Hello, everyone. Good afternoon. My name is Ryan, Vice President of Investor Relations, and it is my pleasure to welcome you to Navigate. Thank you so much for taking the time to be here with us today in person, and thank all of you who are joining us on the webcast. Today is all about giving you a glimpse into the future of where Navan is going, why we are positioned to win, and how we are driving durable and profitable growth. You're gonna hear from three of our leaders today, beginning with Ariel, who's gonna share our vision and why AI is accelerating that vision. We're gonna hear from our President, Michael Sindicich, who will take us through our go-to-market motion and all of the amazing momentum we have there.
Finally, we'll hear from our CFO, Aurélien, who's gonna wrap up with some financials and how our model is durable and high return. We'll finish off the day with about 25 minutes of Q&A. The entire executive team, Ilan's gonna join us for Q&A. It's gonna be a great day. Before we get into it, I have to draw your attention to our safe harbor statement, and let you know that we will be making some non-GAAP statements today, which are reconciled at the back of this deck, which you can find on our IR website, posted shortly after this event. Now, without further ado, I wanna introduce you to our CEO and Co-Founder, Ariel Cohen.
Good day to you. Hey, so exciting to have you here. The main reason we met a lot of you know, in the past, NDR, roadshows, post, kind of NDRs. You never had the opportunity to see our community. This is really all of these customers and prospects and suppliers and our team that are out there. This is actually special for us. This is us really showing you what Navan is really all about. That's exciting. The other thing that is exciting, we're gonna go way more under the hood today. You're gonna get to know our business better than probably we've explained it in the past. I'm excited about that.
You know, I always like to talk about this kind of statement when it rains, Navan shines. This quarter, you know, besides COVID, I'm putting COVID on the side because this was off the chart, was the quarter with most interactions that I've ever experienced since I started to be in this business. We had a TSA shutdown. We had two major storms, you know, in the U.S. Lufthansa strike, Dubai Airport going down, which, you know, is major hub. With all of these interactions, the first thing, we didn't see any decline in business travel. We didn't see spike on cancellation. We didn't see actually changes to what we were expecting to see from a numbers perspective.
We think that this is unique for Navan, and we think that there is a reason for that. We know how to support it. The orchestration between Ava, this is our entire AI framework, the ability to take more than 55% of the interactions with AI, but then combining it with human agents. You cannot solve everything through AI. Combining it perfectly, orchestrating it with a human agent, creates a situation that our travelers are staying happy while they are in the middle of Newark, where all of the flights got canceled. What do you do? They are not canceling their trip, they are rebooking it. You cannot do that if you're waiting 3 hours in the line waiting for the airline to pick it up.
If we solve issues with minutes, you're gonna stay with us, you're gonna rebook your trip, you're gonna continue, you're gonna be happy, and you're gonna bring more customers in that will tell this story. Business travel is so, so important, and we are able to support it no matter what is going on there in the world. Which leads us to our mission. Our mission is really to make travel easy for every traveler by being the best travel agency on the planet. This is what we are building. We are really at the beginning, when we are talking about the best travel agency on the planet, and you're gonna see us delivering more and more and more services to this industry everywhere. You can see these are, you know, previous quarter.
The team needs to kind of train me to remember the previous quarter numbers because obviously, we are about to announce our new quarter. But really amazing numbers, and I'm always pointing out to CSAT and NPS. This is what drives everything. When our travelers, when our customers are happy, we see more bookings, therefore, we see more revenue. You can see that we added significant amount of customers last year. GBV got to $9 billion, and we are growing extremely fast and you're gonna continue to see this coming from us. Why is this? We talked about it in the past, but it is very, very simple. First of all, we think about our customers. Our customers think about where their employees are. They think about compliance, they think about policy.
The icing on the cake, we are saving them money. We are saving them in average 15% on their entire travel budget. Just to give it in perspective, a company in the enterprise space that is spending $100 million on travel will save $50 million from their OpEx on travel. This is not by giving them some discount, by giving different booking fees. This is real money that their employees will spend less when they're using Navan. It is extremely significant for our customers. The user, the traveler, the EAs that are so important on the actual thing, on being here in person, they love it because they participate in the savings. It takes no time to book your personal trip, 7 minutes in average, and minutes or seconds to get support when something happens.
Just to give you an idea, in 30% of the cases, a trip will get changed. You don't want to spend days and hours of changing these trips. With Navan, you go, you start to talk with Ava, you are quickly changing it. The last thing, suppliers, and you're going to see a lot of them here in the conference. You know, suppliers in the travel industry, usually you have this fight. Google it, you're going to see endless amounts of fights. In the case of Navan, really deep suppliers relationship. There is a reason for that. First of all, we have access to the best users for these suppliers. They love business travelers. That's the first thing. The second thing, we know them. We don't have just a connection to these suppliers. We know them.
We know them at scale. We know them online digitally. This is super important for airlines, hotels, rental car companies, and so many other suppliers. This win, win, this drives this entire platform, and that's the main reason that we are growing so fast. I know that AI is a big thing, so we've decided to actually drill down a little bit more to AI because I know that all of you, and definitely the market, wants to better understand it. We in the past took a lot of time to explain our connectivity. This is how we are connected to everything. If it is out there, Navan is connected to this. Now, we are connected to this in real time online, which means that we don't have agents that are calling an airline in Brazil to get the right price.
What we do, we are connected to this online. It allows us to later apply AI to this. The second thing, we are connected to the entire FinTech layer. It means that we are connected to banks, we are connected to aggregators, that we are connected to the ability to run payments for travel at scale in the smoothest way possible, which allows our customers to get the best automated reconciliation, removing a lot of mess from them. This is just the back end, the thing down there, that by the way took us more than 10 years to create, and we are still creating it. It's a never-ended story.
This tons of entire AI layer that allows us to create that service, the seven minutes that I was talking about, that it takes no time to book, sorry, to rebook you, and many more applications that you're gonna see us releasing soon. It starts with our own model. Today, 30% of our calls are actually running on our own model. One month ago, it was 20%, so grew 50% in one month. It gives us way better service, which means that you're gonna see it in more deflection. Later, you're gonna see it in gross margin. As we are using our own model, you're gonna see us becoming more and more efficient and more and more relevant. Another important thing, it will be cheaper, right?
You're gonna see us over the years going directly to our own model. The second thing, Navan now, and it was a three-year experience, is a complete agentic platform. When you are booking a flight, you are using our flight agent. When you are booking hotels, the same. When we've developed a restaurant capability, which is new, completely agentic. On top of all of this, if you look at Ava is kind of an example of kind of the super agent that supports all of these other agents and know when to call an agent. This is very important, and this is Navan Cognition.
The ability to know seamlessly when we are using a human agent, when we are using somebody that works in operation, when we are using an AI agent, and make it seamless to the user, that's the entire magic here in this platform. The orchestration there, I would argue that's actually the magic of everything because creating agents, a lot of people can create it. Creating a, a model, this is very unique to us because we have our own data. Connecting to all of this, nobody is doing it, and super hard to do. The orchestration of all of this is the secret sauce. How do we present it? We present it in something that now we call Navan Classic. This is the Navan that most of our customers are using.
There are agents that have already introduced their store functionality that we call Book with AI. The place that we are really showing off with these agents is in Navan Edge. I will, for the first time, show you a demo of Navan Edge. Very soon you're gonna see it in new products. One of them is Headless TMC. Headless TMC is us delivering us everywhere, no matter how you want to consume it. This is not some, you know, I know that a lot are talking in the industry about headless. This is not some theoretical project. This comes from our customers and partners. Some of our customers, definitely the more cutting edge, would like us to deliver Navan, not to a UI, but to a headless functionality. Same as partners.
Really, I would say the future, and we are really at the beginning there, and Ilan and I keep having this debate, if it's the future or if it's ready, like, in a week. We'll continue to have this debate. I think it's in five years. Ilan think it's in five days. Really, travel flow, which is basically an agent that will just figure out everything for you, automatically. All of this together, this is really, you know, Navan in a nutshell. What does it give us? First of all, the ability to accelerate sales. Because of our AI functionality, more and more customers in an accelerated pace are joining us.
You saw we said last in Q4, we told you that we grew GBV by more than 50%. We think that this kind of momentum will continue. Supporting with Ava and continue to raise the deflection towards the 60%, the 65, the 70%. That's something that you'll see from us. This alongside the conversion of Reed & Mackay into the platform will show you a completely different gross margin profile from Navan. Then the delivery. I've mentioned it in the last call that AI accelerates us. As a tech company, we can now develop more faster, releasing more stuff. Things that were in our roadmap for the next 5, 6 years are on this slide. We talked about Headless TMC forever. It's now on the slide.
We talked about Navan Edge. It's now on the slide. You're gonna see so many things coming from us because you can actually develop stuff faster. When you do it on our platform, you get this entire travel agency delivered through so many things. We are definitely excited about that. Now probably the most exciting thing, I like to do demos, but this is a recorded demo. Maybe next time I will do a real one. I'm gonna actually show you what Navan Edge is all about. I know that I shouldn't have clicked on it, right? Okay. Okay, this is actually Navan Edge. Here I'm actually booking the trip to this place, to Navigate. What you're gonna see is that the system figuring me out, they know that I like United.
They know about the conference, the dates, everything. They know the destination of the conference, they are now aligned to orchestrate the entire trip. Book my flight. The system will tune to United because I'm a United Global Services. Navan Edge is automatically connected to a wallet that we are creating automatically. We knew that you are United Global Services. We know that you are Marriott Gold. We know all of this automatically. The trip will completely align to this, to your past trip, to everything that we know about you in our memory. Super, super easy to book. What you can see here is this combination of a ChatGPT kind of experience with real-life things that you need. For example, selecting your seat. For example, selecting the right flight for you.
I actually think that we are the first one to figure out how to combine chat with real-life objects to actually do something that makes sense for you. This is actually an example of a flight, and now we're gonna see hotels. The system will recommend the five hotels that are relevant for me based on what I care about. I care about loyalty, based on this location, it will even highlight the fact that there are events right now in New York, book it fast. Will give you your Marriott points, will give you Navan points. Basically, really driving a loyalty here. I think where it comes super cool, you'll see it in a second. I had an extra day last night, that was something that I planned last week.
I'm asking: What can I do? You know, I have a free evening on the 12th. What can I do? The system will actually, now you can see that we recorded it last week, recommend to go to the Knicks game, but the Knicks game didn't happen because we won last week, so of course, no 5 game. You can see the point that it will know the event. It will suggest to book them. Instead, I actually want to go for a restaurant. It will book the restaurant that is relevant for me in this area, in the location of the hotel, based on the type of restaurant that I'm booking, all of this in my face. The last thing, proactive, summarizes everything the day before the trip. This is my trip. This is my loyalty.
This how long it will take me to get to the airport. This is everything that I need to know about this trip. It will keep updating me. Keep updating me means that if something has changed about the flight, it will not be a flight notification. Ilan and I used to call it a fuck you notification. Your flight got canceled, then what? It will be, "This is the notification. This is what you need to do about it. This is how we're gonna change your flight. This is how long it will take you to be on the TSA line." Everything that you need to know. This is really Navan Edge. It's cutting edge. It's something that we are super excited about. Released it three months ago. See good traction there.
Many good things are going to come there, which eventually brings me to what we are trying to do. We're going to be everywhere. We're going to do everything. We're going to do it globally. If you want to be there, and it's important for you, we're going to be the agency for you. With that, I'm going to invite Michael. Michael will actually explain to you how do we sell Navan. Thank you.
Great. Great to see a lot of you guys again, and for the people on video, hello. I'm Michael. I'm the President here at Navan. I've been at the company for a little over 10 years now, since we were a little less than 10 people. I've been along the journey for a while and kind of know a lot about the inner workings of how we do things. I'm responsible for basically how we go-to-market as a company these days. Changes every once in a while. As the team has mentioned, and we all know this, it's a massive TAM and a big opportunity for us to take that we are at the early stages.
What the team asked me to do today is walk you through a little bit about how we go-to-market and how we think about continuing to penetrate into the industry. You've probably seen this before, but as we kind of talk about how we attack customers, right, we really think about it in two different segments. There's what we call managed business travel, companies that have a solution today, and unmanaged business travel. The way that we think about this is typically the larger the company, the more likely it is that they have a managed travel solution today. The smaller the company, the more likely it is that they don't use something today. When we attack managed business travel, typically it's through our go-to-market channels called SLG or sales-led growth.
Today, that's for companies that are more than 300 employees. We deploy a salesperson. We've got three different segments: commercial, mid-market, and enterprise. We'll get into how we distribute the sales team across the world. When we think about unmanaged business travel, sometimes it's sold by sales-led growth because we have that 300 employee and above goes through SLG, we might find a company that has something but doesn't really use it or doesn't have anything at all. That's kind of the DIY, we do see mid-market and commercial companies sometimes that have just scaled really fast and didn't have a solution in place. When we think about the SMB or companies that are below 300 employees, typically unmanaged, we attack that through our PLG motion or our product-led growth motion.
Sales-led growth is a more traditional top-down approach. We go deploy a salesperson, do some account-based marketing. We go target the CFO, sell the CFO or the travel manager, the expense manager, they deploy our product throughout their employee base. On the PLG side, it's more performance marketing ads, TikTok, Instagram, targeting admins, who will sign up, create a policy, self-serve, start using our product to manage their travel, we'll get into that as well. Edge, obviously, which Ariel talked about, is much newer. That's our way to get to frequent travelers. They might be at a big enterprise company and hate their solution, they can come and use our product. They might be at an unmanaged small company and need something to help with their business travel.
When we think about how we separate the teams or how we go-to-market across the globe, we've got these major offices. San Francisco, Austin, New York City, Paris, London, Berlin. Boston was a new office that we added earlier this year. That one we see really exciting things coming through that office and we'll continue to scale it. The breakdown from the sales team or the go-to-market team is above. Sometimes I get questions about, you know, how do you distribute the teams? What positions? We wanted to give a bit of a breakdown here. There's acronyms, by the way, it's typical of a traditional kind of software sales team where you have an SDR, a sales development rep.
The AE is the account executive that's actually doing the demoing and the selling. We have solutions architects when you need to get into the details of ERP integrations and really complex travel, nuances. On the marketing side, right, we do field, demand gen, product marketing, and brand. On the operations side, this is really revenue or go-to-market operations, so you can see the functions here. In account management, the main functions are customer success, so managing and implementing that customer after it's been sold. And then consultants or solutions consultants that also have specialization in the various products that we sell so that they can implement and get into the details there. One really cool thing that we've been doing is product-led growth allows us to scale globally and test out how our products resonate in the market.
It's as simple as saying, "Okay, let's translate the product. Let's make sure it works for that market. Let's go deploy performance marketing ads, and if we see a lot of success there, great. Now let's go put a top-down sales team in that region and continue to grow." You know, we expect to continue to scale globally. PLG is kind of everywhere and attacking different markets all over the, all over the world. When, when we think about the sales-led growth sales process, Grant's here. Grant's our CRO. He's done an incredible job to build a repeatable sales process across the globe and all the various offices that we operate from.
I can talk to a rep in Paris and say, "Where are we with this deal?" If they say, "We're in CI," I know we're identifying a champion, I know we're doing disco meetings, I know we're starting to do demos to various folks. The essence of this is basically we have stages for every single sales process. The larger the customer, typically the longer the sales process is. The smaller the customer, typically the faster, and we can get through these gates really quickly. Our sales cycle on the SLG side is roughly two to nine months, depending on, again, size. Once we sell that customer and sign the customerThen what we do is we start launching and implementing that customer. We launch it, and then they ramp up until they get to full ramp or terminal velocity.
During that launch process, whatever we haven't sold them during the sales process, we start the upselling motion. Maybe they bought travel. "Hey, you're implementing, why wouldn't you just use our travel payments?" They bought travel and travel payments, "Why wouldn't you use expense?" "Hey, let's talk about our VIP services." By the way, now that we're working with your team, do you do meetings and events? We can align with that schedule and start selling our meetings and event services. That's kind of the sales-led growth approach. The interesting thing is, you know, what we invest in sales and marketing today takes time to show up in the actual financials because we need to sell, launch, ramp that customer until they get to terminal velocity. I think Aurélien will talk through some of that as well.
When it comes to PLG, product-led growth, think about that similar type of sales process, but things happen in days or hours and not actually weeks or months. It's very, very AI-based. It's all performance marketing ads. It's not field events. It's all lead targeting. It's GEO, it's SEO, and it's really smart, personalized onboarding for the types of people that are signing up for the product. We know your industry, your field. We can organize the product in a specific way. We can handhold you through our AI help to be able to onboard your company, create your policies. We'll suggest policies for you, add your users, integrate your HR system, turn on your SSO, and really be on your way ramping.
You know, we've talked about a few case studies or stories where a company like Anthropic might have signed up through our PLG motion, and what happens is as they scale, we then graduate them to our sales-led growth account management to then work on continuing to manage the program and upsell more and more products to them. It's a beautiful motion, actually, for the company to capture these fast-growing companies that then we can bring on to more managed services. I think one thing that we talked a lot about during the last earnings call is our RFP volume. Typically, a mid-market or an enterprise company will likely do an RFP, a request for proposal, where every couple of years they reach out to a bunch of companies and say, "Hey, tell me about what you do.
I'm gonna learn about this space because I'm in procurement. I don't study travel all day long, and I wanna see what else is out there and if I can make improvements to my program. We get these RFPs, and sometimes companies are doing it because they might wanna negotiate a better fee with their incumbent. They don't have a real reason to switch, or it wasn't in their head that they were gonna switch. A lot of times it is, we're gonna make a change, and we need to see what else is out there. This is a very, very interesting leading indicator to see if there's more activity and more sales that we can be driving by the growth in RFPs.
I think over the years, as we've continued to scale globally, to go upmarket, to create more buzz about the company and have more active champions, more people are reaching out to us to understand what we do, which gives us more at-bats to go and sell them. Why are we getting so much more RFP volume these days? I kind of break it down into a few reasons. Number one, we are the AI-led T&E platform in the space, and all travel managers, expense managers are getting, you know, orders from their leadership to start leveraging AI to be able to drive more efficiency in their operations. That means that you must look at Navan. We see a lot of consolidation in the space. You guys obviously study the industry.
I don't need to tell you what it is, but there's a lot of consolidation, which then means, okay, I need to see what else is out there, because, you know, I don't wanna go with whoever just got bought or this or that. When there's changes in the space, usually people are opening up to see new solutions. I talked about our support and product continues to improve and move us upmarket. For those of you who are on video, you probably don't see this, and for you guys here, hopefully you do see it. We do really interesting events like this. Today we have customers here, 320 at Navigate 2026. 320 customers that spent last year $2 billion of GBV on our platform.
We have 120-plus prospects that are here with these 320 customers that are talking, having drinks, doing breakout sessions with us, sharing about their program. We had on stage earlier, Ofer, our COO, had an open conversation with the travel managers at GE HealthCare, DoorDash, and MUFG, talking about the success that they've had with their program. When the people who are prospects that we're trying to sell to are sitting there eating this up, talking about how amazing Navan is and how great it is, that just helps us sell more. We see that word of mouth, really, really getting out there, which then kind of goes to the integrated marketing that we're doing.
I definitely think that there was an IPO and a brand effect on our name, which got more people to pay attention to us, which was a great branding event and something I'm really happy that we did. If you look at our customer base, you guys have seen the slides, relatively diverse across the industries. We'll break it out for you, I think for the first time in a very ever, probably. 38% of our revenue comes from outside of the U.S., so international customers, so good diversity there. No single customer makes more than 2% of our platform revenue, so there's a good distribution there. This is the breakdown of our revenue from the customers from different industries. You know, tech was the big one.
If you were to ask me five years ago, I think the tech portion would be pretty big because, you know, new startups buy from tech companies and they buy from each other. You can see we're expanding quite a lot more into professional services, manufacturing, finance, media, and all in other industries. That will continue to diversify as we go and as I look at the pipeline coming up. The other piece is, and Ariel mentioned this, but we are becoming more efficient. One of the biggest metrics that Grant and I and Erica are always looking at is how much sales and revenue does a salesperson generate now versus some time ago. It's called productivity of an Account Executive.
If I sold, you know, a dollar of revenue last year, how much do I sell this year? That year-over-year AE productivity is up 50%, which, you know, it's hard. Like, no one can plan for that or, you know, it's really interesting to see such a big increase in productivity. Why is that happening? Again, we are investing more and more in the enterprise segment, so moving upmarket, which has very strong momentum, and it has a very high return for us. We expand more efficiently, so I don't need to start a big office and get a bunch of salespeople and management layers and SDRs and open up a region. I can test it first with the PLG motion and then decide if it's a good place for us to go.
We're leveraging more and more partnerships. In a lot of our sales today, it's not just our salesperson selling. We actually involve the ecosystem to be more efficient and to be able to penetrate into the account. We talked about the brand impact, and the other thing that we're spending a lot of time doing is actually setting up the deal so that it can launch and ramp faster. What we do is we start bringing in account management earlier in the deal cycle to make sure that the customer is ready to go. We've aligned everything because the faster that we can launch the account, the faster we can get revenue onto the platform. In the end of the day, we have all these inputs. We've shared a few things.
Ariel mentioned this, in Q4, year-over-year, we sold new GBV more than 50% than we did the year prior, which we think is a very, very good sign. We see the explosive R&M growth. We said 200%+. Our average deal size and our win rates are increasing year-over-year, which is great. When it comes to the PLG side, our revenue more than doubled in FY 2026, which is a really good sign we're onto something here, and we'll keep on scaling and investing in those products on top of the launch of Navan Edge. We think all of these things create a really nice flywheel effect for us to continue to scale quickly and grow our revenue. With that, I think I'll pass it to Aurélien to get into the numbers. Thank you.
Hi, everyone. Can you hear me? Hi, everyone. Very glad to be here. I'm Aurélien Nolf, the new CFO of Navan. I joined the company two and a half months ago, not 10 years ago like Michael. And I've been, like, amazed by the pace and the momentum, the energy of the team. Like, so far it's been a really amazing journey here. We are hosting this amazing event for our customers today, and I thought it was a great opportunity to also bring the investor community to the table to just see this momentum and give us a chance to also elaborate on our story, on our business, and how we are making money, right?
At the end of the day, this is why we're here, just to tell our story and explain to you what Navan is made of, and why we are confident in our future and in our growth. I'm gonna start with, you know, the very basics, like the model itself. How do we make money as a company? It's a very simple equation when you think about it. We have gross booking volume, so people booking on our platform, and that was a record high of $9 billion in fiscal 2026. We have a usage scale, 7% in fiscal 2026, and that gives us a usage revenue. On top of that, you can layer on some subscription revenue. That gives us those $700 million, another record high, in fiscal 2026.
What's really great is we are monetizing across the board from our customers, from our suppliers, from our payment providers, across travel, payments, and subscriptions. A very, very diverse model. What I think is not really well understood is the fact that most of this revenue is usage-based. That's very important because what's at play here is not a SaaS efficiency model, right? The revenue we are generating is gonna scale with the activity of our customers. That's very important because that's what incentivizes us to keep innovating, coming up with the best platform and the best experience for our customers so that they book more travel on our platform. More and more customers are joining the platform, and we essentially make more revenue at the end of the day as a company. That's really what helps us protect our moat in our business.
Looking at the way we generate that revenue, I don't think it's also very well understood, and I wanted to take a minute here to really explain that. What's super important is, and you can see here in this dark blue part of the pie chart, is the supplier revenue. That's actually the largest part of our revenue. That's how we make the most money as a company. Think about this as all the commissions we are getting from our suppliers, our partners, airlines, hotels. Every time we generate some bookings on the platform, we get some revenue from our suppliers. That again, is the largest part of our revenue. Obviously, we are charging our customers as well through travel fees and platform access fees.
We are also generating some subscription revenue, mainly on our expense business, and that will be on a per seat basis, on an annual basis, depending on the customer. Lastly, we make revenue on our credit card payment business by getting some interchange revenue net of the rebates. I think the point I wanted to make here on this slide, the most important takeaway is that the majority of the revenue comes from our suppliers, not from our customers. That's why it becomes very interesting. It becomes very interesting because not only our revenue is diverse and, you know, we very strong, we also have a very high visibility, which also is something I don't think is well understood. When we start the year, we have roughly 90% visibility on the revenue we're gonna generate during the coming year.
There is a very easy reason for that. Like, three buckets of revenue for FY 2027 fiscal year for the guidance we just shared with you. The first one is the install base. We have a very strong install base, thousands of customers that have joined the platform over the years, and that are very predictable, repeatable patterns from a usage perspective. We see their bookings come in at a very consistent rate. The reason is corporate travel has been very resilient over the years. Like, companies need their teams to get together. They need to get to the sales meeting. They need to close a deal, and people are just traveling a lot. I mean, Ariel mentioned, even in the moments when we see a lot of disruption in the world, corporate travel has been very resilient.
That's just the install base alone that gives us a very, very high visibility on the revenue we're gonna get in during the year. On top of that, we add the customer we signed in fiscal 2026, right? Those large customers that have been, you know, signing a contract with Navan, this SLG population of customers, we know how fast they're gonna ramp, and I'm gonna come back to this in a second. That gets us to the 90% visibility on the revenue. On top of that, the sales team is going out there and, you know, we keep adding more and welcoming more customers to the platform, but most of that revenue is gonna show up in the future on our P&L. Again, 90% of predictability, that's why this usage-based model is so powerful.
Now let me show you how that compounds over the year. What I think is very interesting on this slide is to look at the different cohorts depending on when those customers joined the platform. What's really amazing is to see that the difference between a cohort when they join the first year and the second year is 3-5x from a revenue perspective. The customers are ramping through the sales motion. They are ramping up through the year, and again, in year two, their revenue is gonna be 3-5 times higher than in year one. You see those lines that are stacking up here, year after year after year, and that's where the model becomes very, very interesting.
We are lifting every cohort ahead of above the last cohort. The reason is we are signing more and more of those very important enterprise customers that have very large T&E budget and generate a lot of revenue. Adding on top of that, our net revenue retention of 107% in fiscal 2026 is adding to the flywheel and keeps improving the revenue for every cohort. That's why we are very excited about seeing those new customers joining the platform because that gives us this huge amount of compounding revenue on our P&L. Going to the gross margin. We are already operating with, you know, best-in-class gross margin. 73% in fiscal 2027.
That's more than 1,000 basis points of margin expansion over the last couple of years, which clearly is coming from our technology leadership. Ariel described how, you know, Ava has been making us very efficient in terms of supporting our customer. That's very efficient from a P&L perspective as those gross margin rates are showing here. This is not a ceiling. Like, we are not done. We see a lot of room for gross margin expansion in the coming years. There are three main reasons for that. The first one is we're gonna keep leaning into AI for support and for with Ava, right? We are automating the support service. We get great CSAT results every time Ava is jumping in to help our travelers. That's gonna keep us being very efficient as we provide support to our customers.
Ariel also mentioned the proprietary models we are using from an AI perspective, and that's very powerful because today, 30% of the volume is coming through those models. I think you also mentioned that it was just 20% a couple months ago. You see the adoption rate of our proprietary model jumping very, very fast. The reason why that's very interesting, not only from a customer perspective, because they get faster and more accurate results, it's also very interesting financially because the cost is way less than paying tokens to frontier models. The last input to this equation is the migration of our Reed & Mackay customers from their, you know, first-hand platform to the new Navan platform, which is going to increase our gross margin going forward.
That gives me a natural transition to the way our channel mix works here. On the last earnings call, we've been able to report amazing growth rate on the Navan core platform from an SLG and PLG model. We reported 40% growth year-over-year of the SLG revenue. 100% growth of our PLG motion, so we've doubled the revenue on the PLG. We also reported that the reason like our customers, this revenue base is only growing in the low single digits. What's great is we expect that to keep being the case in fiscal 2027 and beyond, which is going to give us further tailwind from the growth margin perspective. The durability of our top line growth and the margin trajectory here gives us a lot of confidence in our future. Okay.
Now let's look at our sales and marketing expenses and why we are very appeased with the payback we are seeing every time we deploy a dollar of money in our sales and marketing motions. I mean, if you're here in the room today, you can see the excitement from our customers here. That's what we do with our marketing expense. What's really important for you to understand is the disconnect between the moments when we spend the money and the moment when the revenue is showing up on the platform. Michael mentioned that most of the spend from a sales and marketing perspective actually is incurred around or before the time when we sign a new contract with the customer on the SLG motion. Right?
When you think about it, we send our SDR or AEs to sell our product, then we pay a commission when the deal is up. We won't see any bookings on the platform usually before two months after they sign the contract. Right? There's already this natural gap of two months. After that, as I mentioned, customer need time to ramp and book all of their trips on our platform. That's usually something that takes anywhere between five and six months. I mean, the underlying unit economics we are seeing once a customer is fully ramped are really amazing, and they are very strong. That's why we see this revenue compounding over time and those cohorts of customers stacking up every year. The same is true with our PLG motion, right?
The timelines are compressed. It's way faster, right? Between the time when a customer is hearing from us on our marketing channels, there's only seven weeks before they are fully ramped. This is a very short payback that makes this sales motion very, very attractive from a financial perspective. In summary, from a sales and marketing perspective, we have a lot of front-loaded costs, but the revenue is compounding over time, and we are getting more and more efficient as we are scaling the business. Let me touch briefly on our R&D expenses. How do we spend money? How do we create this amazing platform that is in Navan? Here the productivity also matters.
I know Michael walked us through the productivity of our sales team. The same is very true with our R&D team. Our incredible team has been delivering more than 450 products last year, products and new features that have been launched across our travel, our payment, and our expense business. We're doing that with a very disciplined budget. 14% of our revenue was spent on research and development, which is really, you know, cutting edge from a R&D perspective and new products. We've been releasing a lot of new features and a lot of new breakthrough products, inclusive of Navan Edge. It was very fun to see the demo from Ariel earlier today.
The expense chat agents, we had the team here on stage this morning showing to our customers how this can really transform the way people process expenses. TravelClaw are also our audit agent. I'm trying here to put it all together, right? What are the five compounding levers that are going to help us really grow our business, expand our profitability, and grow our free cash flow over time? First of all, our ability to upsell and increase the attach rate of new products.
When you think about products like Navan Pro or VIP service, meetings and events, the payments, and expense business or leisure, all of that are not necessarily something that our customers are using from day one, but that's something we usually upsell over time and is an ability for us to increase our margin from those customers. I've discussed about how confident I am in our ability to expand our growth margin as well through the usage of AI and through Ava or the chat and support bot. From an OpEx perspective, operating expense perspective, I also see a lot of opportunities for us to generate some leverage over time. How are we gonna do that?
Well, we are seeing a lot of momentum from a sales and marketing perspective, we expect to see a lot of efficiency there and keep landing more and more of those very significant enterprise deals with those customers that have very sizable T&E budgets. We're gonna deliver some G&A leverage right through our infrastructure that is fixed. We have done a lot of investment to become a public company in the last couple of years, that's something we expect is gonna generate efficiencies going forward. I just mentioned our disciplined approach to research and development and how AI is gonna help us doing that in a very, very efficient way. Just to be clear, those five different levers are all additive, right? It's not like we're now gonna select between one of them.
That's what is gonna make our path to margin expansion and free cash flow generation very durable. That gives us a clear path to the future of Navan. Here, before we start the Q&A, just wanted to bring everything together from the beginning of this presentation to the end. What are our goals? What are our mission here. First, I will mention, very important, we are a travel agency, and we want to provide the best travel experience to our user, to our travelers anywhere in the world, everywhere they are. Super important to us. That's number one mission. You have to know that every time we have a conversation as a management team, we start with our NPS and our CSAT score. That's number one, very core to the mission of this company. Number two, we have a huge opportunity, a huge market.
Michael mentioned it's a $185 billion addressable market. That's the size of the pie. Obviously, as a business, we are only scratching the surface today. How do we do that? Well, we have multiple revenue streams that are driving the durable growth with a high visibility into our revenue for the years to come. Lastly, we're gonna do that very efficiently through a very efficient and high return go-to-market engine that has very attractive paybacks. I'm very excited to be here. Again, it's been an amazing journey for me over the last two months that I've been the CFO of this company. I'm really looking forward to everything that's ahead of us. Thank you for your time.
With that, I will ask the management team to join me on stage for some Q&A.
You're gonna bring water, right?
Yeah.
Okay, perfect.
I have mine here. I was planning for this.
Over there and then the center.
All right. Okay. We're gonna jump right into Q&A here in a second. A couple of ground rules. We're just gonna take questions from folks in the room. We have a couple of mic runners on either side of the room, so just raise your hand if you have a question, and say your name and where you're from for the benefit of the folks on the webcast. While everyone's compiling their questions, I am gonna get us started here with a question for Ilan. It's the first time we've gotten Ilan on stage, welcome. Glad to have you here.
This is a question I get all the time from investors, at conferences, on calls, and it is: what is it about Navan's infrastructure and technology that is really unique, really proprietary, and that acts as a moat versus, you know, existing competitors and would-be competitors that are thinking about coming into the space?
Yeah. Can you hear me? Cool. I think to answer this question, it actually first starts with just in our backend. Ariel spoke about it earlier. Agents can do nothing without tools. Okay, there's some operation going on here.
Need some water.
I'm the water engineer.
Exactly. Excuse me.
This is me.
Yes. Ariel is an MCP. It really starts with what we've been working on for more than 11 years now. We did not plan it to serve our agents when we
We get some echo-
Yeah, there's echo.
probably because of the mic.
Okay. I get distracted very easily. We spent 11 years building a lot of tools, as soon as the ChatGPT came out, we jumped into it really, really quickly. In 2022 November is when ChatGPT came out. In March was the first time that we had a proof of concept of an agentic framework that we built internally. We built it because nothing else existed back then. We called it Cognition, it allowed us to deploy agents in a mission-critical area like booking flights, upgrading your seat, talking to you about the refund. Areas where the cost of an error is huge. The only way to do it was in a reliable way. LLMs definitely back then, had so many hallucinations.
It was so inconsistent, it was biased, and. We built this agentic solution. Fast-forward to today, we are in a very unique position because we have been having agents, having conversations with users, real conversations about travel with tool usage since May of 2023. We today have a very, very unique dataset that no one else has, that we use this dataset to train our own model to deliver a more accurate experience because it is focused just on booking a flight or just on booking a hotel, or just on this determining whether the answer that Ava now gave is within our SOP, standard operating procedures, or not. This is really important. If we have employees or agents that provide answers that violate our SOPs, we fire them. It is really, really critical.
It's amazing because now that we have the data, we train the model, we get something that is largely 6 times faster than the frontier model, and we still are learning and seeing, and we improve it. It is much lower latency, as I said, much higher accuracy, and definitely much, much, much cheaper. It's also, I would just give you like something to think about. Now that we have our own model, it opens the door to even further enhancements and optimizations in the world of interpretability, which is something that we are investing now in, and it will allow us to fine-tune the model to perfection. We can talk more about it in some other conversation maybe. Super, super exciting. All of this together, I think is.
Super helpful, Ilan. Thank you. I would just note that Ilan is doing his AI keynote right after this. If you can, I would highly recommend sticking around for that. All right, let's go to the audience. First question over here from Samad.
Hi, Samad Samana from Jefferies. Thanks for doing this. Great to see all of you in person. I think a lot of the analysts in the room can definitely relate to all the travel, and I think Navan Edge is really cool. As you think about user experience, we all take a lot of the same trips every year, and to be able to build that knowledge and be able to easily ask based on preferences really resonates with me as a business traveler. I understand the value of the experience and how it differentiates you from a user experience standpoint. How should we think about what the opportunity there is from a monetization standpoint, right? Is it just that it increases either the velocity of GBV?
Is it something that allows new monetization opportunities with suppliers, where you'd get a different profile of the type of customer? Just help us think through what the value there is.
Okay. You too. I think first of all, the first target of Navan Edge is this frequent traveler that tends to go rogue. People that have United GS, you know, Delta 360, all of this. We have Shai here, that used to, you know, run Virgin, he knows this better, has this tendency to do whatever they want to. They can be in a managed environment, but they'll go rogue. They'll go and book somewhere. Navan generally, what we call Navan Classic, is pretty good on capturing them, but not all the time. Our competitors never capture them. We think that there is a great opportunity to hyper-service them, to really get to know them on the level of loyalty, on the level of their behavior. I always like to give this example.
I fly a lot from SFO to London, I'm obsessed with a certain service type, a certain BA flight. There are two types of flights. Don't put me on the other flight. I hate it. It's a certain configuration of business class, while the other one is amazing. You come to any system or to any travel agent, the travel agent will basically tell you that flight is not available. Navan Edge will continue to work for you on this flight. I will book you on the other flight, continue to work for you on this flight until I'm gonna get you this flight. For the top echelon, for the ones that really care about travel, I think 1K and above, this kind of use case is the only way.
If I can optimize your mileage while I'm doing that because I'm automatically connected to all of your i basically created a wallet. If I can give you extra rewards via Navan, this speaks the language of that kind of tier, the frequent travelers that will always do whatever is good for them. We view this as the huge opportunity, the ones that you make most of the money from. They tend to be very loyal while you got their loyalty. We think that only with AI you can give them the service that they want to. Of course, you can create some, you know, cutting-edge VIP travel agency, very hard to scale. With AI, you can scale it. This is what Navan Edge is targeting. I think that Navan Edge will become the future of travel.
I don't think it's the future of corporate travel. I think it will become the future of travel. You'll need more iterations. You'll need more technology development there. I am actually the product guy. I'm putting everything that I know, everything that I got on this product. I think it's the future. The ability to later deliver it, maybe through Navan Classic. There are already features in Navan Edge that are delivered today in Navan Classic. We kind of embedded them in the platform. To deliver it to everybody through a headless platform, I think will make Navan without a doubt the number one in the market. I didn't even say which market. You can imagine which market I'm talking about.
And, and-
Maybe financially, just from a monetization perspective, I would add that I share today for the first time that, you know, the vast majority of our revenue is coming from suppliers, and that's how we would monetize Navan Edge. That's mainly from supplier commissions.
Mm-hmm. Right here.
Thank you. Jared Levine with TD Cowen. I wanted to talk about the current state of travel cost inflation. Can you talk about how that will impact your usage yield as well as revenue? Is it a tailwind or a headwind?
Yeah, maybe.
Thank you.
Maybe I can take that. Yes, we've seen some disinflation in the market right now. In fact, since February, we've seen, you know, the flight on average, the cost of the flight going up double- digit, right? There's inflation in the market. I think we've all seen that it's more and more expensive to fly from one place to another. Given the way we make money, you know, that's good for us, you know, in the short term. Like, it increases the commission we are gaining from our suppliers. That's a tailwind. That's one way to think about it.
So far, we've not seen any meaningful price elasticity from a demand perspective. I mean, companies are craving in-person interactions, right? We keep seeing that with every customer we are onboarding. Those customers are very focused on bringing their teams together, on meeting their customer face-to-face to close a deal. Business travel has been very resilient. Is that, you know, endless? Probably not. So far we've seen a decent amount of inflation and no real impact on demand.
Let me take the next one from Chris Quintero.
Chris Quintero from Morgan Stanley. Thank you so much for doing this. It's been really helpful. I wanted to ask about the ramping of the recent customer cohorts that you mentioned. Really impressive to see that accelerating. Just curious from the go-to-market implementation standpoint, what are you all doing that's really driving that faster ramp of the new cohorts?
Yeah. First of all, it comes from a realization that we do not make money as a business unless our customers use our product. That's actually number 1. We also have a payment mechanism for the sales reps who sell deals where they make some of their commission upfront on the signature, but they make a very good portion of the commission once the account is launched. That incentivizes the sales rep to essentially do everything that they can to make sure that the launch happens fast, as fast as possible so that they make their full commission on the deal. We also implemented what we call Launch 2.0 internally, where every time that there's a deal, it needs to be validated by the account management team. The account management team gets brought in to the sales cycle.
They meet with the customer, they talk about implementation. We align on an implementation schedule and what needs to be done. That Account Manager is actually validating the GL of that account's data, how much do we expect them to spend on travel, that the deal is not doing a pilot, we're doing a full launch, what time we expect to launch the U.S. and then Europe and then APAC. We're aligning all of our incentives as a company to basically make sure that the account is, first and foremost, successful, and second, launches as fast as possible. Those are two of the things, but it all really stems from, like, we're not gonna make a dime if we get a signed contract.
We have to get the account launched and operating and on our platform, and then that account will help us be successful and go sell us to more companies.
I'll add something to this, which I think is important. In the PLG segment that you could see that is becoming significant, this is all AI. We basically took something that used to be human-intensive, and we are not talking there about SMBs with 10 employees. This is 50 to 300 people. 300 in some other organizations will be considered enterprise. We know how, through AI, to sell to them, to onboard them, to do customer success to them. This completely accelerates, you know, the entire thing, the entire launch, fast to get money and also makes it in a cheaper way. These two together are keeping improving the, basically the average of time to make money.
Let's go to Jed here in the front.
Hey, Jed Kelly, Oppenheimer & Co. Thanks for doing this and excited to see some of the product demonstrations after. I think you had a stat that your RFPs are inflecting up 200%. Can you talk about the underlying drivers there? Are you now involved in every big travel RFP that comes up? Can you give us the reasons, like what happens if you don't win, and when they come up maybe three, four years later, how those conversations are going? Thanks.
Yeah.
He's next to the right guy.
Yeah. I talked about some of the drivers. It's brand impact. It's customers saying, "Hey, you really got to look at these guys. They transformed my program. They made me a hero internally, and now I'm promoted," right? It's a lot of that. It's the scaling of the company. It's the narrative now is that, "Oh, actually, Navan can support a Visa or a GE HealthCare globally. By the way, they launched me in just a couple months globally." That type of narrative has shifted in the industry. You know, we were not in every RFP, and the person who told us that ran a consulting firm for these big travel companies, and she was helping run RFPs for them.
A woman named Kim Hammer, we just hired her and said, "Okay, you know all of the big travel companies. You know their consultants. We're not in them." She said we were in about one-third of them. We hired her, and we're hiring more Kim Hammers, and we're getting out there at the local chapters and the GBTAs, and we brought Navigate, our big event. I'd like to think that we are in many more of the RFPs. I mean, if you are on a BCD or an Amex and you're going to an RFP, it would be, at this point, irresponsible not to look at Navan. We IPO'd. We're growing fast, way faster than the rest of them. There's gotta be something good here.
By the way, our sales team has probably hit up you and your boss and your boss's boss and the CEO 20 times by now. I think that we're getting more and more into a lot of these RFPs. What happens when we don't win an RFP, the very vast majority of it is because they decide not to change. It might be that they did an RFP to lower their fees on their current incumbent or to threaten their incumbent to try to get them to do something or to bring on a new partner in a new country. That is why we would lose. It's very rare, very, very rare that we would ever lose an RFP from one big TMC to a different big TMC.
'Cause those two things are basically the same thing. You're using Concur, you switch the agency underneath, it's still a crappy solution.
I think that could be the technical answer that is very relevant to our go-to market. I think there is another thing that is changing. The entire market is changing. You know, we talked about AI all day long. AI needs to start with online. We are basically competing with calling a travel agent. It is very strange to expect your employees today to tell them, "Hey, send an email," and get after 24 hours this is the trip after all of the flight availability has changed or the prices. I think there are actually probably a year ago, there was an inflection point in the market. People want to see something else. Business travel is important. Your travelers are important.
I think more than just the mechanics, I think the market has changed, and it's really played for our favor because nobody else in the market is doing it, so we are in a very, very unique position.
Let's go to Scott in the back corner there.
Thank you. Scott Berg here with Needham & Company. How should we think about your monetization of customers by industry that they're in? I know the general rule of thumb is larger customers tend to have a slightly lower take rate than smaller customers because of pricing concessions. We get some questions, and we've done some work on how to think of this by industry, because in some industries, a customer might only stay at a 2-star hotel. Yet in some industries, customers only stay at 4-star hotels. The monetization on a 4-star hotel is usually better than two, as an example, right? Because the pricing is higher. Even though the take rate might be higher, the price is twice as big. Your monetization obviously is twice as large in that scenario.
I don't know if you've cut the data in by that type of vein, but it'd be wonderful to hear, you know, what industries actually drive the highest absolute a dollar in terms of monetization?
I think, you know, our strategy as a company is to bring GBV up as much as we can because this is about taking the market, taking as much market share as possible. In fact, Navan historically is not that strong in a blue collar and what you are calling 2-star hotels, but I would love to be strong there. I would like to take the entire market, It means that you'll have different yield characteristics for different segments, different verticals, different geos. We're gonna take this entire market. That's our plan. You're gonna see us operating throughout the market. In some cases, it means 2-star hotels, which may be actually usually higher yield on these hotels, but to your point, smaller ADR. In some areas, lower yield, but much more expensive ADR.
You're gonna see us playing everywhere, and you're gonna see us continue to drive GBV faster than the rest of the thing, but you can see the revenue continue to grow up very fast. Our plan is to grow GBV as fast as we can everywhere.
I think that was awesome to see Michael share the diversity of our customer base right now is increasing. I think this is really, really important to us. As you know, there's a cycle in every single industry that have different, you know, pace. Being available everywhere and have a very broad customer base is gonna make our model very, very strong going forward.
Maybe just to add, when we look at a deal, we actually analyze what we think the yields and the gross margins would be, and we have something that is flexible, which is the trip fee. If we sell to a larger customer that has a lot of corporate negotiated rates, which means we would make less commissions, then we would typically charge more on a trip fee basis. The less CNR that you have, then the more yield that we make and stuff like that. We analyze it. I don't see many major differences that I can call out by industry. I see it by size of the company, which is, you know, what we've talked about before.
Let's go to Steve. Oh, sorry.
Great. Steven Enders from Citi. I wanna ask about just industry dynamics. You know, you have Amex being acquired by PE and focusing on AI-ifying their product stack. Just how do you kind of view what that means for the market moving forward and as they try to incorporate AI? What does that maybe mean for competitive dynamics? Thanks.
Yeah. I think first of all, I saw it as a huge compliment that they finally kind of having the language, right? That describes the vision that we've been basically sharing with the industry since 2016. I actually say welcome to 2026. That's the first thing. I think that the second thing, I think this AI will accelerate anything. You can take something that is fairly old, fairly antiquated, fairly offline, and you're gonna get some benefits by implementing AI. No question about it. I think it will take years, and I'm not talking specifically about GBT. Generally, I think it will take years. Basically, I think we are expecting to see efficiency from AI across every industry. Okay.
The benefits from AI for a tech company is going to be completely different because what these guys are talking about right now are the type of discussions that we had seven years ago in Navan.
The discussions that we are having right now in Navan are so different that by the time that a certain gap will get closed, we are today in a different place to what they are talking about. Okay? That's one thing. I think transforming a company that employs 27,000 agents worldwide, that you need to call to make a booking, or you need to send an email. You know, we talked about developing a model. Actually, I don't know how you develop a model from that, but to do that would be a really hard task to do. They will have their business goals from their TA firm. I think this is a huge opportunity for us because I think the first thing that will happen there is a huge degradation of service.
If I need to meet a financial goal and the AI is not going to give me that benefit that I wanted to gain, I think that Michael and Grant are going to have really, really nice lives in the next couple of years. I want to add something to that, is that we have our vision, and we execute, and we always believe that, and execute it again, bringing the best technologies in order to create the best experience and best product and best services for our users globally. There's been competitors. Some of them got some startups disappeared, some startups new startups showed up. Amex is being acquired. It doesn't change our vision. We continue to operate, we don't care. Like, there's new technologies, the pace of technology is accelerating.
Like, now there's OpenClaw, which is from January 2026. We do not wait for competitors to be behind us to say, "Now we need to push really hard." We already are. I already blogged about TravelClaw. I'm using it. We're going to release it soon. That's how we operate. There is market dynamics we cannot deny. It's there. It doesn't change our vision and how we operate.
Let's go to Aaron in the back.
Thanks. Aaron Huzyk from Truist. You guys really strengthened your balance sheet with the IPO. Is it thinking about kind of expense and payments cross-sell? Can you kind of frame for us how you're thinking about it this year compared to last year, any quantification would be appreciated.
Yeah, absolutely. That's one of the main benefits from the IPO actually, which is, you know, getting the balance sheet we need to really go after that opportunity at a fast pace. You saw in Q4 the volume of payments we processed on the platform was going up 19%, which was an acceleration versus what we've seen throughout the year. That's exactly because we had the right balance sheet, and so we could, you know, let the sales team go after that opportunity. I'm expecting to see an acceleration there. This is really interesting for us, right? When you think about us selling a flight or hotel room to someone, if they use our payment solution, then I'm just making more margin on the exact same transaction.
It's a very, very efficient way for us to extend our yield, extend our margin, also makes our customer even more sticky. It's a huge opportunity for us going forward, absolutely.
Let's go to Blair here in the front.
Thanks. Blair Abernethy with Rosenblatt. Thanks for doing this, gentlemen. Two questions for me. First, can we talk a little more about the cost of goods sale opportunity with the shift to AI and how much can you push that? Can you get, you know, well north of 90% servicing from AI in time? What does that mean to the model? The second question is just around, can you just give us an update on Reed & Mackay? There's been some changes you're implementing there and wanna see how that's going and if that's, you know, other M&A that might be still out there. You still feel that's an avenue for you at this point. Thanks.
Yeah. Maybe I can, maybe we can tag team here. I'm gonna start with your question about the gross margin expansion. We said today roughly 65% of the customer support interactions are deflected to our AI agents, right? As we've seen an acceleration of that over the last couple of years, you've seen a very steep expansion of our gross margin. You know, we're not gonna stop there. I think, and Ilan, maybe you can add here. I think we have a huge opportunity to deflect even more of those customer support interactions to our AI bot. The main reason is the technology is getting so much better, and we see CSAT scores that are on par. People are not even noticing sometimes between if they are talking to Ava or to a human agent.
I think we have an opportunity to get this to, you know, 60%, 70%, 80% of the time, which means there's a huge opportunity from a gross margin perspective. That's not just the only factor here. The other one is the usage of our own AI model. Maybe I would love Ilan here to explain exactly what we are doing. Today, 30% of the volume and the cost is significantly cheaper than using a frontier model. Do you want to elaborate here?
Yeah. I want to say a few things. Today, Ava does chat and only chat. We still have, I don't know, Ofer, correct me, it's like 30% of the incoming support contacts are still between email and voice. We already released voice internally, so you can call Ava and chat with her, and it works so well. And one thing that took us years to master, Ariel touched on it earlier. It's the orchestration between the AI agent and then the human agent. You'd be surprised. It's very complex. It took us years to perfect, because the last thing that we want is for you to have a conversation with an AI, and then when it takes you to a live agent, you need to start all over again. It's the most annoying thing.
It's like when I talk to some of the vendors in the U.S. and get service, it's like, what was the purpose of this AI? Just to annoy me more? Now I'm ready to talk to an agent, and I'm really pissed.
Representative.
I totally use the F-word. Yeah. We do now voice and we applied all of the learnings that we had from text to voice. The moving the conversation from the agent to the handover is perfected. It so works so well that the live agent can ask Ava before it gets back to the user follow-up questions. "Wait, did you say that the user wanted this hotel or that hotel?" "No, I meant this or that." "Anything else?" "No." "Okay, I'm gonna connect you now to the user." Amazing. It works so well. The second thing is email. We still have a customer that use email, and today we have agents. We are now starting to see how Ava It required even more adjustments than voice.
It was more complex because, not get into the details, but definitely we'll see an improvement in gross margin by deploying both voice and email. Now about the models, it's simple. It's, we have the data, luckily, since 2023. It's very unique data. Data of conversations with an agentic system that spits out its reasoning, which tool it needs to use, why, which parameters. Super unique data. No one else has this data in the world. We train the models on that, and then you have. The frontier models have anywhere between 1 and 10 trillion parameters. 0.1 trillion. The models that we use have 27 billion parameters. Imagine how much GPU power, and we host it. How much GPU power you need to power a 27 billion with versus 1 trillion. Imagine the latency.
Cost latency, it is so much more professional in that space. If you ask our models about quantum physics, you will not get the best answer, but we don't care. A ton of potential.
The Reed & Mackay question. First of all, we are only now, we have the technology that will allow to do that without upsetting a VIP customer that is willing to pay $150 to click. It's completely different thing, and also booking first class or a private jet and so on. This orchestration that we keep mentioning, only when we got it to a perfection we could actually allow ourselves to move to the Reed & Mackay customer to our platform. The reason that we are moving it is not a gross margin reason. It's because our customers, these Reed & Mackay customers, asked us to have a better booking experience.
For example, in a traditional travel management company, any traditional management company, and Reed & Mackay is similar to that, you have less inventory. There is no local carrier. There is no specific hotel. Very, very hard to book a train. Why these things are important? You'd say, "What? A VIP at C-level will want to use a Ryanair?" Sometimes, yes, because sometimes this is the fastest way for you in Europe to get to somewhere. Having this limited inventory, but I'm a VIP, is a problem. Also, coming and saying, "I always need to talk with an agent, and I cannot just book something quickly," it's a problem. Our customers, the Reed & Mackay customers, asked us, "Can't we get a hybrid?" You know, we can have an agent.
The agent will know us by name. Also, I can get from all of this goodness. First of all, what drove us is service, is what our customers want. Then there is huge gross margins benefit. It's a program that we run. We are running it slowly. The customers there are very mature. We've already migrated several customers. All of them are happy. It actually opened us to a new opportunity that we didn't think about when we planned it. There are some pretty big enterprises there that have been using Reed & Mackay for a success. Now it's an upsell opportunity. The benefits there are, first of all, this is what our customer wants. Second, definitely gross margins expansion. Third, a huge upsell opportunity.
For, very slow, we are very careful with this migration, but, what we see so far, we are very happy.
I think we have time for one more question. We'll take it from Gabriela in the back.
Hey, good afternoon. Thanks so much. We've noticed a trend with software companies where we sometimes see an incredible demo for agentic, but then when you go to the customers, the customer readiness is essentially, there's a spectrum of readiness. I guess my question to you is: How do you view your customer base's willingness and readiness to accept some of the newer generation technologies like travel flow and Navan Edge that you're previewing and generally available today? How do you close the gap between the customers that maybe are less forward-thinking about how they want their travel and expense experience to go?
I think it's a really, really important question, and I will actually answer it as a Product Manager. Yes, technology, AI is a technology. Nobody cares about it. It's not important at all. What's important is what it can give that user, that customer. Does it create value or not? The reason that we keep mentioning Ava, it's a no-brainer. I want to get my service faster. I want to get it in the most accurate way, and I want to be satisfied. Ava, which we started to develop three, actually four years ago, was in that context. It was to solve a customer problem. Our machine learning that is embedded in the platform that was developed in 2016 was developed to allow the seven minutes booking. This is to solve.
It doesn't come with an headline. This is AI. The reason that the search results are so effective is because of machine learning. The 15% saving, this is machine learning. The ability to Book with AI on an agentic platform, very, very relevant on the demo that I showed you earlier with Edge. Another area that is relevant on what we are calling Navan Classic, when you try to book multi-city, very, very complex things to do on an online platform. This is AI. We didn't come to the customer or the user and say, "Here is an headline. This is multi-city powered by our model." We are basically solving problems for our customers, and we know to deploy the relevant things for them on the right time.
If I will take Navan Edge right now, we'll make it the Navan Classic UI, we will not have customers. They are not ready for that. I think, I want to think that we are very, very good on knowing what is the value that the technology creates, when to deploy it. I'm like you sometimes, at all following some of the SaaS company's announcements. Actually, as a customer, I'm saying, "I don't want this." I don't want you to touch my self process that is working extremely well and start to introduce stuff that I don't need. I think it is very, very important to know what the customer wants, what the user wants, and come from that perspective.
If there is something that is fundamental in the Navan culture, it's actually the first value, which is all about the users, all the users, all the time. That's what drives us. Not AI, not a certain technology, not a model, not our growth margins. It's actually the customer, and we are really good on tuning this stuff to what they want.
I want to say one more thing about it. It's more about experiences and less about AI. Just one second. I just want to share one experience that we've seen. We invite some of our Navan Classic users to try a conversational experience with the agent. I've seen a conversation that the user basically said, "I want to book please book this hotel in New Delhi for me on the tenth." The agent replied and said, "Sure, I'll help you with that. However, I see that you land on the ninth. Would you want to book it on the ninth?" The user said, "Oh my God, yes, on the ninth. Thank you so much." That's the difference between an intelligent agentic experience versus forms and tables.
Thank you very much.
Well, that's an awesome place to end. Thank you all for your insightful answers. Thank all of you again for being here and for your support. Have a great day.