavior. I always like to give this example. I fly a lot from SFO to London. And I'm obsessed on a certain [ story ], a certain BA flight. And there are 2 types of flights and don't put me on the other flight. I hate it. It's a certain configuration of business class, while the other one is amazing.

You come to any system or to any travel agent and the travel agent will basically tell you that flight is not available. Navan Edge will continue to work for you on this flight. I will book you on the other flight, continue to work for you on this flight until I'm going to get you this flight. For the top echelon or the ones that really care about travel, I think 1,000 and above, this kind of use case is the holy grail.

Now if I can optimize your mileage while I'm doing that because I'm automatically connected to all of your -- basically created the wallet. If I can give you extra rewards by Navan, this speaks the language of that kind of fear, the frequent travelers that will always do whatever is good for them. We view this as the huge opportunities, the ones that you make most of the money from, they tend to be very loyal while you got their loyalty.

And we think that only with AI, you can give them the service that they want to. Of course, you can create some cutting-edge VIP travel agency, very hard to scale. With AI, you can scale it. This is what Navan Edge is targeting. I think that Navan Edge will become the future of travel. I don't think it's the future of corporate travel. I think it will become the future of travel. You need more iterations. You need more technology development there.

But I am actually, as a product guy, I'm putting everything that I know, everything that I got on this product. I think it's the future. The ability to later deliver it maybe through Navan Classic, there are already features in Navan Edge that are delivered today in Navan Classic. We kind of embedded them in the platform. But then to deliver it to everybody through a headless platform, I think will make Navan without a doubt, the #1 in the market. And I did even say which market you can imagine, which market I'm talking about.

And maybe financially, just from a monetization perspective, I would add that this is -- I shared today for the first time that the vast majority of our revenue is coming from suppliers. And that's how we will monetize the Navan Edge. That's mainly from supplier commissions.

Jared Levine with TD Cowen. I wanted to talk about the current state of travel cost inflation. Can you talk about how that will impact your usage yield as well as revenue? Is it a tailwind or a headwind?

Maybe I can take that. So yes, we're seeing some decent deflation in the market right now. In fact, since February, we've seen the flight on average, the cost of the flight going up double digit, right? So there is inflation in the market. It's -- I think we've all seen that it's more and more expensive to fly from one place to another.

Given the way we make money, that's good for us in the short term, like it increases the commission we are gaining from our suppliers. So that's a tailwind. So that's one way to think about it. And so far, we've not seen any meaningful price elasticity from a demand perspective. I mean, companies are craving in-person interactions, right? And we keep seeing that with every customer we are onboarding. Those customers are very focused on bringing their teams together and meeting their customer face-to-face to close a deal. And so business travel has been very resilient. So is there -- is that any less? Probably not. But so far, we've seen a decent amount of inflation and no real impact on demand.

And we take the next one from Chris Quintero.

Chris Quintero from Morgan Stanley. It's been really helpful. I wanted to ask about the ramping of the recent customer cohorts that you mentioned. Really impressive to see that accelerating. So just curious from the go-to-market implementation standpoint, what are you all doing that's really driving that faster ramp of the new cohorts?

Yes. First of all, it comes from a realization that we do not make money as a business unless our customers use our product. And so that's actually number one. We also have a payment mechanism for the sales reps who sell deals where they make some of their commission upfront on the signature, but they make a very good portion of the commission once the account is launched. And so that incentivizes the sales rep to essentially do everything that they can to make sure that the launch happens as fast as possible so that they make their full commission on the deal.

We also implemented what we call Launch 2.0 internally, where every time that there's a deal, it needs to be validated by the account management team. So the account management team gets brought into the sales cycle. They meet with the customer, they talk about implementation. We align on an implementation schedule and what needs to be done. And that account manager is actually validating the GL of that account's data, how much do we expect them to spend on travel that the deal is not doing a pilot, we're doing a full launch, what time we expect to launch the U.S. and then Europe and then APAC. And so we're aligning all of our incentives as a company to basically make sure that the account is, first and foremost, successful and second, launches as fast as possible.

So those are two of the things, but it all really stems from like we're not going to make a dime if we get a signed contract. We have to get the account launched and operating and on our platform, and then that account will help us be successful and go sell us to more companies.

I'll add something to this, which I think is important. In the PLG that you could see that is becoming significant. This is all AI. So we basically took something that used to be human intensive, and we are not talking there about SMBs with 10 employees. This is 50 to 300 people, 300 in some other organizations will be considered enterprise. We know how through AI to sell to them, to onboard them, to do customer success to them. So this completely accelerates the entire thing, the entire launch, fast to get money and also makes it in a cheaper way. So these two together are keep improving basically the average of time to make money.

Let's go to Jed here.

Jed Kelly, Oppenheimer. Thanks for doing this and excited to see some of the product demonstrations after. I think you had a stat that your RFPs are inflecting up 200%. So can you talk about the underlying drivers there? Are you now involved in every big travel RFP that comes up? And then can you give us the reasons like what happens if you don't win? And then when they come up maybe three, four years later, how those conversations are going?

Yes. Yes. So I talked about some of the drivers. It's brand impact. It's customers saying, "Hey, you really got to look at these guys. They transformed my program. They made me a hero internally, and now I'm promoted, right? So it's a lot of that. It's the scaling of the company. It's the narrative now is that, oh, actually, Navan can support a Visa or a GE Healthcare globally. And by the way, they launched me in just a couple of months globally. And so that type of narrative has shifted in the industry. We were not in every RFP. And the person who told us that ran a consulting firm for these big travel companies, and she was helping run RFPs for them, woman named [ Kim Hammer, ] we just hired her and said, okay, you know all the big travel companies, you know the consultants. We're not in them. She said we were in about 1/3 of them. So we hired her, and we're hiring more Kim Hammers, and we're getting out there at the local chapters and the GBTAs, and we brought Navigate our big event. So I'd like to think that we are in many, many, many more of the RFPs.

I mean, if you are on a BCD or an Amex, and you're going to an RFP, it would be, at this point, irresponsible not to look at Navan. We IPO-ed. We're growing fast, way faster than the rest of them. There's got to be something good here. And by the way, our sales team has probably hit up you and your boss and your boss' boss and the CEO 20 times by now. And so I think that we're getting more and more into a lot of these RFPs. What happens when we don't win an RFP, the very vast majority of it is because they decide not to change.

So it might be that they did an RFP to lower their fees on their current incumbent or to threaten their incumbent to try to get them to do something or to bring on a new partner in a new country. But that is why we would lose. It's very rare, very, very rare that we would ever lose an RFP from one big TMC to a different big TMC because those two things are basically the same thing. You're using Concur, you switch the agency underneath, it's still a crappy solution. So.

I think that would be very -- the technical answer that is very relevant to our go-to-market. I think there is another thing that is changing. The entire market is changing. You can -- we talk about AI all day long. AI needs to start with online. We are basically competing with calling a travel agent. So it is very strange to expect your employees today to tell them, "Hey, send an e-mail and get after 24 hours, this is the trip after all of the flight availability has changed or the prices. So I think there are actually -- probably a year ago, there was an inflection point in the market. People want to see something else. Business travel is important. Your travelers are important. So I think more than just the mechanics, I think the market has changed, and it really plays for our favor because nobody else in the market is doing it. So we are in a very, very unique position.

Let's go to Scott in the back corner there.

Scott Berg here with Needham & Company. So how should we think about your monetization of customers by industry that they're in? I know the general rule of thumb is larger customers tend to have a slightly lower take rate than smaller customers because of pricing concessions. But we get some questions, and we've done some work on how to think of this by industry because in some industries, a customer might only stay at a 2-star hotel, yet in some industries, customers only stay at 4-star hotels and the monetization on a 4-star hotel is usually better than 2 as an example, right? Because the pricing is higher.

Even though the take rate might be higher, the price is twice as big, your monetization, obviously, is twice as large in that scenario. So I don't know if you've cut the data by that type of vein, but it would be wonderful to hear what industries actually drive the highest absolute dollars in terms of monetization?

I think our strategy as a company is to bring GBV up as much as we can because this is about taking the market, taking as much market share as possible. So in fact, Navan historically is not that strong in blue collar and what you are calling 2-star hotels, but I would love to be strong there. I would like to take the entire market. And it means that you'll have different yield characteristics for different segments, different verticals, different geos. But we're going to take this entire market. That's our plan.

You're going to see us operating throughout the market. In some cases, it means 2-stars hotels, which may be actually usually higher yield on these hotels, but to your point, smaller ADR. In some areas, lower yield, but much more expensive ADR. So you're going to see us playing everywhere. And you're going to see us continue to drive GBV faster than the rest of the thing, but you can see the revenue continue to grow up very fast. So our plan is to grow GBV as fast as we can everywhere.

And I think that it was awesome to see Michael share the diversity of our customer base right now is increasing. And I think this is really, really important to us as there's like cycle in every single industry that have different pace. And so being available everywhere and have a very broad customer base is going to make our model very, very strong going forward.

We -- maybe just to add, but when we look at a deal, we actually analyze what we think the yields and the gross margins would be. And we have something that is flexible, which is the trip fee. So if we sell to a larger customer that has a lot of corporate negotiated rates, which means we would make less commissions, then we would typically charge more on a trip fee basis. The less CNRs that you have, then the more yield that we make and stuff like that. So we analyze it. I don't see many major differences that I can call out by industry. I see it by size of the company, which is what we've talked about before.

Let's go to Steve.

Great. Steve Enders from Citi. I want to ask about just industry dynamics. You have Amex being acquired by PE and focusing on AI flying their product stack. Just how do you kind of view what that means for the market moving forward? And as they try to incorporate AI, what does that maybe mean for competitive dynamics?

Yes. I think, first of all, I saw it as a huge compliment that they finally kind of having the language, right, that describes the vision that we've been basically sharing with the industry since 2016. So I actually say welcome to 2026. So that's the first thing. I think that the second thing, I think that AI will accelerate anything. So you can take something that is fairly old, fairly antiquated, fairly offline, and you're going to get some benefit by implementing AI. No question about it.

I think it will take years. And I'm not talking specifically about [ GBT. ] Generally, I think it will take years. But basically, I think we are expecting to see efficiency from AI across every industry, okay? The benefit from AI for a tech company is going to be completely differently because what these guys are talking about right now are the type of discussions that we had 7 years ago in Navan. And the discussions that we are having right now in Navan are so, so different that by the time that a certain gap will get closed, we are today in a different place to what they are talking okay? So that's one thing.

I think transforming a company that employs 27,000 agents worldwide that you need to call to make a booking or you need to send an e-mail. We talked about developing a model. Actually, I don't know how you develop the model from that. But to do that, that would be a really, really hard task to do. But they will have their business goals from the PE firm. So I think this is a huge opportunity for us because I think the first thing that will happen there is a huge degradation of service because if I need to meet a financial goal and the AI is not going to give me that benefit that I wanted to gain, I think that Michael and Grant are going to have really, really nice life in the next couple of years.

And I want to add something to that is that we have our vision and we execute, and we always believe that -- and executed against bringing the best technologies in order to create the best experience and best products and best services for our users globally. There's been competitors, some of them got -- some of them -- some start-ups disappeared, some start-ups -- new startups showed up. Now Amex is being acquired. It doesn't change our vision. We continue to operate. So we don't care like there's new technologies and the pace of technologies accelerate, like now there's OpenClaw, which is from January of 2026. We do not wait for our competitors to be behind us to say, now we need to push really hard. We already are -- I already blogged about TravelClaw. I'm using it. We're going to release it soon. So that's how we operate. So there is market dynamics we cannot deny if it's there. It doesn't change our vision and how we operate.

Let's go to Aaron.

Aaron Husock from [indiscernible]. So you guys really strengthened your balance sheet with the IPO. As you're thinking about kind of expense and payments cross-sell, can you kind of frame for us how you're thinking about it this year compared to last year? And any quantification would be appreciated.

Yes, absolutely. That's one of the main benefits from the IPO actually, which is getting the balance sheet we need to really go after that opportunity at a faster pace. And so you saw in Q4, the volume of payments we processed on the platform was going up 19%, which was an acceleration versus what we've seen throughout the year. And that's exactly because we had the right balance sheet, and so we could let the sales team go after that opportunity. And so I'm expecting to see an acceleration there. This is really interesting for us, right? When you think about us selling a flight or hotel room to someone, if they use our payment solution, and I'm just making more margin on the exact same transaction. So it's a very, very efficient way for us to expand our yield, expand our margin, also makes our customer even more sticky. So a huge opportunity for us going forward, absolutely.

Let's go to Blair here in the front.

Blair Abernethy with Rosenblatt. Two questions for me. First, can we talk a little more about the cost of goods sale opportunity with the shift to AI? And how much can you push that? Can you get well north of 90% servicing from AI in time? What does that mean to the model? And the second question is just around -- can you just give us an update on Reed & Mackay. There's been some changes you're implementing there and I want to see how that's going. And if that's also other M&A that might be still out there, you still feel that's an avenue for you at this point?

Yes. Maybe I can -- we can pack team here. I'm going to start with your question about the gross margin expansion. So we said today, roughly 55% of the customer support interactions are deflected to our AI agents, right? And as we've seen an acceleration of that over the last couple of years, you've seen a very steep expansion of our gross margin. We're not going to stop there. I think -- and Ilan, maybe you can add here. I think we have a huge opportunity to deflect even more of those customer support interactions to our AI bot. And the main reason is the technology is getting so much better than we see CSAT score that are on par.

People are not even noticing sometimes if they are talking to Ava or to a human agent. So I think we have an opportunity to get this to 60%, 70%, 80% over time, which means there's a huge opportunity from a gross margin perspective. And that's not just the only factor here. The other one is the usage of our own AI model. Maybe I would love Ilan here to explain exactly what we are doing. Today, it's 30% of the volume and the cost is significantly cheaper than using a Frontier model. Do you want to elaborate here?

Yes. I want to say a few things. Today, Ava does chat, only chat. We still have, I don't know, [ Aurelien ] correct me, it's like 30% of the incoming support contacts are still between e-mail and voice. We already released voice internally. So you can call Ava and chat with her, and it works so, so well. And one thing that took us years to master is the -- Ariel touched on it earlier, it's the orchestration between the AI agent and then the human agent. You'd be surprised. It's very complex. It took us years to perfect because the last thing that we want is for you to have a conversation with an AI. And then when it takes you to a live agent, you need to start all over again. It's the most annoying thing. It's like when I talk to some of the vendors in the U.S. and get service, like what was the purpose of this AI, just to annoy me more.

And now I'm ready to talk to an agent when I'm really pissed. Representative, I totally use the F word. Yes. So we do now voice and we applied all of the learnings that we had from text to voice. So the -- moving the conversation from the agent to the hangover is perfected. It works so well that the live agent can ask Ava before it gets back to the user. Follow-up questions. Wait, did you say that the user wanted this hotel or that hotel? No, I mean be this or that, this or that. Anything else? No, okay. I'm going to connect you now to the user. Amazing. It works so well. The second thing is e-mail. we still have a customer that use e-mail. And today, we have agents. So we are now starting to see how Ava, it required even more adjustments than voice. It was more complex because not getting into the details. But definitely, we'll see an improvement in gross margin by deploying both voice and e-mail.

And now about models, it's simple. It's -- we have the data luckily since 2023. It's very unique data, data of conversations with an agentic system that speeds out its reasoning, which tool it needs to use, why, which parameters, super unique data. No one else has this data in the world. And we train the models on that. And then you have -- the Frontier models have anywhere between 1 trillion and 10 trillion parameters, call it 1 trillion. The models that we use have 27 billion parameters. Imagine how much GPU power, and we host it, how much GPU power you need to power 27 billion versus 1 trillion. Imagine the latency, so cost latency, and it is so much more professional in that space. If you ask our models about quantum physics, you will not get the best answer, but we don't care. A ton of potential.

Just [indiscernible] the question. First of all, we are only now -- we have the technology that will allow to do that without upsetting a VIP customer that is willing to pay $150 a trip, okay? So it's completely different thing and also booking first class or private jet and so on. This orchestration that we keep mentioning, only when we got it to a perfection, we could actually allow ourselves to move to the Reed & Mackay customer to our platform. Now the reason that we are moving it is not a gross margin reason. It's because our customers, these Reed & Mackay customers ask us to have a better booking experience. For example, in a traditional travel management company, any traditional management company and Reed & Mackay is similar to that, you have less inventory, there is no low-cost carrier. There is no specific hotel, very, very hard to book plane. Now why these things are important? You say what the VIP at C level will want to use Ryanair? Sometimes yes, because sometimes this is the fastest way for you in Europe to get it somewhere.

So having this limited inventory, but I'm a VIP is a problem. Also coming and saying, I always need to talk with an agent, and I cannot just book something quickly, it's a problem. So our customers, the Reed & Mackay customers ask us, can't we get in hybrid? We can have an agent, the agent will know us by name, but also I can get from all of this goodness. So first of all, at dust is service is what our customers want. And then there is huge gross margin benefit. So it's a program that we run. We are running it slowly. The customers there are very mature.

We've already migrated several customers. All of them are happy. It actually opened up to a new opportunity that we didn't think about when we planned it. There are some pretty big enterprises there that have been using Reed & Mackay for a subset, and now it's an upsell opportunity. So the benefits there are, first of all, this is what our customer wants. Second, definitely gross margin expansion; and third, a huge upsell opportunity. So very slow. We are very careful with this migration. But what we see so far, we are very happy.

I think we have time for one more question. We'll take it from Gabriela in the back.

We've noticed a trend with software companies where we sometimes see an incredible demand for agentic. But then when you go to the customers, the customer readiness is essentially there's a spectrum of readiness. So I guess my question for you is how do you view your customer base's willingness and readiness to accept some of the newer generation technologies like TravelClaw and the Navan Edge that you're previewing and generally available today? And then how do you close the gap between the customers that maybe are less forward thinking about how they want their travel and expense -- experience go.

I think it's a really, really important question, and I will actually answer it as a product manager. Yes, technology. AI is a technology. Nobody cares about it. It's not important at all. What's important is what it can give that user, that customer. Does it create value or not. The reason that we keep mentioning Ava there is no -- it's a no-brainer. I want to get my service faster. I want to get it in the most accurate way, and I want to be satisfied. So Ava, which we started to develop 3 -- actually 4 years ago was in that context. It was to solve a customer problem. Our machine learning that is embedded in the platform that was developed in 2016 was developed to allow the 7 minutes booking. This is to solve. So it doesn't come with an headline, this is AI.

But the reason that the search results are so effective is because of machine learning. The 15% saving, this is machine learning. The ability to book with AI on an agentic platform, very, very relevant on the demo that I showed you earlier with Edge. But another area that is relevant on what we are calling Navan Classic, when you try to book multi-city, very, very complex thing to do on an online platform. This is AI. So we didn't come to the customer or the user and say, here is an headline. This is multicity powered by our model. We are basically solving problems for our customers, and we know to deploy the relevant things for them on the right time. If I will take Navan Edge right now and we'll make it the Navan Classic UI, we will not have customers. They are not ready for that.

And I think -- I want to think that we are very, very good on knowing what is the value that the technology creates, when to deploy it. So I'm like you sometimes at all following some of the SaaS companies announcement. And actually, as a customer, I'm saying, I don't want this. So I don't want you to touch my sales person that is working extremely well and start to introduce stuff that I don't need. So I think it is very, very important to know what the customer wants, what the user wants and come from that perspective. And if there is something that is fundamental in the Navan culture, it's actually the first value, which is all about the users, all the users, all the time. That's what drives us, not AI, not a certain technology, not a model, not our gross margins, it's actually the customer, and we are really good on tuning the stuff to what they want.

And I want to say one thing about it. It's more about experiences -- experience and less about AI. And just one second -- and I just want to share one experience that we've seen. We invite some of our Navan Classic users to try a conversational experience with the agent. And so I've seen a conversation that the user basically said, I want to book -- please book this hotel in New Delhi for me on the 10th. And the agent will slide and said, sure, I'll help you with that. However, I see that you land on the 9th. Should you -- would you want to book it on the 9th -- and you said, "Oh my God, yes, on the 9th. Thank you so much. And that's the difference between an intelligent hygientic experience versus forms and tables.

That's an awesome place to end. Thank you all for your insightful answers. Thank all of you again for being here and for your support, and have a great day.

Thank you for joining us. That concludes our investor presentation today.

Good day, and welcome to the Navan, Inc. Q4 Fiscal 2026 Earnings Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker, Mr. Ryan Burkart, Vice President of Investor Relations. Please go ahead.

Thank you, operator. Good afternoon, everyone, and welcome to Navan's Fourth Quarter Fiscal 2026 Earnings Conference Call. With me on the call today are Ariel Cohen, our Chief Executive Officer and Co-Founder; Aurelien Nolf, our Chief Financial Officer; and Michael Sindicich, our President.

Before we begin, during the course of today's call, we may make forward-looking statements within the meaning of federal securities laws. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially, including the risks and uncertainties described in our earnings press release, our quarterly report on Form 10-Q filed with the SEC on December 15, 2025, and our other filings with the SEC.

In addition, on today's call, we will refer to non-GAAP income and loss from operations, non-GAAP operating margin, non-GAAP gross margin and free cash flow. which are non-GAAP financial measures that provide useful information for investors. Reconciliations of these non-GAAP financial measures to their corresponding GAAP financial measures to the extent reasonably available can be found in our earnings press release. With that, it's my pleasure to turn the call over to Navan's CEO and Co-Founder, Ariel Cohen.

Thanks, everyone, for joining. I hope that you had the time to read our prepared remarks. And I have 1 thing to say we are doing it. We just closed a very good Q4 and a year with incredible results. Our NPS in Q4 is at 47%. This is all-time high. Our CSAT is at 96% and maintained very high. And this is a proof point for meeting our mission to make travel easy for every traveler by being the best travel agency on the planet.

The 35% Q4 year-over-year revenue growth and the non-GAAP operating profit in the quarter are demonstrating the leader tradition that we are at. We are executing very well on both our SLG Motion and our PLG motion. So if you think about it in Q4, we signed net new GBV that is over 50% more compared to the Q4 in the previous year. This is a huge growth rate. We are displacing legacy players because we offer great user experience, real savings and proven AI value today. This also brings us very close to the rule of for the first time in our history.

And the item on the cake, we actually turned free cash flow positive for the first time in our history and a year ahead of our plan. Now I want to take a step back and talk about AI because as an AI leader in the travel space, I'm getting a lot of questions. what it means for travel, for the space. So I want to really take the moment and explain it.

So first of all, we, Navan, we are a travel agency. It means that we care about every step of the travel experience from the moment that you are planning your trip, where you're going to go and something happens. And until you return home and you need to expand the trip. We care about travel for travelers for the executive assistant that needs to support you for the business travel managers that are managing the entire travel program in an organization for CFO for accountants for everybody that is involved in travel.

Travel is a huge part of the OpEx, and it means that a lot of people will care about it. And Navan is the best solution for you. So that's the first thing. Second, we have created in the last 10.5 years, the best real-time travel infrastructure on the planet. We call it Navan Cloud. And it's our connectivity to everything in the travel world through software. It requires global licenses, supplier contracts and massive financing for the payments business. And then the most important part is our agent orchestration platform. When you interact with us, we seamlessly orchestrate an AI agent that can book your trip, change your trip, get your money back, give you any information about yet with human agents.

In fact, we basically married human intelligence and judgment with artificial intelligence to create the best experience for our customers. The proof points are in our high NPS at CSAT, ongoing the gross margin expansion and the acceleration of gaining market share. The recent and the most exciting release of Navan Edge, our latest breakthrough in agentic AI is bringing the power of hyperpersonalized executive level travel assistant to the unmanaged travel market, which we estimate at a $57 billion of car. The bottom line here is not only we are a leader in the AI travel space, it is very clear that we and our customers are a huge beneficiary of AI. We also recently announced the migration of the Reed & Mackay customers to our AI platform.

So they will be able to enjoy from both the benefits of both worlds. They're really amazing high-end VIP service that can help you step in when you are stuck in an airport. With everything that are platform is creating. For FY '27, we are going to focus on high growth, scaling in all channels and with all of our offerings, accelerating our innovation, which means that we will continue to invest in AI and to release new products and capabilities using our AI platform, and will continue to demonstrate financial supply. And with that, before I turn over the call to Aurelien, which will talk about our results, I'm actually very excited to have Aurelien as part of the team. I've been working with Aurelien in the last 3 weeks, and it was just amazing.

And I'm actually happy that he has the opportunity to talk with you with this historic quarter for us.

Awesome. Thank you so much, Ariel. It's such a great privilege for me to join the Navan. The Navan team, such a great moment with such a great momentum in the business. As you know, I saw the power of our platform firsthand when I was a customer myself at least. And I know it's not just a layer on top of an all tech.

It's clearly a clean sheet redesign that addresses a huge market of $185 billion. Looking at the numbers, Q4 revenue was $178 million, up 35% year-over-year, while our GBV reached $2.3 billion, up 42% year-over-year, a growth acceleration driven by an incredible go-to-market momentum and faster-than-expected enterprise onboarding and ramp.

Addressing the GAAP figures, you'll notice our GAAP operating margin was negative 50% in Q4. This was mainly driven by a strategic onetime move. We decided to retire the Reed & Mackay brand for new sales, resulting in a $36.2 million noncash amortization charge.

As Ariel just mentioned, this is a very intentional move that will ultimately deliver the power of the Navan platform to the Reed & Mackay customers. Our non-GAAP operating margin was breakeven, a remarkable 1,100 basis points improvement over last year. We are driving leverage across the board with our non-GAAP operating expenses being down as a percentage of revenue, even as we invest in more product innovation and our incredible go-to-market strategy.

We ended the year with a very strong balance sheet, $741 million in cash and short-term investments against just $125 million in debt, mainly related to our expense business. We expect this great momentum to sustain in fiscal 2027.

And from a guidance perspective for the full year 2027, we expect revenue between $866 million and $874 million or 24% growth at the midpoint and a non-GAAP operating profit between $58 million and $62 million, a 7% margin at the midpoint.

For Q1 fiscal 2027 specifically, we expect revenue between $204 million and $206 million, which represents 30% growth as we head into a seasonally strong spring with non-GAAP operating profit expected to be in the range of $4.5 million to $5.5 million. Navan is proving that we can grow fast while we are becoming a disciplined and profitable engine. We have an incredible mission, the right product and the right team to execute. And with that, we'll open it up for questions.

[Operator Instructions] And our first question will come from the line of Steve Enders with Citi.

I guess just to start, I want to get a better understanding for the bookings momentum that you're seeing in the business. I think you called out 50% growth in bookings there. Just how do you kind of view the sustainability of that growth and what you're seeing in the sales pipeline? And I guess as we think about that 50% number, I mean, I guess that kind of implies an acceleration versus the 42% GBV growth we saw this quarter. So just how should we think about the potential for overall GBV growth to excel further from here?

This is Aurelien Nolf. I'm going to test you with Michael on this one, but I'm going to start with highlighting the 42% trade GBV growth we saw in the fourth quarter, right? So incredible momentum. And Michael is going to speak to why we are seeing this momentum with our customers so far. But clearly, this acceleration of our booking growth is very, very, very exciting.

What I just want to really clarify here is the 50% Ariel mentioned is the new signed GBV. So the new signed GBV is something we are looking at internally. It's a data point we are looking internally. It's the total annual travel spend that we expect from new customers that we just signed during the quarter, right? So it's what we know is going to fuel our revenue going forward. And it's we are seeing great momentum there. So we believe we're going to keep seeing very strong bookings growth going forward.

Yes. And maybe I'll take -- to give a little bit of color of what we're seeing. First of all, I don't know how many people on the call here have been in sales before. But what I can say is it feels so damn good to be able to walk into any room at any size of customer around the globe and believe in our bones that we can support their travelers better than anyone else on the planet.

And so we take that energy into these customers, and we really explain what we deliver. And when we think about what matters to our buyers, First of all, we deliver 15% median savings off of your current travel budget compared to whatever you're currently using. That's huge, right? T&E budgets are big and at a time now, people are really focused on being able to save money. Next, if we can tell you that through AI and through our products, we can book in 7 minutes or less on average compared to 45 minutes. Think about how many travelers are booking day in, day out. They're really expensive employees that need to go win customers or drive the business forward.

And we're saving a ton of time. More than 70% of our expenses are automated. We just launched the Expense AI agent where you can just launch your drop-in receipts and automatically code your expenses. And then when we have a saying internally, when it rains, Navan shines. We just had massive storms. There's wars going on.

And your employees or customers' employees are typically waiting on hold or sending e-mails to get a hold of their travel agent when 50% of our support is completely automated with AVA. And then you can also call in 24/7, 365 in a bunch of different languages. So ultimately, it's a really high NPS. It's a really high CSAT. We're showing really new AI capabilities that are actually launched and deployed that travelers are using every single day. And then everyone loves the system, so they use it. So you can actually manage from a duty of care perspective. And when things are crazy, the thing that you need is visibility on where your employees are and then people who can support them.

So I think that's kind of why we win. And then we see a lot of tailwinds in the industry. We eliminate Frankenstein cobbled together solutions, legacy booking tools, legacy TMCs. We have our customers that are happy talking in back rooms and really sharing why they're buying Navan because people would rather listen to their friends, they don't want to listen to our sales team.

So that's a big tailwind for us. And then lastly, there's a lot of consolidation in the space. We've seen that consistently over the last couple of years. And so there's a lot of turmoil, which we're steady. We're growing fast. We have happy customers. And all those things ultimately result in our RFP volumes increasing hundreds of percent, which we saw and told you earlier. So I think that's kind of the confidence that we use when we walk into a new sale.

Okay. That's great to hear. I guess just to follow up, you mentioned some of the, I guess, uncertainty out there, conflict were out there. Just maybe what impact has that had on what you're seeing from bookings activity or from the impact that's having on the business? And I guess on the other side of that, just how are you kind of incorporating that ongoing conflict into the outlook here?

Yes. It's a great question. So far, we're seeing very minimal impact, right? We have a very, very low volume exposed to the Middle East, in fact, low single-digit volume exposed to the Middle East. So we're not seeing any significant impact at this point. It's very, very hard for me to sit here today and say that I can predict everything that's going to happen in the world. But what I can tell you is during our Q4, we saw actually a lot of disruption to travel. When you think about the winter storms on the East Coast, we had this war in the Middle East. TSA also has been disrupted recently.

And that's exactly what Michael just mentioned. That's when our platform really stands out as being the right tool for people to use. But what I would say from a guidance perspective, our forecast today assumes, I would say, what is a typical amount of disruption we are expecting to see in the world, nothing more, nothing less. I mean, disruption is part of the business. That's something we know and manage very, very well. Yes, that's the color I can provide.

One moment for our next question and that will come from the line of Samad Samana with Jefferies.

It's great to see the strong close to the fiscal year and the strong outlook for '27 or fiscal '27. Just a couple of things. Maybe first on the Red and the K transition, can you help us maybe think through what the benefit of that will be going forward beyond the branding component?

Should we expect maybe better unit economics there? Should we think about that it makes it easier to sell, so you're not describing it separately. Just help us think about both the financial impact and then the selling impact there? And then I have one follow-up question.

Samad, so first of all, we actually always, always, always in a van walking it back from our customers. So the main reason for accelerating the integration of Reed & Mackay into the Navan platform is that, that's what our customers want. We have endless discussions of customers that are telling us, on one side, I do want to have the ability to sometimes talk with an agent and a really, really, really good travel agent, especially if I'm stuck, especially if it is an extremely complex trip. Sometimes I just want to offload the entire thinking to somebody else, and I'm actually willing to pay for it. So that's on one side.

On the other side, I see a lot of things in your platform that I cannot get from this travel agent. For example, the level of access to content that we have, different types of airlines, low-cost carriers that even VIPs want to use when they are in Europe. The ability to change stuff instantly to book stuff immediately, that these are things that we are hearing from our VIP customers, the C level, the executive assistance that they want to see.

So basically, bringing a solution that marries the 2 together, we see it as a huge upside. We see it as an upside for the sales organization, for our sales organization to upsell Read McKay for all of our 12,000 customers. So definitely an upside. And there is another upside here, the economics of our AI platform, so gross margins, unit economics are completely different. the economics of the Reed & Mackay platform. The Reed & Mackay platform, you can think about it as very, very, very similar to any kind of travel management company that you are familiar with.

While the Navan platform, it's really an AI-driven platform. So there are mainly 2 benefits here. On the top line, we will see more people using our VIP offering. And from a unit economics perspective, it's definitely higher gross margins business.

And maybe some financial color that I can add here. You can see in the prepared remarks that we just published that the Read McKay business is roughly 20% of our total revenue for FY '26. And they had a growth rate that was significantly lower than the core Navan platform. In fact, the core Navan platform grew the high 40s from a GBV perspective and just above 40% from a revenue perspective. So there's clearly very, very different dynamic there. And what I would say to wrap on this topic is the net revenue retention rate for Navan overall in 2026 was 107%, right? So it was slightly lower than the 110% we've seen in the past. And that was fully driven by the Reed & Mackay dynamics, right? Because the core platform, the core Navan platform grew -- the net revenue retention was 110%, very, very stable there.

And if you add the ramp of our new customers, it was even above 120%. So we are seeing a very strong retention in our core business, but that was a little bit offset by this dynamic within the Reed & Mackay business which is the reason why we're very excited about migrating those customers to the Navan platform.

Really helpful. And then maybe just as a follow-up. If I unpack the fiscal '27 guidance, very good growth, just can you help us get some context around how you're thinking about GMV growth versus usage yield, especially given the context that the usage yield in the fiscal fourth quarter was much better than investors were expecting.

Yes, absolutely. So we just guided to a 24% revenue growth. We are seeing a lot of acceleration in the business right now, the platform is growing very, very nicely with a great momentum Michael just described with our customers. But it's very, very early days in the year. And so we have a prudent approach to our guidance with those 24%. I'm expecting bookings to grow slightly faster than revenue.

So that means we may see a 30 basis point yield change in 2027 versus what we see in 2026. And that will be mainly driven by the Reed & Mackay dynamics that we just described, but also a mix across the different channels and across the different customer. We are now -- we have a very diversified base of customers, and they all have different characteristics, right? The enterprise business has a slightly lower yield than a smaller company for many different reasons. Reed & Mackay, we just discussed, but we have a lot of opportunities to also optimize this yield percentage with our payment business with meetings and events. And so I'm very excited to see the momentum from a bookings perspective and this great guidance we are able to share on the revenue side as well.

One moment for our next question. And that will come from the line of Gabriela Borges with Goldman Sachs.

This is Noah on for Gabriela. Given the expense control, cash expense control that you guys have managed to show, we were wondering if that impacts at all your strategy for payments. You noted in the prepared remarks that the financing that you have for that side of the business, that's a moat that you have versus some of the nascent companies. So we were just wondering, are you more willing to move into that space in terms of the terms you offer and things like that?

Yes. Yes, we are growing the payment business, right? In fact, we plus 19% year-over-year in Q4. So there's still a meaningful growth here. What I would add to that is that coming out of our IPO, we are -- we have a very, very clean balance sheet, right? We have very strong balance sheet with $741 million of cash, cash equivalents and short-term investments, small debt. And that will help us over time, grow this business as we are upselling our customers. This is a huge opportunity for us. And frankly, I think we are only scratching the surface of what we can do with this business. So you should expect us to keep being very aggressive from a sales perspective there and really lead to more upsells in the marketplace.

One moment for our next question. And that will come from the line of Siti Panigrahi with Mizuho.

I want to go back to the fiscal '27 guidance to understand the factors you have embedded into it. We see a lot of different factors. Airlines, mainly Delta talked about strong corporate travel momentum for this year. And then we see some kind of offset with the war. And also internally, you are seeing a lot of strong momentum. I'm just wondering what are the puts and takes you have embedded into your guidance?

Yes, that's a great question. We -- so as we've said, we are seeing great momentum in the business, right? Again, 42% GBV growth in Q4, very, very strong momentum. We are not seeing any impact from any geopolitical tensions right now in our business. In fact, we believe historically, business travel has been pretty resilient, right? It's a category where you see people traveling, they need social interactions with their customers, with their coworkers.

So people are really craving for those in-person interactions. And so we keep seeing the corporate business travel to be a very, very strong category. In fact, the GBTA index right now is showing a growth in mid- to high single digits year-over-year, way faster than the TSA checks, which are more in the low single-digit range of growth. So we're seeing corporate travel to be very strong. But on top of that, we're gaining share, right? Like our bookings are growing fast. They are accelerating. And so no matter what I would say, what happens in the industry, we are gaining share.

And so we are seeing a lot of momentum, more customers joining our platform, onboarding faster than ever. And so we believe that the combination of a very strong industry, very strong dynamic and the momentum we have in our business right now is going to help us grow the business very significantly in 2027.

I want to add something to this. If you should think about the 2 storms that we had in January, which really created huge interruptions in the eastern part of the U.S. business travel, people will obviously cannot travel when the airport is closed. There is no question about that. But they will travel the week after. And if you support them well during the storm and really help them to reschedule the trip, this trip is going to happen. This is why you actually don't see an impact on our business when these things are happening. this is how much business travel is way more stable than any other type of travel. And to add to the point that earlier I was talking about, the SLG channel, we just gave you a number of 50% growth year-over-year in 1 quarter.

This feeds our system for the next years to come. So that's one thing. PLG, basically, this is people coming to us from Instagram, from TikTok and starting to be a customer is growing extremely fast. And we've just released a very important release that is based on our agentic platform, which is Navan Edge, which we have huge expectations from it. And although it's early, we see really good signs there.

And we are prudent, right? I said, it's early days. We just grew our revenue in Q4 by more than 30%. We guided to a 30% growth in Q1, 24% for the year, but we are prudent, very early days.

Yes. That's great. And I was going to ask this Navan Edge question. And specifically on the demand side that you're seeing right now, are you seeing travelers from your unmanaged market that's signing up now independently? Or is this primarily from your existing Navan corporate customer that are extending that usage of -- to their employees for unmanaged travel. What kind of trends are you seeing on the Navan site?

Yes, it's actually an amazing question. So first of all, Navan Edge targets non-Navan users and customers, okay? So that's the targeting there. And everybody that is using the platform right now are non-Navan customers and users. So that's basically a completely new market for us, and we are only targeting that market. And we see better signs than what we thought we're going to see. But again, very early days, but very, very, very promising. So that's one side. On the other side, because we are running on agentic platform, and what does it mean agentic platform? We have capabilities, right? This is our connectivity to everything in travel. Then we have all of the knowledge, right?

Some of the knowledge is in our actual code, some of our knowledge is in travel agents and the ability to capture these skills and marry it together with the capabilities and deliver it as an agent. So we are an agentic platform. That's what we've been building here in the last 3 years.

So once you see an agent, an AI agent that is doing something extremely well, in the Navan Edge platform, let's take booking a restaurants for you. We are actually taking this agent and providing it in the main Navan platform. So our customers are actually benefiting from the development of agents in the Navan Edge in the Navan main platform. So both are benefiting from it. The platforms are feeding each other with different AI agents and different human agents, by the way, in both platforms. But the target from a go-to-market perspective and the users on the Navan Edge platform are only non-Navan customers from the non-managed segment.

One moment for our next question. And that will come from the line of Scott Berg with Needham.

Really nice quarter here. I guess 2 questions for me. I guess on the shareholder letter that was written there, the prescripted remarks, I guess, you talked about adding restaurant bookings to the platform. That's obviously new to the Navan platform. I guess how should we think about the economics, maybe the inventory that's available there? And any implications in terms of your guidance from that new offering this year?

Yes. So -- so the way that we are thinking about Navan, right, and think about it also of where everything is going, people really, really care about meeting face-to-face of being there. But they also care about their experiences. So it's no longer just a transaction.

I need to book a trip. I want to -- when I'm planning the trip, I want to feel that you know who I am, that you know how I'm thinking about this trip, what kind of hotel will I want to be at, the type of airline that I like, Who am I loyal to, right?

Loyalty is a really, really big component on travel. But then I'm arriving and I'm taking my lift, my Uber, my black car and I'm getting to the hotel. And now it's night, right? And I can have a business trip, sorry a business dinner. I can meet with a coworker. We see this as part of the trip. In fact, in Navan, we see every aspect of being there. part of the entire dream. Part of this is obvious, you book stuff. Part of this, we really care to match what you want, what you need with our platform and then how you pay for it.

So this is the payments business. This is the expense management business and so on. So basically from every direction. So restaurant getting into restaurants was a very obvious move for us. And this is actually when AI is important. We can build endless amount of things. Travel is endless. You can think about it as Amazon.

It's just endless. You can sell flights, you can sell cars, you can sell hotels, but there are restaurants, there are experiences while you are on the go, it's just endless. And because AI is so powerful, we are actually accelerating our road map across the board. So you're going to see us releasing more and more and more offerings, basically AI agents to our customers across the board. Restaurants is one of them.

And I would add, since you asked about the economics, the managed is not a significant contributor to our 24% year-over-year revenue guidance, right? We are -- it's early days. It's a new category that we want to redefine here with a completely new product.

We're very, very excited. like we are ahead of our expectations from an acquisition perspective and a conversion perspective, but it's still early days. Although it's the biggest part of our addressable market, right, $56 billion is the size of the addressable market, what we call the unmanaged market. So very, very exciting.

Understood. Very helpful. And then from a follow-up perspective, your new premium offering that's going to replace Reed & Mackay there. I guess what's different about that, whether it's experience or maybe some of the products offered there? Help us understand if there's really any differences or if there's going to be something similar?

Yes. We -- first of all, we call it now Navan Pro. So that's part of the change of the brand, and it's part of the Navan platform. And it's really -- I've talked about it at the beginning, this orchestration of when do we deploy AI, when we are actually having a really good, highly personalized discussion with you with an AI agent. and when are we deploying a real agent.

And all of us, I'm sure, have experienced some bots in their like. And you have this thing that there is a point that you are starting to yellow the bot representative. And that's not the experience that we've created here. The experience here is so amazing. It's so seamless. The CSAT there, the satisfaction is almost the same as a human being. And in a lot of cases, people will prefer it because it's faster and never make mistakes. So this is our AI platform and the benefit from that. But when you marry it with really the best, most experienced VIP agent that you can think of and you marry the 2 together, you're just getting a really, really good experience when you plan your trip, when you are at the airport, when you are coming back.

And that's really what we are doing here. I've mentioned AI acceleration earlier. I can do today way more things with our engineering department, with our product department, with our designers. And that's why you can -- you will see us accelerating delivery of stuff to our customers in the years to come. That's what you're going to see from Navan.

One moment for our next question. And that will come from the line of Jed Kelly with Oppenheimer.

When we listen to the airlines on recent conferences and everything, they're really leading with how corporate travel is sort of leading the results and driving a lot of their growth. Is there something they are doing with direct -- with NDC and leaning into corporate travel and then that's benefiting? And can you just explain how you're benefiting from some of the growth we're seeing with the benefit of corporate travel to the airlines?

Yes, 100%. So first of all, NDC, Navan is the leader in that, which means that we connect to airlines sometimes actually a lot of -- in a lot of the cases directly through the NDC protocol. We are also using GDS. So we will sometimes connect to airlines through GDS. As I said earlier, we took the decision 11 years ago to connect to everything. And it is about trust. It's about the trust with our travelers, with our customers to tell them that in 100%, if it is out there, you're going to see it in the platform. What NDC gives you is the ability to merchandise, to take it further, to buy stuff together. I don't know how many of you have sat in an airplane and suddenly, I don't have the WiFi, and I need to kind of in a very, very slow way to buy a Wi-Fi for the flight, right?

So that's an example of something that you can attach if you are going through NDC, you can attach to the time that you are buying the ticket when you are selecting the seat and so on. And it's just one example of merchandising of assuring the right price at that moment, the right class and et cetera. So the experience that NDC is giving to our customers is extremely good.

It's part of what I was talking about earlier, Navan Cloud. And when you are marrying that ability to connect to the airline directly with the knowledge of what to book for you, that's basically the skills of the agent, you are creating really, really good experience for the traveler, but also for the company because you are assuring the right price. Therefore, you are making sure that nobody is overspending on the travel expense.

Great. That's helpful. And then just as a follow-up, we recently saw OpenAI pull back from within their app and Walmart cited that they weren't seeing great results. And are there any parallels to what we saw with OpenAI and just the complexity of all the underlying travel technology and just how hard it is to complete travel transactions and even if you think in just a normal LLM AI experience?

100%, the reason that I took the time at the beginning of this discussion to explain our platform. And the first complexity, when you are a travel agency, it's not just to connect to stuff. Obviously, we are connected to everything. And by the way, there is no travel agency on this planet that took the time, the effort, the money to connect to everything globally.

I'm talking in China, in India, obviously, in Europe, in the U.S., everywhere in the world. So that's the first thing. But connectivity is just one thing. It's about knowing the airline rules about everything that you do. There are various internal classes. What happens when you cancel a trip, how exactly you're going to get the credit back? How are you going to apply it later? It is actually very complex, per airline, per hotel, per any type of inventory that is out there.

And what I just described, this is, I would say, 1/3 of what our platform does. Then there is all of the knowledge. The knowledge means that I actually know when you told me, I want to book this flight, I know exactly what type of airline class I will book for you.

What type of room, there are endless amount. You're saying that in hotel that has 100 rooms, there are 100 rooms. The amount of permutations there is endless, which means that there is a lot of skills that you need to marry with that. And we've said it time and again, we are basically creating a seamless orchestration between people, real life agents that sometimes are working in the background, sometimes are talking with you with AI agents.

The reason is travel is so complex and business travel is even more complex, but payments is extremely complex. So the complexity level here requires a combination of AI. And we think that we are one of the leaders in this space when it comes to travel with the connectivity that I talked about earlier, the airlines agreements, the licenses that you need to get, the amount of money that you need to raise in order to provide credit in the credit card business and so on. So the level of complexity here is huge.

And I've been saying it in the past. everybody in the -- can create nice demos to actually doing it. The only one that is doing it in the AI world is Navan.

One moment for our next question. And that will come from the line of Keith Weiss with Morgan Stanley.

Sitting in for Chris Quintero. Congratulations on a really solid quarter. Maybe 2 questions. If I may, bring in Aurelien Nolf into the conversation. It's always very interesting to hear from a CFO when they first joined the company, I think CFOs look at companies very similar to how we and investors do and particularly at this point in time when there's so much uncertainty and so much investor concern around software companies broadly, including Navan. So maybe what was it that got you comfortable and got you excited about joining Navan as CFO at this point in time? And maybe that will help us get more comfortable with the sort of the durability of the story.

Yes, it's a great question. First of all, I would say I don't see ourselves as a software company. So maybe that helps answering that question a little bit. We -- I think when Ariel and I discussed about me taking the role, we really discussed about how we can transform an industry, we are a travel agency, right?

And we are doing it very, very well because we are leveraging a very cutting-edge technology, which obviously is something that got me excited, but really the mission -- people are mission-driven here.

And when you walk in the door, my day 1, I met a lot of people that are very passionate about our travelers and how they can make their traveling experience seamless and frictionless. So that's super important to me, joining a company of people that are so excited about what they are doing and their mission is obviously super important. The size of the addressable market is huge, right?

The $185 billion, huge opportunity. I think we are only scratching the surface today, although we are gaining share, and we see so much momentum in the business, it was very clear to me that given the quality of the sales team, the quality of the product, the quality of our marketing and the passion of the team that we had something very, very special here that we can take pretty far.

So I would say those are the different things that I've been really looking at. And then on top of that, a clear vision of how we're going to expand profitability, generate free cash flow, et cetera, is also top of mind for us as a company, and I think it's something that got me very, very excited.

Got it. And maybe a follow-up on that. Earlier in the commentary, you guys talked about approaching Rule of 40, not quite there yet. As we're modeling out the company over the next couple of years, should we be thinking about that as the North Star in terms of how we should be looking at where Navan is going to be heading?

I would not say it's a North Star. I think it's a good benchmark that people have been using across many different industries. Honestly, I don't see that as a limiting factor, like we have a lot of ambition. And when we see, again, the momentum in this business and how differentiated our platform is versus what our competition is offering, I don't see that as a ceiling, to be very clear.

We just guided to strong growth for next year. As I said, we are prudent. It's very early in the year. We also guided to margin expansion, which is pretty awesome given the level of growth we are seeing in the business. We are expanding our margin. And on top of that, we turned free cash flow positive 1 year earlier than we initially anticipated. So I don't see -- I think the Rule of 40 is interesting and is a good benchmark. But clearly, that is not a ceiling for us.

And one moment for our next question. That will come from the line of Patrick Walravens with Citizens.

Great. And congratulations on all the success. Ariel, I have 3 trips I need to book after this call, so hopefully, I can do them all in 7 minutes on Navan. My question is about the RFPs. So Michael, you're talking about -- I forget exactly what you said, but I think you said hundreds of percent. So I was wondering if you could just give us more details about what you're seeing in the RFPs, who you're seeing them from sort of how that's different from maybe a year ago and whether being public is helping drive those inbound inquiries.

Yes. Great question. And by the way, you'll definitely book your trips in less than 7 minutes, so let me know if you can. But really thank you guys so much for being a customer. It really means a lot. When I think about RFPs, so who runs an RFP, it's typically a larger company, right? So our commercial segments and our lower mid-market segment, they oftentimes we can make a switch without going out to an RFP, but the larger and larger, the more global the company, they'll typically run an RFP to do that.

So to answer your question directly, where do we see the acceleration of the RFP, it's upmarket that doesn't mean it's not an indication of the increased demand down market as well. As Ariel mentioned, the PLG segment is growing extremely fast, 50% growth in new GBV from our SLG market includes commercial mid-market and enterprise. So we see it across all segments and RFPs come from larger customers.

Cool. And does being public are you noticing that make a difference?

Yes. Sorry, I was just going to answer that. Thanks. We do. So there is a lot of smaller travel agencies or expense management platforms or payment platforms that are not public today. And that level of transparency is something that we see as an advantage because it means that we're durable, it means that we're not hiding anything.

When we were private before, right, we'd have to talk about these questions without revealing our finances and things like that. And today, we're at a state where we can say, hey, just go listen to the last earnings call or look at our press release. So I think it's giving a lot of confidence, one, on our numbers, but then two, on the durability of us, right? When we engage in an enterprise deal, typically, they might have been on their incumbent for 20 years. And when we're pitching someone, we want to be their incumbent for the next 20 years and beyond.

And if you think about a couple of hundred thousand employees travel and expense, it's not just a feature that you launch to some subset of the employees. It's a full rip and replace globally for our employees. And so while we do the implementations extremely fast, it is something that requires change management and someone doesn't want to switch in 2 years, if that makes sense.

One moment for our next question and that will come from the line of Andrew DeGasperi with BNP.

This is Ari Friedman sitting in for Andrew. I just had 1 question. In terms of investments, we're noticing a meaningful uptick in hiring in your sales force. What's the typical ramp a sales rep before they're fully productive? And do you guys know how much more productive approximately a fully ramped rep is?

Yes, it's a good question. So we are hiring across our different go-to-market channels. So the ramp time is usually pretty correlated to the segment that the rep is starting it. .

So we have a lot of SDRs, which are the ones that are pipeline generation. They're doing a lot of cold calls and e-mails for the sales reps. They get promoted, right, into the commercial segment. And if someone is internally being promoted, we see that ramp time a little bit faster because they know the company, they know the system, the value props, et cetera.

So that's a pretty fast ramp. And then if we were to hire from the outside someone like an enterprise rep, you start thinking about those deal cycles, which can be relatively long. So a big enterprise company, maybe it's a 6-month sales cycle and then with the whole RFP and then it's an implementation and a launch a little bit later. So it can extend from, let's call it, a year until like really fully ramped in all the knowledge couple of weeks down market for us. So that's kind of how we think about it. And we are growing across all the different segments.

One moment for our next question. And that will come from the line of Blair Abernethy with Rosenblatt Securities.

Great quarter, guys. I just wanted to ask you here as we're entering 2027, how are you thinking about the expense management subscription business and driving further penetration into your base? And how you're looking at driving new customer adoption going forward?

Yes. First of all, we are actually thinking about it as an end-to-end solution. So customers that are using our expense management business as well as the payments business basically seeing better results in terms of an ability to understand what is their total travel and expense budget, how much they are spending.

Are they spending it correctly, can they save money there, et cetera. Also, their employees, and if you think about who is traveling, the employees that are traveling usually the most important employees in the organization.

This is your enterprise sales team. This is your corporate development. This is your entire C level. So saving their time is critical. When you use our payments and expense business, you swipe the card and that's it, nobody else needs to do anything. On top of this, nobody needs to sit in the finance team and reconcile.

And from a saving money perspective, you get immediately the feedback, was that in policy or not, was this expense exaggerated or not and so on. So it's actually really part of our offering and really what supports our end-to-end solution. We have mentioned in the past that we had some constraint in this business because of our payments business.

And the IPO has actually unleashed this constraint. And you can actually see that we return to growing in these 2 businesses, the payments business, in the expense business. And remember that in all of our businesses, there is some lag between sales and what you are actually seeing. So we are extremely bullish on the expense business. We are extremely bullish on the payments business, but we really see it as an end-to-end solution for our customers. And we just think that they are benefiting more if they are using the entire suite.

One moment for our next question. And that will come from the line of Dan Jester with BMO Capital Markets.

Great. And maybe just a follow-up on that last one. Are you seeing at time of initial sale? Are you seeing customers take more offerings as you release innovation in the expense management space, as you release innovation around meeting and events. Are you seeing customers take those at the beginning? Or are these still things that we should expect will be cross-sold over time?

Maybe I'll take the beginning of it and then Michael, who is in the field all day long will continue. The first thing that I would say, and I kind of alluded to this earlier, once we move to be in agentic platform, it actually allows us 2 things. First of all, to develop faster.

So that's really, really important. But the second thing we can reuse. And I'll give you an example of a feature that we recently released on the expense management side, there is an expense agent there that if you didn't use our credit card, you just did it manually with your own credit card, you have a manual expense.

You can actually take 20, 30, 100 receipts, put it and upload to the system, which takes like less than, I don't know, 10 seconds, we automatically analyzing the entire thing, we reconcile it for you.

We reconcile it for the finance team. It actually it looks like magic. I don't think that anybody in the expense management world is doing something that or is even close to that level of technology. But that was developed in the expense management team. And we think that, that kind of capability, this agent is actually relevant all over our platform.

In fact, we even think that it's relevant in Navan Edge. So you can see this -- you will see this functionality coming across the board. I can say the exact same thing about our focus on meeting and events. Meeting and events was an off-platform service.

And you saw that we recently announced our BoomPop integration to actually allowing it to be on platform. So what you're going to see from us from a technology product perspective that the offering is becoming stronger and stronger and stronger by coming together. And I will actually let Michael maybe provide more color, but obviously, the reasons that we are doing it are driven by the request and what we are seeing in the field.

Yes. And to answer your question, are we selling more products at the time of the first sale for the customer? The answer is yes. So we approach ourselves in a couple of ways. One is we have a sales rep that goes and finds the new customer, and we understand what products that they need and want us to supply to them.

That might be just travel, that might be travel and payments, it might be travel, payments, expense, meetings and events, VIP, all the suites that we have. And then they go and they launch and they have a great experience. We also have an upsell team.

And so that upsell team is working very, very closely with the account management, who are constantly talking to the customers every single day, week or month or even during quarterly business reviews with the account. And then we bring those solutions to those customers as well. So we do see us attaching more products at the point of sale, but we also see a lot of success on upselling the various solutions that we have for the customer.

One moment for our next question. And that will come from the line of Mark Schappel with Loop Capital.

Ariel, could you discuss the legacy displacement opportunity, which appears to have accelerated this quarter and maybe where you're seeing the strongest traction?

Yes, definitely. I think generally, we see our growth accelerating on all channels, so this means when we displace -- that's what we call the managed segment. But also in our PLG channel, when we are new, when it's the first time that this customer is managing travel. I think the best person to describe exactly how do we see it in the field is Michael. So Michael, maybe you can take it.

If I caught the question correctly, you were saying the acceleration in the legacy space is that I assume that's correct. Yes, so I kind of described it earlier, we walk into a room almost confused why the customer hasn't come to Navan yet. And usually, the customer starts to see that once we're talking to them, right?

So if we're going to save you 15%, we're going to have you book in less than 7 minutes versus 45. We're going to deliver this NPS and the CSAT and all the things that we've talked about before. Usually, it's about making sure that we prove that we've reached the scale to support that customer and that we're global enough to do that. .

And we've done a lot of work to continue to expand upmarket and globally, you've seen the acquisitions that we've made around the world, and we've built partnerships to be able to support these customers. .

And so what do we see on the other side that's driving customers to us. There was a big acquisition with a company called CWT, which is a big player in the space. There used to be 3 big travel agencies, Amex, BCD, and CWT. So CWT was acquired. And then you saw Egencia, which is more of the online booking platform that was built out of France was also acquired.

And then I'm sure you can read headlines, but there's other companies that are having some turmoil. So that, we think, has created quite a lot of tailwinds for us that people are saying, well, let me go check out this new Navan platform. And by the way, my CEO and everyone on my Board is telling me start using AI in my platform, and I want Ariel in my company, and I want to start transforming my finance operations to be more efficient. .

And so if we can prove the savings, the time we can prove that we're global, and we can support customers and we can give them 5 references to go talk to that are similar to them that they've made the transition to Navan, and they will never look back. It's a really compelling story. And I think that's why we're winning specifically in the legacy managed space.

And today's final question that will come from the line of John Roberts with FT Partners.

Just to start, I wanted to ask a quick one. What was net revenue retention for you guys exiting or just for the fiscal year 2026. I didn't see that in the presentation. And then just regarding product attach, can you maybe stack rank which of these 3 additional products are most commonly being attached? And then maybe how long an average is it taking for customers to get to this level? Just any commentary -- any commentary here would be super helpful.

Sure. Hi John, this is Aurelien. So on net revenue retention, I just mentioned on the call earlier that it was 107% for 2026. So we are seeing a very stable revenue retention on the Navan platform side, stable at 110%, which is even above 120% when we include the ramp off the new customers that joined the platform. But it was 107% for 2026. And that was many -- slight contraction is mainly due to the Reed & Mackay dynamics that we discussed on the call. Maybe Ariel and Michael, you want to take the second part of the question?

Yes, sure. So I can take -- so I think the question was around attach and then stack ranking. So the product that we have, first and foremost, and is attached to everywhere is our travel, so our transient travel product, which is the employees traveling for the company.

Then the next product is we see a big attach into what we call leisure. So a lot of people are booking personal travel on our platform. It's a separate experience. It doesn't show up in the admin dashboard. You can't use the company card, but what you can use is the rewards that we give to travelers.

So we actually pay the traveler rewards when they save the company money, which is part of how we get to that 15% savings. And so if I'm going on a work trip to New York, I want to stay for the weekend, I can actually book that leisure trip in the Navan platform, which we see good attach there.

The next piece we build into is actually our travel payments, so this is getting into our payments product. I can put Navan corporate card lodged into the platform. It's actually not 1 card, but we create a unique credit card number, 16 digits for every new booking, and it perfectly reconciles your travel bookings and those expenses for your admins and a traveler will never have to do an expense report for a flight or a hotel or a rail that was booked in our platform. .

So we see a lot of adoption there. That then naturally leads into our expense platform. You can then buy our expense platform and now we own the entire context, whether someone is traveling or not we actually see more than 70% of employee expenses are some way, shape or form, tied to a trip.

I'm either booking that trip or I'm on the trip, but I'm at a restaurant or a taxi or however you spend the money. And so we expand into that product. Then there's also the VIP product, which Ariel talked about as part of our Navan Pro offering with R&M. So that's a product that we would upsell or sell at the point of sale to the C-suite or people who need VIP level of support.

And then the last product that I can think of at least right now is our meetings and events. So as we gain that customer, we manage their corporate travel, a lot of times, they might have an exec offsite or an SKO or a customer conference, and they'll leverage our meetings and event services. So off the top of my head, I'm pretty sure that's the exact order of the penetration and the percent of adoption that we have of the various products.

Thank you all. This concludes today's program. You may now disconnect. Goodbye.

Thank you for standing by, and welcome to Navan's Third Quarter Fiscal Year 2026 Earnings Conference Call. [Operator Instructions] I would now like to hand the call over to Vice President, Investor Relations, Ryan Burkart. Please go ahead.

Thanks, operator. Good afternoon, everyone, and welcome to Navan's Third Quarter Fiscal 2026 Earnings Conference Call. With me on the call today are Ariel Cohen, our Chief Executive Officer and Co-Founder; and Amy Butte, our Chief Financial Officer.

Before we begin, during the course of today's call, we may make forward-looking statements within the meaning of federal securities laws. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially, including the risks and uncertainties described in our earnings press release, our prospectus dated October 29, 2025, filed with the SEC on October 31, 2025, and our other filings with the SEC.

In addition, on today's call, we will refer to non-GAAP income and loss from operations, non-GAAP operating margin, non-GAAP gross margin and free cash flow, which are all non-GAAP financial measures that provide useful information for investors. Reconciliations of these non-GAAP financial measures to their corresponding GAAP financial measure to the extent reasonably available can be found in our earnings press release.

With that, it is my pleasure to turn the call over to Navan's CEO and Co-Founder, Ariel Cohen.

Thanks, Ryan. Good afternoon, and welcome to Navan's first earnings call as a public company. This is a new beginning for Navan, but our mission is unchanged to make travel easy for every frequent traveler. That has been our obsession from day 1. Travel is complex. It is fragmented. It rarely works the way business travelers need it to work. We have spent more than a decade rebuilding this category from the ground up. Our IPO confirmed the market's belief in both our platform and our strategy. As a public company, we operate with even greater discipline and transparency, and we are committed to delivering substantial high-quality growth for our shareholders.

Before we get into our results, I'd like to take a moment to discuss Amy's departure. As announced, Amy will leave as Navan's CFO on January 9. Amy first joined Navan as a Board member in early 2024 and a few months later, joined our management team to serve as our CFO as we prepared for the next step in our evolution. Much like the role she played earlier in her career at the New York Stock Exchange, Amy helped build out our finance organization and prepare the company for the public markets. With our listing now complete and the business carrying strong momentum, it was the right time for her to move on to find her next opportunity. We wish her the best. Amy will help support a seamless leadership transition and will continue to serve as a strategic adviser to Navan while the Board conducts its search for the company's next CFO. Anne Giviskos, the current SVP, Strategic Finance and Chief Accounting Officer, will assume the role of an interim CFO.

Now let's talk about our business. Q3 was a strong quarter that demonstrated both the power of our platform and the operating leverage we are unlocking with AI. Revenue grew 29% year-over-year. Non-GAAP operating margin reached 13%, up nearly 9 percentage points year-over-year, reflecting both AI-driven gross margin expansion and the underlying leverage in our model. Our execution momentum continues across our $185 billion addressable market. Our sales-led growth motion remains strong, especially in enterprise, where we signed the second largest European deal in our history with a CAC40 company. We also closed deals with Frasers Group and Axel Springer and recently launched major customers, including Visa, ENGIE and Fortune 500 health care company.

Our PLG motion continues to grow rapidly in SMB and while still a small part of our mix, the velocity and efficiency are in line with what we've expected when we've invested early here. Customer satisfaction hit a high of 97% with NPS rising to 45, far above an industry average of 5. This reflects one thing. frequent travelers love the Navan experience. Travel and expense is critical infrastructure for modern businesses. It is how companies connect, sell, support customers, train teams and build culture. Navan exists for the people who make this happen, the road warriors, the finance teams and the CFOs who need visibility, control and savings. We are the only fully integrated end-to-end platform that solves fragmentation across 3 stakeholders.

Business travelers enjoy a tailored and seamless experience with average booking times of just 7 minutes. There is no need to waste time filing expense reports after returning from a trip. Everything is handled quickly and efficiently. from booking the trip to receiving support on the road, minimizing the time spent on expense management. Customers get real-time visibility of employees' safety and spend, built-in policy compliance and 15% median savings. Our suppliers and partners get direct access to high-value, frequent, predictable travelers. This creates a self-reinforcing flywheel. Higher adoption generates more data. More data trains our AI. Better AI improves experience, savings and control. Stronger performance increases adoption again. This is why we win and why our lead keeps growing. And our leadership in this space is being noticed by some of the largest organizations in the world. We are winning significant deals with global enterprises driven by structural tailwinds that continues to be strong.

First, the network effect. As more companies adopt our platform, experience our ease of use and see the savings it delivers, the word gets out, and we see more and more opportunities. Second is industry consolidation. There has been a lot of consolidation in the space among some of our competitors, and there is speculation of more. Consolidation is great news for us because it forces companies to reevaluate their solution, and we do very well when companies compare our modern platform to legacy solutions.

Finally, the AI native nature of our platform is a big tailwind because it puts us on everyone's list. If a company wants to leverage AI to drive greater efficiency and deliver better employee experiences, and that is essentially every company today. We must look at Navan as the AI leader in travel and expense. The Visa launch this month was a good example. It was one of our largest launches ever. Visa, a world leader in digital payments, chose us as they seek to provide an innovative experience and high service levels for the Visa travelers globally. Frasers Group, Axel Springer and many others did not choose Navan for incremental improvement. They chose us because the old model no longer works for global enterprises. They want AI-driven experiences, real-time data, fewer offline bookings, smarter controls and a platform their employees actually use.

These wins reflect structural tailwind and our accelerating enterprise leadership. AI is reshaping the travel and expense category, and Navan is leading that transformation. AI has been at our core since our earliest days when we built machine learning to personalize inventory. When LLMs emerged, we immediately recognized the opportunity, but also the limitations. Travel is not answering a password reset. Travel is dynamic, personal and high stakes. Mistakes have real consequences. Generic LLMs hallucinate, they decay over time. They cannot reason over inventory, policy or travel logic.

That is why we built Navan Cognition. Cognition is our homegrown AI agentic framework designed specifically for travel. It allows us to train and deploy unsupervised agents that handle complex travel tasks. We have proven this at scale for more than 2 years. Ava, our AI support agent powered by Cognition, handles over half of all of our users' interactions with customer satisfaction at human levels. That reliability is why our non-GAAP gross margin expanded from the low 60s to over 70% today and hit 74% in Q3, an all-time high. This is a transformation for both service quality and margins. Only Navan can do this today because only Navan built Cognition.

There are 3 AI advantages we have that will define our future. First is Cognition itself, our agentic AI architecture. Second is data. More than 10,000 customers complete millions of bookings per year on one integrated platform, giving us a category-defining data set. Third is the Navan Cloud, our global real-time inventory network. It was built by over a decade of face-to-face negotiations and thousands of direct supplier connections. We believe nothing in the market can match its depth or its integration with AI.

These assets position us to build the AI-powered travel booking experience of the future, which we call Navan Edge. It is in development now, and we look forward to sharing more soon. This paired with the support of real human agents during unexpected issues provides the ultimate travel solution for frequent travelers. We are an AI-first travel solution designed for frequent travelers and their companies.

Over the next year, our focus will be threefold: first, driving sustained high growth across all customer segments, channels and geographies; second, accelerating innovation, especially around AI, meetings and events and VIP. Third, maintaining the right balance between growth and profitability. We will deploy capital where we have conviction such as payments, expense and foundational AI innovation while continuing to expand efficiency across the business. Our investment in Navan Cognition and Ava 3 years ago is a great example of this approach, deliberate, strategic, proprietary and driving meaningfully better margins for our business today. Our success is directly tied to the frequent travelers experience and the customers' strategic goals. That alignment is the core of our model.

To the Navan team, thank you for your execution and discipline. To our new shareholders, thank you for your confidence. This is just the beginning. With an integrated platform, a global travel network and an AI core, Navan is uniquely positioned to lead the future of travel and expense.

Before I hand the call over to Amy to review our financial results I want to thank her for everything she has done to position Navan for success.

Thank you, Ariel. I'm really proud of what we were able to accomplish at Navan, including completing the IPO, and I wish the company and the leadership team continued success.

Now I am happy to report that Q3 was a strong quarter that demonstrates our ability to deliver significant top line growth while simultaneously improving our profitability profile. As a reminder, we are a seasonal business. While we are reporting Q3 today, when we think about our business, we think about it annually over an entire fiscal year. Referencing our Navan business Travel Index, Q3 is seasonally strong. Let's start with some thoughts on the current environment.

First, it's important to note that we have not seen an impact to our business from travel disruptions related to the government shutdown. We saw no impact in October during the height of the shutdown. In fact, it was a record month for Navan. As a seasonal business, we plan for a slowdown around the Thanksgiving holiday. Just before the normal holiday slowdown, we saw a very minor volume impact for about 4 days, beginning on November 11 when the FAA announced flight cancellations. There was an offset here as we benefited from higher airline ticket prices as a result of the reduced capacity. The net of these 2 offsetting impacts was not material relative to our outlook for Q4. Volume rebounded to normal levels immediately following the end of the shutdown. The current business travel environment remains robust, and our expectation is that these conditions will persist through the remainder of our fiscal year ending January 31. Again, it is important to remember that business travel is seasonal and per our usual, our fiscal Q4 is expected to be seasonally lower than fiscal Q3.

Now let's review the detailed results. Our revenue performance was excellent across the board. Total revenue for the third quarter was $195 million, representing a strong 29% increase year-over-year. Drilling down, usage revenue was up 29%, while our subscription revenue grew 26% year-over-year. Gross booking volume reached $2.62 billion in the quarter, growing 40% year-over-year. Usage yield was 6.9%, down from 7.5% in Q3 fiscal year '25. As a reminder, usage yield can vary by quarter depending on the timing of supplier volume bonuses, quarterly mix and travel activity and trends in our higher-yielding R&M business. Year-to-date usage yield is 7.1%.

Payment volume processed through Navan cards was $1.13 billion, up 12% year-over-year. Payment volume is a place where we think we can increase attach over time as we put some of our IPO proceeds to work. Revenue from international customers represented 37% of our total in Q3 and is 38% year-to-date.

Moving on to profitability. We continue to drive meaningful operating leverage in the business. Our non-GAAP gross margin expanded by approximately 200 basis points year-over-year to 74% in the quarter. This sets a new high watermark for Navan, driven primarily by the continued automation of customer support through our virtual agent, Ava and efficiencies gained through scale. Again, Q3 is our strongest quarter seasonally, and we would expect gross margins to compress in Q4, in line with normal seasonal trends.

Historically, non-GAAP gross margin has come down 300 to 400 basis points between Q3 and Q4. Year-to-date, non-GAAP gross margin is 73%. Our non-GAAP operating margin was 13% in the third quarter, a substantial improvement of 870 basis points year-over-year. This expansion was driven by the strong gross margin gains I just mentioned, combined with increased efficiency across all 3 of our operating expense lines, sales and marketing, R&D and G&A. We are committed to disciplined spending while investing for long-term growth. Finally, free cash flow was negative $11 million in the quarter, an improvement of 30% compared to Q3 fiscal year '25.

Before I provide our financial guidance, I want to take a moment to remind everyone of the key structural growth drivers underlying our business and which give us confidence in our outlook. I will also review our strong balance sheet. First, let me walk you through our growth algorithm. Despite operating on a usage-based model, we have a high degree of visibility into our expected revenue growth for the following year. Our net revenue retention was above 110% in fiscal year '25. This means that the first 10 points or so of annual revenue growth has come from our existing customer base historically. This expansion is driven by 3 factors: underlying organic growth in our customers' businesses, leading to higher travel spend, some degree of travel price inflation and increasing product attachment. As of the end of fiscal year '25, 36% of our customers attached to 3 or more products. We are focused on attaching more payments, online meetings and events and on-platform VIP services in the future.

The next component of our growth comes from what we call the customer ramp. If we were to include the impact of customer ramp in our net revenue retention calculation as some other usage model companies do, our NRR would have been greater than 120% in fiscal year '25. The average time to launch and ramp across our customer base is 60 days and 5 months. Enterprise has the longest ramp and growth customers have the shortest in days. We are actively working to shorten the time across our channels and across our customer segments.

Finally, we achieved the remainder of our annual growth from new customers, and we are seeing momentum across channels, customer segments and geographies, as Ariel already talked about. As I mentioned at the outset of my remarks, our successful IPO has significantly fortified our balance sheet. We have streamlined our capital structure to improve our cost of capital and reduce our interest expense going forward. We believe we will be more efficient because we expect to get better terms as a public company and the health of our balance sheet lets us extend our capacity. We expect this to play out in growing payments revenue longer term as we are able to extend credit to more customers when we choose.

As a reminder, we do not provide credit to SMBs. As of the end of Q3, we held $809 million in cash and cash equivalents and $207 million in debt. We anticipate continued strong capital-efficient growth across our entire business, and our balance sheet is ready to support our global expansion.

With that, let's move on to our financial guidance. Today, we are providing guidance for the fourth quarter and the full fiscal year 2026. We will provide guidance for fiscal 2027 when we report our Q4 and full year 2026 results next year. For the fourth quarter, we are raising our guidance and now expect revenue to be in the range of $161 million to $163 million, which would represent year-over-year growth of 23% at the midpoint. Non-GAAP loss from operations is expected to be between $15.5 million and $14.5 million, representing a non-GAAP operating margin of negative 9% at the midpoint. For the full fiscal year 2026, we are raising our guidance and now expect total revenue to be in the range of $685 million to $687 million, up 28% year-over-year at the midpoint. Non-GAAP income from operations is expected to be in the range of $21 million to $22 million, representing non-GAAP operating margin of 3% at the midpoint.

Please keep the following modeling notes in mind as you update your forecast. As I mentioned earlier, we operate in a seasonal business. Historically, business travel tends to be strongest in the fall and the spring, which aligns with our fiscal Q3 and Q1. Conversely, business travel typically slows down over the major holiday season and the summer months. Given this, you should expect fiscal Q4, which we are currently in, to be seasonally slower in volume than the Q3 we just reported. Correspondingly, margins in Q4 tend to be lower than Q3. These expected seasonal effects are fully reflected in the guidance we have provided. Given our commitment to maintaining the right balance between growth and profitability, we expect to be free cash flow positive for the full year of fiscal 2027.

Finally, I would also encourage all of you to monitor the Navan Business Travel Index, which is published quarterly. It serves as a strong national and global indicator of the strength of the overall business travel economy. While the index only tracks a subset of activity on our platform and is based on calendar quarters, not our fiscal quarters, it remains an excellent resource for monitoring directional trends in the macro business travel environment.

Thank you all for your time today and for the continued support of Navan. We are excited about our position in the market and confident in our ability to execute on our growth strategy with continued financial discipline. We are now ready to open the call for your questions.

[Operator Instructions] Our first question comes from the line of Steve Enders of Citi.

Good to see first quarter out the gate here. I guess maybe just to start, I want to get a better sense for what you're seeing on the enterprise side of the business and how you're kind of viewing the opportunity to maybe capture some share from some of the managed incumbents at this time?

This is Ariel. We actually see strong momentum across all of our segments, but enterprise is really accelerating. And we're actually thinking that there are 3 reasons for that. The first one, we just have more customers that are happy with the service, with how efficient we are making their employees while they're on the road, but also from the savings from the platform's visibility and so on. So we really see these customers becoming ambassadors of Navan and bringing more customers in.

The second is we just see consolidation in the marketplace, which is a great thing for us because the real competitor of Navan is actually do nothing. And when there is consolidation, customers, companies are reevaluating their solution. And when this is happening, our modern solution that is driven by AI compared to the old model, we always win. So that's the second reason that we see enterprise acceleration.

And the third one is actually AI. We are the only vendor in this space that is actually using AI to make the trip, the travel experience more effective, but also to allow a major savings, 15% in average for customers that are using us. So there are a lot of initiatives of AI right now in the enterprise, and we will always be there when companies want to use AI.

So these 3 different things are really creating enterprise acceleration. And you can see customers that we won recently, a major CAC40 customer in Europe. We see Axel Springer in Europe again. We just launched Visa and also a major health care provider. So we see a lot of enterprise momentum.

Okay. That's great to hear. I guess for a follow-up, yes, I guess really good to see the gross bookings volume come in and accelerate. And I think it looks like the best growth that we've seen at least in our model here. Can you just help us maybe think through what drove the strength within GBV this quarter and maybe how to think about factors that maybe impacted usage yield this quarter as well?

Sure. Thanks for the question, Steve, and thanks for noticing the robust growth. I think it's really the overall go-to-market motion and strength across our channels and our segments. So the growth in GBV, if you kind of recall and think about our growth algorithm, there are really 3 parts, right? One is the NRR of our existing business, which has been over 110 in fiscal year '25. So as Ariel mentioned, customers are growing and they're attaching. Second is the ramping. So seeing the benefits of the customers we signed 6 to 12 months ago. And then the growth algorithm, which is the momentum of new customers, which will add on and ramp into next year.

So all of that is leading to the GBV. When we think about mix of business and we think about yield, we think about all of the different components, right? There are trip fees, there's supplier yield, which is dependent on mix of how much is hotel, how much is air, how much is car, how much is rail as well as our ability, I think, more into the future to attach incremental products such as more payments and expense now that we have an expanded capital structure and strong balance sheet to do that and a focus on moving more of the meetings and events and VIP services from kind of that more traditional to our platform. So it really just speaks to the overall momentum in the business.

Our next question comes from the line of Noah Naparst of Goldman Sachs.

Can you hear me? Yes. It's Kash Rangan with Goldman Sachs. Congrats on your first quarter as a public company. Good to see the GBV growth, overall top line growth and also gross margin and operating leverage. So I have a couple of things that I would like to ask you about. One is with respect to the large enterprise deals that you signed on, is it a complete enterprise-wide implementation? Or is it just a part of it? I'm curious if you could talk about how the revenue recognition of all the GBV lifetime value in these clients will flow through to the business?

And as a follow-up question, if I could, the margin leverage you saw on the gross margin operating leverage line in this quarter, how sustainable is it? And if you can also talk about the sustainability of yield since it was 6.2% and the year-to-date is 7%. Are we right in expecting a bounce back in the yield in Q4? Congrats once again.

You've got a lot of questions in that.

This is my last call, right? My last call as a analyst. So I got to pack it all in.

But let's just talk about the large enterprise deal. I think it shows momentum in enterprise that Ariel mentioned. I would also say that most of the enterprise deals that we're signing are attaching not just travel, but attaching multiple products at the same time right at launch. They also show that the time between signing and launching is stable, if not getting shorter and that we are accelerating our ramp even faster, which is a real focus for our account management team.

In terms of the second question on gross margin, that is really our ability to leverage Ava, we're deflecting 54% of customer support interactions using our Ava support -- AI support agent as well as just general efficiency in the business. And what I think is fascinating is that we're doing this at the same time, we're investing in added support even for enterprise customers. So I remind you, once again, it's seasonal. Q3 is always the highest gross margin. But all of it is playing together into the future.

In terms of OpEx, you're right, we saw only a 17% growth in OpEx versus 29% growth in revenue year-over-year in the third quarter. I think, look, we've said to you before to everyone that fiscal year '27 is really a year for investment right? We will continue to invest in the business when we have conviction, such as examples like Edge, where we feel we have a competitive advantage and can take outsized share in this large TAM. At the same time, we are committed to showing the scale and profitability and efficiency in the model as a public company. We expressed this in committing to being free cash flow positive in fiscal year '27, even during a period of investment. And I think there are lots of levers to pull across sales and marketing efficiency, across G&A and across R&D.

Yes. And just to clarify something, when we are saying that we won an enterprise, it means the entire enterprise globally. So a company like ENGIE with a market cap of $30 billion, this is for the entire 15,000 employees. Same goes with Visa, the company that I've mentioned in the health care space and the recent wins in Europe. And it's really, really important because it's actually rare to have an entire enterprise adopting so fast. It's something that is important for the company, but that's what's happening in the case of Navan. The entire enterprise is adopting us globally.

Our next question comes from the line of Siti Panigrahi of Mizuho.

Great. Congrats on first quarter as a public company. I want to ask about -- you mentioned about the investment side, specifically, Navan is mainly going into that PLG motion. Could you talk about your investment plan at this point? When should we think about any kind of revenue contribution from that? And interesting to see that free cash flow positive by '27. What kind of margin impact we would see from that investment?

Yes. So I'll start with the Navan Edge and maybe Amy will take the second part. But Navan Edge is based on Navan Cognition, which is our AI platform. This is a Navan homegrown AI platform that is based on our data, our models. It's basically an [ energetic ] platform that was designed to support complex travel use cases. So everything that we've learned as a company in the last 10 years, you can really see it in Cognition. On top of Cognition, we've built Ava, which, as Amy mentioned earlier, is now deflecting or supporting 54% of the interactions when it comes to you need to change your flight, you need to apply unused credit, you are stuck in the airport and you need support. All of these things are done by Ava with really high satisfaction of around 80%.

And then the second big application of Navan Cognition is going to be Navan Edge. Navan Edge is really us going after the frequent traveler, making sure to hyper service them, first of all, with AI. So it will be a completely different experience. But then augment it with travel agents when they need to kind of intervene. So it's really, really after these high-end clients, which we believe that we are positioned to gain a massive share on that market.

So when it comes to investments, we started leaning into that investment probably the second half of fiscal year '26. We'll continue to make those investments in '27 and would look to see top line contribution more into fiscal year '28.

Great. And then one quick follow-up. You talked about some of these large deals that you signed. So what do you factor into your guidance when you guide for, let's say, 4Q at this point? Do you factor in kind of the ramp in that customer? Or you want to see kind of their usage before you include that in the guidance? Any kind of color on the guidance philosophy will be helpful.

I think the guidance philosophy is we think about the forecast as it relates to our active customers. That's why it's so important. We use machine learning to really understand not just what we think is going to happen in the future, but what we think is going to happen in the future based on what has happened in the past even under different scenarios. We do not -- we incorporate all of those customers that are existing customers ramping customers and if they're new, when we expect them to launch and ramp. So we take all of those factors into play when we think about our guidance. When we look out into the future, we're also looking at some of those new initiatives. We're looking at our expected go-to-market return, particularly in SLG and PLG as a whole. So we take all of it into account.

Our next question comes from the line of Samad Samana of Jefferies.

I will echo the congrats on the IPO. And Amy, it was great working with you and wish you the best in your future endeavors. We'll miss you. But maybe a couple of questions. I guess, first, I know we dug into what drove the upside in the quarter, and I heard Siti's question about guidance. But just as we think about the trends that drove the upside in F 3Q, how much of that did you maybe carry that trend line over into the F 4Q guidance and/or maybe where maybe some of the conservative nodes? And then I have a follow-up question as well.

Sure. I think all of the trends are in effect that are positive, right? We had strong results, good momentum across all our go-to-market channels and geographies, no impact from the shutdown, and we feel good about the trends we're seeing across the business. However, it wouldn't be an answer to a question if I didn't say, remember, we're seasonal and maybe take a look at the business travel index, both historically as well as we'll have the calendar fourth quarter come out in January.

The fourth quarter for us, our fiscal year is seasonally lower. And when we think about our guidance, we take -- we are taking a prudent approach. And you know, probably because you all have encouraged us to build a track record and credibility early in this public company cycle and that we'll continue to kind of remind you of the seasonality in our business, the usage-based revenue in our business and all of the trends kind of taking place in travel as well. So we're going to try to be prudent and conservative and continue to prove out this durable growth model.

Great. And then, Ariel, maybe one for you. Just with the company now public, and I know it's only been a short amount of time, but have you noticed an impact on the profile or the visibility of the top of the funnel that you're seeing on the enterprise side and what that's done from either a competitive standpoint or helping the profile of the company or just even deals that maybe you're waiting to close? Just trying to extrapolate any changes now that you guys have a higher profile.

Yes, 100%. We definitely saw it as a kind of market awareness boost. What I'm hearing from our sales teams is that they get much more -- much less questions, right, about us in the long term. So this is really important. They are also just getting more leads as we are becoming more and more relevant in the marketplace and credible. And to add to this, definitely raising the money in the IPO helps us to be much more aggressive in the payments space, which helps us to create a complete solution. So we see it across the board. Actually, we definitely see a boost there.

Our next question comes from the line of Chris Quintero of Morgan Stanley.

Amy, it's been a pleasure working with you, and I wish you all the best in this next part of your journey here. Maybe just to double-click on that CFO transition change. It is a pretty quick switch here. So could you provide us a bit more context? Is this always part of the plan here for you, Amy, to move on after the IPO is completed? Or has something else changed here?

Yes. Maybe I'll take it and Amy can add. So I will just reiterate, we are very fortunate to have had Amy as our CFO in the last 1.5 years. And it was really during an important time in our history as Amy was playing a critical role of building our finance organization and making our company ready for being public. But we kind of -- we felt or Amy felt it with our listing now complete and momentum underway, which we just shared with you across the business, and you can see it in the results, Amy decided that it's time for her to move on to our next opportunity. Me and the Board supported it. But we are definitely happy that Amy will stay as a strategic adviser and also promoting Anne to the new role. So that's kind of the transition and maybe Amy can add to this.

Look, I am so proud of what we've accomplished. The financials are in incredible shape, the capital structure in great shape, the team, the business. So it just seemed like the right time. So thanks for the question.

Understood. And maybe as a follow-up, one of your competitors, Corporate Travel Management is going through some issues right now. So curious if you're seeing that act as a tailwind to help boost the enterprise momentum for you all?

I think just in general, Chris, any time we see consolidation, anytime we see uncertainty across the competitive spectrum, anytime we see particularly legacy players questioning kind of where they stand in the marketplace, that is basically a signal that Navan is taking share, right? And it's an opportunity to take share. As Ariel mentioned in his opening remarks, the flywheel effect is really moving, and I think that goes to the overall momentum that we're feeling in the business.

And the other thing that I would say -- sorry, if I can. I think the other thing I would say, which is really important, we're also seeing a lot of companies talk about -- maybe Ariel wants to talk about this a little bit more. We're seeing companies talk about using AI to attract travel. And for us, we also feel very comfortable about our moat, right? Anybody can make an itinerary using AI, but not everyone can make the AI into an actual booking and into an actual experience. You need the whole integrated platform to do that. So we feel very comfortable about our competitive positioning overall, not just in legacy and enterprise, but also relative to new entrants and new opportunities to take share.

Our next question comes from the line of Scott Berg of Needham & Company.

Nice quarter. I will echo the sentiment, Amy. We wish you well. Two questions for me. I guess let's start off with the usage yield in the quarter. I guess I can appreciate the puts and takes in any quarter. I think we've discussed that a couple of different times in length. But are you seeing anything in the business, I guess, in the last quarter that would suggest on an annual basis going forward that, that take rate shouldn't be right around 7% plus or minus?

So we still feel comfortable with thinking about kind of a 7% rate. Remember that we have headwinds and we have tailwinds going into that. So the headwinds are Reed & Mackay, our more traditional legacy business has higher yields because it has a higher percentage of meetings and events and VIP. It is growing slower than our on-platform business. Therefore, as it becomes a smaller percentage of our total revenue base, the yield impact is a headwind to our overall usage yield.

In addition, PLG's growth, particularly outside the U.S. is faster growing. It's the opposite and has a smaller yield than that 7%, something that we're looking at, can we attach more products rather than just travel on to that PLG or growth customer. On the opposite side, on the tailwinds, we think about greater hotel attach. So if you remember, hotels have a higher yield than air, car and rail. As well as the ability to attach more products over time to the existing customer. And in particular, short term, we're looking at being able to attach more payments, being able to leverage the improved capital structure and balance sheet.

For example, immediately after the IPO, we sat down with our enterprise account management team and talked about where we could extend more credit to customers, where it made sense, how we think about terms so we can be more competitive in the marketplace. And as we've mentioned, with the improved capital structure, we are lowering our overall cost of capital, and we're getting better terms with our partners, and we think that will be an uptick to our usage yield. So for now, we feel comfortable we have work to do, and we feel very comfortable with that 7% rate.

Understood. And then from a follow-up perspective was actually on the credit kind of expectation and that scenario. I guess how do we think about the timing for the deployment of the extra cash for some of the credit payments and obviously have a -- that will have a positive impact to the business. Is this going to be like a big bang impact that you're going to be able to extend and use enough of this cash here in the short term and we see a pretty quick kind of impact on the P&L in the next quarter or 2? Or is this something that kind of phases in over a multi-quarter time frame?

I would say it's more the latter. It's more phasing in over fiscal year '27, seeing the impact into '28. Remember, it's not just about the capital. It's also about the product as we work to improve the product as well and meet what our customer needs are in that area. So I would say you kind of think about more once again as investing in '27, accelerating in '28. What is more short term is improved economics from our partners and lower cost of capital. So you'll see a decrease in our interest expense below the line. That should come down to approximately only $4 million per quarter now. And incrementally, we should be able to add a decent amount of basis points to our net interchange rate, our net interest income.

Our next question comes from the line of Jed Kelly of Oppenheimer & Co.

Congrats. And Amy, good luck. Just zeroing back on that 40% bookings growth, really strong. Can you talk about how the increase in direct connections with suppliers? Are you seeing higher conversion, better merchandising? Can you just talk about how the higher direct mix is kind of boosting your bookings growth?

Yes, 100%. So if I remind you, Navan, the entire product and offering is based on 2 platforms that we've developed. One is our cloud connectivity, which is basically the connectivity to airlines, hotels to any type of content that is out there, and we do it globally. And direct connections to airline, what the industry will call NDC really allows us to merchandise better to assure the right prices. So it creates a lot of trust with the travelers and the customers. It's kind of common in the industry that the traveler will look at a system and will say, I can actually find something cheaper outside, why you are making me booking and using this platform. You don't see it at Navan because of our connectivity to everything. So if it's out there, you will see it on the Navan platform.

And when you kind of connect it with our AI platform, Cognition, you are making sure to show to our travelers the right things for them. So if I'm using a certain airline all the time, if I'm using a certain hotel all the time, the platform will actually tune all of this content to me, making sure that it will take no time to book something. In 7 minutes, you can book an entire business trip on our platform. So the connectivity and NDC and connecting directly to airline hotels is a major, major part of why we win.

Yes. And I love the story of the multi-city booking, right? It's a great example of having those direct connections using Cognition as a platform, but also just the ingenuity of people here at Navan and the engineers, right? Everyone said you couldn't do it on platform. That would be one of those things you'd always have to pick up a phone. And now we can do it on platform. So I think that's a great example of using all 3 things, the people, the AI and the supplier connections.

Great. And then just as a follow-up, just around M&A opportunities, can you just talk about strategy going forward and just some of the efficiencies you can get now from better tech platform?

Yes. Well, first of all, you notice that we've acquired in the past, and we've done it successfully. So as a company, we are always looking for opportunities. And when I'm looking at this, I'm looking at 2 things. First of all, what else can we bring on platform. We've talked in the past about the opportunities in the meeting and event space in VIP travel and so on. But also a major, major focus of the company today is continuing to iterate on Navan Cognition, our own AI platform and then to introduce it in Ava, but also in Navan Edge. And I want to iterate on something that Amy mentioned earlier, which is we are not planning here some demo to build an itinerary or something that is really an eye catcher. We are talking about a platform that will use AI with Navan Edge to book your entire trip, to plan your stay when you're on the go to get support when you're coming back to make sure that you did it in the most efficient way.

So this is really advanced. And in this space, although we looked a lot of should we buy something, we actually didn't see something mature. The use cases are very, I would say, early naive, does not reflect the 10 years of experience that we have with Navan team. So all in all, we are always looking for opportunities to accelerate our growth. But right now, in the space that is the most important for us where we see the biggest opportunity, which is AI, we actually think that what we are developing in-house is significantly better than what you can find outside.

Our next question comes from the line of Andrew DeGasperi of BNP Paribas.

Also for me, congrats on the IPO and the first earnings call. And Amy, good luck to you as well. I just wanted to maybe ask a question on the SAP Concur Partnership with Amex GBT. Just wondering if you think this is a response to the success you've had in [indiscernible] market share. And otherwise, could you give us some context on what you make of that?

Yes, maybe I can take it. I think that the old model of like connecting stitching together a lot of things, taking a booking tool like Comcare and then a travel agency and to try to kind of connect them together is so antiquated. You basically -- you start to search for something in Comcare, then you're finding yourself calling an agent. And in the era that people are expecting for everything to be online for -- to see machine learning to see AI kind of really driving efficiency, making sure that the experience is great, you're finding yourself there with a completely different model calling an agent. So I think it's becoming completely irrelevant and comparing it to what we are doing in Navan is like it's night and day. So if the question, are we worried about it or do I even care about it, the answer is no.

That's helpful. And I guess maybe just Visa leaving Amex as well. I mean I thought that was pretty interesting and pretty groundbreaking. Just wondering what -- can you elaborate a little bit on the conversations you had with them? Like what won them over [indiscernible] platform?

Yes. I think it's exactly what we are talking about. Think about it. Visa is one of the biggest fintechs in the world, and it's a modern company. And they are [indiscernible] here in the Bay Area. And for them to tell their employees to pick up the phone to book a trip, it's kind of -- it doesn't make any sense. So Visa saw our product, saw our vision, so that they can save money by using Navan, so that they can save a lot of time with their employees globally and decided to join this journey. And I think that when you are referring to the market and consolidation there and so on, at the end of the day, we are the disruptor in this space. We completely changed the business model. We've changed the technology. And I think that we are making an impact, and that's the pressure that you see in the marketplace and then all of these enterprise wins that you see.

I will tell you one of my favorite pieces of Visa is that, one, we were able to launch relatively quickly for such a large-scale enterprise. But more importantly, the adoption is really fast. And so they're ramping much faster than we expected, which validates their enthusiasm, and it also validates our focus on launching faster, ramping faster, particularly for these large enterprise customers.

Our next question comes from the line of Mark Schappel of Loop Capital.

Congrats on your first quarter as a public company. Most of my questions have been answered, but just one here, Amy, I wonder if you could just repeat your comments in your prepared remarks around the slowdown you saw before Thanksgiving.

Sure. So we did not see a slowdown in October. October was actually a record month. We actually saw about 4 days of slowdown versus what we anticipated before Thanksgiving, which was right about November 11 when the FAA actually restricted the number of planes that were flying. But after that, we had planned for a slow Thanksgiving week, and we're seeing activity rebound as anticipated in December.

Our next question comes from the line of Blair Abernethy of Rosenblatt Securities.

Best of luck to you, Amy. Ariel, just on the payments, back on the payments question, I'm just wondering if you could provide a little more color on sort of how you're approaching this market now that you have some more capital to put into it? And where are you pushing sales to drive new business? And sort of what does an ideal customer look like for you?

Yes. First of all, we had payments across the board in all segments but SMB. And it's actually a great enterprise and mid-market addition. The reason is that when payments is part of the program, employees can submit expenses in no time, and they will not see any issues around payments when they -- around the hotels, flights and so on. So it really gets back to our vision to make travel easy for frequent travelers and payments is part of this. We see more attach in the enterprise space. We see more attach in the mid-market space. And having this capital available for us right now will actually allow us to see acceleration there. But from a demand perspective, we always had demand in this space, and now we have the capital to actually meet this demand.

That's great. And then just if I could, one more on -- just on Navan Edge. Is this an upsell? Is there a revenue opportunity here? Or is this more just driving more stickiness, more activity on the platform?

Navan Edge is actually unlocking more of the TAM. So if I'm taking a step back, you have in the TAM part that is managed. This is when we come and replace -- we take a customer like Visa and we replace the incumbent. And then there is the nonmanaged. These are either customers that never managed travel before or employees that are just out there in the road. And Navan Edge is really going after them. So this is unlocking more of the TAM. And in terms of the business model, exactly like our current business model, we make money from booking fees and partners and suppliers fees. So it's the same business model. It's just unlock part of the market that we believe that we can actually be a winner there.

Thank you. Ladies and gentlemen, we have reached the end of Navan's time. This does conclude today's conference call. Thank you for participating. You may now disconnect.