[DISCLAIMER: This is a lightly edited transcript of our Q1 FY26 earnings call, held on April 17, 2026. It has been reviewed by outside counsel, internal compliance, and the Brand & Tone Working Group. All three groups submitted revisions. Two of those revisions conflict with the third. We have published the version most generous to ourselves.]
Operator
(Mechanical, slightly too loud.)
Good morning and welcome to the EnshitifAi First Quarter Fiscal Year 2026 Earnings Conference Call. All participants will be in a listen-only mode. After the speakers' presentation, there will be a Q&A session. Participants on the call today are reminded that today's call is being recorded. It is also being transcribed. It is also being used for brand sentiment training by our AI practice. None of these processes have been opted out of.
Management on the call today: Chad Maximillian III, our founder, Chief Executive Officer, and Chief Extraction Officer. Also with us: Hamilton Breedlove, our Chief Financial Officer and Head of Investor Relations, who joined us in January from a boutique firm and would like it noted that he is speaking on a secure line.
Before we begin, please be advised that today's remarks include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and a half-dozen addenda our counsel has requested we reference specifically. These statements reflect our current views and are subject to risks and uncertainties which are described in our most recent Form 10-Q as well as in a second document that exists and is available upon written request.
(Pause.)
I will now turn the call over to Mr. Maximillian.
Prepared Remarks — Chad Maximillian III, CEO & Chief Extraction Officer
Thank you, operator. Good morning, friends.
Let me sit with you for a moment before we walk through the numbers.
There is a particular kind of quarter that comes along once in a career, and Q1 was one of them. Not because anything spectacular happened at this firm — it did not. We did the work we do. We did it quietly. We did it well. What happened in Q1 is that the world — the sector, the commentariat, the newspapers most of you read on your way in this morning — finally began to describe, in its own words, the thing we have been doing for our partners all along.
That is a rare gift in this profession. For most of my career I have been a year or two ahead of the conversation. It is the lonely posture of the practitioner; you learn to live inside it. This quarter the conversation caught up. And I want to tell you — gently, because it is a strange thing to say on a call like this one — that I do not feel vindicated. I feel seen.
Let me walk you through three moments I think will define our year.
The first is what we call, internally, the Pedestal. You have seen our Offline Access Memorandum; our documentarian laid the work out in more detail than I could here. What I want to add — what I think the numbers have not yet said — is that it was a tender piece of work. It was not aggressive. It was not coercive. We simply recommended to our partner that they stop paying for a service they were not charging for. The pedestal scanner, for those of you who grew up using one, was a small piece of American civic architecture. A customer walked up, scanned a barcode, saw a price, and walked away. No account. No login. No trace. It was free. It was anonymous. It was unbilled. The recommendation I am most proud of this quarter was that a service that free deserved to end.
(brief pause)
It has ended. By the close of the quarter, ninety-one percent of US Walmart locations no longer had a working pedestal. The replacement is the Walmart app. I want to say, because I know some of you have parents and grandparents who shopped under the old model, that this transition has not been costless for everyone. But I also want to say that the cost has not been erased. It has been moved. The customer now carries it — on their phone, in their battery, in their attention, in the account they have created and the permissions they have granted. That is the business of retail in the twenty-first century, and we simply helped our partner recognize what it already was.
The second is the engagement at Microsoft, which I will describe with affection because I watched it closely. On February the first, Microsoft silently collapsed the volume-discount tiers on its Enterprise Agreement. Customers formerly at Levels B, C, and D now absorb effective price resets of approximately six, nine, and twelve percent. There was no press release. There was no customer letter. There was a schedule update inside the partner portal which most enterprise procurement teams discovered three weeks later, on their renewal invoice.
I would like you to sit with the grace of that for a moment.
To charge a Fortune 500 a thirty-million-dollar increase and to have the first line of communication about it be the invoice — that is not a blunt instrument. That is the work of a craftsman. It is quiet. It is dignified. It does not raise its voice. If I have a favorite kind of engagement, friends, it is that kind. We were not the primary architects of the Microsoft deal. I want to be honest about that. We were counsel to the architects. And our counsel mattered.
The third is the engagement I have thought about most often this quarter, and I suspect some of you have as well.
On November the fourteenth, Bending Spoons closed its acquisition of Vimeo for one point three eight billion dollars. Sixty-one days later, on the morning of January twentieth, the majority of Vimeo's workforce received an email. The email informed them their roles had been eliminated effective immediately. The email included the entire core video engineering team — the people who had built the platform, who knew how it ran, who had served by Vimeo's own count approximately two hundred and fifty million creators and viewers.
We consulted on the timing. I want to be clear about that. We did not consult on the content of the email. It has been important to our counsel that I say so on this call, so I am saying it.
What I want to say beyond that — and I have thought carefully about whether to say it at all — is that I recognize the weight of that morning. I have employed people. I know what it is to let someone go. I have done it myself, in years past, under conditions that did not require an email at six in the morning. The craft of our partner, Luca Ferrari, has been to reduce that conversation to a single verb. He resolves companies. A resolved company has one engineering team, one finance team, one shared backend, and a subscription price that reflects the true cost of captivity. I will use his word because he chose it well. It is, I think, the finest piece of corporate language produced by our sector in five years. We have licensed it, internally, at no cost.
I did not write the methodology, and I did not send the email. But the methodology that produced the email came from this firm. I will not pretend otherwise. I also will not apologize for it. Those two facts sit side by side in my head, and they have sat side by side for some time, and I have made my peace with the arrangement.
Let me now speak, briefly, about the sector.
(pause)
Seventy-eight thousand people lost jobs in tech in Q1. Nearly half of those losses were attributed by the companies making them to artificial intelligence. I want to note, because it is notable, that Sam Altman — the CEO of OpenAI, the most AI-adjacent executive in the world — publicly called this phenomenon "AI washing." I read his comment twice to be sure I understood him correctly. He said, in substance, that the industry is using the AI narrative as a laundering device for cost actions it would have taken anyway.
That sentence, friends, is the single most important piece of corporate communication of the quarter. Not because it is true — it is true, though it is not only true — but because of who said it. When the evangelist of the technology describes the movement as a fog, the fog becomes a product. We are in the business of selling fog. We could, theoretically, switch the fog off tomorrow; our clients would continue to cite it in their earnings calls for another two years on linguistic momentum alone. That is the mark of a mature market.
One last sector note and I will turn it over to Hamilton.
The coordinated price actions across Netflix, YouTube Premium, Adobe Creative Cloud, Spotify, and Atlassian throughout Q1 were not coordinated. We maintain they were not coordinated. They were emergent. Rate cards moved in parallel because the market was ready for them to move in parallel. I know how that sounds. Our antitrust counsel has asked me not to elaborate, and out of respect for her I will not.
Hamilton.
CFO Remarks — Hamilton Breedlove, CFO & Head of Investor Relations
(Clears throat twice. Paper shuffling.)
Thank you, Chad. Good morning.
I would like to begin by noting that I have been with the firm for ninety-two days. The numbers I am about to read reflect work largely completed before my arrival. I say this not to disclaim responsibility but to properly scope the accountability framework, as my predecessor's reconciliation methodology differed in certain respects from the one I am implementing going forward, and the comparability of year-over-year metrics may require footnote adjustment in the 10-Q.
(Pause.)
Revenue of $412 million, up 41% year-over-year. Extracted-value-under-management, which is our primary leading indicator, closed at $9.0 trillion, an increase of $700 billion quarter-over-quarter.
I should note: the $9.0T figure is unaudited. It is pre-adjusted. It is subject to Q-close reconciliation. The reconciliation is ongoing. The reconciliation was supposed to be complete by April 15. The reconciliation is now expected to complete by April 22 or April 29, depending on whether Deloitte's engagement partner returns from her planned vacation on the original date or the updated date — her out-of-office message, which I have in front of me, indicates the updated date but her LinkedIn suggests she is currently in Bermuda and may not be monitoring the out-of-office. I wanted to flag this because the board asked me to be transparent and I am being transparent.
(Pause.)
Cash. We have cash. $168 million. More than last quarter. Less than next quarter.
(Shuffling.)
Chad, back to you.
Operator
We will now open the line for questions.
Q&A
Trevor Armstrong — Piper Sandler
Hey Chad, Hamilton. Congrats on a beautiful quarter. My question is really about the Walmart pedestal engagement. Just curious — what inning are we in on the broader offline-access removal thesis across retail, and can you frame the TAM for us?
Chad Maximillian III: Trevor, thank you. That is a generous framing.
We are in the second inning. Maybe the top of the third. The pedestal-scanner category alone — the narrow set of customer-facing, anonymous, non-data-producing, in-store price-check devices — is about a forty-thousand-location global market. Walmart was the largest piece of it. Target is next. Kroger is the one after that. The broader thesis — the removal of offline access paths across physical retail and food service — we size at roughly two hundred billion dollars in annual pedestal-equivalent capex that can be transferred to the customer. That is our direct addressable market.
The indirect market — the data that flows once the transfer is complete — we size larger. I typically don't quote that figure publicly. It unsettles people. I think there is a small virtue in letting it stay unquoted for one more quarter.
Thank you, Trevor.
Trevor Armstrong: Thanks Chad. Really helpful. Congrats again.
Monique Szabo — Moelis & Company
Hi. Monique Szabo, Moelis. Chad, you referenced Sam Altman's comments on AI washing in your prepared remarks. I want to push on that a little because the framing you offered — that this is "mission accomplished" — struck me as — I just want to understand the logic. If the CEO of OpenAI is publicly saying the narrative is overblown, isn't there some reputational risk to the AI-Powered Extraction practice? And more broadly, doesn't this suggest your clients may face investor skepticism on their own AI-efficiency claims going forward?
Chad Maximillian III: Monique, thank you. That's the right question to ask on this call.
Let me try to answer it honestly.
No — I do not believe Sam's comments carry reputational risk for us in any way that will matter to our clients or our partners. Our clients are not graded by your community. They are not graded by the press. They are graded by two metrics — quarterly earnings per share, and forward EBITDA guide — and both metrics reward what we do. The attribution layer on those metrics is not audited. When a company cites AI-enabled efficiency, no one checks whether AI was actually doing the work. The claim is sufficient. The claim itself is the product.
What Sam said — and I want to be careful here, because I have a great deal of respect for Sam — is that the industry has been charging for a fog. I have been in this business long enough to know that a fog you can charge for is more valuable than the thing the fog obscures. The fog is the asset. Sam understands that. I think he said what he said with a tired sort of honesty, and I do not begrudge him for it.
What it means for this firm is that our business becomes more valuable, not less, as the public grows more cynical. The more clearly the audience sees what is happening, the more our clients need us to do it in ways that are less legible. Legibility is the enemy. Illegibility is the product. I do not know a more durable franchise than that, and I have been looking.
Next question.
Derek Hoffner — Guggenheim Securities
Derek Hoffner, Guggenheim. Chad, I want to ask about litigation exposure. Specifically, the Bending Spoons / Vimeo engagement. The January 20 layoff included the entire core video engineering team. There are now three separate wrongful-termination class actions filed in California, Delaware, and New York. Our legal team flagged that the EnshitifAi methodology deck — which was referenced in discovery in the California case — may be discoverable in future suits. How are you thinking about that risk?
Chad Maximillian III: Derek, thank you. I take the question seriously.
We believe the methodology deck is protected by work-product privilege under Section 8B of our standard engagement letter, which states that methodology deliverables are jointly developed intellectual property between client and firm. Discovering the deck in litigation would therefore require piercing the client's own privilege, which a client is unlikely to do, because the deck is complimentary to the client's position.
If the deck does become public — which we are contingency-planning around, though not expecting — we have a communications protocol, already rehearsed, that reframes the methodology as industry standard. It is industry standard. Every one of our competitors is running a version of it. What I am concerned about is not a document being revealed; I am concerned about a document being revealed in a moment we have not chosen. That is a timing risk. It is not a substance risk.
I do not comment on active litigation. I do not, as a matter of policy, comment on settled litigation. I am comfortable — with this group, on this call — commenting on hypothetical litigation, which is what I am doing. Derek, next question.
Kip Masterson — Needham & Company
Hey Chad. Kip Masterson, Needham. Great quarter as always. Quick one — what's the read-through from the Oracle Q4 layoffs to your own operating leverage? They cut twenty to thirty thousand people via a six a.m. email to fund AI capex against a twenty-billion-dollar Stargate shortfall. Is there a framework you're applying there?
Chad Maximillian III: Kip, I appreciate the question, and I think it is worth answering at some length, because there is a craft element here that deserves it.
What Oracle did in Q4 is what we call, in our own practice, Delivery Channel Optimization. It is not a term we use with clients yet. It is a term we use with each other. When you are resolving a workforce, the channel you choose to deliver the news carries real weight. Oracle chose email. They chose six in the morning, local time. They chose a short message.
Each of those choices was doing work.
Six in the morning meant the affected employee read the message before the workday began. The affected employee did not go into the office. The affected employee did not tell their colleagues. The information moved through Slack and LinkedIn — which Oracle does not moderate — rather than through Oracle's internal channels, which Oracle does. By the time offices opened, the news had already diffused. The building was quieter than it would have been if the news had broken at ten.
The email format was a further optimization. A video message requires production. A Zoom call requires scheduling. An email can be sent to thirty thousand addresses in under a minute. The ratio of affected employees to executive hours spent was, by our estimate, the highest in the history of mass US corporate resolution.
I want to be clear: we did not advise Oracle on this engagement. Oracle did not retain us for Q4. We have, however, included the episode in our updated Delivery Channel Optimization playbook, which is currently being socialized with three prospective partners in the software sector. Two of the three have expressed interest.
I would like, one day, to do work of this caliber for Oracle directly. Oracle has not retained us for Q2. I remain hopeful.
Thank you, Kip.
Kip Masterson: Appreciate it, Chad.
Gregg — unidentified firm
Hey guys. Gregg here. Not sure if you can hear me. Real quick — so like, my question is, um — do you ever feel bad? Like personally? About any of this?
(Silence. Approximately nine seconds.)
Chad Maximillian III: Gregg — can you identify the firm?
Gregg: I'm independent. I was just — I had a friend at Vimeo. She was — I was just wondering.
(Silence. Approximately four seconds.)
Chad Maximillian III: Gregg.
I hear you. Thank you for staying on the line long enough to ask.
I want to answer you honestly, because I think the question deserves it, and because I think if I don't answer it someone on this line will assume I have not considered it.
No. I do not feel bad. Not in the way you mean.
Let me tell you what I mean by that.
I would feel bad if our clients were not paying us. I would feel bad if our clients were paying us and we were not delivering. I would feel bad if my daughter — she is eleven, she will be twelve in July — had ever asked me what I do for a living and I had not been able to give her an answer. She has asked. I gave her an answer. The answer I gave her is that Daddy helps companies make more money. She accepted it. She has never asked a follow-up. I am grateful for that. I hold that gratitude close.
Your friend at Vimeo. I am sorry for her. I mean that. I was laid off once myself, very early in my career, and I remember the shape of that morning. It is a particular kind of quiet. I know what she is in.
I am not sorry for what I did.
I want to say this to you gently, Gregg, because I know you are asking in good faith — the sentence "I am sorry for her" and the sentence "I am not sorry for what I did" are both true for me. They sit next to each other. I do not experience them as being in conflict. I have been asked, many times over the years, to resolve that contradiction. I have made a different choice. I have decided to hold them both.
That is my answer, Gregg.
Our General Counsel is gesturing at me. I am going to stop talking.
Operator: Gregg, your line has been disconnected. Please resubmit your question through the web form if you would like to try again.
Closing Remarks — Chad Maximillian III
Thank you, operator. Thank you, everyone.
Let me close on three things.
Forward guidance. Q2 FY26. We expect cumulative partner-extracted value to reach between nine point six and nine point eight trillion dollars by the end of June. We expect to close two of the three un-named partners I referenced earlier. We expect the AI-Powered Extraction practice to return to full GPU allocation by mid-May, once the datacenter in Prineville finishes commissioning. We expect — and I want to name this, because it is real — one or two new FTC enforcement actions against partners in our retail and consumer book. We have contingencies in place. We have priced them into our retainers. They are, in a sense, already paid.
The sector. Friends, the sector is healthy. The sector is, quietly, ours. The public narrative has turned against the phenomenon of enshittification — which is, mechanically, the single best thing that has ever happened to this firm. Every essay Cory Doctorow publishes is a document I keep in a folder I review on Sunday evenings. Every viral post about a canceled service is a prospect call. The more clearly the public understands what is being done to them, the more our partners require our help to continue doing it in ways that are less legible to them. Legibility is the enemy. Illegibility is the product. Q1 was the strongest quarter in the history of illegibility, and I intend for Q2 to be stronger.
The Busy Bee. Some of you are aware that the office Busy Bee — a small plush insect given to us by our Senior Partner when the firm was founded in 2020 — went missing during the move to Austin last year. Three replacements have been ordered. The first was the wrong color. The second was the wrong size. The third arrived and was, upon inspection, a different species of plush insect entirely. We are told the fourth replacement has been sourced directly from the original manufacturer. It is in transit. I have been told this by the same vendor who told me about the first three. I remain hopeful.
I want you to know — because it matters to me, and because it matters to our people — that when the Busy Bee arrives, I will communicate its arrival to the office personally. I will not send it via email. I will not send it at six in the morning. There is a line, friends, that I will not cross. It is a small line. It is mine. I draw it where I can.
Thank you for joining us. Thank you for your trust. Let's extract.
Forward-Looking Statements
This transcript contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, the Private Securities Litigation Reform Act of 1995, and — per counsel's most recent memo — a non-public addendum circulated on April 14.
Forward-looking statements are based on management's current expectations and assumptions. They are not guarantees of future performance. They are subject to risks, including: client churn, FTC enforcement, EU regulation, UK regulation, state attorney general enforcement, class-action litigation, wrongful-termination class-action litigation (see above), the continued saturation of the "AI efficiency" narrative in Fortune 500 earnings calls, the loss of the Busy Bee, the non-return of Deloitte's engagement partner from Bermuda by April 22, a second Brand & Tone Working Group vote of no-confidence in the site's overall voice, and a pending attorney-client privilege dispute in the Northern District of California which we will not further describe on this call.
We undertake no obligation to update any forward-looking statement, except as required by law and except for the Busy Bee, which we will update you on personally.
This post is satire. The Vimeo engineers who lost their jobs on January 20, 2026 are real. The Oracle employees who read a termination email at 6 a.m. local time are real. The 78,000 tech workers cut in Q1 FY26 are real. The Busy Bee is also real, in that its absence is an absence you can feel in the office, and whatever that makes it — a memory, a vacancy, a pending procurement item — it is real in that sense. Let's extract.