Navan Earnings Call: Strong Growth, AI and New Challenges

Navan, Inc. Class A ((NAVN)) has held its Q3 earnings call. Read on for the main highlights of the call.

Navan’s Earnings Call Mixes Strong Growth With Emerging Challenges

Navan’s latest earnings call struck an optimistic but nuanced tone: management highlighted robust revenue growth, record gross margins, strong enterprise momentum, and exceptional customer satisfaction, all underpinned by its AI platform. At the same time, investors were reminded of a few pressure points, including a CFO transition, still-negative free cash flow, seasonal headwinds in the near term, and a decline in usage yield that could weigh on unit economics.

Revenue Growth Accelerates on Strong Customer Demand

Navan reported a 29% year-over-year revenue increase, with third-quarter revenue reaching $195 million. This pace of growth underscores continued demand for the company’s business travel and expense platform, even amid a more cautious macro environment. The performance demonstrates that Navan is increasingly winning share in its market, translating its product investments and AI capabilities into tangible top-line gains.

Enterprise Expansion Fuels Long-Term Scale

Enterprise wins were a central theme. Navan closed major deals, including the second largest European contract in its history with a CAC40 company, and added well-known names like Frasers Group and Axel Springer. These large, multi-year relationships support revenue visibility and validate Navan’s positioning for complex, global enterprises, a segment that can expand significantly over time through higher adoption and incremental services.

Customer Satisfaction Remains a Competitive Strength

Customer satisfaction metrics were standout positives. Navan cited a 97% satisfaction rate and a Net Promoter Score of 45, far above an industry average near 5. Such scores suggest the platform is resonating strongly with users and corporate buyers alike, and they provide a supportive backdrop for renewals, upsells, and word-of-mouth-driven growth in a competitive travel and expense market.

Record Gross Margin Driven by AI Efficiencies

Profitability metrics are moving in the right direction. Non-GAAP gross margin expanded to a record 74% in the third quarter, up roughly 200 basis points year over year. Management credited AI-driven automation and operational scale as key drivers, indicating that Navan’s technology investments are lowering servicing costs and improving the economics of each dollar of revenue.

IPO Strengthens Balance Sheet and Lowers Costs

Navan’s recent IPO was framed as a strategic milestone. Management said the listing has fortified the balance sheet, enhanced financial flexibility, improved the company’s cost of capital, and reduced interest expenses. For investors, this translates into a stronger capital position to fund growth initiatives while gradually improving the path toward sustainable profitability.

AI Platform Navan Cognition and Future Product Innovation

AI was positioned as the core engine of Navan’s strategy. The company highlighted Navan Cognition, its AI platform, as a critical differentiator across booking, support, and expense workflows. Looking ahead, Navan is developing Navan Edge, described as a next-generation, AI-powered travel booking experience. These initiatives are intended to deepen automation, enhance user experience, and keep Navan ahead of legacy competitors in business travel technology.

Deeper Direct Supplier Connections Boost Bookings

Navan is increasing direct connections with travel suppliers, which is helping drive bookings growth. By connecting directly rather than relying solely on intermediaries, Navan aims to secure better pricing, richer inventory, and more reliable data. Management emphasized that these deeper relationships build trust with travelers and corporate clients, potentially enhancing wallet share and stickiness.

CFO Transition Adds a Note of Uncertainty

On the leadership front, Navan announced that CFO Amy Butte will depart effective January 9, with Anne Giviskos assuming the role of interim CFO. While the company framed the transition as orderly, CFO changes can introduce a measure of uncertainty for investors, particularly at a time when the company is scaling rapidly and public market scrutiny is rising post-IPO.

Free Cash Flow Still Negative but Improving

Despite strong revenue and margin trends, Navan remains free cash flow negative, posting negative $11 million for the quarter. The company stressed that this figure has improved by 30% compared with the prior year, signaling progress toward breakeven. The trend suggests operating discipline is improving, but investors will likely watch closely for continued movement toward sustained positive cash generation.

Seasonality Weighs on Near-Term Outlook

Management reminded investors that Navan’s business is inherently seasonal, with the fourth quarter typically softer than the third. As a result, Q4 is expected to be seasonally slower, with correspondingly lower margins. This commentary helps set expectations and suggests that sequential comparisons should be viewed in the context of normal travel patterns rather than a deterioration in underlying demand.

Usage Yield Decline Highlights Mixed Unit Economics

One area of softness was usage yield, which declined to 6.9% from 7.5% a year earlier. The company attributed this to factors such as supplier volume bonuses and changes in the mix of travel activity. While not alarming on its own, the trend indicates some pressure on per-transaction economics and will be an important metric to monitor as Navan balances growth, incentives, and profitability.

Guidance Signals Confidence in Growth and Path to Cash Flow Positivity

Navan’s forward-looking guidance reinforced its growth narrative. The company raised its outlook for the fourth quarter, projecting revenue between $161 million and $163 million, and forecast full fiscal 2026 revenue of $685 million to $687 million, representing about 28% year-over-year growth. Non-GAAP operating margin has already improved to 13%, supported by AI-driven efficiencies and strong enterprise sales, while gross booking volume climbed 40% to $2.62 billion. Management expects free cash flow to continue improving and is targeting free cash flow positivity in fiscal 2027, underpinned by ongoing innovation in AI and payments.

Navan’s earnings call painted a picture of a high-growth, AI-enabled travel and expense platform successfully scaling with large enterprises while steadily improving its margin profile. Investors will need to weigh the impressive revenue trajectory, record gross margins, and exceptional customer satisfaction against leadership transitions, lingering negative free cash flow, seasonal softness, and a modest decline in usage yield. For now, the balance tilts positive, with management’s raised guidance and clear path toward cash flow breakeven helping support a constructive long-term outlook.