Ladies and gentlemen, thank you for standing by. My name is Krista, and I will be your conference operator today. At this time, I would like to welcome you to the Pegasystems Third Quarter 2025 Earnings Conference Call. [Operator Instructions] I would now like to turn the conference over to Peter Welburn, Vice President, Investor Relations and Corporate Development. Peter, please go ahead.

Thanks, Krista. Good morning, everyone, and welcome to Pegasystems' Q3 2025 Earnings Call. Before we begin, I would like to read our safe harbor statement. Certain statements contained in this presentation may be construed as forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. The words expects, anticipates, intends, plans, believes, will, could, should, estimates, may, forecasts and guidance or variations of such words and other similar expressions identify forward-looking statements, which speak only as of the date the statement was made and are based on current expectations and assumptions. Because such statements deal with future events, they're subject to various risks and uncertainties. Actual results for fiscal year 2025 and beyond could differ materially from the company's current expectations. Factors that could cause the company's results to differ materially from those expressed in forward-looking statements are contained in the company's press release announcing its Q3 2025 results and the company's filings with the Securities and Exchange Commission, including its annual report on Form 10-K for the year ended December 31, 2024, and in other recent filings with the Securities and Exchange Commission. Investors are cautioned not to place undue reliance on such forward-looking statements, and there are no assurances that the matters contained in such segments -- in such statements will be achieved. Although subsequent events may cause our views to change, except as required by law, we do not undertake and specifically disclaim any obligation to publicly update or revise these forward-looking statements, whether as a result of new information, future events or otherwise. Our non-GAAP financial measures discussed in this call should only be considered in conjunction with our consolidated financial statements prepared in accordance with GAAP. They are not a substitute for financial measures prepared under U.S. GAAP. Constant currency measures are calculated by applying the September 30, 2024, foreign exchange rates to all periods shown. Reconciliations of GAAP and non-GAAP measures can be found in the company's press release announcing its Q3 2025 results. And with that, I turn the call over to Alan Trefler, Founder and CEO of Pegasystems.

Thank you, Peter, and to all who are joining today's call. I'm really excited to see the continued strong results through Q3. And as we've seen for the last number of quarters, our team is really focused, executing well and our differentiated AI strategy continues to resonate with clients, prospects and partners. We've been saying for some time that we believe we have a competitive advantage in today's AI world, one that's built on a unique architecture and a special approach to AI and agents. I believe that the results we've seen over the past few quarters reflect those advantages and will continue to serve us, our clients and partners well for the foreseeable future. Ken will walk you through the financial highlights in a few minutes, but I want to talk a bit about what I'm seeing in the market. AI continues to dominate the tech conversation. And candidly, not always for the right reasons. The buzz is [indiscernible]. There are new tools, new terms, lots of hype. And we've all seen headlines with 95% of enterprise pilots failing and predictions that Gen AI will actually, in some ways, eliminate the software industry. I think all of that misses the point. First, most of the failures aren't about bad tech. They're about misapplication. And this is an industry problem stemming from our competitors' approach to use LLMs to orchestrate and control workflows while an application is running live in production. In other words, at run time. Using an LLM to orchestrate and control workflows at run time runs the risk of mixing the appropriate context and guardrails and results in what we consider to be an inadequate level of accuracy and reliability. The unpredictability of this approach is a nonstarter for regulated industries like banking, health care and insurance,…

Thanks, Alan. We delivered record results in Q3 2025 with Pega Cloud ACV, revenue and free cash flow, all reaching new highs and showing continued acceleration. These results reflect the demand for Pega and our ability to both execute on and monetize our differentiated AI strategy. At the same time, we've demonstrated our strong commitment to return capital to shareholders by completing our largest share repurchase quarter ever. Annual contract value grew 14% year-over-year. Through the first 9 months of 2025, we added over $147 million in net new ACV in constant currency, and that exceeded the total net new ACV we added in the entire year of 2024. Once again, the standout performer was Pega Cloud, which grew 27% year-over-year and represented the fastest-growing component of Pega's total ACV. This accelerating growth trajectory highlights not only the scalability of our platform, but also the increasing client focus on cloud-native architectures and solutions for the adoption of AI. Several factors drove our ACV growth. First, our global sales organization continued to execute well across all major GOs. Several years ago, we made a strategic decision to reorganize and refocus our go-to-market model, aligning teams more closely to our clients. That transformation has clearly paying off through deeper client engagement and a far more efficient sales motion. Second, Pega Cloud remains a major growth driver. As more clients migrate to Pega Cloud, we're experiencing accelerated growth and momentum and the economics of our cloud migration strategy are compelling as well. Pega Cloud margins continue to expand, approaching 80% in Q3. With the vast majority of our net new ACV coming from Pega Cloud, we continue to realize the benefits of a more scalable business model that drives significant customer value. Third, our unique approach of utilizing AI in the design phase,…

[Operator Instructions] Your first question comes from Steven Enders with Citi.

This is Palak for Steve Enders from Citi. So my first question is, you touched on this a bit, is what drove the much better ACV and acceleration versus your expectation of it slowing down on a much tougher comp? And how should we think about ACV for Q4 and FY '25 as a whole?

So thank you for your question. So I think when we guided at the beginning of the year, we were pretty clear that we said we were not going to factor a direct impact from Pega Blueprint into our results. And I think what you're seeing is through the first 3 quarters, Pega Blueprint has begun to impact our business in a positive way. It's the exclusive way that we go to market with our clients and our partners are now adopting it at an accelerated pace. So I think the performance is certainly connected to the impact of Blueprint on our business, and we would -- we see that continuing.

Perfect. And I have a follow-up on what you were seeing on the federal side of the business and what the deal environment looks like?

I mean the federal space, I think, obviously has been through a lot of change in 2025. And with the current situation of the government not being open right now, certainly, there's impact to our clients. That said, our projects with our clients are long term and very strategic and tend to go across not just weeks and months, but tend to go across years in terms of the change we're helping them drive. And so we've been through shutdowns before and our clients have certainly continued to move forward with their initiatives. So we don't expect that to be different now.

Your next question comes from the line of Jake Roberge with William Blair.

Great to hear that Blueprint continues to resonate with customers. Just on some of the newer predictable AI agents you recently launched, can you talk about the early feedback you're getting for those solutions? And just what's different about those agents versus what some of your competitors are doing?

Yes. I think it's actually great seeing that the understanding of the difference is starting to resonate with customers because there's so much noise and hype in this space. It's just you can't wait. It's pretty crazy. The way all of our competitors build agents is they give you a prompt studio. You go into a studio and you begin writing prompts and now they're trying to put additional controls in because they realize those prompts haven't necessarily always resulted in the right outcomes. So they introduced Salesforce's agent script to be able to sort of jury where it controls it. The problem with that approach is relying on the LLM and run time is inherently unpredictable to a degree. And when you're in a business where you really, really want predictability, you want to be 2 customers the same way based on law, based on policy, it's really important to have codified that in advance. So by using the LLM to foster the creativity, to foster the discipline at design time and being able to take this library of workflows and be able to execute it at run time, it's really quite remarkably more predictable and it's structural. The other thing that I'll tell you, and this is interesting as well. A lot of people talk about how LLMs are driving waste in the electric grid. And candidly, when we run at design time, the LLMs we're using are exactly the same. But a workflow is thousands of times less consumptive of natural resources than an LLM and they run on an ordinary CPU. They don't need the fancy CPU to be able to run. Being able to do this has an interesting additional environmental effect. So as far as I'm concerned, the predictability is the most absolutely compelling part of it.

Very helpful. And then it's pretty clear the acceleration that Blueprint is driving within the existing base. But now that you've started to invest more in new logos over the past few quarters, can you talk about the doors that Blueprint is opening on that front and just how that overall push has gone thus far?

Well, I think, Jake, I'll start just real quick and then let Alan chime in. I think there's 2 things that -- there are 2 aspects of new logo acquisition. The first is how you initially engage with them and what the experience is. And I think the Blueprint is a completely different kind of nontechnical, very user-friendly experience where you don't need to know Pega or actually have someone that is an expert in Pega to start that engagement. The second thing is it speeds up the business development kind of solutioning time in the campaign. So I view those as 2 really great accelerators, and we're seeing the ability to actually be more targeted with more new logos to be able to accelerate that, which previously was hard to do because of the time that it took to actually get through kind of getting something into the pipe, so to speak. Any thoughts, Alan?

Yes. I think that the ability to show a customer what we do has gone from something that took months and lots of meetings to something that when people see Blueprint and spend an hour and if you haven't done it already, Peter, I'm sure, would be glad to walk you through a Blueprint demo, any of you, be happy to do that. When you see it, you go, "Oh, I get it," and the thing I'm really excited about is it's not just speed. We've been able to take a lot of our design principles and a lot of the ways that we've learned about and have thought about workflows and process automation for all these decades. And we've been able to build those into Blueprint as a critical part of the intellectual property. And what that does is it's not just faster, I think even more important than speed is it's way better. And I think it's also much more reliable from an implementation point of view because it guides you to get it right. So it's a fundamental change, particularly with new logos and others who don't know Pega because they just get it. I'll tell you the truth, it actually made our own internal training of all of our staff easier and better, too, because people really, really understand Pega at a different level after having just even done one.

Your next question comes from the line of Raimo Lenschow with Barclays.

Perfect. Congrats from me as well. Ken, one for you. Like I was trying to understand your comments a little bit better when you talked about like the impact of more cloud that it does have on term and license, and you said you kind of wanted to help us a little bit with Q4. So should we kind of think about that deceleration or like that we saw on that kind of client cloud line of the business should continue probably maybe a little bit more in Q4 as you gain momentum there? Just kind of trying to translate your words into numbers.

Yes. I think -- so that's a great question. I was really trying to make sure to highlight that in some historical quarters, the term revenue is -- has been higher because the mix of the deals were more into the term bucket than Pega Cloud. And when you have 85% of growth happening in ACV from Pega Cloud, you get less of an impact from that. So you're going to see that term license revenue decline over time. I know that I've said that in the past that it hasn't declined at the pace that maybe -- I think maybe I even thought just because of some of the anomalies around like duration, but that's really what I was touching on is when you have 85% Pega Cloud, you would obviously expect less impact from term license revenue. It's not going to -- I'm not talking about like $100 million difference or anything of that scale, but you should expect that to decline. That's what I was trying to highlight.

Yes. And let's think a lot of this confusion that can come in is because of what I would consider an accounting anomaly where if you have a piece of business that's a $20,000 a month piece of business and it's term, if it goes on for extra years, you end up having a present value. And look, we would much rather not do that, but it's just the way the accounting rules work. I think you're seeing the powerful move of our business towards Pega Cloud, which is a real validation of the quality of cloud. I see with my customers that are switching that they tell us that they get better reliability running on Pega Cloud than they do when they were running it themselves. We're able, I think, to do a better job from a performance point of view with them because we've got so much automation, and we've really, really booked in just a whole support system for them that we can do when it's running on the cloud. And so you're seeing our business sort of inexorably shift to be, I don't know, an 85% cloud business over time. There's always going to be some customers who, for one reason or another, really want to run it on-prem. And we like being able to offer that choice to our customers. But it's becoming really a cloud business. And at that point, once you realize that, yes, we really are a bonafide cloud business, you then I think, really want to look at ACV. ACV is what tells you about the momentum of the business. It tells you about the durability of the business, and it doesn't flop around the way that particularly the term license line. And I think what Ken is saying the term license line is going to -- it flops around a bit just because of things that don't actually relate to the strength or weakness of the business. So I'd just also direct from a quality point of view, you think about Pega clearly has made the transition to cloud compared to where we were years ago. When we started this, we were a very small percentage and look at it now. And we have strong ACV growth. That's pretty exciting.

Yes. No, makes total sense. It's really, really good to see. And then hopefully, that translates into guidance as well ---in the guidance approach as well. The other question I had, Alan, is the other big area around AI that should be really interesting for you is application modernization because there's so much that can be done there. Can you speak a little bit about where we are on that journey?

Yes. So we are seeing a lot of energy around that and in particularly around the new features that we've introduced in the last 60, 90 days, which you can see if you go to Blueprint and you go to the place where you can upload assets, we've made it so that if you have an old mainframe system without any documentation, you can actually hook up and take a video of somebody using it. And they can go through and they can explain what they're doing and what the system will generate off of a 20-minute video in terms of creating not just a cloud-native replacement for some old legacy thing, but actually modernizing it and innovating. And if you have 2 or 3 systems you want to group together when they're modernized, you just grab the assets from all of them and upload it and Blueprint will work to help you reconcile them. So we think this is just enormously, enormously exciting, and you're going to see us continue to put a lot of work into making this better and better because it's a pretty terrific area. A number of those 100-day implementations that we talked about fall into that legacy modernization category.

Your next question comes from the line of Patrick Walravens with Citizens.

Congratulations you guys. [Technical Difficulty] we talk about how pricing is evolving maybe in this industry. In the script, there was -- I know you touched on it, but if we can go deeper, that would be great. Script, there was one comment about priced on real work process. And then you've got Bret Taylor, CEO of Sierra talking a lot about outcome-based pricing and how that really shifts the playing field. So any thoughts you have on how pricing might be evolving would be super interesting.

Yes. My thought is we're about a decade ahead of all these other guys. So...

Yes, I know. We are in the right place, yes.

Yes, we've realized 8 or 9 years ago that we would go into a customer, sell them a bunch of seats, make them 30% more efficient and then you come to renewal time and the customer said, "Well, I don't need all these seats." And it really didn't seem right when -- particularly on our cloud, we're burning through all these -- the number of transactions has gone up, not down. So we said, look, we're just thinking about this the wrong way if we're thinking about bunch of seats. And so we really began a move to move our clients broadly to work-based pricing. We price based on the amount of work the system does and we tend to be a process automation workflow case management system. So the system makes it pretty easy to count and charge for the number of workflows, the amount of work, the amount of output that the system is involved in. I think all of these people who have some form or another of seat or human counting-based pricing have a structural problem. And they have a structural problem both because that's, I think, a lousy way to do business with the customer. It doesn't align the incentives of the vendor and the customer. We as a vendor and the customer should both want to make that business as efficient as possible. Seat-based pricing businesses don't work that way. They get penalized by making more efficient, whereas we really have every incentive to do that. So I think that the pricing in this industry is going to have to change pretty radically, and we feel like we're way ahead.

That's right. As a follow-up, Alan, are you seeing any new players in the space? Are you seeing Sierra or Decagon or anyone else like that?

We see them on the periphery. I mean, they talk to a lot of the same customers that we talk to. We get asked about them. The challenge with these chatbot agent type systems is one of the big things you've heard me talk about, Pat, is this concept of center out, this idea that you need an agentic system that's going to be able to work in every channel that the rules and the processes that run need to be able to operate if somebody is having a dialogue with the system or if somebody sends an e-mail to the system or if somebody is in a back office and wants to go to the system in all of those situations, you really want to be in a true omnichannel way, what we call center out, which we've been talking about also for about 8 years. And I think a lot of these companies that are out there are building things that get locked into a particular channel. And when you're locked into a channel, it's hard to envision how you're going to do something that really can serve clients and serve the staff in all the places they're going to want to use it. So I also think structurally, this center out concept is perfect for agents because it lets you work agentically, but it also lets you work when you have to have a person involved. And so these folks who come in and people have come in for a long time with one -- years ago, it was IVRs, then it was robots. I think that running your enterprise at the periphery, having the business logic at the periphery just doesn't make as much sense as to have a fabric that is a center out type fabric.

Your next question comes from the line of Mark Schappel with Loop Capital Markets.

Nice job on the quarter, guys. A couple of questions around the legacy transformation opportunity. Alan, starting with you, the newest Blueprint release introduces AI agents that kind of essentially analyze like legacy apps and automatically design workflows. Regarding that transformation opportunity, are you seeing customers actually integrate this capability into production today? Or are they just still in the planning stages for that matter?

Well, our blueprint is responsible for every new implementation that we've done in the last 6 months and many, many, many of those are in production. Remember, what runs in production is our workflow engine. The nice thing about this is we're able to enhance Blueprint literally every week or 2 because it runs as a SaaS app on pega.com connected to Pegasystems. We've recently added localization facilities so that the Blueprints actually will get stored in our -- if a customer is a Pega Cloud customer, the information that is uploaded about Blueprint actually gets stored in their Pega Cloud region. So it's stored in a distributed basis, which includes if they're in another country and they worry about data residency and things of that type, that's now all been incorporated so that it will save the information in a place consistent with this sort of [indiscernible]. And run time, what's running is the Pega system, as we built it existed for such a long time, obviously, with enhancements, but it's not like Blueprint itself. This is where I think people got a little confused when we talk about Blueprint. Blueprint is a different way of doing Pega that permeates the entire design environment. It's not this sort of separate SKU that they would then run. So every customer that I can think of has started with the Blueprint for months here. And it was funny. We had somebody appeared at one of our sessions, one of our customers got up and had a sign that says this is our motto. No sprint without a Blueprint. We said basically that every time they went to look to build something, they always start that way. And there's a lot of enthusiasm for it.

Okay. And then as a follow-up, Ken, if I recall correctly, the legacy transformation opportunity was supposed to add about 1 point of growth to ACV this year. Is it still tracking to that? Or do you see the legacy opportunity kind of outperforming that expectation?

I would say that any acceleration over what we guided, I would say I would completely tie to -- or I would largely tie to Blueprint and legacy transformation opportunities. I think that if we accelerate growth, it's going to be on the backs of Blueprint and most of what we do is tied to some type of digital legacy transformation, application modernization, whatever buzzword the industry is using.

Your next question comes from the line of Blair Abernethy with Rosenblatt Securities.

Nice quarter guys. I just wanted to delve into verticals just a little bit. You touched on federal. Maybe just to dig into that a bit more. What sort of are you seeing there from a claims volume perspective? I'm not sure what percentage of the government base is on cloud versus on-prem, so if it makes that much of a difference? And are you changing your go-to-market activity there right now? And just maybe a little more color around what you guys see happening in federal.

Yes. So a couple of things. One, we feel a little fortunate that some of the agencies that really were targeted what happen not to be the ones that we do a lot of work with. But having said that, when the offices are closed, progress on projects is slowed down. The services projects, they don't necessarily come to a halt, but they massively, massively reduce. And so if this goes on, this will obviously affect how those projects roll out. But as Ken said, these tend to be very long-term agreements, and they're not going anywhere, so we'll pick them up when things come back. We have accelerated the move to the cloud in the federal government. So we've actually had quite a few successes with our Pega Cloud for government offering, which is designed specifically for the FedRAMP federal environment. We actually have other customers in other governments like some state governments, et cetera, that are interested in Pega Cloud for government. And so -- that's, I think, a good offering. So cloud, I think, is strong. Projects are, as you would expect, in some turmoil with work stoppages when the workers don't come in. And we're hopeful that sooner than later, this will get unlocked.

One comment I'll make on the government vertical, so to speak, is I've spent and Alan has as well over the last few months, a series of meetings with different agencies, different committee members and their staff to really understand kind of how Congress is prioritizing spending initiatives going forward. And IT modernization is what they're actually calling it in the government, is a bipartisan focus area. So I think what you're seeing is you're seeing a lot of momentum around fixing the legacy debt that these agencies have around IT and actually even trying to repurpose dollars wherever possible to make sure that they're supporting that. So I think that is one interesting kind of observation I've had is that it is -- no matter who you talk to, IT modernization is a priority in the government.

And there are lots of workflows in government, and they really need to be done predictably. So I think it just plays perfectly in what we're doing.

Your next question comes from the line of Devin Au with KeyBanc Capital Markets.

Could you maybe talk a little bit more, I guess, a little bit more since you've already talked about on the prepared remarks, but more so on the partner-branded Blueprints. I know you said it previously, but have you seen that kind of unlock a whole host of use cases that Pega and maybe broader partner system has not seen before? And maybe give us some flavors on what the new use cases that you've seen stemming from them? And kind of how has that influenced sales pipeline and velocity thus far from the launch of that?

So it's going to, I think, be quite important. It's very new. So remember, we announced it in June. We have partners -- we have 5 partners who have set up their what we call knowledge buddies, which are private knowledge stores that are private to them that we run on Pega Cloud. And what happens is when Blueprint runs for one of these partners, if a staff member, like I mentioned Cognizant for somebody signs on to the system, what they will see is Blueprint with that company, the partner's name right at the top. And it and only they, if they're signed in from that ID will be able to access this IP. It will get pulled in automatically into the analysis that Blueprint does and what happens. So I think it does a couple of pretty important things for us. One, it allows us to enable the partners to leverage their experience along with ours as part of -- and it's a great use of AI to tell you the truth to do that. But what I'm excited about is, historically, with most of these partners and all of these partners, they've had Pega practices. And the Pega practices are the parts of the partner that would work on implementing the Pega system. But for the very large partners, these Pega practices were just a couple of percent of the total partner population. What we're trying to do with Power Blueprints is position this as a way where outside of the Pega practice, the partner staff or the partner sellers will be able to use this as a way to talk to their prospects, their customers, not to sell Pega, but to sell their IP and what they have to offer as the partners themselves are in very competitive environments now. And as we unlock this going into next year, I think it could be very, very exciting.

Great. That's helpful context. And then for my follow-up for Ken, again, a really strong cloud ACV growth in the quarter and also noticed that license ACV declined sequentially quarter-over-quarter. I'm assuming that's a function of the strength you've seen from the strong migration activity. Could you maybe in any way kind of help put some numbers around how much has kind of migration from licenses contributed to cloud ACV growth this quarter or maybe thus far this year?

Sure, Devin. So migrations are an important element of our strategy to get clients on to Pega Cloud. But migrations in and of themselves have not been -- if you look at total ACV and the acceleration in total ACV, that is not driven materially by migration. That is driven by clients continuing to expand their use of Pega. However, migrations are going to drive the term ACV and associated term revenue down over time. And you haven't seen that -- this year, you're going to see term license revenue be up year-over-year because of the large revenue that we had -- sorry, term revenue, sorry, if I said ACV, term revenue will be up year-over-year because of the large amount of revenue we had in Q1. But if you actually look at Q3 and in Q4, we see that term revenue kind of coming down when you compare year-over-year so you are going to see that. And that is a reflection of the movement to Pega Cloud. But overall, our growth is being driven by more spend with our clients.

[Operator Instructions] Your next question comes from Rishi Jaluria with RBC Capital Markets.

Nice to see continued strength in the business. I wanted to start by maybe thinking a little bit conceptually about Pega's role in this new AI ecosystem, broadly speaking. Alan, I know we've talked about this concept before, right? But as every kind of vendor and stack is building agents, one thing that we really haven't seen anyone truly crack the code on is the ability for someone to be kind of a neutral middle man and handle the agent orchestration layer, right, and allow a lot of these agents to work with one another and especially at a time where MCP is still in its nascency and A2A probably even more so. Can you talk about maybe what potential role Pega can play in that in kind of assisting all these agents across so many different stacks? And then I've got a quick follow-up.

Sure. So if you talk about orchestration or you think about it, and maybe I'll take a moment and explain how we think about it. There are a couple of aspects to it. One aspect is the technical connectivity orchestration, like how does one agent call another. And things like MCP and A2A actually are pretty good already at being able to make it so that if somebody else has an agent, I can call it, and I can have it make sense. And we're doing that all the time now as part of how we execute. But the other part of orchestration is not just the kind of connectivity, it's the logic. I mean orchestration is about getting things done as I think about it. It's not just about connecting things. And the important part of getting things done is getting them done in the right order in the right way and connect them to the right things. And that's where, to us, workflows come in. So when we look at our -- when we look at others, look at Microsoft, look at Salesforce and ServiceNow, they're allowing an agent to orchestrate or they're allowing their fabrics as everybody uses that term too to orchestrate using an LLM for control. And as I said, the problem with that is particularly if you have agents calling agents or a fabric calling agents, the [ data good back ] is sometimes subtly different. And the LLM can go down different paths. What we say is, hey, figure out what you want the orchestration to be for the different types of work that you do everywhere you can and hesitate to call the LLM for reasoning at run time, make it so there's a reliable workflow that does the orchestration. And look, there are different use cases where this will matter more and matter less. But for the use cases where predictability is important, I think this is a huge, huge distinction and something that we have as a structural difference as opposed to just something that we could say, well, we're a little ahead or a little behind. It's not. We've taken a path that I think if you think about it, it is going to make a lot more sense for orchestration and for reliable predictable execution. So we've got to get that message out there. And we're seeing the customers can hear it. Not a lot. Though it's [ fair ] that everything in...

Yes. Got it. That's helpful. And then if we just think conceptually about growth drivers for ACV from here, clearly, a lot of it's been -- you had Blueprint as a potential driver of upside. But a lot of it has been within your existing customer base. If we think now about Blueprint and the lower barriers to entry, it feels like there really is an opportunity for net new logos to be a driver of -- a key driver of growth over the next several years. Just conceptually, just how should we be thinking about what that mix over time could start to look like? And could we see new logos be a more meaningful driver of future ACV growth?

Yes, I think you're going to see new logos be a more meaningful driver if our partner strategy is successful because by recruiting partners to be able to have their own powered Blueprints that let them bring their IP to their customers their way, it opens the aperture on who we would be talking to a lot. And it does it without us having to do all the heavy lifting of doing it ourselves. So I think that we're in the cusp of a huge set of changes here. But I think these changes as you think about next year and you think about where this is going, we're really pretty jazzed that we've got a lot of the stuff in the right group.

I think, Rishi, one way to think about it is if we try to scale new logos through a direct account executive covered model, we are limited with the logistics of scaling that organization, right? You have to hire people, you have to sign [indiscernible] and so it will -- that will still -- that will -- that could and will accelerate our ability to get new logos. But what Alan is talking about is an order of magnitude growth change is to leverage the 100,000-plus sellers that are already talking to those same organizations in our partner ecosystem to that's kind of where -- those are 2 both -- they're not one or the other, it's just that one has the ability to push growth much faster. The other one is limited by the logistics of us scaling it.

And that's why we have to do a great job for our partners to let them capture their IP and let them bring their story to a prospect here. And if we can be successful on that, it's, I think, extremely exciting. Hopefully, that makes sense. And I think we are at time. So with this, I'm going to thank everybody for attending. I want folks to know we're working real hard for you, and I look forward to talking to you after we wrap the year. Thanks.

Ladies and gentlemen, this does conclude today's conference call. Thank you for your participation, and you may now disconnect.