Financial Trends -- 8/10

Textbook "deceleration to re-acceleration" inflection. Revenue YoY has climbed from a ~2-3% post-COVID trough to +5.5% in FY27Q1 (fastest in years), led by Enterprise (+7.2%, now 61% of revenue) and an Online segment inflecting from contraction back to ~+3%. Non-GAAP operating margin at a multi-year high (41.1%). ~40% FCF conversion, ~$7.7B net cash, no debt. Share count shrinking ~4% YoY on buyback. Held off a 9-10 only by flat gross margin (sub-100bps band) and lumpy quarterly FCF. No penalty modifiers. Weight: 25%

FY27Q1 Revenue

$1,239M

src | +5.5% YoY | Accelerating

NG Op Margin

41.1%

+130bps YoY | Multi-year high

FCF Margin

~40%

$1.9B FY26 | Large & growing

Share Count

Declining

-4% YoY buyback | Accretive

Quarterly Revenue Trajectory ($M)

Quarter	FY25Q1	FY25Q2	FY25Q3	FY25Q4	FY26Q1	FY26Q2	FY26Q3	FY26Q4	FY27Q1
Total Revenue	$1,141.2	$1,162.5	$1,177.5	$1,184.1	$1,174.7	$1,217.2	$1,229.8	$1,247.0	$1,239.0
YoY	—	—	—	—	+2.9%	+4.7%	+4.4%	+5.3%	+5.5%

Clean re-acceleration: +2.9% to +5.5% over five comparable quarters (~+260bps off trough). Led by Enterprise (+5.9% to +7.2%, now 61% of revenue) and the Online segment inflecting from -1.2% to +2.8%. Drivers: enterprise upmarket shift, $100K+ customer adds, AI Companion monetization, and Phone / Contact Center / Workvivo attach.

Segment Revenue ($M, quarterly by customer type)

Metric	FY26Q1	FY27Q1	YoY
Enterprise	$704.7	$755.7	+7.2%
Online (SMB/consumer)	$470.0	$483.3	+2.8%
Enterprise % of revenue	60%	61%	+1pp mix-up

Enterprise is the growth engine. Enterprise revenue compounding high-single-digit (+7.2% YoY) and steadily taking mix (58% to 61% over two years), while Online has inflected from contraction back to modest growth. The mix-up toward higher-quality, stickier enterprise revenue underpins the re-acceleration.

Margins (quarterly)

Metric	FY26Q1	FY26Q2	FY26Q3	FY26Q4	FY27Q1
Non-GAAP gross margin	79.2%	79.8%	80.0%	79.8%	79.9%
Non-GAAP op margin	39.8%	41.3%	41.2%	39.3%	41.1%
GAAP op margin	20.6%	26.4%	25.2%	20.0%	25.1%

Operating margin expanding; gross margin flat. Non-GAAP operating margin is at a multi-year high of 41.1% (+130bps YoY, +220bps off the FY25Q3 trough of 38.9%), and GAAP operating margin has structurally lifted from the mid-teens to ~25%. Non-GAAP gross margin, however, is essentially flat in a 78.6%-80.0% band -- strong but not "expanding 100+bps." That flatness is one of the two reasons this is an 8 rather than a 9-10.

Annual Financial Summary (FY ends January 31)

Metric	FY2023	FY2024	FY2025	FY2026	FY2027E (guide)
Total Revenue ($M)	$4,393.0	$4,527.2	$4,665.4	$4,868.8	~$5,085
Revenue YoY	—	+3.1%	+3.1%	+4.4%	~+4.4%
Enterprise rev ($M)	$2,409.3	$2,619.3	$2,754.2	$2,934.1	—
Online rev ($M)	$1,983.6	$1,907.9	$1,911.2	$1,934.7	—
Non-GAAP gross margin	79.2%	79.9%	78.9%	79.7%	—
Non-GAAP op margin	35.9%	39.2%	39.4%	40.4%	—
Non-GAAP diluted EPS	$4.37	$5.21	$5.54	$5.92	$5.96-6.00
Free Cash Flow (NG, $M)	$1,186.4	$1,471.9	$1,808.7	$1,924.1	—
FCF margin (NG)	27.0%	32.5%	38.8%	39.5%	—
Diluted shares (M)	304.2	308.5	315.1	307.3	—

Key trends

Revenue re-accelerating: From $4.39B (FY23) to $4.87B (FY26), with YoY re-accelerating from +3.1% to +4.4% at the full-year level and to +5.5% in FY27Q1 -- a clean deceleration-to-re-acceleration arc
Operating margin expanding: Non-GAAP operating margin lifted from 35.9% (FY23) to 40.4% (FY26), +450bps over three years
FCF large and growing: $1.19B (FY23) to $1.92B (FY26), ~40% FCF margin; TTM ~$1.96B
Share count net-declining: Diluted shares reduced to 307.3M (FY26) via ~$2.7B of buybacks; -4% YoY in the latest quarter

Note: EBITDA series was unavailable in Daloopa; non-GAAP operating margin (~41% on ~80% gross margin) is the cleaner profitability proxy. FY2027 is in progress (only FQ1 reported), shown as management guide, not actuals.

Free Cash Flow ($M, quarterly)

Metric	FY26Q1	FY26Q2	FY26Q3	FY26Q4	FY27Q1
Free Cash Flow (NG)	$463.4	$508.0	$614.3	$338.4	$500.5
FCF margin (NG)	39.4%	41.7%	50.0%	27.1%	40.4%
FCF YoY	-18.7%	+39.1%	+34.2%	-18.7%	+8.0%

FCF large and growing on a trailing/annual basis, but lumpy quarter-to-quarter. FY26 FCF of $1.92B (+6.4% YoY); TTM ~$1.96B; ~40% FCF margin. Quarterly FCF YoY swings on working-capital and tax seasonality (two negative-YoY prints in the window). That lumpiness -- i.e., FCF YoY not cleanly accelerating every quarter -- is the second reason this dimension is an 8 rather than a 9-10. No penalty modifier (FCF strongly positive throughout).

Share Count & Buybacks (quarterly)

Metric	FY26Q1	FY26Q2	FY26Q3	FY26Q4	FY27Q1
Diluted shares (M)	312.8	308.2	305.0	303.1	300.2
Shares YoY	-0.8%	-1.8%	-2.9%	-4.3%	-4.0%

Share count declining steadily: 312.8M (FY26Q1) to 300.2M (FY27Q1), ~-4% YoY, buyback-driven
Capital return: ~$2.7B of buybacks completed with an incremental $1B authorized May 2026, funded from ~$7.7B net cash with no leverage

Score Rationale

Score of 8/10 reflects a high-quality, improving financial profile fitting the "deceleration to re-acceleration" pattern the firm prizes. No penalty modifiers applied.

Supports 8/10:

Revenue YoY accelerating +2.9% to +5.5% (~+260bps off trough), led by Enterprise (+7.2%) and Online inflecting positive
Non-GAAP operating margin expanding ~+130bps YoY / +100bps full-year to 40.4% (FY26)
Share count declining ~4% YoY via buyback; incremental $1B authorized May 2026
FCF large and growing on a trailing/annual basis ($1.92B FY26, +6.4%; TTM ~$1.96B)
Net-cash (~$7.7B), effectively debt-free balance sheet

Why not 9-10:

Gross margin is essentially flat (78.6%-80.0% band), not expanding 100+bps
Quarterly FCF YoY is lumpy (working-capital seasonality, two negative-YoY prints) -- not cleanly accelerating every quarter

Penalty modifiers: Negative FCF -- N/A. Dilution >10% -- N/A (shares declining). Revenue up / operating income down -- N/A (operating income up faster than revenue). Debt growing faster than revenue -- N/A (net cash, no debt). No penalties. Final score = 8/10.

Data sourced from Daloopa (fundamentals). Fiscal year ends January 31. All financials in USD.