0000950170-25-114005
SEC filingRevenue grew 25% YoY in Q2 FY2026, driven by platform subscription and usage-based revenue, with gross margin improvement to 70.8%.
For the three months ended July 31, 2025 (Q2 FY2026), total revenue increased 25% year-over-year to $242.1 million, driven by strong growth in both platform and professional services. Platform revenue rose 26% to $232.7 million, fueled by a 27% increase in subscription revenue and a 23% increase in usage-based revenue. The latter benefited from higher gross transaction volume ($22.9B vs $19.2B) and an improved earn rate. Professional services revenue grew 18% to $9.4 million on higher service volume.
Gross profit expanded 35% to $171.3 million, with total gross margin improving from 65.7% to 70.8%. Platform gross margin rose from 73.4% to 77.7%, primarily due to the reclassification of certain customer success costs to sales and marketing, lower impairment losses on operating lease assets, and improved delivery efficiencies. Professional services gross margin improved to (99.9%) from (111.7%) due to reduced third-party consulting costs.
Operating expenses increased 29% to $206.1 million, with notable increases in general and administrative costs (+64%) driven by a $20.5 million rise in stock-based compensation, including $13.5 million in performance-based RSUs for co-founders. Sales and marketing expense rose 19% due to higher personnel costs and marketing spend. Research and development expense increased 17% from headcount growth. As a result, loss from operations widened slightly to $34.8 million from $32.6 million, though operating margin improved to (14.4%) from (16.9%). Net loss narrowed to $32.2 million from $35.7 million, aided by higher interest income and lower interest expense.
Platform remains the dominant segment, contributing 96% of total revenue. Its gross margin improvement reflects scaling efficiencies and cost optimization. Professional services continues to operate at a negative gross margin as the company invests in onboarding and implementation to drive customer success and long-term retention. The net dollar retention rate exceeding 110% indicates strong expansion within the existing customer base, supported by add-on product adoption and increased GTV.
Management highlighted key growth drivers: increasing GTV through customer expansion, serving larger customers, entering new trades, and building new products. The company expects continued investment in sales and marketing and R&D. Seasonally, Q2 historically sees strongest sequential growth due to summer demand. The company has sufficient liquidity ($471.5M cash) and $140M available under its credit facility. No specific financial guidance was provided for future periods, but strategic priorities include deepening platform adoption and innovating new products to expand market opportunity.