Conestoga Capital Advisors Q3 2024 Quarterly Commentary

3Q24

YTD

1 Year

3 Years

5 Years

10 Years

Since Inception

12/31/1998

Conestoga Small Cap Composite (Net)

10.09%

7.77%

19.59%

-0.08%

8.93%

12.61%

11.35%

Russell 2000 Growth Index

8.41%

13.22%

27.66%

-0.35%

8.82%

8.95%

7.06%

Since 1/31/2017

Conestoga SMid Cap Composite (Net)

12.94%

12.12%

26.99%

0.84%

10.09%

14.25%

Russell 2500 Growth Index

6.99%

11.20%

25.20%

-0.75%

9.75%

10.50%

Since 12/31/2019

Conestoga Micro Cap Composite (Net)

7.60%

3.28%

16.40%

-10.12%

6.88%

Russell Microcap Growth Index

8.57%

9.29%

26.38%

-8.31%

3.62%

Since 3/31/2010

Conestoga Mid Cap Composite (Net)

8.36%

9.42%

21.46%

-0.68%

8.92%

11.46%

11.87%

Russell Midcap Growth Index

6.54%

12.91%

29.33%

2.32%

11.48%

11.30%

12.61%

*Periods longer than One Year are Annualized. Please see additional important disclosures in the fully compliant GIPS presentations at the end of this commentary. Russell 2000 Growth Index measures the performance of those Russell 2000 companies with higher price-to- book ratios and higher forecasted growth values. Russell 2500 Growth Index measures the performance of those Russell 2500 companies with higher price-to-book ratios and higher forecasted growth values. Russell Micro Cap Growth Index measures the performance of those Russell Micro Cap companies with higher price-to-book ratios and higher forecasted growth values. Russell Mid Cap Growth Index measures the performance of those Russell Mid Cap companies with higher price-to-book ratios and higher forecasted growth values.

Portfolio Guidelines

Micro Cap Growth

Small Cap Growth

SMid Cap Growth

Mid Cap Growth

Strategy Inception

11/30/2018

12/31/1998

12/31/2013

3/31/2010

Investment Vehicles†

SA, MF

SA, MF, CIF

SA, MF, CIF

SA, MF

Primary Benchmark

Russell Microcap Growth

Russell 2000 Growth

Russell 2500 Growth

Russell Midcap Growth

Total Strategy Assets

$43.0 Mil

$6,682.7 Mil

$1,960.8 Mil

$22.0 Mil

Availability

Open – $500 Mil Plus Capacity

Limited

Open – $2.5 Bil Plus Capacity

Open – $10 Bil Plus Capacity

Market Cap. (Wtd. Avg.)

$1.2 Bil

$5.6 Bil

$11.2 Bil

$28.5 Bil

Number of Holdings

25-40

45-50

40-60

30-45

† SA = Separate Account, MF = Mutual Fund, CIF = Collective Investment Fund. Source: FactSet.

This table was provided as an illustrative example of Conestoga’s portfolios. Guidelines and compositions may change over time and are based on information as of 9/30/24.

CSW Industrials, Inc. (CSWI)

CSWI is diversified industrial company focused on niche, value added products heavily tied to residential heating ventilation and air conditioning (HVAC) maintenance and repair. The stock reacted favorably to its calendar second quarter report which included 8% organic growth and 20% EBITDA growth.

Simulations Plus, Inc. (SLP)

Based in Lancaster, CA, this company provides software and services that allows for the modeling of drug development to the biotech and pharmaceutical industry. In the third quarter, SLP reported revenue that was in-line with expectations, but EBITDA fell slightly below estimates. The company maintained its guidance for 2024 following its acquisition of Pro-ficiency. SLP also suspended its dividend to focus on growth initiatives. Investors are questioning the strategic fit of the recent acquisitions and the pathway to improved profitability looks less clear. There is also continued concern on the spending patterns within the biotech and pharmaceutical industry.

Exponent, Inc. (EXPO)

EXPO is a scientific and engineering consulting firm that specializes in highly technical analysis across more than 90 scientific disciplines. This was EXPO’s second consecutive quarter as a leader as they reported second quarter results with EBITDA and earnings per share above consensus estimates. EXPO’s PhD’s specialize in numerous secular growth markets that are driving growth, namely wearables technologies, battery manufacturing, advanced driver capabilities, and AI.

PROS Holdings, Inc. (PRO)

PRO is a developer of pricing optimization software. The stock underperformed in the third quarter after management pushed out their financial targets given soft demand from their airline customers. Airlines are focused on correcting operational issues, which has led to elongated sales cycles for PROS. The holding was sold from clients’ portfolios during the quarter.

Construction Partners, Inc. (ROAD)

ROAD has now been a leader in three of the past four quarters. The infrastructure spending the United States has benefitted ROAD’s markets in two ways. One, simply the level of demand and funding that is available. Two, with hot mixed asphalt plants being a fixed cost that can’t be replicated quickly, its caused tightness for supply in the market, leading to better pricing and expanding margins. ROAD continues to compliment strong organic growth with opportunistic M&A that creates further density and efficiencies in their markets.

Trex Co., Inc. (TREX)

TREX is the market share leader in composite decking and railing and has been a long-term holding. After the stock price reached a two-year high in late March, shares sold off over the last six months given some macro concerns and several decking surveys that showed a weakening decking market. Also, TREX management lowered their guidance for earnings in the year ahead. Despite the near-term headwinds, we remain positive on TREX given the continued consumer preference for composites over wood, as well as some exciting new products from TREX such as TREX’s Lineage Decking which has heat mitigation technology.

AAON, Inc. (AAON)

Based in Tulsa, OK, this specialty heating, ventilation, and air conditioning company (HVAC) announced quarterly earnings that exceeded expectations. Management reported that the resolution of production issues earlier in 2024 led to increased production and efficiencies. The solid results were led by strength in the data center market. This strength offset short-term uncertainty in the traditional rooftop unit division. AAON’s order backlog also increased 23% and profit margins increased to an all-time high level.

Fox Factory Holding Corp. (FOXF)

FOXF designs and manufacturers suspension products for high-end bicycles and a variety of powered vehicles, selling to both OEMs and the aftermarket. Both the biking and powered vehicles segments have been under pressure as consumer demand has softened and excess inventory among manufacturers is reduced. In the third quarter, FOXF reported earnings that were below expectations and lowered their guidance for full-year earnings.

Q2 Holdings, Inc. (QTWO)

Based in Austin, TX, this company provides software and services to mid-sized bank and regional financial services firms. The company has rebounded from the early 2023 banking crisis, which raised concerns for its end market’s spending on digital banking. The feared slowdown in spending failed to materialize, keeping revenue growth on track. In fact, demand for digital banking has significantly increased since early 2023. QTWO’s management team has also implemented expense management programs driving significant improvement in its profitability.

Vericel Corp. (VCEL)

VCEL develops advanced cell therapies for the sports medicine and severe burn care market. VCEL’s growth engine has been MACI, an autologous chondrocyte membrane for the repair of cartilage defects, which continues to grow more than 20% and has a near-term market expansion opportunity by offering an arthroscopic option. VCEL’s stock pulled back 7.9% in the third quarter, after appreciating by greater than 20% in the first half of the year.

National Research Corp. (NRC)

NRC is a provider of survey-based performance measurement, analysis, tracking, and improvement service to the healthcare industry. Our decision to sell NRC was based on the company’s revenue growth underperformance versus our expectations, and the lack of conviction that growth will reaccelerate. The proceeds of the sale were reinvested in higher conviction names within the portfolio.

Omega Flex, Inc. (OFLX)

Originally purchased into the Small Cap Growth strategy in 2019, OFLX was sold as it failed to meet our expectations for growth of its revenues and earnings. OFLX manufactures and sells flexible metal hosing that is used across a range of industries. Importantly, the company has not achieved its goals for penetrating the health care markets. Conestoga trimmed OFLX over the past two quarters and fully removed the stock from client portfolios over the third quarter.

PROS Holdings, Inc. (PRO)

PROS is a developer of pricing optimization software. The stock was a long-term holding of Conestoga, but it has faced various headwinds over the years. These include a perpetual to SaaS revenue model conversion, Covid’s impact on the travel industry, and more recently, airline customers focusing on correcting operational issues which has led to elongated sales cycles for PROS. These issues forced management to push out their financial targets. Given the uncertainty surrounding the business, we have concluded that the stock should be sold from clients’ portfolios. The proceeds of the sale were invested in more attractive companies within the portfolio.

*Portfolio holdings shown above experienced material activity during the quarter.

Symbol

Company Name

Sector

% of Assets

DSGX

Descartes Systems Group, Inc.

Technology

4.53%

EXPO

Exponent, Inc.

Industrials

4.35%

CWST

Casella Waste Systems, Inc.

Utilities

4.20%

SSD

Simpson Manufacturing Co., Inc.

Industrials

3.95%

AAON

AAON, Inc.

Industrials

3.74%

ALTR

Altair Engineering, Inc.

Technology

3.47%

FSV

FirstService Corp.

Real Estate

3.40%

SPSC

SPS Commerce, Inc.

Technology

3.33%

NOVT

Novanta, Inc.

Technology

3.28%

ROAD

Construction Partners, Inc.

Industrials

3.20%

Total with in the Composite:

37.45%

*Sources: Conestoga, Russell Investments. Composite creation date is December 31, 2013. Please see additional important disclosures in the fully compliant GIPS presentations at the end of this commentary. Russell 2500 Growth Index measures the performance of those Russell 2500 companies with higher price-to-book ratios and higher forecasted growth values.

SMid Cap Composite – Top 5 Leaders

SMid Cap Composite – Bottom 5 Laggards

Construction Partners, Inc. (ROAD)

ROAD has now been a leader in three of the past four quarters. The infrastructure spending the United States has benefitted ROAD’s markets in two ways. One, simply the level of demand and funding that is available. Two, with hot mixed asphalt plants being a fixed cost that can’t be replicated quickly, its caused tightness for supply in the market, leading to better pricing and expanding margins. ROAD continues to compliment strong organic growth with opportunistic M&A that creates further density and efficiencies in their markets.

Trex Co., Inc. (TREX)

TREX is the market share leader in composite decking and railing and has been a long-term holding. After the stock price reached a two-year high in late March, shares sold off over the last six months given some macro concerns and several decking surveys that showed a weakening decking market. Also, TREX management lowered their guidance for earnings in the year ahead. Despite the near-term headwinds, we remain positive on TREX given the continued consumer preference for composites over wood, as well as some exciting new products from TREX such as TREX’s Lineage Decking which has heat mitigation technology.

Axon Enterprise, Inc. (AXON)

AXON, who is leveraging technology to transform public safety, is a leader for the second time this year. AXON continues to see robust demand for its product and services, from Tasers to body cameras to the software that powers many applications within public safety operations. In its most recently reported quarter, AXON grew revenue and EBTIDA, and order backlog surged 41%. In addition to strong revenue growth, AXON expanded EBITDA margins in the quarter.

Cognex Corp. (CGNX)

Leading provider of machine vision solutions used in factories and warehouses to measure, inspect and identify items to ensure accuracy. Revenue has been challenged as its largely dependent on customers’ capital spending. The stock rallied strongly through the spring in anticipation of Federal Reserve monetary easing, however it gave back all of the gains by selling off 20% following a disappointing second quarter update which include very soft third quarter guidance.

Guidewire Software, Inc. (GWRE)

This company is a best-in-class provider of core software solutions for property and casualty insurers. GWRE reported another strong quarter, including 37% subscription revenue growth and profits well above consensus estimates. GWRE has continued to realize scale benefits as its business model transitions to cloud software.

West Pharmaceuticals, Inc. (WST)

WST, a market leader in containment and delivery solutions for the pharmaceutical industry, was a laggard for the second straight quarter as the bioprocessing industry continues to suffer from destocking downstream with biopharmaceutical customers. This process has taken longer than expected to normalize, causing WST to lower its revenue and earnings per share for the full year. We believe WST has a favorable market position, but the company ultimately needs supply chains and inventory levels to normalize.

Exponent, Inc. (EXPO)

EXPO is a scientific and engineering consulting firm that specializes in highly technical analysis across more than 90 scientific disciplines. This was EXPO’s second consecutive quarter as a leader as they reported second quarter results with EBITDA and earnings per share above consensus estimates. EXPO’s PhD’s specialize in numerous secular growth markets that are driving growth, namely wearables technologies, battery manufacturing, advanced driver capabilities, and AI.

MSA Safety, Inc. (MSA)

The company develops, manufactures, and sells products that enable a safe and healthy environment for workers. MSA is a market leader in its segments, has a strong ROE, is under levered, and has been consistently beating earnings estimates. Shares were slightly lower in the quarter as investors took profits during periods of volatility, but we believe the company remains well positioned in its segments and continues to develop innovative products.

First Service Corp. (FSV)

FSV is a North American leader in essential property services. FirstService Residential is the largest manager of residential properties in North America, and the company has been winning market share in this segment through its scale and market density. FirstService Brands is diversified across roofing, restoration, and home brands such as California Closets. While higher interest rates have hurt this segment, FSV has invested both organically and through M&A to consolidate market share. In the second quarter, FSV saw increased revenue and raised full year EBITDA guidance.

Altair Engineering, Inc. (ALTR)

ALTR, a leader in design and simulation software, was a leader in two of the past three quarters before declining modestly in the third quarter. ALTR is seeing strong demand across many verticals, notably in aerospace, defense, and automotive. ALTR also benefited from some disruption in the electronics simulation market caused by Synopsys’ acquisition of Ansys. In the second quarter, ALTR grew revenue and earnings in the mid- to high-single digits.

Source: FactSet

SMid Cap Composite – 3Q24 Buys*

SMid Composite – 3Q24 Sells*

None..

Five 9, Inc. (FIVN)

FIVN is a leading provider of cloud contact center software, serving over 350,000 contact center agents. Despite record bookings and signing their largest ever deal, FIVN has seen revenue decelerate to the low-teens, with net revenue retention falling. Optimism around AI is just starting to feed into the financials, but bears point to the potential of fewer contact center agents as a looming headwind. Conestoga lost confidence in which outcome could materialize and removed FIVN from client portfolios.

*Portfolio holdings shown above experienced material activity during the quarter.

The positions represent Conestoga Capital Advisors largest equity holdings based on the aggregate dollar value of positions held in the client accounts that are included in the SMid Cap Composite. All information is provided for informational purposes only and should not be deemed as a recommendation to buy the securities mentioned. Sectors are defined according to the ICB industry definitions.

Micro Cap Composite – 3Q24 Buys*

Micro Cap Composite – 3Q24 Sells*

Mama’s Creations, Inc. (MAMA)

MAMA is a leading marketer and manufacturer of fresh deli prepared foods, found in over 8,400 grocery, club and convenience stores nationally. CEO Adam Michaels joined MAMA in mid-2022 and has transformed the company into a more sophisticated operator with a broader platform of offerings. Adam has added management talent and Board depth, and he has an ambitious goal for raising revenues. The $25 billion prepared deli foods category is one of the fastest growing categories in grocery and is increasingly being prioritized to drive traffic. The category is growing 8-10% per year and MAMA has been taking share, pushing organic growth to double-digits. Profit margins have also increased, which has led to better cash generation and the ability to fund acquisitions to further grow the platform.

PROS Holdings, Inc. (PRO)

PRO is a developer of pricing optimization software. The stock has been a long-term holding of Conestoga but has faced various headwinds over the years. These include a perpetual to SaaS revenue model conversion, Covid’s impact on the travel industry, and more recently, airline customers focusing on correcting operational issues which has led to elongated sales cycles for PROS and forced management to push out their financial targets. Given the uncertainty surrounding the business, we have concluded that the stock should be sold from clients’ portfolios. The proceeds of the sale were invested in more attractive companies within the portfolio.

Vita Coco, Co. (COCO)

COCO is a market leader in the coconut water beverage category. The company pioneered the category and now has sales of over $500M – 87% in the US and 13% internationally. They sell branded products, which represent 74% of revenue, and private label which is 26% of revenue. COCO brands are one of the fastest growing categories in beverages and should benefit from its strong competitive advantages, high market share, and solid growth expectations.

*Portfolio holdings shown above experienced material activity during the quarter.

Micro Cap Composite – Top 5 Leaders

Micro Cap Composite – Bottom 5 Laggards

Alpha Teknova, Inc. (TKNO)

TKNO is a leading provider of critical reagents that enable the discovery, development, and production of biopharmaceutical products such as drug therapies, novel vaccines, and molecular diagnostics. The company reported a solid quarter and called out an improving biotech funding environment and better customer order activity. Combined with improving investor sentiment, shares rallied considerably to reach 52-week highs. As market conditions improve, TKNO appears poised to capture outsized market share with the recent opening of their GMP facility.

Montrose Environmental Group, Inc. (MEG)

MEG is a pure play environmental services company that offers end-to-end solutions for addressing environmental issues. Despite reporting a strong quarter, the stock sold off roughly 40% during the quarter following the Supreme Court overturning a legal precedent (“Chevron Deference”). This introduced fears that the Environment Protection Agency will not be able to push new regulations, or that enforcement actions of existing environmental regulations would be delayed.

Willdan Group, Inc. (WLDN)

WLDN provides technical and consulting services to utilities, private industry, and public agencies. WLDN’s second quarter performance was well above expectations, with strength coming from all areas of the business, which resulted in improved profitability. Consolidated contract revenue grew, and adjusted EBITDA increased. Management highlighted electric power demand strength fueled by growth of data centers from artificial intelligence. With recent momentum expected to continue, management raised their fiscal 2024 guidance for all financial targets.

Simulations Plus, Inc. (SLP)

Based in Lancaster, CA, this company provides software and services that allows for the modeling of drug development to the biotech and pharmaceutical industry. In the third quarter, SLP reported revenue that was in-line with expectations, but EBITDA fell slightly below estimates. The company maintained its guidance for 2024 following its acquisition of Pro-ficiency. SLP also suspended its dividend to focus on growth initiatives. Investors are questioning the strategic fit of the recent acquisitions and the pathway to improved profitability looks less clear. There is also continued concern on the spending patterns within the biotech and pharmaceutical industry.

Q2 Holdings, Inc. (QTWO)

Based in Austin, TX, this company provides software and services to mid-sized bank and regional financial services firms. The company has rebounded from the early 2023 banking crisis, which raised concerns for its end market’s spending on digital banking. The feared slowdown in spending failed to materialize, keeping revenue growth on track. In fact, demand for digital banking has significantly increased since early 2023. QTWO’s management team has also implemented expense management programs driving significant improvement in its operating profitability.

Pros Holdings, Inc. (PRO)

PRO is a developer of pricing optimization software. The stock underperformed in the third quarter after management pushed out their financial targets given soft demand from their airline customers. Airlines are focused on correcting operational issues, which has led to elongated sales cycles for PROS. The holding was sold from clients’ portfolios during the quarter.

Construction Partners, Inc. (ROAD)

ROAD has now been a leader in three of the past four quarters. The infrastructure spending the United States has benefitted ROAD’s markets in two ways. One, simply the level of demand and funding that is available. Two, with hot mixed asphalt plants being a fixed cost that can’t be replicated quickly, its caused tightness for supply in the market, leading to better pricing and expanding margins. ROAD continues to compliment strong organic growth with opportunistic M&A that creates further density and efficiencies in their markets.

Bowman Consulting Group, Ltd. (BWMN)

Bowman is a multi-disciplinary consulting firm offering a broad range of real estate, energy, infrastructure, and environmental management solutions to both public and private clients. BWMN surprised investors with a second quarter report that fell short of plan and investor expectations. Despite robust civil infrastructure demand, BWMN saw higher interest rates pressure their Buildings Infrastructure division, which represents nearly half of their backlog. Management emphasized that deals have not been lost, just delayed. In addition, the Transportation segment saw multiple large projects starts delayed through the contracting process.

Energy Recovering, Inc. (ERII)

ERII is a global leader in energy efficiency technology through its proprietary pressure exchanger technology. Shares gained in ERII’s first full quarter in the portfolio as its results beat Street expectations on both revenue and adjusted EBITDA. The company indicated that its backlog coverage to hit full year guidance is ahead of normal. Looking forward, investors anticipate significant growth not only in its core water desalination vertical, but also in wastewater and CO2 refrigeration, two potentially large market opportunities.

U.S. Physical Therapy, Inc. (USPH)

USPH is a leading provider of outpatient physical therapy clinics. Shares fell over the quarter as reported earnings were lower than expected. Medicare accounts for almost one-third of their revenue base and lower reimbursements were a drag on results. We believe future growth prospects for the company remain promising as they continue positive negotiations with commercial insurance payers and make strategic acquisitions for new clinics.

Source: FactSet

The positions represent Conestoga Capital Advisors largest equity holdings based on the aggregate dollar value of positions held in the client accounts that are included in the Micro Cap Composite. All information is provided for informational purposes only and should not be deemed as a recommendation to buy the securities mentioned. Sectors are defined according to the ICB industry definitions.

Mid Cap Composite – Top 5 Leaders

Mid Cap Composite – Bottom 5 Laggards

Fortinet, Inc. (FTNT)

FTNT is the worldwide market share leader in network security firewalls (by units). During the quarter, FTNT reported a significant beat on billings and saw accelerating bookings growth, indicating the firewall product cycle may have turned positive. The company is also managing inventory well, and operating margins surprised to the upside in the reported quarter. FTNT maintains a healthy outlook for highly profitable growth.

West Pharmaceutical Services, Inc. (WST)

WST, a market leader in containment and delivery solutions for the pharmaceutical industry, was a laggard for the second straight quarter as the bioprocessing industry continues to suffer from destocking downstream with biopharmaceutical customers. This process has taken longer than expected to normalize, causing WST to lower its revenue and earnings per share for the full year. We believe WST has a favorable market position, but the company ultimately needs supply chains and inventory levels to normalize.

Guidewire Software, Inc. (GWRE)

This company is a best-in-class provider of core software solutions for property and casualty insurers. GWRE reported another strong quarter, including 37% subscription revenue growth and profits well above consensus estimates. GWRE has continued to realizes scale benefits as its business model transitions to cloud software.

Copart, Inc. (CPRT)

CPRT is a leading provider of salvage auctions in the US, Canada and the UK. The company has been investing heavily in its platform, including several new initiatives, and the quarter’s revenue and gross profit performance came in below estimates resulting after an earnings miss.

Tyler Technologies, Inc. (TYL)

A software services company, TYL reported quarterly results that beat expectations as their conversion to a softwareas-a-service (SaaS) provider gathered momentum and boosted earnings. TYL provides software to municipalities and other public government agencies that are used across a wide range of applications. Originally purchased by Conestoga in our Small Cap Growth portfolios in 2008, we added TYL to the Mid Cap Growth portfolios in 2016. TYL was sold from the Small Cap Growth strategy as its market capitalization rose above $13 billion. Our Mid Cap Growth portfolios have continued to hold TYL, and the company’s market capitalization was near $25 billion at the end of the third quarter.

Procore Technologies, Inc. (PCOR)

PCOR is a market leader in cloud-based construction project management software sold to building owners, general contractors and subcontractors. Revenue guidance for the upcoming quarter missed and its customer growth decelerated. Shares have been under pressure over the last six months and despite the company lifting its full-year revenue outlook, investors seem more focused on short-term issues.

HEICO, Inc. (GWRE)

Commercial and military aircraft aftermarket parts company which designs, manufactures, repairs and distributes jet engine and aircraft component replacement parts. The company has benefitted from solid travel growth as well as healthy parts and maintenance spending due to the delayed retirement of older aircraft given production issues at Boeing (BA).

Roper Technologies, Inc. (ROP)

ROP operates a collection of market-leading vertical software franchises and industrial technology businesses. The company reported an uncharacteristic miss in revenue, the first in nearly three years. Its smart meter business, Neptune, faced operational issues during the quarter (since corrected), leading to delayed revenue. Looking ahead, the highly acquisitive company is seeing an attractive pipeline of M&A targets that should see more reasonable valuations in the coming months, a key source of earnings growth.

Pool Corp. (POOL)

As its name implies, POOL distributes supplies and equipment for pools and the related hardscaping products. Based in Covington, LA, POOL’s shares benefited from increased home improvement spending during the COVID era. Shares cooled in 2022 and we believe the company’s growth trajectory has normalized. POOL’s revenues and earnings modestly exceeded analyst expectations in the second quarter.

Ansys, Inc. (ANSS)

The gold standard in selling computer-aided engineering (CAE) software that allows engineers to simulate how product designs will behave in real world environments before they are manufactured. Shares underperformed during the quarter due to its pending acquisition by Synopsys (SNPS) which is not all cash, rather a combination of cash and SNPS shares.

Source: FactSet

Mid Cap Composite – 3Q24 Buys*

Mid Cap Composite – 3Q24 Sells*

None.

1. Five 9, Inc. (FIVN)

FIVN is a leading provider of cloud contact center software, serving over 350,000 contact center agents. Despite record bookings and signing their largest ever deal, FIVN has seen revenue decelerate to the low-teens, with net revenue retention falling. Optimism around AI is just starting to feed into the financials, but bears point to the potential of fewer contact center agents as a looming headwind. Conestoga lost confidence in which outcome could materialize and removed FIVN from client portfolios.

*Portfolio holdings shown above experienced material activity during the quarter.

The positions represent Conestoga Capital Advisors largest equity holdings based on the aggregate dollar value of positions held in the client accounts that are included in the Mid Cap Composite. All information is provided for informational purposes only and should not be deemed as a recommendation to buy the securities mentioned. Sectors are defined according to the ICB industry definitions.