Navan, Inc. ($NAVN)

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

Thank you, operator. Good afternoon, everyone, and welcome to Navan's Fourth Quarter Fiscal 2026 Earnings Conference Call. With me on the call today are Ariel Cohen, our Chief Executive Officer and Co-Founder; Aurelien Nolf, our Chief Financial Officer; and Michael Sindicich, our President. Before we begin, during the course of today's call, we may make forward-looking statements within the meaning of federal securities laws. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially, including the risks and uncertainties described in our earnings press release, our quarterly report on Form 10-Q filed with the SEC on December 15, 2025, and our other filings with the SEC. In addition, on today's call, we will refer to non-GAAP income and loss from operations, non-GAAP operating margin, non-GAAP gross margin and free cash flow. which are non-GAAP financial measures that provide useful information for investors. Reconciliations of these non-GAAP financial measures to their corresponding GAAP financial measures to the extent reasonably available can be found in our earnings press release. With that, it's my pleasure to turn the call over to Navan's CEO and Co-Founder, Ariel Cohen.

Thanks, everyone, for joining. I hope that you had the time to read our prepared remarks. And I have 1 thing to say we are doing it. We just closed a very good Q4 and a year with incredible results. Our NPS in Q4 is at 47%. This is all-time high. Our CSAT is at 96% and maintained very high. And this is a proof point for meeting our mission to make travel easy for every traveler by being the best travel agency on the planet. The 35% Q4 year-over-year revenue growth and the non-GAAP operating profit in the quarter are demonstrating the leader tradition that we are at. We are executing very well on both our SLG Motion and our PLG motion. So if you think about it in Q4, we signed net new GBV that is over 50% more compared to the Q4 in the previous year. This is a huge growth rate. We are displacing legacy players because we offer great user experience, real savings and proven AI value today. This also brings us very close to the rule of for the first time in our history. And the item on the cake, we actually turned free cash flow positive for the first time in our history and a year ahead of our plan. Now I want to take a step back and talk about AI because as an AI leader in the travel space, I'm getting a lot of questions. what it means for travel, for the space. So I want to really take the moment and explain it. So first of all, we, Navan, we are a travel agency. It means that we care about every step of the travel experience from the moment that you are planning your trip, where you're going to go and something happens. And until you return home and you need to expand the trip. We care about travel for travelers for the executive assistant that needs to support you for the business travel managers that are managing the entire travel program in an organization for CFO for accountants for everybody that is involved in travel. Travel is a huge part of the OpEx, and it means that a lot of people will care about it. And Navan is the best solution for you. So that's the first thing. Second, we have created in the last 10.5 years, the best real-time travel infrastructure on the planet. We call it Navan Cloud. And it's our connectivity to everything in the travel world through software. It requires global licenses, supplier contracts and massive financing for the payments business. And then the most important part is our agent orchestration platform. When you interact with us, we seamlessly orchestrate an AI agent that can book your trip, change your trip, get your money back, give you any information about yet with human agents. In fact, we basically married human intelligence and judgment with artificial intelligence to create the best experience for our customers. The proof points are in our high NPS at CSAT, ongoing the gross margin expansion and the acceleration of gaining market share. The recent and the most exciting release of Navan Edge, our latest breakthrough in agentic AI is bringing the power of hyperpersonalized executive level travel assistant to the unmanaged travel market, which we estimate at a $57 billion of car. The bottom line here is not only we are a leader in the AI travel space, it is very clear that we and our customers are a huge beneficiary of AI. We also recently announced the migration of the Reed & Mackay customers to our AI platform. So they will be able to enjoy from both the benefits of both worlds. They're really amazing high-end VIP service that can help you step in when you are stuck in an airport. With everything that are platform is creating. For FY '27, we are going to focus on high growth, scaling in all channels and with all of our offerings, accelerating our innovation, which means that we will continue to invest in AI and to release new products and capabilities using our AI platform, and will continue to demonstrate financial supply. And with that, before I turn over the call to Aurelien, which will talk about our results, I'm actually very excited to have Aurelien as part of the team. I've been working with Aurelien in the last 3 weeks, and it was just amazing. And I'm actually happy that he has the opportunity to talk with you with this historic quarter for us.

Awesome. Thank you so much, Ariel. It's such a great privilege for me to join the Navan. The Navan team, such a great moment with such a great momentum in the business. As you know, I saw the power of our platform firsthand when I was a customer myself at least. And I know it's not just a layer on top of an all tech. It's clearly a clean sheet redesign that addresses a huge market of $185 billion. Looking at the numbers, Q4 revenue was $178 million, up 35% year-over-year, while our GBV reached $2.3 billion, up 42% year-over-year, a growth acceleration driven by an incredible go-to-market momentum and faster-than-expected enterprise onboarding and ramp. Addressing the GAAP figures, you'll notice our GAAP operating margin was negative 50% in Q4. This was mainly driven by a strategic onetime move. We decided to retire the Reed & Mackay brand for new sales, resulting in a $36.2 million noncash amortization charge. As Ariel just mentioned, this is a very intentional move that will ultimately deliver the power of the Navan platform to the Reed & Mackay customers. Our non-GAAP operating margin was breakeven, a remarkable 1,100 basis points improvement over last year. We are driving leverage across the board with our non-GAAP operating expenses being down as a percentage of revenue, even as we invest in more product innovation and our incredible go-to-market strategy. We ended the year with a very strong balance sheet, $741 million in cash and short-term investments against just $125 million in debt, mainly related to our expense business. We expect this great momentum to sustain in fiscal 2027. And from a guidance perspective for the full year 2027, we expect revenue between $866 million and $874 million or 24% growth at the midpoint and a non-GAAP operating profit between $58 million and $62 million, a 7% margin at the midpoint. For Q1 fiscal 2027 specifically, we expect revenue between $204 million and $206 million, which represents 30% growth as we head into a seasonally strong spring with non-GAAP operating profit expected to be in the range of $4.5 million to $5.5 million. Navan is proving that we can grow fast while we are becoming a disciplined and profitable engine. We have an incredible mission, the right product and the right team to execute. And with that, we'll open it up for questions.

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

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

This is Aurelien Nolf. I'm going to test you with Michael on this one, but I'm going to start with highlighting the 42% trade GBV growth we saw in the fourth quarter, right? So incredible momentum. And Michael is going to speak to why we are seeing this momentum with our customers so far. But clearly, this acceleration of our booking growth is very, very, very exciting. What I just want to really clarify here is the 50% Ariel mentioned is the new signed GBV. So the new signed GBV is something we are looking at internally. It's a data point we are looking internally. It's the total annual travel spend that we expect from new customers that we just signed during the quarter, right? So it's what we know is going to fuel our revenue going forward. And it's we are seeing great momentum there. So we believe we're going to keep seeing very strong bookings growth going forward.

Yes. And maybe I'll take -- to give a little bit of color of what we're seeing. First of all, I don't know how many people on the call here have been in sales before. But what I can say is it feels so damn good to be able to walk into any room at any size of customer around the globe and believe in our bones that we can support their travelers better than anyone else on the planet. And so we take that energy into these customers, and we really explain what we deliver. And when we think about what matters to our buyers, First of all, we deliver 15% median savings off of your current travel budget compared to whatever you're currently using. That's huge, right? T&E budgets are big and at a time now, people are really focused on being able to save money. Next, if we can tell you that through AI and through our products, we can book in 7 minutes or less on average compared to 45 minutes. Think about how many travelers are booking day in, day out. They're really expensive employees that need to go win customers or drive the business forward. And we're saving a ton of time. More than 70% of our expenses are automated. We just launched the Expense AI agent where you can just launch your drop-in receipts and automatically code your expenses. And then when we have a saying internally, when it rains, Navan shines. We just had massive storms. There's wars going on. And your employees or customers' employees are typically waiting on hold or sending e-mails to get a hold of their travel agent when 50% of our support is completely automated with AVA. And then you can also call in 24/7, 365 in a bunch of different languages. So ultimately, it's a really high NPS. It's a really high CSAT. We're showing really new AI capabilities that are actually launched and deployed that travelers are using every single day. And then everyone loves the system, so they use it. So you can actually manage from a duty of care perspective. And when things are crazy, the thing that you need is visibility on where your employees are and then people who can support them. So I think that's kind of why we win. And then we see a lot of tailwinds in the industry. We eliminate Frankenstein cobbled together solutions, legacy booking tools, legacy TMCs. We have our customers that are happy talking in back rooms and really sharing why they're buying Navan because people would rather listen to their friends, they don't want to listen to our sales team. So that's a big tailwind for us. And then lastly, there's a lot of consolidation in the space. We've seen that consistently over the last couple of years. And so there's a lot of turmoil, which we're steady. We're growing fast. We have happy customers. And all those things ultimately result in our RFP volumes increasing hundreds of percent, which we saw and told you earlier. So I think that's kind of the confidence that we use when we walk into a new sale.

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

Yes. It's a great question. So far, we're seeing very minimal impact, right? We have a very, very low volume exposed to the Middle East, in fact, low single-digit volume exposed to the Middle East. So we're not seeing any significant impact at this point. It's very, very hard for me to sit here today and say that I can predict everything that's going to happen in the world. But what I can tell you is during our Q4, we saw actually a lot of disruption to travel. When you think about the winter storms on the East Coast, we had this war in the Middle East. TSA also has been disrupted recently. And that's exactly what Michael just mentioned. That's when our platform really stands out as being the right tool for people to use. But what I would say from a guidance perspective, our forecast today assumes, I would say, what is a typical amount of disruption we are expecting to see in the world, nothing more, nothing less. I mean, disruption is part of the business. That's something we know and manage very, very well. Yes, that's the color I can provide.

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

It's great to see the strong close to the fiscal year and the strong outlook for '27 or fiscal '27. Just a couple of things. Maybe first on the Red and the K transition, can you help us maybe think through what the benefit of that will be going forward beyond the branding component? Should we expect maybe better unit economics there? Should we think about that it makes it easier to sell, so you're not describing it separately. Just help us think about both the financial impact and then the selling impact there? And then I have one follow-up question.

Samad, so first of all, we actually always, always, always in a van walking it back from our customers. So the main reason for accelerating the integration of Reed & Mackay into the Navan platform is that, that's what our customers want. We have endless discussions of customers that are telling us, on one side, I do want to have the ability to sometimes talk with an agent and a really, really, really good travel agent, especially if I'm stuck, especially if it is an extremely complex trip. Sometimes I just want to offload the entire thinking to somebody else, and I'm actually willing to pay for it. So that's on one side. On the other side, I see a lot of things in your platform that I cannot get from this travel agent. For example, the level of access to content that we have, different types of airlines, low-cost carriers that even VIPs want to use when they are in Europe. The ability to change stuff instantly to book stuff immediately, that these are things that we are hearing from our VIP customers, the C level, the executive assistance that they want to see. So basically, bringing a solution that marries the 2 together, we see it as a huge upside. We see it as an upside for the sales organization, for our sales organization to upsell Read McKay for all of our 12,000 customers. So definitely an upside. And there is another upside here, the economics of our AI platform, so gross margins, unit economics are completely different. the economics of the Reed & Mackay platform. The Reed & Mackay platform, you can think about it as very, very, very similar to any kind of travel management company that you are familiar with. While the Navan platform, it's really an AI-driven platform. So there are mainly 2 benefits here. On the top line, we will see more people using our VIP offering. And from a unit economics perspective, it's definitely higher gross margins business.

And maybe some financial color that I can add here. You can see in the prepared remarks that we just published that the Read McKay business is roughly 20% of our total revenue for FY '26. And they had a growth rate that was significantly lower than the core Navan platform. In fact, the core Navan platform grew the high 40s from a GBV perspective and just above 40% from a revenue perspective. So there's clearly very, very different dynamic there. And what I would say to wrap on this topic is the net revenue retention rate for Navan overall in 2026 was 107%, right? So it was slightly lower than the 110% we've seen in the past. And that was fully driven by the Reed & Mackay dynamics, right? Because the core platform, the core Navan platform grew -- the net revenue retention was 110%, very, very stable there. And if you add the ramp of our new customers, it was even above 120%. So we are seeing a very strong retention in our core business, but that was a little bit offset by this dynamic within the Reed & Mackay business which is the reason why we're very excited about migrating those customers to the Navan platform.

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

Yes, absolutely. So we just guided to a 24% revenue growth. We are seeing a lot of acceleration in the business right now, the platform is growing very, very nicely with a great momentum Michael just described with our customers. But it's very, very early days in the year. And so we have a prudent approach to our guidance with those 24%. I'm expecting bookings to grow slightly faster than revenue. So that means we may see a 30 basis point yield change in 2027 versus what we see in 2026. And that will be mainly driven by the Reed & Mackay dynamics that we just described, but also a mix across the different channels and across the different customer. We are now -- we have a very diversified base of customers, and they all have different characteristics, right? The enterprise business has a slightly lower yield than a smaller company for many different reasons. Reed & Mackay, we just discussed, but we have a lot of opportunities to also optimize this yield percentage with our payment business with meetings and events. And so I'm very excited to see the momentum from a bookings perspective and this great guidance we are able to share on the revenue side as well.

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

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

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

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

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

Yes, that's a great question. We -- so as we've said, we are seeing great momentum in the business, right? Again, 42% GBV growth in Q4, very, very strong momentum. We are not seeing any impact from any geopolitical tensions right now in our business. In fact, we believe historically, business travel has been pretty resilient, right? It's a category where you see people traveling, they need social interactions with their customers, with their coworkers. So people are really craving for those in-person interactions. And so we keep seeing the corporate business travel to be a very, very strong category. In fact, the GBTA index right now is showing a growth in mid- to high single digits year-over-year, way faster than the TSA checks, which are more in the low single-digit range of growth. So we're seeing corporate travel to be very strong. But on top of that, we're gaining share, right? Like our bookings are growing fast. They are accelerating. And so no matter what I would say, what happens in the industry, we are gaining share. And so we are seeing a lot of momentum, more customers joining our platform, onboarding faster than ever. And so we believe that the combination of a very strong industry, very strong dynamic and the momentum we have in our business right now is going to help us grow the business very significantly in 2027.

I want to add something to this. If you should think about the 2 storms that we had in January, which really created huge interruptions in the eastern part of the U.S. business travel, people will obviously cannot travel when the airport is closed. There is no question about that. But they will travel the week after. And if you support them well during the storm and really help them to reschedule the trip, this trip is going to happen. This is why you actually don't see an impact on our business when these things are happening. this is how much business travel is way more stable than any other type of travel. And to add to the point that earlier I was talking about, the SLG channel, we just gave you a number of 50% growth year-over-year in 1 quarter. This feeds our system for the next years to come. So that's one thing. PLG, basically, this is people coming to us from Instagram, from TikTok and starting to be a customer is growing extremely fast. And we've just released a very important release that is based on our agentic platform, which is Navan Edge, which we have huge expectations from it. And although it's early, we see really good signs there.

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

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

Yes, it's actually an amazing question. So first of all, Navan Edge targets non-Navan users and customers, okay? So that's the targeting there. And everybody that is using the platform right now are non-Navan customers and users. So that's basically a completely new market for us, and we are only targeting that market. And we see better signs than what we thought we're going to see. But again, very early days, but very, very, very promising. So that's one side. On the other side, because we are running on agentic platform, and what does it mean agentic platform? We have capabilities, right? This is our connectivity to everything in travel. Then we have all of the knowledge, right? Some of the knowledge is in our actual code, some of our knowledge is in travel agents and the ability to capture these skills and marry it together with the capabilities and deliver it as an agent. So we are an agentic platform. That's what we've been building here in the last 3 years. So once you see an agent, an AI agent that is doing something extremely well, in the Navan Edge platform, let's take booking a restaurants for you. We are actually taking this agent and providing it in the main Navan platform. So our customers are actually benefiting from the development of agents in the Navan Edge in the Navan main platform. So both are benefiting from it. The platforms are feeding each other with different AI agents and different human agents, by the way, in both platforms. But the target from a go-to-market perspective and the users on the Navan Edge platform are only non-Navan customers from the non-managed segment.

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

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

Yes. So -- so the way that we are thinking about Navan, right, and think about it also of where everything is going, people really, really care about meeting face-to-face of being there. But they also care about their experiences. So it's no longer just a transaction. I need to book a trip. I want to -- when I'm planning the trip, I want to feel that you know who I am, that you know how I'm thinking about this trip, what kind of hotel will I want to be at, the type of airline that I like, Who am I loyal to, right? Loyalty is a really, really big component on travel. But then I'm arriving and I'm taking my lift, my Uber, my black car and I'm getting to the hotel. And now it's night, right? And I can have a business trip, sorry a business dinner. I can meet with a coworker. We see this as part of the trip. In fact, in Navan, we see every aspect of being there. part of the entire dream. Part of this is obvious, you book stuff. Part of this, we really care to match what you want, what you need with our platform and then how you pay for it. So this is the payments business. This is the expense management business and so on. So basically from every direction. So restaurant getting into restaurants was a very obvious move for us. And this is actually when AI is important. We can build endless amount of things. Travel is endless. You can think about it as Amazon. It's just endless. You can sell flights, you can sell cars, you can sell hotels, but there are restaurants, there are experiences while you are on the go, it's just endless. And because AI is so powerful, we are actually accelerating our road map across the board. So you're going to see us releasing more and more and more offerings, basically AI agents to our customers across the board. Restaurants is one of them.

And I would add, since you asked about the economics, the managed is not a significant contributor to our 24% year-over-year revenue guidance, right? We are -- it's early days. It's a new category that we want to redefine here with a completely new product. We're very, very excited. like we are ahead of our expectations from an acquisition perspective and a conversion perspective, but it's still early days. Although it's the biggest part of our addressable market, right, $56 billion is the size of the addressable market, what we call the unmanaged market. So very, very exciting.

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

Yes. We -- first of all, we call it now Navan Pro. So that's part of the change of the brand, and it's part of the Navan platform. And it's really -- I've talked about it at the beginning, this orchestration of when do we deploy AI, when we are actually having a really good, highly personalized discussion with you with an AI agent. and when are we deploying a real agent. And all of us, I'm sure, have experienced some bots in their like. And you have this thing that there is a point that you are starting to yellow the bot representative. And that's not the experience that we've created here. The experience here is so amazing. It's so seamless. The CSAT there, the satisfaction is almost the same as a human being. And in a lot of cases, people will prefer it because it's faster and never make mistakes. So this is our AI platform and the benefit from that. But when you marry it with really the best, most experienced VIP agent that you can think of and you marry the 2 together, you're just getting a really, really good experience when you plan your trip, when you are at the airport, when you are coming back. And that's really what we are doing here. I've mentioned AI acceleration earlier. I can do today way more things with our engineering department, with our product department, with our designers. And that's why you can -- you will see us accelerating delivery of stuff to our customers in the years to come. That's what you're going to see from Navan.

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

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

Yes, 100%. So first of all, NDC, Navan is the leader in that, which means that we connect to airlines sometimes actually a lot of -- in a lot of the cases directly through the NDC protocol. We are also using GDS. So we will sometimes connect to airlines through GDS. As I said earlier, we took the decision 11 years ago to connect to everything. And it is about trust. It's about the trust with our travelers, with our customers to tell them that in 100%, if it is out there, you're going to see it in the platform. What NDC gives you is the ability to merchandise, to take it further, to buy stuff together. I don't know how many of you have sat in an airplane and suddenly, I don't have the WiFi, and I need to kind of in a very, very slow way to buy a Wi-Fi for the flight, right? So that's an example of something that you can attach if you are going through NDC, you can attach to the time that you are buying the ticket when you are selecting the seat and so on. And it's just one example of merchandising of assuring the right price at that moment, the right class and et cetera. So the experience that NDC is giving to our customers is extremely good. It's part of what I was talking about earlier, Navan Cloud. And when you are marrying that ability to connect to the airline directly with the knowledge of what to book for you, that's basically the skills of the agent, you are creating really, really good experience for the traveler, but also for the company because you are assuring the right price. Therefore, you are making sure that nobody is overspending on the travel expense.

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

100%, the reason that I took the time at the beginning of this discussion to explain our platform. And the first complexity, when you are a travel agency, it's not just to connect to stuff. Obviously, we are connected to everything. And by the way, there is no travel agency on this planet that took the time, the effort, the money to connect to everything globally. I'm talking in China, in India, obviously, in Europe, in the U.S., everywhere in the world. So that's the first thing. But connectivity is just one thing. It's about knowing the airline rules about everything that you do. There are various internal classes. What happens when you cancel a trip, how exactly you're going to get the credit back? How are you going to apply it later? It is actually very complex, per airline, per hotel, per any type of inventory that is out there. And what I just described, this is, I would say, 1/3 of what our platform does. Then there is all of the knowledge. The knowledge means that I actually know when you told me, I want to book this flight, I know exactly what type of airline class I will book for you. What type of room, there are endless amount. You're saying that in hotel that has 100 rooms, there are 100 rooms. The amount of permutations there is endless, which means that there is a lot of skills that you need to marry with that. And we've said it time and again, we are basically creating a seamless orchestration between people, real life agents that sometimes are working in the background, sometimes are talking with you with AI agents. The reason is travel is so complex and business travel is even more complex, but payments is extremely complex. So the complexity level here requires a combination of AI. And we think that we are one of the leaders in this space when it comes to travel with the connectivity that I talked about earlier, the airlines agreements, the licenses that you need to get, the amount of money that you need to raise in order to provide credit in the credit card business and so on. So the level of complexity here is huge. And I've been saying it in the past. everybody in the -- can create nice demos to actually doing it. The only one that is doing it in the AI world is Navan.

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

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

Yes, it's a great question. First of all, I would say I don't see ourselves as a software company. So maybe that helps answering that question a little bit. We -- I think when Ariel and I discussed about me taking the role, we really discussed about how we can transform an industry, we are a travel agency, right? And we are doing it very, very well because we are leveraging a very cutting-edge technology, which obviously is something that got me excited, but really the mission -- people are mission-driven here. And when you walk in the door, my day 1, I met a lot of people that are very passionate about our travelers and how they can make their traveling experience seamless and frictionless. So that's super important to me, joining a company of people that are so excited about what they are doing and their mission is obviously super important. The size of the addressable market is huge, right? The $185 billion, huge opportunity. I think we are only scratching the surface today, although we are gaining share, and we see so much momentum in the business, it was very clear to me that given the quality of the sales team, the quality of the product, the quality of our marketing and the passion of the team that we had something very, very special here that we can take pretty far. So I would say those are the different things that I've been really looking at. And then on top of that, a clear vision of how we're going to expand profitability, generate free cash flow, et cetera, is also top of mind for us as a company, and I think it's something that got me very, very excited.

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

I would not say it's a North Star. I think it's a good benchmark that people have been using across many different industries. Honestly, I don't see that as a limiting factor, like we have a lot of ambition. And when we see, again, the momentum in this business and how differentiated our platform is versus what our competition is offering, I don't see that as a ceiling, to be very clear. We just guided to strong growth for next year. As I said, we are prudent. It's very early in the year. We also guided to margin expansion, which is pretty awesome given the level of growth we are seeing in the business. We are expanding our margin. And on top of that, we turned free cash flow positive 1 year earlier than we initially anticipated. So I don't see -- I think the Rule of 40 is interesting and is a good benchmark. But clearly, that is not a ceiling for us.

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

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

Yes. Great question. And by the way, you'll definitely book your trips in less than 7 minutes, so let me know if you can. But really thank you guys so much for being a customer. It really means a lot. When I think about RFPs, so who runs an RFP, it's typically a larger company, right? So our commercial segments and our lower mid-market segment, they oftentimes we can make a switch without going out to an RFP, but the larger and larger, the more global the company, they'll typically run an RFP to do that. So to answer your question directly, where do we see the acceleration of the RFP, it's upmarket that doesn't mean it's not an indication of the increased demand down market as well. As Ariel mentioned, the PLG segment is growing extremely fast, 50% growth in new GBV from our SLG market includes commercial mid-market and enterprise. So we see it across all segments and RFPs come from larger customers.

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

Yes. Sorry, I was just going to answer that. Thanks. We do. So there is a lot of smaller travel agencies or expense management platforms or payment platforms that are not public today. And that level of transparency is something that we see as an advantage because it means that we're durable, it means that we're not hiding anything. When we were private before, right, we'd have to talk about these questions without revealing our finances and things like that. And today, we're at a state where we can say, hey, just go listen to the last earnings call or look at our press release. So I think it's giving a lot of confidence, one, on our numbers, but then two, on the durability of us, right? When we engage in an enterprise deal, typically, they might have been on their incumbent for 20 years. And when we're pitching someone, we want to be their incumbent for the next 20 years and beyond. And if you think about a couple of hundred thousand employees travel and expense, it's not just a feature that you launch to some subset of the employees. It's a full rip and replace globally for our employees. And so while we do the implementations extremely fast, it is something that requires change management and someone doesn't want to switch in 2 years, if that makes sense.

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

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

Yes, it's a good question. So we are hiring across our different go-to-market channels. So the ramp time is usually pretty correlated to the segment that the rep is starting it. . So we have a lot of SDRs, which are the ones that are pipeline generation. They're doing a lot of cold calls and e-mails for the sales reps. They get promoted, right, into the commercial segment. And if someone is internally being promoted, we see that ramp time a little bit faster because they know the company, they know the system, the value props, et cetera. So that's a pretty fast ramp. And then if we were to hire from the outside someone like an enterprise rep, you start thinking about those deal cycles, which can be relatively long. So a big enterprise company, maybe it's a 6-month sales cycle and then with the whole RFP and then it's an implementation and a launch a little bit later. So it can extend from, let's call it, a year until like really fully ramped in all the knowledge couple of weeks down market for us. So that's kind of how we think about it. And we are growing across all the different segments.

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

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

Yes. First of all, we are actually thinking about it as an end-to-end solution. So customers that are using our expense management business as well as the payments business basically seeing better results in terms of an ability to understand what is their total travel and expense budget, how much they are spending. Are they spending it correctly, can they save money there, et cetera. Also, their employees, and if you think about who is traveling, the employees that are traveling usually the most important employees in the organization. This is your enterprise sales team. This is your corporate development. This is your entire C level. So saving their time is critical. When you use our payments and expense business, you swipe the card and that's it, nobody else needs to do anything. On top of this, nobody needs to sit in the finance team and reconcile. And from a saving money perspective, you get immediately the feedback, was that in policy or not, was this expense exaggerated or not and so on. So it's actually really part of our offering and really what supports our end-to-end solution. We have mentioned in the past that we had some constraint in this business because of our payments business. And the IPO has actually unleashed this constraint. And you can actually see that we return to growing in these 2 businesses, the payments business, in the expense business. And remember that in all of our businesses, there is some lag between sales and what you are actually seeing. So we are extremely bullish on the expense business. We are extremely bullish on the payments business, but we really see it as an end-to-end solution for our customers. And we just think that they are benefiting more if they are using the entire suite.

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

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

Maybe I'll take the beginning of it and then Michael, who is in the field all day long will continue. The first thing that I would say, and I kind of alluded to this earlier, once we move to be in agentic platform, it actually allows us 2 things. First of all, to develop faster. So that's really, really important. But the second thing we can reuse. And I'll give you an example of a feature that we recently released on the expense management side, there is an expense agent there that if you didn't use our credit card, you just did it manually with your own credit card, you have a manual expense. You can actually take 20, 30, 100 receipts, put it and upload to the system, which takes like less than, I don't know, 10 seconds, we automatically analyzing the entire thing, we reconcile it for you. We reconcile it for the finance team. It actually it looks like magic. I don't think that anybody in the expense management world is doing something that or is even close to that level of technology. But that was developed in the expense management team. And we think that, that kind of capability, this agent is actually relevant all over our platform. In fact, we even think that it's relevant in Navan Edge. So you can see this -- you will see this functionality coming across the board. I can say the exact same thing about our focus on meeting and events. Meeting and events was an off-platform service. And you saw that we recently announced our BoomPop integration to actually allowing it to be on platform. So what you're going to see from us from a technology product perspective that the offering is becoming stronger and stronger and stronger by coming together. And I will actually let Michael maybe provide more color, but obviously, the reasons that we are doing it are driven by the request and what we are seeing in the field.

Yes. And to answer your question, are we selling more products at the time of the first sale for the customer? The answer is yes. So we approach ourselves in a couple of ways. One is we have a sales rep that goes and finds the new customer, and we understand what products that they need and want us to supply to them. That might be just travel, that might be travel and payments, it might be travel, payments, expense, meetings and events, VIP, all the suites that we have. And then they go and they launch and they have a great experience. We also have an upsell team. And so that upsell team is working very, very closely with the account management, who are constantly talking to the customers every single day, week or month or even during quarterly business reviews with the account. And then we bring those solutions to those customers as well. So we do see us attaching more products at the point of sale, but we also see a lot of success on upselling the various solutions that we have for the customer.

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

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

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

If I caught the question correctly, you were saying the acceleration in the legacy space is that I assume that's correct. Yes, so I kind of described it earlier, we walk into a room almost confused why the customer hasn't come to Navan yet. And usually, the customer starts to see that once we're talking to them, right? So if we're going to save you 15%, we're going to have you book in less than 7 minutes versus 45. We're going to deliver this NPS and the CSAT and all the things that we've talked about before. Usually, it's about making sure that we prove that we've reached the scale to support that customer and that we're global enough to do that. . And we've done a lot of work to continue to expand upmarket and globally, you've seen the acquisitions that we've made around the world, and we've built partnerships to be able to support these customers. . And so what do we see on the other side that's driving customers to us. There was a big acquisition with a company called CWT, which is a big player in the space. There used to be 3 big travel agencies, Amex, BCD, and CWT. So CWT was acquired. And then you saw Egencia, which is more of the online booking platform that was built out of France was also acquired. And then I'm sure you can read headlines, but there's other companies that are having some turmoil. So that, we think, has created quite a lot of tailwinds for us that people are saying, well, let me go check out this new Navan platform. And by the way, my CEO and everyone on my Board is telling me start using AI in my platform, and I want Ariel in my company, and I want to start transforming my finance operations to be more efficient. . And so if we can prove the savings, the time we can prove that we're global, and we can support customers and we can give them 5 references to go talk to that are similar to them that they've made the transition to Navan, and they will never look back. It's a really compelling story. And I think that's why we're winning specifically in the legacy managed space.

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

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

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

Yes, sure. So I can take -- so I think the question was around attach and then stack ranking. So the product that we have, first and foremost, and is attached to everywhere is our travel, so our transient travel product, which is the employees traveling for the company. Then the next product is we see a big attach into what we call leisure. So a lot of people are booking personal travel on our platform. It's a separate experience. It doesn't show up in the admin dashboard. You can't use the company card, but what you can use is the rewards that we give to travelers. So we actually pay the traveler rewards when they save the company money, which is part of how we get to that 15% savings. And so if I'm going on a work trip to New York, I want to stay for the weekend, I can actually book that leisure trip in the Navan platform, which we see good attach there. The next piece we build into is actually our travel payments, so this is getting into our payments product. I can put Navan corporate card lodged into the platform. It's actually not 1 card, but we create a unique credit card number, 16 digits for every new booking, and it perfectly reconciles your travel bookings and those expenses for your admins and a traveler will never have to do an expense report for a flight or a hotel or a rail that was booked in our platform. . So we see a lot of adoption there. That then naturally leads into our expense platform. You can then buy our expense platform and now we own the entire context, whether someone is traveling or not we actually see more than 70% of employee expenses are some way, shape or form, tied to a trip. I'm either booking that trip or I'm on the trip, but I'm at a restaurant or a taxi or however you spend the money. And so we expand into that product. Then there's also the VIP product, which Ariel talked about as part of our Navan Pro offering with R&M. So that's a product that we would upsell or sell at the point of sale to the C-suite or people who need VIP level of support. And then the last product that I can think of at least right now is our meetings and events. So as we gain that customer, we manage their corporate travel, a lot of times, they might have an exec offsite or an SKO or a customer conference, and they'll leverage our meetings and event services. So off the top of my head, I'm pretty sure that's the exact order of the penetration and the percent of adoption that we have of the various products.

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