Navan, Inc. (NAVN) Q2 2027 Earnings Report, Transcript and Summary

Good day, and thank you for standing by. Welcome to Navan Second Quarter 2027 Fiscal Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to turn the call over to your speaker for today, [ Irène ] VP of Investor Relations. Please go ahead.

Thanks, Lisa. Good afternoon, everyone, and welcome to Navan's Second Quarter Fiscal 2027 Earnings Conference Call. With me on the call today are Ariel Cohen, our Chief Executive Officer and Co-Founder; Aurélien Nolf, our CFO; and Michael Sindicich, our President. As a reminder, we publish detailed prepared remarks on our IR website. During the course of today's call, we may make forward-looking statements with 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 annual report on our Form 10-K with the SEC on April 2, 2026, and our other filings within the SEC. In addition, on today's call, we refer to non-GAAP gross margin, non-GAAP operating margin, non-GAAP income and loss from operations, 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 on our earnings press release. And with that, it's my pleasure to turn the call over to Navan's CEO and Co-Founder, Ariel Cohen.

Thank you, Irène, and thank you, everyone, for joining us. I hope you had the chance to review our prepared remarks. In this quarter, you can have only one conclusion about us. We are winning. You can see it with the following: the current usage of the platform and its growth, our new sales and growth of our end-to-end AI platform from business travel, payments and expense, VIP travel and now meeting and events and our AI platform leadership. We are simply executing across the board while gaining momentum. Let's talk about the current usage of the platform. This quarter, total GBV, this is travel bookings on the platform, grew by 45% year-over-year to more than $3 billion. We exceeded our expectations for both revenue and non-GAAP operating income, and we are raising our full year FY '27 outlook again. Customer satisfaction remained high with CSAT of 96 and NPS of 44. Our platform is gaining usage across the board on every use case in every geo. Let's talk about sales and new customers and us taking share. So we are seeing strong sales execution across SLG. SLG, it's our sales-led growth, which is basically enterprise sales; and PLG, which is our product-led growth, which is our self-serve sales cycle. Our enterprise sales motion delivered another strong quarter with SLG having their strongest sales quarter ever. New signed GBV for SLG was $4 billion in the last 12 months, and that was up 60% compared to Q2 last year. Product-led growth revenue more than doubled year-over-year again and comes as an addition to our new sales in SLG. Payment volumes reached $1.3 billion and grew 34% and subscription revenue was $21 million, with a growth of 39%. To be clear, our growth is not coming from one isolated part of the company. The entire system is working together, sales, product, deployment, operations, customer success and our global travel and fintech infrastructure. At the same time, our own execution is creating more opportunity. The volume of RFPs to Navan has tripled in the first half of the year compared to the first half of last year. We now serve 50 companies in the S&P 500, up from 45 last quarter. We are winning larger and more complex enterprise customers across the globe. The most important thing is that our investment in our sales and marketing is becoming more and more efficient with the help of AI in this huge market. AI, obviously, is an important part of our strategy, so let me cover that. As I've explained in our last call, before we even get to AI, it is important to understand the foundation we have built. Navan is connected to virtually every airline, hotel, rail provider and ground transportation solution that our global customers need. Business travel and fintech connectivity are extremely complex, and we have spent the last 11 years bringing that complexity together on a single real-time global platform. This is not just about booking a trip. It's about managing the entire journey, finding the right inventory, booking it, paying for it through a physical or a virtual Navan card, supporting the traveler, changing the itinerary where needed and ensuring the proper credit refunds reconciliation are handled automatically. To do that at a global scale, you need supplier relationship and negotiated rates, banking partnerships and credit lines, local entities and licenses, compliance with local law and taxes, payments infrastructure and operational expertise in markets around the world. We have built all of this into Navan's real-time infrastructure. That foundation is extremely difficult to replicate, and it is what we believe allows us to turn our AI platform to a scalable solution supporting big enterprises across the globe. We are not treating AI as the feature layered on to traditional travel products. We are rebuilding the travel and expense experience around intelligence, orchestration and action. Navan Cognition is the intelligence layer that orchestrates specialized AI agents, human experts, data, live inventory, policy, payments and fulfillment. The important distinction is that Navan does not just provide an answer. It can understand intent, take action, complete the transaction, manage the trip, reconcile the expense and bring in a human expert with the full content when judgment is required. Ava is our AI customer support agent who is already demonstrating the value of this architecture. In Q2, Ava handled approximately 60% of customer interaction and our customers love it. To be clear, Ava is not doing simple things like resetting your password. She's rebooking your trip when you are stranded in an airport, changing your hotel when you are not happy, taking care of your refunds and many more complex business travel support tasks. The perfect orchestration between human and AI agents improve the traveler and our corporate customers' experience by supporting them more accurately and faster. Since servicing business travel and payments requires massive travel agency and operation support, it's very hard to scale fast. By utilizing our AI platform, we are able to support Navan usage growth without jeopardizing the quality of our service. This is one of the reasons that we are so confident to raise our guidance for the second time this year to 32% year-over-year. We are also taking increasing control of our technology stack. Approximately 50% of our Ava AI model calls now run on Navan-owned models, up from 30% in Q1. These models are purpose-built for travel and expense and trained on our own data. Over time, we believe that should give us greater accuracy, faster response time and lower cost. So AI is not just a product investment. We believe it is also an opportunity for a structural gross margin expansion and greater operating leverage. By bringing Navan capabilities directly where travel intent begins, Navan MCP extends our Navan Anywhere strategy. It provides conversational access to data across travel, expense, booking and policy in ChatGPT, Claude, Cursor. And separately, we are adding agentic capabilities in key collaboration tools like Gemini and Slack. Navan Edge is our flagship AI product. Edge is a full travel assistant who deeply understand you like a real person. It's not only plans your trip, but also books everything from flights, hotels, restaurants and events and make the changes when needed. Simply, it's the best travel agent in the world. To summarize our AI platform, travel and fintech infrastructure are the key. Ava, Navan Anywhere and Edge are creating the application layer value and using our own model give us a unique value proposition based on our own data. These 3 components allow us to grow our revenue faster with better economics while creating massive value for our customers. The last thing that I wanted to talk about is M&A and the expansion of our platform. As we have explained in the past, business travel has endless needs, and our goal is to bring every need into our AI platform. Travel is still an entry point, but is increasingly connected to payments, expense, meeting and events, VIP travel and the bleisure. Each of these additional products allows us to manage more of the customers' spend, replace more fragmented workflows and become more strategic inside the enterprise. That is flywheel we are building. Better inventory and connectivity drive better experiences, better experiences drive adoption and broader adoption creates more opportunities across the platform. This is why we build new products and make acquisitions and why I'm so excited about our acquisition of BoomPop. This expands our capabilities in meeting and events, an enormous category that remains largely unmanaged and messy. Together with BoomPop, we expect these opportunities to make Navan more valuable to our existing customers and expand the universe of customers we can serve. BoomPop is already a partner. Our joint AI platform allows us to plan events using conversational AI in an efficient way that was never seen before. I'm super excited to welcome the BoomPop team to the Navan family. So stepping back, this quarter gives us an evidence across every layer of our thesis. We are growing in a resilient market. We are winning larger customers and taking share. SLG, PLG are scaling. Customers love the product. AI is improving the experience, increasing efficiency and creating a margin advantage. And we are raising our full year outlook because our execution is strong, our visibility is improving and the opportunity ahead is large. I want to close this by thanking the Navan team, our customers and investors. The team is firing on all cylinders, and we are having a great time while winning. We are still in the early innings of a large opportunity, and we are building the best travel agency on the planet for the agentic era, and we are only just getting started. And with that, I'll turn it over to Aurélien.

Many thanks, Ariel. It's great to be here, and thanks all for joining us today. What continues to impress me is how consistently the team is executing across the business, and Q2 was another strong example of that. Ariel just covered the broad momentum, so let me focus on the financial takeaways, which is growth and operating leverage are advancing together. Revenue was $233 million, up 35% year-over-year, and GBV reached just over $3 billion, up 45% year-over-year. Once again, we exceeded our expectations for both revenue and non-GAAP operating income. This outperformance was driven primarily by strong volume demand and bookings on the platform with healthy expansion from existing customers, continued growth from ramping customers and faster contribution from new launches. We also benefited from a higher premium cabin mix. Our visibility into future growth continues to improve. Over the last 12 months, we signed $4 billion of new GBV in our SLG business, a leading indicator of future revenue growth. While ramp-up timing varies by customer, meaning it does not translate to a specific growth rate for GBV in any specific period of time, we believe this metric reinforces our expanding footprint in the sector, driven by our accelerating go-to-market momentum. We are also seeing continued leverage in the platform. Non-GAAP gross margin was 75% and non-GAAP operating margin was 7%, up from 5% a year ago. Revenue continued to grow faster than our cost base even as we invested in AI infrastructure and product innovation. The primary driver of that is Ava higher resolution rate, which is further supported by the increasing use of our own models that are helping us scale more efficiently, and we expect further leverage over time. Free cash flow was $28 million on a trailing 12-month basis compared with a burn of $33 million a year ago. We ended the quarter with $820 million in cash and short-term investments and approximately $125 million of debt. That gives us substantial flexibility to invest in the business and pursue strategic opportunities, but we will continue to deploy capital with discipline. Now turning to the outlook. For Q3, we expect revenue of $253 million to $255 million, representing 30% growth at the midpoint and non-GAAP operating income of $35.5 million to $36.5 million, representing a 14% margin. Now for the full year and considering the sustained momentum in the business and healthy demand for business travel, we are again raising revenue guidance now to $927 million to $933 million or 32% growth at the midpoint. We are also raising non-GAAP operating income guidance to $82 million to $86 million or a 9% margin. So now stepping back, we believe Q2 reinforces this financial story, strong and broad-based growth, continued operating leverage and disciplined investment. We are entering the second half with a very strong momentum, a very good visibility and a very strong balance sheet. We will remain focused on converting that opportunity into durable growth and cash generation over time. I'm very, very thankful for all the great and hard work happening across the company. And as Ariel mentioned, we are having a great time here furthering our mission of building the best travel agency on the planet. And with that, operator, we are ready for questions.

[Operator Instructions] The first question of the day will be coming from the line of Chris Quintero of Morgan Stanley.

Congrats on a great quarter here. Maybe first, you all have been seeing a lot of momentum with that RFP activity up 200% year-over-year for the past few months and quarters. So curious on the win rate side, how that's been progressing and how that's translating in terms of timing to revenue and closing those deals?

Yes. Great question. This is Michael Sindicich here. Good to hear from you again. So I think in general, we're -- first of all, we're absolutely pumped and I'm so, so proud of the go-to-market team and everyone at Navan who's building the products and services that we're delivering. To your point, there's a lot of tailwinds that we're seeing. It's RFP volume increasing. It's industry stuff. It's the products that we deliver that drive 15% savings on average and you can book within 7 minutes, and everyone is super hyper focused on employee efficiency, especially from the people that are generating revenues for their company, which happen to be a lot of travelers. So I think with all of these tailwinds, all of the increases in the RFPs, which just gives us more at bats, I think it's really just simply, like, signaling to us that we're watching disruption happen in front of our eyes. We get a lot more at bats and we get a lot more opportunities, to your point. And what we've talked about in the past is we actually see win rates increasing. We see ASPs or average pricing also increasing, and we see the productivity per rep also increasing. So with those 3 things happening, that then translates to faster growth, which we show with bookings and revenue volume. And for the first time, we're super happy to report on the new sales, which was $4 billion of travel volume coming from the SLG team. And so what that means is we then sell a deal. And then we've talked about this before, where it takes about 2 months on average to implement the customer. So what happens then is we connect to the HR system, your SSO, the expense solution, payments, and then we set up the policy and we launch to the company. Once we launch with the company, then it's about a 5-month on average ramp until the account gets to full ramp and full adoption. And that could mean deploying country by country. It could be big bang launches. But on average, it's about a 2-month implementation and a 5-month ramp-up of the customer. And so that, kind of, gives you an hint and idea of, kind of, what it takes to close the deal all the way to ramp. And if you think about it, the companies that are doing RFPs are generally enterprise-type companies, so larger. And those deal cycles can be a little bit longer as well. So we get an RFP, it might be 6 to 9 months before we have a signed contract and then go and begin the implementation.

Got it. Very helpful, Michael. And then maybe as a follow-up, really great to see the subscription and payments revenue acceleration here. So maybe could you unpack some of the key drivers there? I know you all have been focused on getting your sales team out and selling more of the payments and expense management solution, but just curious, kind of, some of the details there.

Yes, totally. It's consistent again with what we talked about a couple of quarters ago, but we were in an environment where we are relatively capital constrained. And so what that meant is we weren't as focused on selling the payments volume, which often actually comes with the expense ACV product as well. And so what we've done throughout the IPO is we've restructured our capital structure. We have brought on warehouses. We have the capacity. And now the sales team is going out there and really selling our payments and expense product, which you can see just how fast that acceleration has occurred just in a few quarters. And we're really excited to get these products out there because customers absolutely love it. And ultimately, what it does is it drives automated expense management and the finance teams don't have to spend a lot of time reconciling their travel bookings. But I don't know, Aurélien, if you have anything to add?

Yes, I'm super excited to see the acceleration here, right, in terms of -- because the growth of the payment volume is coming across the board. So we have more new customers signing up for payment and expense. We are seeing more upsells. And then we are seeing the existing base adopting our solution even more. And so that's why you're seeing this growth in terms of payment volume and acceleration to 34% versus 29% last quarter. And we're very excited about these products, as Michael mentioned.

Our next question is coming from the line of Patrick Walravens of Citizens.

Congratulations guys on all the momentum. So Ariel, why do you like the meeting off-site space? Who is your competition there who you're going to disrupt? And how will -- I mean, everyone on this call, we all notice so many conferences and we all host so many conferences. How is our experience going to be different once you get BoomPop integrated?

Yes. It's a good question. Thank you, Pat. So here's the thing. I always thought about Navan as we first land a customer and a business traveler, right? So we tell them there is a new way to think about stuff. It is way more automated. AI is part of it. It's easy to book. On the Navan platform, it takes 7 minutes to book. When you want to change something, it's super fast. So really, really surrounding you, the traveler around this goodness. But we also know that business travel has many more needs. We've talked about payments and expense. In the past, we talked about VIP, how can we take the VIP experience and bringing it and make it an AI experience. Meeting an events is a big part. It's actually 30% of the TAM of this market. It's a big TAM of the need of the need of the company, of the need of the traveler. And when we looked into this years ago, when we came to the market, we saw that it is so antiquated. You're basically having an RFP per event. You're sending an EA to sort some hotels and restaurants and other things. It's really, really old school. It takes a lot of time. It's extremely not transparent. You are signing with somebody a deal. They go and, kind of, negotiate with 3 hotels for you and then they tell you, this is the hotel that you're going to use. It takes a lot of time, antiquated, the opposite of what Navan is all about. So we thought if we can bring that experience to become online, to become conversational, hey, I want to have an event for my sales team. I'm thinking about Vegas or New York, and this is my budget, and this is what I need, and I'm talking with you or with the platform. And then the platform is actually automatically going and talking with the various providers. And we are creating this match. It will make the experience completely different. People will like it. And then we, as Navan, we're going to create more value to our customers. We are basically becoming more and more their one-stop shop for every need around business travel. So that's why we are excited about it. And BoomPop specifically, we know these guys for quite some time. They are the guys. They really, really innovated in this space. They prove that you can take something that is extremely manual and make it AI, which, by the way, 2 years ago, when I first met them, I actually didn't believe them. And I went very, very deep and understand that it's really AI and not some story as a lot of people are telling. And it's just amazing. We partnered with them. We are seeing happy customers together, and we decided to make them part of Navan.

Maybe I'll add to your point about how -- I was going to add how prevalent it is. People are saying that it's roughly 30% of all business travel volume is actually coming from meetings and events. So the opportunity is obviously huge.

Our next question is coming from the line of Samad Samana of Jefferies.

I have one question, and I have one follow-up. Great to see the large logos, notable ones like Ingersoll Rand and Cummins they all stood out. Just help us understand how the enterprise segment bookings looked in the quarter and maybe how the pipeline looks heading into the back half? And then I have one follow-up for Aurélien.

Yes. So the -- I'll answer the first question about the pipeline. The RFP, kind of, thing that Ariel mentioned is a leading indicator, right? So generally, larger companies are more prone to launch a request for proposal. And so obviously, there's quite a lot of people that are interested in looking at Navan. And I think the choices are relatively limited. It's essentially antiquated version or it's the modern AI-based travel and expense platform, which is Navan. And so that, kind of, gives you an idea of the pipeline. When it comes to the specific bookings in enterprise or anything like that, we actually don't separate the 2 or we haven't announced, kind of, the difference between them. But in general, I'll let Aurélien talk about how bookings are trending.

Yes, very healthy demand across the board, inclusive of the enterprise segment, obviously, like we see companies keep leaning into business travel to generate revenue, right? Like, when you think about the reason why people in the first place are using our platform, it's because they need to meet the prospect, they need to meet customers. They need their teams to get together. And we keep seeing more travelers traveling more and the average booking going up. So we see a very, very healthy level of demand across the board.

Great. And Aurélien, just maybe a follow-up on travel price inflation. Can you help us understand how much of a tailwind that was in F2Q? And what type of assumptions are you making about that specifically for the rest of the year and the guidance? Or are you assuming trend levels that we've seen in the first half of the year? Are you expecting more moderate travel price inflation? Just help us think about the F2Q impact and what's embedded in guidance.

Yes, absolutely. Great question. So you may remember when we discussed about Q1, we obviously mentioned that we saw in the back half of the first quarter some more inflation than at the beginning of the quarter, obviously, due to the disruptions that are happening in the world. And our assumption for the Q2 guidance was that the exit level is what we would see throughout the second quarter, and that's exactly what happened. So from that standpoint, I think steady inflation is what we've seen throughout Q2. And this is also what we are assuming for the rest of the year. It's obviously very hard to sit here today and predict inflation. But based on everything we are hearing, all the commentaries across the industry, what we are seeing today, we believe it's a reasonable assumption. So that's how we are thinking about our guidance. What I would add to that is, obviously, we are not providing a bookings guidance. We are booking -- we are guiding to our revenue number. And as a reminder, most of the inflation is impacting flights as opposed to hotels. And the way we monetize flights versus hotels is such as the impact of inflation on revenue is way less than the impact on bookings. So I just wanted to also reiterate that.

Our next question is coming from the line of Noah Naparst of Goldman Sachs.

Maybe one more on BoomPop. I think you cited in the deck a 30% savings rate, which just seems very impressive relative to the 15% you talked about for the rest of the business, which is already great. So just wondering where that comes from.

Yes. I don't -- I won't know all the specifics of each type of savings there, but I can talk generally about it. So what BoomPop does is, first of all, it's -- as Ariel mentioned, it's fully AI conversational based. And what they'll do is you can explain what you want to do. And then they will actually go out and source various hotels. They will source catering, they'll source photographers. If you want to buy a Swag, they'll create a website for you, they'll manage your attendees. It's a very, very robust program that, kind of, puts together in one solution, this, like, spaghetti type of operation of doing an event. And then what happens is BoomPop has really deep relationships with suppliers. And what they do is they can bring them volume and you can get better rates than what you would see just on the normal hotels website. And so again, not knowing exactly each specific of how it adds up, but the bulk of the savings is going to come from the discounts from the list pricing if you were to go and do it yourself and just sign up with a hotel and book those rooms because they're able to pass on the negotiated rates that they can get to the customer. Does that make sense?

It does. And I guess if you think about, sort of, your algorithm and the way you capture value through pricing, would you expect meetings and events to, kind of, continue to be a higher-yielding segment for you and this, sort of, amplifies that? Or would you think of it long term as in line with the rest of the business?

We -- it's Aurelien here. So we are usually not breaking down yield by line of business or the different components of the business. But what I can tell you is it's roughly steady and very consistent with what we are seeing. But what's really more important than that is combining the 2 companies gives us a huge opportunity, like we have a great portfolio of customers that are all organizing meeting and events and most of them doing that offline. And combining forces with the BoomPop team and their cutting-edge technology, gives us the ability to upsell and really attach meeting and events business to more and more of our customers. So when I think about the value we are providing here, it's, as Al mentioned, is going deeper in our relationship with our customers through that new business of Meeting & Events, which we were already doing as a company, but we are now bringing it online with BoomPop.

Our next question is coming from the line of Steve Enders of Citi.

Okay. Great. I guess to start, I want to ask about the Direct Connect relationship with Hilton on the hoteling side. I guess, to get your perspective on what this new relationship means and maybe how it augments the hoteling side of the business and industry moving forward?

Yes. In general, the way that we approach our platform is to try to drive the best and the most content out there. And so that means connecting to multiple GDSs like traditional agencies. It means building and being at the forefront of all the NDC connections that we can do with the airlines, it means adding low-cost carriers like your Ryanair, EasyJet and your Southwest. And so the idea is basically, we want travelers to be able to access all the best content, all the best rates and the best inventory that's suitable for them. One thing that we launched is the Engine partnership as well, which is huge for us to add more content and more availability and better types of bookings for different industries. But on top of that, to your point, 1 of the things that we did is launched a direct connection to Hilton, and what we're doing by connecting directly to suppliers is it allows them for more flexibility, more accurate retailing, better upselling of ancillaries that are relevant to travelers and it allows us to service these types of bookings really quickly, apply unused credits automatically and just manage, cancel, change these types of bookings. So for us, it's not a play about driving a different yield or a different revenue from these types of things. It's about giving the right content, the best content, the best pricing to our travelers on the platform.

Okay. Perfect. That's great to hear. And then maybe to follow up, just on the margin dynamics in the quarter. I guess anything on I mean the revenue, I think, upside was pretty strong. But I guess trying to understand that didn't really flow through to the bottom line. So I'm trying to understand the moving pieces in that and maybe how you're thinking about those incremental investments and what you're assuming in the guide for the rest of the year as well.

Yes, of course. Maybe I can unpack that a little bit. So first of all, as you mentioned, very strong revenue beat and driven by a lot of bookings, great sustained momentum and demand. So yes, great beat on revenue. We are -- our gross profit was more than 75% for the first time in the company history. So very, very -- we keep seeing a lot of tailwinds here coming from the rate of resolution that Ava is handling at 60% over Q2, and that makes us way more effective from a cost perspective on top of obviously providing a better service for our travelers. But obviously, very, very good from a gross margin perspective. And then because we've been so successful in our go-to-market initiatives, and with more than $4 billion new signed GBV for SLG, there's -- we're just paying more commissions, right? And again, very, very happy about the payback here and what we are seeing with a very, very strong and efficient go-to-market team. And so that led us to also beat our bottom line expectations as well.

The next question is coming from Jed Kelly of Oppenheimer & Company.

Great. Just looking at the pace of your gross margin expansion in 2Q sort of moderated from what we were seeing in the last couple of quarters. Is there anything in there to call out? Or is it just tougher comps?

Yes. We -- I mean, we expanded gross margin 200 basis points in the year-over-year in Q2. And as a reminder, we expanded gross margin by 1,000 basis points over the last couple of years. So I mean we keep making a lot of progress there. And we are launching more customers and be very, very thoughtful about deploying human agents, orchestrated with our AI agents, and we're very pleased, I'm very excited to see the rate of resolution from Ava going to 60%. And the team has a lot of ambition here to keep driving that mix at even higher point specifically as we use more and more of our own models that are more accurate, give better results and faster results. And so as we keep making progress here, we're going to keep Ava handling more and more of our support function and margins are going to keep expanding. But I'm very excited about the pace of the expansion because what's the secret sauce of Navan and the reason why our customers love us is, we are not optimizing for gross margin. We are optimizing for NPS and CSAT. And as a result of that, we are seeing a gross margin expansion. But first and foremost, the reason why we are successful is because we are the best travel agency in the planet. And that's what comes across when you look at our satisfaction scores.

Great. And then just as a follow-up, congrats again on the help on the NDC with Hilton. Just -- can you talk about -- can you discuss other conversations you're having with chains on sort of direct connections. And I know you just mentioned it's not about yield management, but wouldn't this improve your yield by relying less on indirect supplier agreements?

Yes, that's a really good question. I think we really -- when we think about what we call internally content, it's all about all of these advantages that I was talking about when it comes to because there are so many ways to connect to suppliers, to airlines, hotels and other. You can use a lot of aggregators, but that means that you are not always assuring the right price for the customer. But also from a merchandising perspective, you don't have the right information, right? So it could be the pictures of the room. It could be the size of the description. Same goes, by the way, to airlines. So when you go to the Navan platform, no matter if we show it in the UI or in the conversation in a platform like Navan Edge, it's all about really, really, really knowing what's out there what you the user want and create the match between that. So if any of this call -- of the people on this call have used Navan Edge, obviously, it's a new product. You can see that I can actually tell Navan Edge what kind of hotel, what kind of room I will want to have in my next day in New York. And it will tell me because you like the bar and you like the gym. We suggest that it will be in this hotel. But I didn't really ask about the gym or the bar, right? Or I didn't look for the logo of the gym and the bar. So Navan Edge really knows me. That's really important. But it really it is thirsty for content. It really needs all of this information, like you think about merchandising. So by connecting directly to suppliers by going to aggregators. By taking all of this data, which is, by the way, in a Navan data now, we can actually create an amazing experience, which, by the way, creates more revenue because you are more likely to book in the Navan platform, we are less likely to go and look for it outside because we are just giving you the better information. So this is really what lays behind the NDC strategy. Are there sometimes benefits of yield to us or benefits of pricing to the customer? The answer is yes. But that's not what drives this strategy. What drives this strategy is data and the data that we are presenting to our customers.

Our next question is coming from the line of Jared Levine of TD Cowen.

To start, I was hoping you could give an update in terms of your sales head count investments. I guess where is capacity growth at currently at this point in the year? And what are you targeting for the rest of the year?

Yes, this is Aurelien. So we -- you're seeing our marketing and sales investment, which is mostly sales investment growing at roughly the same pace Q-on-Q. So I would not expect any significant changes this year from that standpoint. What will fluctuate every quarter is always the amount of commissions we are paying to our sales team, depending on how successful they've been. And as you've seen, they've been very, very successful recently. Michael has been discussing about the great pipe for the rest of the year. And so we would be very pleased to keep investing in our marketing and sales engine for the balance of the year. And then beyond that, if we step back from our P&L, the opportunity is massive, right? And so when the management team has conversations about where do we want to invest, where is the opportunity, it's very, very clear to us that the size of the corporate travel market is so significant, and we are such at the beginning of the penetration of that market. We're very proud of serving 50 companies out of the S&P 500, but that means many of them are up for grab, and that's the opportunity. And that's why we will keep investing in our marketing and sales engine going forward.

Got it. And then my follow-up, can you dig into between SmartTrip and BoomPop, those 2 acquisitions, the impact that had to your FY '27 guidance update. I guess some online resources are suggesting that BoomPop could be north of a $100 million revenue run rate, which could be pretty significant in terms of that contribution. So any kind of incremental color in terms of the impact of the guidance update would be helpful.

Yes. So absolutely not -- those level of revenue impact. So for fiscal '27, SmartTrip is top and bottom line here very immaterial. So if it's in your model, you're doing it wrong. So it's small, very strategic, and we're very excited about it because of the access. This is giving us to a lot of local inventory, IATA licenses and a great team, but immaterial impact to our financial statements in the short term. And then from a BoomPop perspective, low single digit -- very low single-digit impact to revenue in fiscal '27, so far away from the number you just quoted and a mid-single-digit impact to the non-GAAP operating income as we are integrating the team. We expect that business to become accretive in fiscal '28, though. But fiscal '27, the summary is immaterial impact to top and bottom line.

The next question is coming from the line of Blair Abernethy of Rosenblatt Securities.

Great quarter, guys. Just wanted to -- 2 questions. I guess, one, any update on the transitions going on with the Reed & Mackay customer base onto your platform to sort of how that's progressed this quarter? And then secondly, just from -- in terms of new customer adoption of the Navan MCP and Navan Edge. Maybe just any other color around what you're seeing there in terms of the profile of customers that are utilizing these new capabilities?

Sure. So first of all, regarding Reed & Mackay, we really need to understand that there are 2 aspects there. One is really us providing VIP service on platform for most of the Navan customers. And there, it's actually fully integrated and people are super happy. As you know, we are always measuring CSAT and NPS. Then the Reed & Mackay customers, which are fairly traditional used to mainly talk with agents, calling, sending e-mails. We have this idea, which I've talked about in the past, to bring them on platform. And then it's a program that will take several years. And right now, we are very happy with what we see. We see more and more customers of that nature actually going to this platform. And by that, really enjoying this orchestration that I'm talking about, AI agent and actually VIP agents, in this case, together providing them service. And the reason that we know that they are happy when they are doing this transition, their NPS and CSAT tends to be really high. So that's what we see, and that's why we are continuing with this program. This is really how I'm looking at this program and asking myself, is that successful or not? Are we seeing satisfaction by this very, I would say, traditional customers that want this type of service. So that's that part. Regarding the question of Edge, first of all, I would say maybe the bottom line here, Edge is the fastest-growing product that we've ever launched in Navan. So that's really, really important. It actually tells us that this idea that people will want to have a conversation basically with AI and booking their entire trip, but also having restaurants, events as part of the trip doing all of these things automatically, while we know them very, very well. That idea resonates with a new type of customer for Navan. This is not a corporate customer that we signed with. This is actually an individual who is a business traveler that is coming to our platform and starting to book a trip. And what I'm looking at is, first of all, are we growing. And as I said, we are growing really fast. Second, I'm asking myself is NPS is high, CSAT is high. NPS there is actually very high, significantly higher than what we see in the Navan platform. Then I'm asking myself, do I see repeating usage? Remember, this is not a company that the CFO told them, you have to use Navan. This is an individual that decided to come to our platform and book. So do I see that individual coming again for their next trip and their next trip. And the number there is actually amazing. It's way more than what I was expecting and it's actually the trend is going up. So all of the numbers trend is very, very positive. We are very happy with what we see there. And I'm actually very optimistic as this starts to get scale to start to see impact next year on our numbers.

And the next question is coming from the line of Siti Panigrahi of Mizuho.

Most of my questions are asked. Just wanted to ask on the competitive landscape. There are some kind of consolidation we saw in the legacy vendors. I'm wondering how is the pipeline and win rate trending and how you're trying to capture that market?

Yes. In general, we see the consolidation as a big tailwind for us. I think hopefully, customers are seeing that we are causing quite a lot of disruption because we're completely changing the way that it means to manage corporate travel in the world of technology and AI, and so because of that, a leading indicator is what Ari talked about earlier, where RFP volume has tripled since H1 of last year versus H1 of this year. And so usually, those RFPs are coming from more enterprise customers, and you can assume the enterprise customers are coming from more of the legacy travel management companies that are doing some of the consolidation. So hopefully, that gives you a clear view of kind of what we're experiencing internally.

The next question is coming from the line of Nafeesa Gupta of Bank of America Securities.

Really broad-based question here. So as you win larger global enterprises, I would love to understand how do the long-term economics compare with some of the midsized smaller customers you've had historically across product attach retention...

Sorry, Nafeesa, you're cutting. Can you say that again?

Can you hear me now?

Yes, it's better. Thank you.

All right. I'll just repeat. So I was asking on your larger global enterprise wins and how do the long-term economics compare with some of the smaller customers you've had previously across metrics like product attach, retention yield, implementation costs and maybe like expanding potential in general, how should we think about long-term trends?

Yes. Yes. So first of all, before I compare the different cohorts of , I just want to reiterate that it's been very steady, right? Like we are not seeing any shift when we look at segment by segment, not seeing any shift from pricing or yield or the way we work with different companies. What we've been discussing in the past is generally speaking, enterprise customers have a very different profile than mid-market or smaller entities. At the end of the day, the gross margins look very, very similar, but the way we construct the gross margin is a little bit different. So enterprise customers frequently have direct negotiation rate with airlines or hotel chains. And so on those bookings that we facilitate on our platform, we charge more trip fees as opposed to getting some commission from our suppliers. And the opposite would be true when you go down in the market. But every customer is made different One of the reasons why we love all of them in all those segments and with their different characteristics is they also come with different tailwinds that they provide to the platform. So enterprise customers are coming with very significant volumes. They are very sticky customers, and they offer a lot of opportunities for us to upsell and attach more the expense in payment now the M&A business as well and provide a lot of opportunity for our sales team to just go and upsell and grow the relationship with them. And so again, different characteristics, overall similar gross margins but are being constructed in a different way.

Next question will be coming from the line of Scott Berg of Needham & Company.

This is Ian Black on for Scott Berg. Congratulations on the acquisition of BoomPop. What's the opportunity for more tuck-in deals like this? And are there any areas where you think you could benefit from M&A?

Yes. I mean it's -- obviously, I don't have any specific targets or acquisition in mind today that I want to talk about, but we are always looking for opportunities to expand like we just did to a new product that helps us upsell and attach more products to our existing relationship. So that's what you saw with BoomPop, SmartTrips were clearly us trying to increase, expand our footprint globally. And so we could see more of that in the future. But I won't say the bar for M&A is very high, right? We really look at companies that can bring things that we don't have internally or that we think will take a long time for us to build by ourselves. But it's not a goal. It's just a tool for us to accelerate our vision.

Thank you. And I would now like to turn the call back over to management. Please go ahead.

Great. So thank you all. So just as last quarter, we have been asking our individual investors to submit some questions on our platform. And so I think, Erin, you have -- you want to share the top updated questions with us.

Yes. Thanks, Aurelien. I've got 3. The first question, I think it's for Ariel. This is for Patrick P., he asks the company is mostly for business use. Will there be available for individuals in the near future?

Yes. So first of all, the first user that is now coming to the platform as its own decision is actually people that are coming to Navan Edge. These are employees that are working for companies, they either don't have a managed solution in the organization that they work for or they are not happy with that solution. And because of it, they are coming to Navan Edge. So in a way, while they are business travelers, they have behavior of a consumer; they are deciding to book their business trip in Navan. Now across the platform, while you are using us, you can also use us for your personal needs. We internally call it bleisure, which means that, let's say, that I'm flying to New York but I'm also spending the weaken there, I can actually combine the usage of my business need with my personal need. There is an entire functionality there that allows you to split the cost to really kind of have the personal trip isolated from the company reporting and so on. So these 2 aspects today in the Navan platform are very consumer. One, it's actually I'm deciding to use Navan Edge and the other one, I'm expanding my business trip to a personal trip and people like to use these 2 products.

Great. The next question, I think, is for Aurelien. If business slows down, what are your cost-cutting strategies?

Yes. So first of all, so far, so very good, right? We -- I think we've been discussing this on this call the demand for business travel is very, very strong right now. So obviously, not something I'm focused on at the moment because we are very excited about the volume of bookings on the platform. I think in that scenario, the process will be the exact same than we have today, which is really focused on the return of investment and being very intentional. Today, we are clearly going on the offense because we see great payback. Every time we invest, be in R&D, marketing and sales, we see a very, very good payback. And I think if that were to be the case, the process will be, again, exactly the same.

Okay. That's very helpful. And our last question, Michael, this one's for you. This is from John C, on Navan Rewards program. How is Navan incentivized to earn rewards either at personal stays offices, why do they expire?

Yes. Great question. So just to set some context that everyone here knows, Navan actually pays travelers when they choose more cost-effective options on behalf of their company for business travel. So it's a really unique way to help drive that 15% savings that we bring to our customers. And to the question, so some airlines, hotel programs, et cetera, the points will expire, some of them don't. A lot of them -- a lot of points programs generally are rather opaque and the Navan platform is giving dollar for dollar. So when we give you a dollar reward, you can use it, its value is worth $1 for a personal travel booking. And essentially, our travelers on our platform are able to triple dip. So when they make a booking, they can use their credit card and get credit card points. They can book suppliers that will give you those specific airlines and those hotel points. And then on top of that are the Navan rewards that we pay for. And so because of that, it's the kind of program that actually expires those rewards after 12 months. So our message is just make sure you hurry up and use them if you've saved your company money to go on a personal vacation.

Great. Thank you. Now turning it back to the operator. Thank you all for joining us today.

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