VIA - NYSE

Good morning, and welcome, everyone, to Via's Fourth Quarter 2025 Earnings Call. I'm Gabby McCaig, Via's Chief Corporate Communications Officer and Head of Investor Relations. With me today are Daniel Ramot, Via's Co-Founder and CEO; and Clara Fain, Via's Chief Financial Officer. During today's call, Daniel will review our fourth quarter 2025 business update before handing it off to Clara to discuss financial results and our guidance for the full year 2026. Daniel will end with some additional comments before opening it up to Q&A. In addition to prepared remarks on this call, additional information can be found in our investor presentation, press release and SEC filings on our Investor Relations website at investors.ridewithvia.com. Before we get started today, we wanted to draw your attention to the safe harbor statement included in our press release and investor presentation. Items we discuss today will include forward-looking statements about topics, including, but not limited to, our future financial performance, projections and management's plans and objectives for future operations. Actual results may differ materially from those presented in the forward-looking statements and are subject to risks and uncertainties described more fully in our SEC filings, including our annual report on Form 10-K. Any forward-looking statements that we make on this call are based on our assumptions as of today, February 27, 2026. Unless required by law, we undertake no obligation to update or revise these statements as a result of new information or future events. We would also like to point out that our discussion today will include certain non-GAAP financial measures in addition to, not as a substitute for, financial measures calculated in accordance with generally accepted accounting principles. Definitions of these non-GAAP financial measures, along with reconciliations of non-GAAP to GAAP financial measures are provided in our press release and our investor presentation. And without further ado, I'll now hand it over to Daniel.

Thanks, Gabby, and thank you, everyone, for joining us today. We're delighted to report that Via delivered another exceptional quarter, exceeding expectations on both top and bottom line performance. In Q4, our revenue grew 30% year-over-year to $119 million. This was the eighth consecutive quarter with year-over-year platform revenue growth at or above 30%, highlighting Via's ability to consistently deliver rapid, durable growth. Q4 was the strongest quarter in company history for net new platform revenue. This outstanding result was driven by our relentless focus on product innovation and our ability to deliver to our customers not only the most cutting-edge technology in the market, but also the solution that best matches their needs. The number of customers on our platform grew sharply in Q4 to 821. We saw strong organic customer growth of 9% year-over-year, and we added 94 new customers through our acquisition of Downtowner, an important expansion of our platform and exciting opportunity for future growth. We also remain highly focused on maintaining our progress towards profitability. In Q4, we had the narrowest loss in Via's history at negative 6% of adjusted EBITDA margin. 2025 was an outstanding year for Via. Not only did we take the company public and acquire Downtowner, we also achieved rapid and consistent growth throughout the year and continue to invest in our product and team to support durable growth in the years to come. In 2025, we grew platform revenue 31% year-over-year to $434 million. Adjusted EBITDA improved year-over-year by 8 points to negative 8%. In Q4, we continue to win new customers at a rapid rate. We are seeing strong growth in the number of large customers who adopt our platform across the U.S. and globally, in part driven by an acceleration in the number of cities and transit agencies selecting Via to manage their entire transit network. As has been consistently the case throughout Via's history, we saw exceptional retention and growth from our existing customers. For the past year, Via's net revenue retention was 119%. We also recorded the highest gross revenue retention in Via's history, 98%, beating the previous record set just a quarter earlier in Q3 2025. Our incredibly low churn is the result of the meaningful impact in ROI we deliver to our customers and the consistency with which we do so. Sarasota County, Florida has been a Via customer since 2021 when we partnered with the county to launch a new microtransit system. At the time, the county trimmed 15 underutilized bus routes and used those savings to fund the microtransit service. For the same annual budget, Sarasota was able to significantly expand the reach of their public transit network, shorten passenger wait times by 4x and reduce cost per ride by 50%. Further savings of $700,000 annually were achieved by leveraging the microtransit system to serve transportation disadvantaged riders, a service that was previously provided by a separate fleet. Breaking down operational silos is a key advantage that Via platform provides to our customers. This success led to Via being awarded a paratransit software and services contract, representing a 6.3x expansion of our contract. We can now leverage our unified platform to integrate the microtransit and paratransit services and drive even greater savings for the county. I wanted to share another case study that demonstrates the outstanding ROI that our customers can achieve when they adopt our platform. An agency in Missouri was able to reduce cost per ride by more than 50% from $75 to $30 when integrating paratransit and microtransit through our platform. This translates into $2 million of savings per year for the agency. One of our key goals for the IPO was to gain the ability to leverage our public company stature and balance sheet to strategically acquire assets that broaden our platform and global reach. We're very pleased that in Q4, just 3 months after the IPO, we made our first such acquisition. We have been following Downtowner and its founders for many years and have been impressed with their execution and product. We also recognize a strong cultural fit between our teams, which is a critical consideration for every acquisition we evaluate. Over more than a decade, Downtowner built a specialized business focused on efficient public transit solutions for Destination Cities. The Downtowner team developed innovative tools, deep expertise and proprietary data to manage the complex geography and weather conditions, seasonal demand patterns and local commuting needs of these unique environments. In acquiring Downtowner, we gained direct access to these tools, expertise and data, which we can now leverage to expand our platform. We also gained 94 new customers. We believe that many of Downtowner's customers have additional transit technology needs that are well served by Via's platform. The average ARR per Downtowner customer is significantly lower than Via's current ARR per customer, providing an exciting opportunity for growth within the Downtowner customer base. We believe that in the current market conditions, targeted and selective acquisitions such as Downtowner represent an attractive opportunity and sound capital allocation strategy for Via. Product innovation is a key driver of our growth. In 2025, our product development accelerated meaningfully. Our team of 400 engineers, product managers and data scientists released more than 50 new products and major features during the course of the year. A key driver of product acceleration was our use of AI to increase the efficiency of our engineering and product teams. The faster rate of product innovation has allowed us to increase the pace at which we expand our product portfolio and broaden our platform, an increase that is already having a measurable impact on our business. Our pipeline grew more than 50% year-over-year in 2025. While we have always used machine learning to power algorithms, we are now embedding AI across our platform, automating key workflows, improving the learning and decision-making of our algorithms and leveraging Via's proprietary data to generate deep insights and proactive recommendations for our customers. We are setting the industry standard when it comes to developing AI for government, providing solutions that meet the exceptionally high bar for accuracy, reliability and security that is necessary when powering critical public services. We know there's a lot of talk about AI. We wanted to go beyond talk and show you some of the AI products we're rolling out to our customers. As you'll see, the proprietary data we've amassed over more than a decade is a critical foundation underlying many of these products. First, let's take a look at our tool for automating the design of transit networks. Using AI, we leverage publicly available demographic data alongside Via's travel demand, rider mode choice and other proprietary data to generate an optimal bus network. Once we've established the optimal bus network, the AI can turn its attention to the microtransit component of the system. You can see the AI in action as it evaluates a large number of potential zone designs before converging to the optimal microtransit zones. This is a powerful new planning tool that has the potential to revolutionize how transit networks are planned. We have also embedded AI into our operations software, where it monitors the system's operations to proactively generate insights and recommendations. Here, we see insights generated by the built-in agent based on ridership demand data. Each insight leads to an AI-powered recommendation. Planners can rapidly visualize the data in forming the recommendation and take immediate action. In this case, expanding the microtransit zone to cover a whole foods that is driving a lot of ridership. Once the zone change is made, it goes live immediately, allowing riders to travel directly to the whole foods. The same tool also continuously evaluates system safety. Here, we see another AI-generated insight, identifying an unsafe virtual bus stop. With a click, the planner can access satellite footage to review the location. In this case, the planner determines the stop is indeed unsafe and easily removes it from the system. Dispatchers often need to deal with unexpected disruptions. Our AI agent can assist them, transforming potentially challenging and stressful real-time decisions into a human-AI collaborative process that is well informed and seamless. In this example, the dispatcher needs to secure a new ride for a passenger whose vehicle is broken down. The AI agent helps the dispatcher quickly understand how assigning the passenger to a new vehicle will impact other passengers already on that vehicle. The AI agent then facilitates the assignment selected by the dispatcher. Our target market is unique and very few companies that sell into this market and have been able to achieve meaningful scale. As the category leader and thanks to the proven impact that our platform has delivered to cities, we've been able to develop strong relationships with mayors, city managers and other key municipal decision makers. This is evident in the outstanding bipartisan group of mayors who are the inaugural members of our newly launched Mayors Council. The goal of the council is to support transit innovation in the U.S. and facilitate adoption of modern transit technology and innovative transit approaches by mayors across the country. We are confident that the support of mayors on the council will prove instrumental to accelerating adoption of smart transit solutions in cities throughout the U.S. Our market is massive, and we have only begun to penetrate it. Based on a report we commissioned from a major consulting firm, our serviceable addressable market is estimated to be $82 billion. Today, we capture a little over 1% of this market. Across this massive global market, there is an enormous gap between the antiquated technology that government organizations have historically relied on and the cutting-edge software we have developed. This gap is rapidly expanding, in large part, thanks to AI. We believe that transforming this market represents a generational opportunity. It is also a market with a unique set of challenges. While our customers are mission-driven and motivated to provide high-quality service to their constituents, they are burdened by cumbersome procurement and regulatory constraints. They also have many complex and bespoke technical requirements that are essential to their operations. We've spent over a decade developing a deep understanding of these customers. One of our most important early insights was that our customers need so much more than better software. They need better solutions. We learned that the standard seat-based SaaS model will not drive durable growth or achieve meaningful scale when the customers are local governments. That is why we have, from the very beginning, been steadfast in our approach. We must provide our customers not only cutting-edge software, but a complete solution. To do this, we adopted a novel innovative approach to our market. We built an end-to-end platform of software and services. Our platform comprises the world's most advanced AI-powered software for public transit systems. It also incorporates a broad range of technology-enabled services, many of which are provided through a curated ecosystem of third-party providers that we assembled over the years, and it is priced based on usage, not seats. As Via grew, we often faced skepticism about our model. Wouldn't it have been so much simpler to just sell software. But we made what I believe has proven to be a prescient decision to look beyond the traditional software model. Our platform approach enabled us to grow rapidly and become the undisputed leader in our category. Our scale affords us a tremendous data advantage over existing players and potential newcomers to the space. And the services we provide ensure that our platform is tightly linked to the physical world, which we believe will ensure that Via emerges as a long-term beneficiary of AI. One powerful case study for how our platform can leverage AI is our use of autonomous vehicles. By incorporating AVs as a service into our platform, as we've done with Waymo and Chandler, Arizona, we will be able to drive increased margins in our operations and deliver savings for our customers as the cost of AVs declines. Perhaps most interestingly, as we work closely with local government organizations around the world, we've seen how badly they need smart AI-powered solutions in virtually every aspect of their internal operations. We've spent the past decade establishing Via as a company that can deliver complex solutions that really work for the public sector. In the process, we've built strong relationships with mayors and senior city officials the world over. Today, with AI dramatically speeding up product and software development, we're exceptionally well positioned to build on these relationships and partner with mayors and city managers to build AI-powered solutions that extend well beyond public transit. This new initiative is Via AI Labs. Just launched out of stealth, it's already clear that we have a huge opportunity to help cities use AI to solve some of their most pressing challenges efficiently and scalably. As we look forward to 2026, we couldn't be more bullish about the opportunity to leverage our engineering team and category leadership in public transit to meaningfully expand the range of solutions we provide to local governments and help drive efficiency across multiple areas of municipal government. And with that, I'll pass it over to Clara to review the financial highlights for the quarter and the year.

Thank you, Daniel. We are very pleased to wrap up our first year as a public company with another remarkable quarter. Q4 net new revenue was the strongest in the company's history, and we exceeded our revenue and adjusted EBITDA guidance, showcasing our commitment to consistent execution and durable growth as we continue to capture the massive opportunity ahead of us. Now let's dive into the results. In Q4 2025, our annual run rate revenue, which is defined as our quarterly revenue multiplied by 4, was $476 million, representing a year-over-year increase of 30%. This marks our eighth consecutive quarter of 30% plus year-over-year revenue growth for our platform. Our growth continues to be fueled by exceptional strength in the United States with platform revenue up 39% year-over-year in the U.S. In Q4 2025, the number of customers leveraging our platform was 821, representing a year-over-year increase of 23%. Our year-over-year organic growth was 9%, in line with our historical range of 8% to 12%. In addition, we acquired Downtowner, our first acquisition as a public company in late December. This added 94 customers to the platform. In Q4 2025, excluding Downtowner, revenue per customer was the highest in Via's history as more customers than ever expanded their usage and adopted multiple products on our platform. We ended the quarter with 94 customers with annual run rate revenue over $1 million, a 31% year-over-year growth. In 2025, we generated 97% of revenue through recurring fees for access to the platform. Our contracts are typically multiyear, 2 to 3 years on average with additional option years. Our contracting unit is typically the vehicle, whether the contract is software or software and services, we offer bundled price per vehicle per month or per vehicle per hour. This allows our customers to easily scale their usage of the platform. Upfront or onetime revenue is very limited, representing less than 3% of total revenue in 2025 and often consists of software implementation, consulting, hardware or advertising fees. As an example, a customer in Texas contracted for $3.4 million over 3 years. The customer selected our microtransit software and tech-enabled services, including fleet, drivers and call center. The contract includes approximately 22,000 vehicle hours per year at a rate of $50 per hour. This brings the annual contract value of the contract to $1.1 million of annual recurring fees. An annual inflation escalator of 3% is automatically applied in the second and third years of the contract. The contract also included $15,000 of upfront software implementation fees recognized over the life of the contract. We are continuing to benefit from flywheel effects in multiple states such as Ohio and Illinois, where the success of existing customers drives referenceability and allows us to rapidly grow revenue without a corresponding increase in sales and marketing investment. In Ohio, we have seen an 1,800% increase in revenue per sales head with S&M decreasing over time. We ended 2025 with 19 states in flywheel, representing a 73% growth year-over-year. Now let's dig into our margins and expenses, which we're presenting on an adjusted basis. As of Q4 2025, we spent 13% of our revenue on sales and marketing compared to 15% in Q4 2024. Over time, we expect to continue to invest efficiently in S&M to capture our market opportunity. We also spent 15% of revenue on G&A, which was consistent year-over-year. Our G&A expenses went up quarter-over-quarter, driven by a onetime step-up of expenses related to our transition from private to public company, professional services, legal and infrastructure costs as well as increased auto and D&O insurance costs, which both renewed at higher rates. Our research and development efforts are our #1 area of investment. As of Q4 2025, R&D expenses represented 18% of revenue compared to 21% in Q4 2024. Our engineering team continues to gain efficiency by extensively leveraging the most advanced AI coding tools. And it is worth noting that our R&D spend as a percentage of revenue declined meaningfully in 2025 despite the weakness of the U.S. dollar versus the Israeli shekel, the currency of our largest R&D center. We wrapped up Q4 2025 with negative 6% adjusted EBITDA margin, our lowest loss on record compared to negative 10% in Q4 2024 and negative $0.5 million of operating cash flows, driven by improved financial performance and favorable timing of customer collections. Over the past few years, we have been able to drive significant operating leverage while generating rapid revenue growth. We strongly believe that we can continue to execute at the same level in 2026. Now let's turn to 2026 guidance and our long-term plans. For the first quarter of 2026, we expect revenue to be between $123.3 million and $123.8 million, representing 25% to 25.5% year-over-year growth. We expect adjusted EBITDA margin to be between negative 5.9% and negative 5.5% with adjusted EBITDA between negative $7.25 million and negative $6.75 million. For the full year 2026, we expect revenue to be between $542.9 million and $545.1 million, representing 25% to 25.5% year-over-year growth. We expect adjusted EBITDA margin to be between negative 2.3% and negative 1.4% compared to negative 8% in 2025, with adjusted EBITDA between negative $12.5 million and negative $7.5 million. Additionally, we expect to deliver our first quarter of profitability in Q4 2026 with positive adjusted EBITDA, which will be a major milestone for Via and an important step on our path to delivering great returns to our shareholders. Finally, we wanted to reiterate our commitment to our long-term financial goals to achieve 20% to 25% in adjusted EBITDA margin. Now I'll pass it back to Daniel for some concluding remarks.

Thank you, Clara. I just wanted to reiterate again how pleased we are with this quarter and the full 2025 year performance. 2025 was a banner year for Via, capped by milestones like our IPO, continued 30% plus growth and an incredible velocity of impactful product development. However, we are still in the early days of transforming the massive and hugely important public transit market, not to mention the opportunity to enable local government efficiency more broadly. And I'm confident in our ability to continue to deliver strong performance in the coming years. With that, I wanted to thank you all again and turn it back to the operator so we can take some questions.

[Operator Instructions] Your first question comes from John DiFucci with Guggenheim Securities.

Since it's one question, I was -- I'll let someone else ask the AI question. So I'm going to go on to something here, something else. Listen, we've done a ton of work on Via. And by the way, this looks really good. So nice job on this quarter and the guide. And we've done a ton of work here on the space lately and realize there's a lot out there that you can do because your customers are public, and so they -- all that stuff is public, you just have to find it. It just takes a lot of work. We also realize in doing this, there's a lot of FUD out there that when taken out of context can be somewhat misleading. So we -- like we see Via as a software-led solutions company. Although there's some stuff out there, I think, with some investors wondering how much services comes into that. We think it's really important as Daniel did a good job explaining that today in your prepared remarks. But I think there's one large customer out there with contracts that are services. That customer, I think, also buys software from you. But I'm just curious, is this somewhat of an anomaly that is services-only contracts that aren't coupled with software? Or is it more common to see in your business?

John, thanks for the feedback and the question. You're absolutely right. That specific contract that I believe you're referring to is an anomaly, and it's an outcome of a very specific set of circumstances. Generally, we don't see anything like that in the market across the U.S. or Europe or any of our other markets. We're very focused on selling, as you said, software-enabled solutions. And as I tried to explain in my prepared remarks, as you commented, we think it's absolutely critical to the business model and other companies that have attempted to do it a different way, come in with your standard SaaS model or just insist on selling software. I don't think have been able to scale in any meaningful way. And so this is just -- in our view, this is the way to conquer this market. It's a huge market. And I think with AI coming in, some of this is looking even better than it was before as far as resilience and the opportunity, frankly, to leverage AI to deliver even better results to our customers.

And I think that the unique circumstances around that contract, I think we're fully aware of, and anyone that wants -- we have all that information that's out there. Nice job.

And thank you also for all the work that you did on that. That report was excellent and really enjoyed reading it.

Your next question comes from Adam Hotchkiss with Goldman Sachs.

I guess, Daniel, to start, as you enter '26 and think about the '26 guide, how should we think about what the RFP pipeline looks like in public transit? What are the mix of deals available out there this year versus what you did in '25? And then maybe, Clara, what are the puts and takes around margins from a mix perspective, particularly on the gross margin front?

Adam, thanks. What we're seeing as far as RFPs coming out of the public transit systems, agency, cities and so forth, if I take a step back and look more broadly, it's pretty consistent year-over-year. For us, what's interesting is that the number of these opportunities today that we're able to go after versus a year ago, feels much larger because of the expansion of the solutions that we're able to provide, the scale that we're at, frankly, the IPO, I think, has really helped as well. And so we're just seeing -- of the RFPs that are coming out of the opportunities that become available, if I try to estimate what percentage of those can we go after at this stage in early '26 versus, say, early '25, it feels like a significantly larger percentage, and you're seeing that in that pipeline number that we disclosed. So you're seeing both more opportunities and then they tend to be larger opportunities just as far as you're asking about the mix. We're increasingly seeing opportunities to take over entire transit networks that we're today feel very well positioned to go after and are winning. So that's the good sign. So I think we feel very bullish about that pipeline of opportunities coming into 2026.

On the gross margin question, as you saw, the gross margin was consistent quarter-over-quarter, slightly up. The breakdown of the mix of customers buying services was also consistent with about 20% of our customers buying services as well as software. In the long term, we're reiterating our commitment to our 50% target. As Daniel mentioned, the services we provide are core to the business, and they're actually particularly important in the context of AI. We've discussed before that we have multiple levers to get to 50%. But we've also discovered that we have some new levers which are coming faster than expected, Adam, and one of them is AVs. Drivers represent a large chunk of our COGS, about 50%. And that alone could drive a paradigm shift that we're not really factoring into our assumptions. So all the levers are very much in place, and they will contribute over time to gross margin improvement. And in the short term, we believe that gross margin will be consistent with what we've been saying.

Your next question comes from Josh Baer with Morgan Stanley.

Congrats on a strong quarter. I wanted to ask one on the AI moats that you have, but actually not on the data sets and the technology, which I think should be really clear to everyone, and you did a great job demoing that and explaining some of your proprietary data sets. So I want to approach that from a different angle that's sort of unique, I think, to Via and your end market around go-to-market. What do you have -- like how would you characterize your go-to-market moat selling into this government customer base? Maybe a couple of ways to answer like what would it take for a new entrant to effectively sell to government transportation agencies and cities? And you talk about the years of work and investment building up your current go-to-market.

Josh, thanks for the question. I totally agree. There are multiple moats from an AI perspective that we believe we have. You mentioned some of them. I think the go-to-market is probably one of the less appreciated ones. This is a very -- there are very few companies that sell certainly at any scale into this market. It's not just the government market. I think I would just kind of go one level deeper and classify it as the local government, specifically in this case, focused on transit and public transportation. And access to that market is very challenging for a number of reasons. The regulatory requirements, the process itself is tough to get through and requires a huge amount of investment. And then in the end, there's a huge element of trust and relationship and understanding the decision-makers, knowing them. We've invested over a decade in doing that. If you were to come out to the U.S. conference, mayors with us and see the relationships that we've built with mayors across the country, that's not a -- it didn't happen to us. We created this through many, many years of investment and delivering solutions to them. And I actually think our business model factors into that as well. I think if we were just selling software, we would be another software vendor that they have across a list of -- a very, very long list of software vendors by being focused on solutions, by providing them sort of wrapping that go-to-market with consulting, with engineers that support them, with people on the ground to help with the deployment, just creates a huge level of understanding between our company and these customers that then allows us to accelerate our delivery and our go-to-market.

Your next question comes from Patrick Walravens with Citizens.

Daniel, I'm particularly interested on how you're using intelligence internally and where you see that going. And I'm sure everyone would love to hear your thoughts on Block announced last night that they're laying off 40% of their employees as they're leveraging intelligence across their country -- company. I mean I just wonder what your reaction is to that.

Thanks, Pat. That's a really interesting question. We're using -- so there's the obvious stuff. We're seeing incredible gains in efficiency and engineering. I think that's very clear. And I do think that's a paradigm shift in how our teams are working, the rate at which we're able to deliver new product. It's opening up enormous opportunities for us. And we're trying to use these tools, and I think they have been quite successful across the company. So whether it's sort of back-office operations, we've talked about before the way we respond to RFPs. These are extremely complex, I'd say, somewhat convoluted processes that often require hundreds of pages of responses very, very formal and structured. And so the ability to deploy AI to support us in that process, for example, has led to some really nice gains. So across the company, we're trying to deploy these. On the question of how does that affect headcount, I guess it depends what kind of market you are. Our feeling is that in our market, we are just scratching the surface as far as the number of customers that we're able to get to. We're just above 1%. But also within those customers, what we could offer them that at least for me, any gain in productivity that we can achieve, I would like to turn into selling more stuff to more customers faster rather than trying to use that to cut the team in any dramatic way. I guess if you're in a different market and you don't have that opportunity, then maybe that's the right calculus for you. For us, any centimeter -- percent of gain that we can get, we're just going to deliver more value to our customers and I think accelerate our penetration of this market that -- it's not easy to get into this market as I described before. So that's the opportunity that we're trying to pursue rather than necessarily using that to cut our team.

Your next question comes from Brian Peterson with Raymond James.

Congrats on the results. So Clara, I wanted to understand on Downtowner, how we should be thinking about the financial contributions for 2026. And as we think about M&A opportunities, how does that pipeline look for the next couple of years?

Brian, thanks for the kind words and for the question. The Downtowner acquisition was not about the revenue contribution. We acquired them to penetrate the Destination Cities market and add 94 customers. And those customers are quite small today, but they have the potential to adopt the entire Via platform. So we're pretty bullish on that and the opportunity there and that we're very excited about. On your general question about M&A, we're particularly excited about the M&A opportunities ahead of us. There's a dislocation in the market, and our industry is not immune to that. And so we're going to continue to be very disciplined, but we're seeing lots of opportunities in the market at attractive prices.

Your next question comes from Brad

I guess just with a number of new wins in the quarter, can you tell us how regional network effects played a part in winning new business in what sounded like a strong U.S.-led quarter? And also, how are things progressing internationally?

Brad, thanks for the question. We were really pleased with the flywheel effect that we're seeing. I think we're sharing two new examples in the earnings today with Ohio and Illinois. And you can see we're seeing an acceleration of revenue at a much faster pace in those flywheel markets. So we have about 19 states that we consider flywheel today in the U.S. So we're getting started. And as we continue to concur more states, we should see accelerations in those markets as well. So we're pretty excited about it. And I would say this is playing out the referenceability and the flywheel effect are playing out as expected. And you can also derive that in our S&M as a percentage of revenue, which has been continuing to come down despite having a record quarter from a net new revenue perspective. You pointed out that the growth has been fueled by the U.S. The U.S. was up 39% this quarter year-over-year. So we're continuing to see really strong results in the U.S. And our pipeline is definitely reinforced up more than 50% year-over-year, reinforced by that strength in the U.S. market.

Brad, I can comment on Europe. Europe is a complex picture, a very interesting and complex one. We have some markets that are strong like the U.K. and then other markets where we're facing some headwinds like in Germany. To try to understand what's happening in Germany, maybe I'll describe the following. We first entered the market, which is typical the same as we did in the U.S. and other places with microtransit. As microtransit is adopted, what we're trying to then transition into is a state where the more and more of our platform is being adopted by those customers. So planning and then eventually that they're acquiring our entire platform. And that is for us to get to that next stage of growth, if you will, that's the transition that's required. In Germany, we were very successful in introducing microtransit. That next phase where adoption of our entire platform is becoming ubiquitous from a change perspective, a regulatory perspective, with the European structure is just proving to take longer than we would have liked, certainly and longer than it took in the U.S. So in Germany, we're just at this interim phase. We're still selling microtransit. We're trying to get to that next level of being able to sell the entire platform. And that really requires -- for that to happen, it requires our customers to change their network to reduce certain fixed routes, replace them with microtransit, combine services that have previously been siloed. That is just -- with the regulatory environment in Europe, it is just proving to be a longer process. I think it's inevitable. We're confident that it is going to happen. It just may take a little bit longer for us to break through and then hopefully see that acceleration come up again.

Your next question comes from Alex

Congrats on a solid report. Maybe for Daniel and Clara for both of you, I think you both mentioned opportunities, specifically both on the new product side with some of the AI-powered software that you're introducing. And Clara, you mentioned some opportunities with the autonomous vehicle adoption that should be pretty gross margin accretive, I think maybe a little bit even sooner than what we had in our models. And I'm curious kind of how we should think about that playing out for the coming year. Obviously, we have the guidance. If you could comment on kind of where the investments are for the coming year over and above what we kind of had in our model. And how we should think about gross margin progression, particularly through the year as we look at the guidance based on those products coming to market.

Alex, thanks for the question. And I think you're right to point out that there are some potential step function changes to gross margin from organic efforts around AI and autonomous vehicles. The timing of those is quite interesting to think through. I would say in the very short term, we believe that gross margin will be consistent with what we're seeing, but has the potential to have step function improvement from these levers. And these levers definitely include AI products at scale where we're seeing really nice opportunities as well as the acceleration of the AV rollout with some of our AV partners. And again, we're feeling increasingly confident that, that will happen. In the future that may not be in the next quarter or 2, but it's not too distant either.

Your next question comes from Michael Turrin with Wells Fargo.

You mentioned starting the year with record pipeline. You're also guiding for very stable growth throughout this year. So I was just hoping you could give us a bit more context around what drives the consistent growth profile you're expecting throughout the year, the visibility you have into what you're guiding for? And then also, how should we think about timing in this market around converting pipeline to bookings and revenue? I'm just aiming to tease a bit more around the durability of the growth profile you're expecting for investors here.

Thanks, Michael. That's actually an insightful question. I'm glad you asked the question. It's worth remembering the model that we're in. We are selling long-term contracts that are multiyear with committed budgets and volume kickers to our customers, meaning that as we sit today, we have over 95% visibility in our revenue guidance for the next 12 months. Meaning that most of the revenue is coming from deals that are already live, contracted or won and about to be contracted. So we have really high visibility into the guidance that we've shared. Now looking forward, we are -- the pipeline is an interesting leading indicator where we're seeing an increasing pipeline of over 50% starting this year. It takes on average 9 to 10 months from a deal to get from opportunity creation to close. So that pipeline on average should convert throughout the year, but really towards the second half of the year, and it's really a good indicator for the demand that we're seeing for 2027. That's how we think about it internally. Obviously, it's on us to execute on the pipeline with the existent win rates to be able to deliver the durability of the growth, but the leading indicator is there.

Your next question comes from Jonathan Ho with William Blair.

Congratulations on the strong quarter. I just wanted to understand a little bit more about AI Labs and the opportunity that you see sort of with that launch. And what sort of drove the decision? Like what are customers specifically focused on achieving with AI?

Thanks, Jonathan. Really appreciate the question. It's been -- for a very long time, we've been thinking that the access that we have to our customers at the highest levels of municipal decision-making is pretty unique and something that we should be able to leverage to diversify and grow into other areas. The challenge has always been that there's so much to do in our own space in transit, so many new products to build, solutions to develop that we've never quite had the bandwidth to do that and go into these other areas, and we want to remain very focused. What we're seeing with AI and this acceleration in our ability to build product very, very quickly is that all of a sudden, we have a way in a scalable way, not just one-off things that we then can't scale to build solutions that extend beyond transit. And we are hearing from our customers in many conversations that in addition to transit, they're saying to us, if you could do what you did for us in transit in the way we -- I mean, I'll just throw out a couple of examples, the way that we process small business applications, how we deal with sanitation, that would be transformational. And no one else is really doing that for us and no one understands these needs. These are conversations anywhere from mayors to city managers, city council members, but all the way down to staff. And so we've seen these opportunities. I think what's unique about this period is that we have the ability to go after them in a way that I think can be very successful and scalable. And so that's what we're trying to do.

Your next question comes from Scott Berg with Needham & Company.

Congrats on a really nice quarter. I wanted to focus on the gross retention metric at 98% that you said was your best ever, certainly would be one of the best in my coverage universe today. But did you do anything different in 2025 to help power those results? And how do we think about your assumptions around gross retention into your '26 guidance?

Thanks, Scott. Thanks for the question. We've been executing at very high levels of gross revenue retention forever. So part of it is the mission criticality of the platform. But I think this quarter, we reached a record high gross revenue retention, particularly because our customers are benefiting from the entire platform. So as we sell more products to our customers, we are seeing an increasing gross revenue retention with these customers, and it just increases the strength of the platform. So as we think about why we're getting to these levels of retention, I think it definitely comes back to the ubiquity of the platform and our ability to sell more products to these customers and having them benefit from them as we continue to scale.