INTA - NASDAQ

Hello, everyone, and welcome to the Intapp Fourth Quarter Fiscal 2025 Earnings Webcast. [Operator Instructions]. Please be advised that today's conference is being recorded. Now it's my pleasure to turn the call over to the Senior Vice President of Investor Relations, David Trone. The floor is yours.

Thank you. Welcome to Intapp's Fiscal Fourth Quarter and Year-end 2025 financial results. On the call with me today are John Hall, Chairman and CEO of Intapp; and David Morton, Chief Financial Officer. During the course of this conference call, we may make forward-looking statements regarding trends, strategies and the anticipated performance of our business, including guidance provided for our fiscal first quarter and full year 2026. These forward-looking statements are based on management's current views and expectations entail certain assumptions made as of today's date and are subject to various risks and uncertainties, including those described in our SEC filings and other publicly available documents that are difficult to predict and could cause actual results to differ materially from those expressed or implied by such forward-looking statements. Intapp disclaims any obligation to update or revise any forward-looking statements, except as required by law. Further, on today's call, we will also discuss certain non-GAAP metrics that we believe aid in the understanding of our financial results, including non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income, non-GAAP diluted net income per share and free cash flow. As a reminder, all of our financial figures we will discuss today are non-GAAP financial measures or other metrics, except for revenue and revenue growth, cash and cash equivalents and total remaining performance obligations. Our GAAP financial results, along with reconciliations of GAAP to non-GAAP financial measures can be found in today's earnings release and its supplemental financial tables which is available on our website and as an exhibit to the Form 8-K furnished with the SEC prior to this call or a supplemental financial presentation, which is available on our website. With that, I'll turn the conversation over to John.

Thank you, David. Good afternoon, everyone. Thank you for joining us today as we share the results of our fiscal fourth quarter and full year fiscal 2025. I'm happy to say that once again, we've achieved strong quarterly results as well as a strong year across the business. In Q4, our Cloud ARR grew 29% year-over-year to $383 million. Cloud now represents 79% of our total ARR of $485 million. In the quarter, we earned SaaS revenue of $90 million, up 27% year-over-year and total revenue of $135 million, up 18% year-over-year. Additionally, we now have 109 clients with ARR of more than $1 million, a year-over-year increase of 49%. We released additional AI capabilities designed for the specialized needs of our highly regulated target markets, and we're seeing real enthusiasm for these. We expanded our product portfolio and R&D capability through strategic acquisitions. We added notable new logos, consistently grew existing accounts via cross-sell and upsell, expanded our international footprint and migrated more clients to the cloud. We also continue to grow our partner ecosystem with significant wins related to our partnerships, most notably Microsoft. Going into fiscal year 2026, we feel optimism and confidence that our Applied AI strategy, vertical SaaS platform, enterprise go-to- market strategy and unique competitive position for these highly regulated firms provides a strong foundation for sustained growth and execution in this large addressable market. Now I'd like to share some details on our growth drivers from the quarter and the year. We continued progress on our Applied AI strategy and road map this year. We launched several new AI solutions and showcased our innovation at our largest client event, Intapp Amplify in February. Our AI strategy reduces cost through automation and helps the professionals to grow revenue by providing back to them unique insights from the firm's proprietary data, relationships and knowledge, all while staying compliant with the industry's complex regulations. Our AI is helping our firms to originate and win more business and to onboard new clients and engagement faster while maintaining the unique compliance obligations that this highly regulated industry requires. In their increasingly competitive markets, this is what firm leadership is looking to invest in, using AI to arm their professionals with more of their firm's differentiating proprietary knowledge and expertise, which live in Intapp systems. As a quick recap from last quarter, we announced the general availability of Intapp DealCloud Activator, a research-backed AI-enabled growth platform that gives professionals the tools, insights and coaching they need to build, scale and apply the most successful business development behaviors. We added new Intapp Assist for DealCloud capabilities, including origination, recommendations, smart tagging, prompt studio and AI-powered search. We announced the general availability of Intapp Assist for terms, a new Gen AI feature that makes it easier for legal professionals to comply with client terms. We introduced Intapp Walls for AI, which offers protection against the over sharing of confidential data by AI tools. And in Q4, we launched the next generation of Intapp Intake, featuring AI-powered persona-driven summaries and Intapp Data integration. Our AI-driven wins for this year and the quarter speak to our clients' enthusiasm to name just a few wins here. An international commercial law firm shows Intapp Assist and our compliance solutions to help them comply with new AML regulations in Australia. Eversheds Sutherland, an AM LAW 200 firm, purchased Intapp Assist to help manage the complexity and volume of outside counsel guidelines. And Pantheon Ventures, a global private equity firm replaced its legacy system with DealCloud and Intapp Assist to improve deal flow, capture more opportunities and bring AI into their workflows. You'll hear more about our AI wins throughout my remarks. We're also pleased to have furthered our growth through our expansive partner network and strategic combinations. I'll speak first about our partnerships. We continue to build our partner strategy around strategic depth as well as breadth. We've curated a high- impact ecosystem, anchored by Microsoft and a focused set of vertical data technology and services partners. This ecosystem consistently helps us scale our largest deals, accelerate time to value and expand platform adoption. Some notable new and expanded partnerships announced this quarter include an expanded partnership with Snowflake, which lets our clients build and apply analytics across firm-wide data in the Snowflake AI Data Cloud and a new partnership with MSCI, which provides access to private capital real asset and deal data within Intapp Cloud. In Q4, partners were directly involved in 17 of our 20 largest deals. Microsoft, in particular, continues to be a major growth driver. Almost half of our largest Q4 wins were jointly executed with Microsoft. And in several of those, Microsoft even fronted Azure investment dollars to help accelerate the deals. As an example, one of the world's largest multinational investment banks added on Intapp Assist after seeing it at Amplify. The firm's deal makers will leverage Intapp's AI to bring a more robust and data-driven approach to their complex network of deal sourcing relationships. Working closely with Microsoft, we were able to close the deal quickly and complete the purchase via the Azure marketplace using their existing MACC agreement. Next, I'll speak about M&A. To briefly recap from Q3, we acquired TermSheet, a software provider for real estate teams. Bringing together DealCloud and TermSheet expands our capabilities and our ability to serve new personas within real assets. The TermSheet team is bringing great energy and insights and we're already winning together with new clients like Kronos Real Estate Group, a real estate investor focused on Spain and Portugal. True Homes, one of the largest private homebuilders in the U.S. and a private real estate investment firm with a primary focus on hotels and resorts. Speaking of growth, I'll now turn to some notable wins from Q4. Our growth was powered by adding new clients, expanding within existing clients, and migrating clients to the cloud. We also made traction in new markets, spanning across our verticals, products and global locations. Our success this quarter was bolstered by a number of large enterprise deals. As you may recall, in fiscal '24, we successfully piloted our strategic accounts program. In fiscal '25, we solidified this model by creating an enterprise sales group that focuses on large accounts, which represent 70% of our SAM. We saw tremendous success in this approach with 49% growth in the number of our million dollar accounts year-over- year. I've already mentioned some today, but I'd like to share a few more examples of how our enterprise go-to-market strategy is working here in financial services. The M&A team at a multinational professional services firm chose DealCloud as part of its strategy to improve data management, access and analysis. A leading global alternative investment manager, added additional capacity within DealCloud for new employees coming into the company following an acquisition and a preeminent multi-strategy asset manager chose DealCloud within Intapp Assist to replace a well-known legacy horizontal software provider. Intapp Assist was a differentiator that supported the replacement purchase because it enabled the firm's investment professionals to improve their comprehensive coverage of management teams and their pursuit of new investment opportunities. I'd also like to mention some new deals, reflecting our continued success in investment banking. Capstone Partners added DealCloud within Intapp Assist to support pipeline generation and streamline operations using AI and industry-specific workflows. A large U.S.- based investment bank chose DealCloud for its M&A business as a single source of truth for deal data from origination to execution to long-term relationship management. And the specialty investment bank, focusing on M&A and capital advisory services for the middle market chose to replace its legacy horizontal solution with DealCloud and Intapp Assist to facilitate firm growth and ensure a better AI-driven user experience across the firm. In Q4 also, accounting firms continue to modernize their compliance practices using Intapp solutions to handle the increased complexity created by PE investments and mergers. These included Anderson Tax, one of the largest independent tax firms in the world. Baker Tilly, a leading advisory tax and assurance firm, one of the largest accounting and advisory firms in the U.S. and a top 10 global accounting firm. Additionally, Law firms are continuing to replace legacy and horizontal CRM by adding Intapp DealCloud to their existing Intapp product portfolios. I'll share a few examples from Q4. A Quebec-based firm chose DealCloud and Intapp and Intapp Assist to support business development and relationship management in French. Fish & Richardson chose DealCloud to up-level its business development activities and tracking, especially relationship management. And Marshall Gerstein chose DealCloud as its integrated system to enhance marketing and business development efforts, information sharing and activity tracking. Finally, our legal clients, including Goodwin and Steptoe continue to find value migrating their on-prem impact time to the cloud. Once implemented, they'll have access to all our new AI features and our continuous innovation. In conclusion, we're proud of our strong fourth quarter and fiscal '25 performance, and we continue to be optimistic about our growth opportunities. As our performance has shown. We're growing by adding new capabilities and increasing our global enterprise go-to- market reach. We see continued opportunity both to add new clients across a broad TAM and to deliver greater value by expanding our existing client base. We're serving a durable end market with our subscription revenue model, industry-specific cloud platform and Applied AI and compliance capabilities. We have a great growth opportunity to drive AI and cloud adoption and modernization across the industries we serve. As always, I'd like to thank our clients, our partners, our investors, our board and our global Intapp team for their hard work and dedication. Thank you all very much. Okay. David, over to you.

Thank you, John, and thanks to everyone for joining us today. I'm pleased to report a strong fourth quarter performance. We concluded fiscal 2025 with several notable achievements that highlight our strong progress, winning in the cloud, expanding operational efficiency and deepening our presence with enterprise clients across our vertical end markets. We scaled our $1 million- plus annual recurring revenue or ARR client base into triple digits with both the number of clients and corresponding ARR more than doubling compared to FY '23. We grew our cloud business through land, expand and migration motions with nearly 80% of total ARR now in the cloud. We surpassed the $0.5 billion mark in annual revenue and we generated well over $100 million of free cash flow. These results underscore the opportunity ahead of us as we continue executing against key market tailwinds, digitalization, cloud forward adoption and compliance-driven demand. We enter fiscal 2026 with strong traction and a sustained focus on delivering durable, profitable growth. Let's begin with the fiscal Q4 results. SaaS revenue was $90.2 million, up 27% year-over-year, driven by new client acquisitions, contract expansions and the migration of on-premise products to the cloud. We exited Q4 with 93% of our clients having at least one cloud module and over 80% of our clients fully deployed in the cloud. License revenue totaled $31.8 million, up 5% year-over- year, primarily driven by on-prem expansions within our compliance solutions. This was partially offset by the continued migration of clients through our cloud-based SaaS offerings. Professional services revenue was $13 million, down 2% year-over-year. Our evolving partner ecosystem strategy is helping us more efficiently support long-term cloud growth with increased emphasis on co-sell production and elevated client satisfaction. Total revenue was $135 million, up 18% year-over-year, driven primarily by sales of our cloud solutions. Client adoption of Intapp vertical SaaS AI offerings accelerated in Q4, building on momentum from our Amplify product event. Assist for DealCloud now accounts for approximately 35% of new DealCloud wins up from 8% last year. Looking ahead to fiscal 2026 and beyond, we anticipate continued broad-based adoption across all of our AI offerings. Supported by a growing client base, a healthy pipeline and a compelling value proposition. We remain focused on delivering vertical-specific AI solutions that drive sustainable growth for Intapp and long-term value for our clients. Our partner ecosystem closed FY '25 with 145 active partners playing a critical role in our largest wins, accelerating time to value and driving broader platform adoption. Our co-sell motion continues to deliver solid results with partner-engaged enterprise deals outperforming our win rates over the past 2 years. Q4 highlighted the strength of this collaboration with partner influence bookings growing more than 50% year-over-year. As we continue to focus on margins and operational efficiency, our Q4 non-GAAP gross margin was 78%, up from 76.1% a year ago, reflecting progress toward breakeven gross margins and professional services and a reduced top line contribution from that business. Non-GAAP operating expenses were $84 million compared to $73.6 million in the prior year period, reflecting ongoing investments in our product-led growth strategy and go-to-market motion as we enter fiscal 2026. Non-GAAP operating income was $21.3 million, up from $13.5 million in Q4 of last year. Non-GAAP diluted EPS was $0.27 compared to $0.15 in the prior year period. Free cash flow was $37.5 million for the quarter or 28% of total revenue, defined as cash flow from operations less capital expenditures. We ended the quarter with $313.1 million in cash and cash equivalents, reflect our upfront cash payment of $51 million made at the April closing of our TermSheet acquisition. Now turning to our key metrics. Our cloud ARR increased 29% year-over-year, while total ARR grew 20% over the same period. Total remaining performance obligations, RPO, were $719.7 million, up 27% year-over-year. We ended the fiscal year with over 2,700 total clients. Our go-to-market strategy this year has emphasized landing and expanding within enterprise named accounts. And that focus gained traction as the year progressed. We grew our $1 million-plus ARR client base to 109, up from 73 in the prior year, nearly 50% year-over-year growth. We also expanded our $100,000-plus ARR client base to 795, up from 698 a year ago. Our cloud net revenue retention rate was 120%, exiting FY '25, demonstrating strong retention and steady expansion among existing cloud clients. Now turning to our full year fiscal 2025 results. SaaS revenue was $331.9 million, up 28% year-over-year, driven by new client acquisitions, contract expansions and ongoing cloud migrations. License revenue totaled $120 million, up 2% year-over-year. Growth was driven by on-prem price increases on track expansions and multiyear renewals, partially offset by continued migration of on- prem contracts to the cloud. Professional services revenue was $52.1 million, down 3% year-over-year. As we increasingly rely on our services partners to lead implementation, this aligns with our focus on co-sell execution and improving client satisfaction. Total revenue reached $504.1 million, up 17% year-over-year, primarily driven by growth in our cloud solutions. Non-GAAP gross margin was 77.3% compared to 74.2% in the prior year. Non-GAAP operating income was $75.6 million, nearly double the prior year's $38.7 million, reflecting revenue growth, improved mix and operating leverage across expense lines. Non-GAAP EPS was $0.94, up from $0.45 in the prior year. Free cash flow was $121.9 million or 24% of total revenue, reflecting meaningful progress on strengthening our operational efficiency. Now turning to our outlook. For the first quarter of fiscal 2026, we expect SaaS revenue of between $95.7 million and $96.7 million. Total revenue in the range of $134.8 million and $135.8 million. Non-GAAP operating income is expected to be in the range of $16 million to $17 million. This Q1 outlook includes some front-end spend related to our go-to-market motion, specifically our FY '26 sales kickoff as well as targeted marketing investments as we build on the momentum from a strong Q4. And non-GAAP EPS in the range of $0.18 to $0.20 using a diluted share count weighted for the quarter of approximately 85 million common shares outstanding. For the full fiscal year of 2026, we expect SaaS revenue of between $411.4 million and $415.4 million, revenue in the range of $566.7 million and $570.7 million. This outlook assumes a professional services revenue mix consistent with fiscal 2025, where it accounted for approximately 10% of total revenue and reflects a more material participation in our cloud migration efforts. Non-GAAP operating income in the range of $96 million and $100 million. And non-GAAP EPS in the range of $1.09 to $1.13 using a diluted share count weighted for the fiscal year of 2026 of approximately 87 million common shares outstanding. Thank you. And I'll now turn the call back to the operator.

[Operator Instructions]. Your first question comes from the line of Kevin McVeigh with UBS.

Great. Thanks so much and what a terrific, terrific result. I wanted to start on just kind of the 120% NRR. Maybe help it, sounds like it's some retention and steady expansion, but maybe frame that a little bit more. And then what are you assuming in the 2026 guidance?

Kevin, it's Dave. The 120% obviously has continued to be contributed by low churn that we've always commented on. You know, that's one of the beauties of being a very sticky vertical SaaS and knowing your end clients. Secondly, as we continue to go further upstream into the enterprise, those expands get even more material, both from an upsell as well as a cross sell. And so we saw some strong execution that you can see in our top line results. And then thirdly, you know, we've taken a very conservative number going into FY '26 as we continue on because we have a large opportunity in front of us, not only with net new logos, but then also with our continued expand motion, with our continued product innovation that we've announced over the past couple of years at our key market events of Intapp Amplify.

Terrific. And then just a quick follow-up because obviously the incremental margins look really, really strong in 2026. How do we think about just with the mix in the enterprise, I would think maybe a little bit lesser margin. Maybe I'm not right on that, but just is it less professional services? Or just what's driving that leverage?

Yes. We've continued to drive efficiency both in our model and our product offering. And so, again, how we've kind of brought items to market have been true value, that we've sold into our client base. And so as we've seen that continued leverage across all of those lines, we've continued to yield that, both, at the top as well as, below the line. And so, you know, enterprise, mid market, you know, those items are moderated, and, obviously, we're selling the value of that end prop versus, you know, just a simple solution set with a simple ASP.

Your next question comes from the line of Koji Ikeda with Bank of America.

I wanted to ask a question on RPO. So when I punch in the RPO to the model, it looks like a pretty good growth quarter in the fourth quarter up 27% year over year. But when I look at total contribution for RPO for this year compared to last year, a little bit less this year versus last year. So just trying to understand if there's anything within RPO we should be thinking about or we're just kind of pulling teeth here on the numbers comparing fiscal 2025 to 2024?

Yes. I think you might be pulling some teeth as we finally have kind of crossed the chasm, if you will, on more material input from some of these enterprise clients. You know, our total value, of duration hasn't really materially changed, from last year to this year. Clearly, we'll continue to garner that contract value that we'll recognize, but there wasn't anything both from a seasonality or contract duration that changed that.

Got it. That is super helpful. And maybe the follow-up question for you, David. In the prepared remarks, thank you for giving the in the guidance, 10% of revenue coming from professional services for fiscal '26. But when I look at the license line item, is there anything we need to be aware of from a renewal seasonality that could create any sort of quarterly volatility or movement in that license line item specifically for '26?

Yes. We're going to do our best to continue to keep everyone as transparent as possible as we work through. It's not a matter of if, it's just when we're able to get our clients transitioning more aggressively to the cloud. And so there may be some puts and takes between Q2 and Q3. But clearly, for the year, we have our work kind of identified, but there may be some quarter puts on that. So we'll make sure that we're very transparent as we go through this.

Your next question comes from the line of Alexei Gogolev with JPMorgan.

This is Bella on for Alexei. For our first question, can you explain the rationale behind your collaboration with Snowflake? What customer overlaps did you identify and how has early feedback been?

Sure. Thanks, Bella. We're excited about the growth in the partner ecosystem generally. Obviously, we've talked a lot about the Microsoft relationship. Snowflake was an important partnership for us to strike as we move into the enterprise because they've made such a strong amount of progress there. There's a lot of interest in the key information that we are helping to manage and collect and report on and analyze and then report back to all of the professionals who are working in the firms that stored an Intapp DealCloud in our compliance platform, in our collaboration system. And the clients really want to make that a central component of their overall business analysis and the integration with Snowflake was a request that we began to receive pretty strongly as we started to win some of these large enterprise accounts, and we were very excited to be able to strike a formal agreement with Snowflake to ensure interoperability. And I think it is one more step for us in helping make sure that the enterprise firms see us increasingly as a key strategic pillar of their overall vertical solution.

That's helpful. And as a follow-up, with the upcoming QC 1000 accounting change, what opportunities do you see arising from this regulatory shift? And how much of that is currently baked into fiscal 2026 guidance?

There's a lot of opportunity for us, I think, in the -- several of the regulatory changes, including QC 1000, we talked a little bit about the Australia AML change that's happened as an example. And actually, the compliance issues for this market generally have always driven the demand for a vertical-specific solution So the company's strategy throughout the technology generations from the on- prem era to the mobile era to cloud and now AI, a key part of our differentiation versus the traditional horizontal systems is our understanding of the -- not just the workflows, but the compliance requirements of those workflows for these firms. And they really are looking for a strategic technology partner that understands those and can design for those so that they can put the best opportunity forward for their various regulators. And this is just one more change. And as the accounting rules continue to evolve, the regulatory frameworks continue to evolve in each of the jurisdictions that we sell into, we're keeping up with that, and we're making sure that the firms can continue to trust us as the people who can now bring AI in a compliant way to the marketplace. It's a centerpiece of our differentiation and one of the reasons why you're seeing growth like this.

Your next question comes from the line of Parker Lane with Stifel.

John, really nice to see 17 of the 20 largest deals, including a partner. I think you said partner influence bookings up 50% year-over- year. When you take a step back, how would you assess where you're at on the maturity curve of the co-selling relationship with these partners? And do you characterize this as an inflection point that will continue to support this durable growth? Or is there still some enhancements you could do to even drive further performance there?

Well, there's always more to do. We are consciously recruiting partners strategically to help us address different aspects and different segments of the market of the whole solution. That being said, yes, we've been talking with you all for a few years now about our investment in the partner ecosystem. We wanted to consciously give you some statistics on this because this has been one of the questions, how is the partner ecosystem contributing to your growth? And we've really reached a very important stage. We're not just in each of the large deployments, but across the scale of our clients, we have partners working with us. You see it in the relative mix of services revenue in the model, working more and more with the ecosystem, and that's helping us on the sales side, too, because all of those partners who have relationships with their clients are referring us in and have an incentive to sell with us and work on the deployments and taking care of customers after the deployment. Microsoft, in particular, we wanted to emphasize, because such a big contribution to our large deals this time came from the Microsoft relationship that we've been cultivating for many years, and this has been a question out there. So more than half of our clients are working with us and Microsoft together at the large end of the market and just a little under half of the deals this quarter came that way. And we're seeing very strong support from Microsoft because the AI that we're delivering in a compliant way to this regulated market is a great way to pull Microsoft's technology and Azure into the marketplace. They see us as a key partner there. And there are already existing MACC agreements with Microsoft at the large firms across the market. So that reduces our time to sale and makes the budget question less of a question because people have already committed to spending X with Microsoft each year, and they can use that now to buy our solutions. So the partnership is really working, and we're very excited about how that's going.

Got it. That's great feedback. And the other thing you called out here was just a lot of AI enhancements across the platform, across the different sub verticals and verticals you operate in. If you had to look across the board, is there any one area that stands out above the rest in terms of AI adoption and utilization? Or is it truly a broad based demand you're seeing right now?

Well, it's common experience how strong the AI story is generally in the industry. We're absolutely benefiting from that. I think one of the things that's happening is we're able to come in and show a vertical solution that is built into their workflows and a compliance solution and the relationship with their key technology platforms like Microsoft and Snowflake and some of the other things that we've been talking about. So people see a whole product there. And I think in the application space discussion, this front end of their problem, how can they apply AI to arm their professionals to better compete, pursue growth opportunities, identify, originate new business bring that on board and keep the revenue stream running. This is an angle that is not what you hear from a lot of the AI start-ups. It's something we're in a unique position to deploy AI to solve for, given our history with DealCloud and with our intake and conflict solutions around business acceptance and it's actually the thing that the very most senior people in the firms are trying to figure out how do I use AI to drive growth for my firm. So I think we're well positioned to tap into confluence of top priorities for just AI itself, but AI for growth and compliant AI for growth. That mix is just awesome, and people are really responding well.

Your next question comes from the line of Alex Sklar with Raymond James. Please go ahead.

John, on the fourth quarter bookings improvement, can you just help break down how much of that you saw from any sort of macro improvement versus productivity just with more time in market with the strategic account team changes you put into place at the start of the year? And, Dave, just a quick follow-up for you. Any quantification on what TermSheet added to ARR in the quarter?

Thanks, Alex. So there's a healthy demand for our solutions and for AI in the marketplace. Macro-wise, we're seeing positive draw. On the productivity point, I do think that our continued evolution in a very measured and data-driven way towards originally the strategic accounts pilot in fiscal '24, then the increase to the enterprise go-to-market organization in '25 absolutely contributed to a bunch of these numbers, 70% of our SAM is in the top 2,000 accounts. And so our emphasis of evolving our go-to-market more and more towards the top 2,000 accounts in our enterprise group is a conscious effort. We're investing a little bit more here in Q1 to get that group now off and running with a bigger sales kickoff and armed with more training and support to continue to build on the very strong funnel that we're seeing. So I think it's both a mix. Strong demand, clearly, AI is a pull, and they gave some stats about how that's making its way through our pipeline strongly since the two launches that Intapp Amplify last February and this February. And then the enterprise shift as well. So all of those things are adding together. And then I've already mentioned the Microsoft relationship and how that's supporting us in the field.

Your next question comes from the line of Terry Tillman with Truist Securities.

Good afternoon, John, Dave and David, congrats on the quarter. I had two questions. The first one actually just kind of building on top of the question and your answer, John, as it relates to front-end loading some investments, sales kickoff, et cetera. You all made good progress with this enterprise sales team build out. Is it more on just marketing kind of branding and just investments in the event? Or are you actually adding more sellers now as you've gotten enough good signals with the enterprise sales motion? The second part of this first question is these increased investments in the beginning of the year, do you all see potential payoff from those investments maybe later in the year on cloud ARR? And then I had a follow-up.

Thanks, Terry. So from an organizational standpoint, yes, it's bringing the sales team together, but really taking the lessons from the '24 and '25 experience and making sure that all of the team members are armed with the best learnings about how to be successful out there. We've had some really incredible wins here. I want to make sure that everybody has the knowledge and the training to support that. In addition, yes, we are making some increases in that enterprise force. We think there's a real opportunity to continue to grow and scale there.

Yes. The follow-up question is just related to, I get a lot of questions over time around kind of the longer-standing part of the business and the legal industry, serving law firms. And just knowing the penetration you all had, you did talk about kind of whether you assist the AI product around Assist. But just in terms of DealCloud like penetration and attach rate, how is that progressing on the legal side? And just how do you see in terms of the vitality of kind of the law firm legal side of your business?

Yes, this was a core strategy for the DealCloud combination years ago. We did a lot of work. We've talked to you all over the years about blueprints and specific workflow definitions and some terminology change data change and some data integration we needed to do. All of that is paying off. So we've got successful clients rolling out DealCloud as their business development system at small, medium and large law firms. We have Intapp Assist now as a key value proposition in that story, which is being taken up very positively. I gave some examples. We also -- as you recall, we did a lot of work on our relationship intelligence system, which is an AI component of the platform that helps the partners in the firm navigate with each other to more client opportunities out in the world in a way that is really enthusiastically being received. So it took us a little while. That's something that we've talked about, but a lot of these results, very positive. So I'm excited about the core concept, vertical compliant, growth, AI for these firms in a way that's really built for them. And we are announcing, I'm thrilled, replacements consistently now of traditional horizontal CRM systems that were not built for the industry with our vertical-specific AI-powered solution. And I think that, that word of mouth continues to grow. So it's a great growth opportunity for us.

Your next question comes from the line of Steve Enders with Citi.

Okay. I just want to follow up on Alex's earlier question. But I guess what was the TermSheet contribution in the quarter to ARR? And I guess, on the backside of that, just as we think about kind of seasonality of ARR, does the shift to the account management structure, does that, I guess, maybe structurally change how we should think about linearity of ARR through the year? Or just kind of what are the factors that we should be taking into account there?

Apologies. And I'm glad you reasked Alex's question. We got cut off there. Regards to TermSheet altogether, they're integrating phenomenally, both from a technology as well as hitting the deck running on landing some key new wins that I believe John articulated in his prepared remarks. As far as the overall contribution from your net ARR question, I would say it was relatively immaterial. When you'd say immaterial, it was less than 5%. And so we love what they're doing. We love the end client. We love the market that they're serving. And we really like how that pipe is developing for continued contribution to overall Intapp here in this fiscal year. So hopefully, that addresses that question.

Yes. Sorry. And just to clarify, when you said it was 5 -- or under 5%, you're talking of the total ARR of the net new ARR in the quarter?

The incremental ARR from the cloud.

Got you......

How -- yes, the delta between Q3 to Q4 is less than 5% of that delta.

Okay. Perfect. That's helpful context there. And then I guess just on the Microsoft partnership and that relationship, it feels like the commentary this quarter, I think, feels different from, I guess, the overall contribution or how it's impacting bookings. I guess, how are you kind of viewing the kind of further contribution for that or the core groundwork being laid for that to now just kind of be harvest the fruit there? Or is there -- or are there any kind of more hurdles or things that need to be worked through to kind of like fully unlock the Microsoft relationship?

There's always more opportunity with an organization that size, but I think we hit some big milestones here. There were some important deals at the large end of the market that now both the Intapp sellers and the Microsoft sellers saw accomplishment of quota and quota release in that fiscal year. Interestingly, Microsoft fiscal year is the same as ours. So they haven't set to get things done on June 2. We saw some great results from the MACC agreements, which I think we're increasingly able to leverage in our sales motion earlier. People are getting more used to that and seeing the power that, that can have to smooth making deals happen and take the budget question off the table and how do you navigate that. In these enterprise sales motions. I also think we've got more and more success stories that are traveling among the sales team and among clients by referrals about how to get AI in successfully this way. And I just think that the experience that we have working with their sales force, they made a change in addition to their financial services team, they've put together under one executive of professional services sales organization, which includes legal, accounting, consulting. So we have an easier way to navigate the Microsoft go-to-market team now, and it's easier to get a line. So a lot of things are aligning on the relationship there that are very excited.

Your next question comes from the line of Saket Kalia with Barclays.

Great. John, maybe for you. I'd love to just double-click on TermSheet a little bit. I think the size that we just heard there and correct me here if my math is off, it sounds like it was probably less than $2 million in ARR, right? And I'm assuming that's the total ARR base that contributed in the quarter. And again, correct me if I'm wrong, I think the size of the purchase price there was about $50 million. Maybe there's another $20 million of earn-outs possible. Can you just talk about how you kind of view that revenue opportunity long term with TermSheet specifically?

TermSheet is a component of our overall real asset solution strategy, we had already been making progress with DealCloud into certain parts of the real assets universe, specifically the fundraising that all the real assets investors were doing, very strong solution there. The coverage program that they use to look for opportunities in the marketplace, a very strong solution there. As you would expect, a lot of overlap with our existing private equity style, asset managers, the multi-strategy asset managers that had both private equity and real assets investment strategies, and then increasingly, the real assets specialists. What TermSheet brought us was an extension of additional functionality that looks at the deals after the funds are deployed into the deals and helps with asset management over the life of the asset. There's some specific requirements that those firms needed that the TermSheet technology really helped us extend. And so actually, together, we have an even better whole product than we had prior to the combination. In addition to that, there was a very strong AI-first team in TermSheet that are bringing a lot of horsepower to our growing engineering group that's focused on all the AI solutions we can bring out. And there's a great opportunity for us to leverage both the real asset expertise and even more of the AI expertise that we're bringing into the team. So it's a great story. And the real assets market and industry, we talked a little bit about at Investor Day last year when we first went into it, this is a very significant space that is totally analogous, very closely related through the multi-strategy asset managers that we serve to all the core businesses that we've pursued. And it's similarly underserved. This is a vertical space that has not successfully taken up the horizontal systems for all the same reasons that our private equity and private credit investment banking community has taken. So this just seems like the perfect SAM expansion and stepped curve for us for continued growth here. I think it would be a big part of our business over time.

Got it. Got it. That sounds exciting. Maybe for my follow-up for you. How do you sort of think about the shape of net new ARR next year? Are there any comments you want to make just on overall ARR growth as we sort of think about that versus revenue growth?

From a shaping perspective, I think we started orienting folks around some implied seasonality, definitely June and December quarters are going to be a little bit stronger just because of the natural follow-through of where some of our clients year-end reside and a renewal base already being driven naturally in those two. And so FQ2 and FQ4 are going to be naturally higher. Now, with that said, we're looking at every quarter to be successfully contributing to our growth and our aspirations as we look forward to our $1 billion revenue narrative. It was a very big year for us when you think about just our overall construct, finally breaking through the $500 million finally generating well over $100 million of free cash flow. And so when you put all that into consideration and now you're starting to see some natural seasonality trends that flow this is the next stage and evolution of the company as we exit '25 on to a successful '26.

Your next question comes from the line of Patrick Moley with Piper Sandler.

I was hoping to just get your updated thoughts on capital allocation priorities from here? And then with the share repurchase program announced today, just how you're thinking about the pace and timing of buybacks throughout the rest of this fiscal year?

Patrick, nice to formally meet you. Welcome to the Intapp team account coverage. Yes, thanks for asking on the share authorization. Clearly, we didn't necessarily want to co-mingle our strong results coming off of Q4 and the importance of our '26 guide. But the Board has authorized this $150 million in share repurchases. The way we think about things here is we're going to continue to invest in ourselves. There's a lot to be done within our, product, road map, with AI and the opportunities that we see for our end clients. Secondly, some of the previous questions have evolved around TermSheet or recent acquisition. So we clearly have a profile there of key items that, may be fitting within our own, I'll call it, persona of an acquisition target and that funneling. And then thirdly, we now have this authorization to take every opportunity to put capital at work when we deem fit.

And that concludes our question-and-answer session. And I will turn it back to John Hall for final comments.

Okay. Thank you, everyone. We have a very strong fiscal '25 behind us, and I am very excited about fiscal '26 and the opportunities in front of us. The team is off and running, and we're very excited to look forward to talking to you again in 90 days to talk about Q1. Thanks for your time today.