Cvent Holding Corp.

Good day. My name is Savannah, and I will be your conference operator for today. At this time, I would like to welcome everyone to this event's second quarter 2022 earnings conference call. Today's call is being recorded. All lines have been placed on mute to prevent any background noise, and after the speaker's remarks, there will be an opportunity to ask questions. If you would like to ask a question during this time, simply press star 1 on your telephone keypad. If you would like to withdraw your question, please press star 1 again. Thank you. And I would now like to turn the conference over to April C., investor relations. Please go ahead.

Good evening, and thank you for joining us on today's conference call to discuss the financial results for Cvent's second quarter 2022. With me on today's call are Reggie Agarwal, Cvent's founder and chief executive officer, and Billy Newman, Cvent's chief financial officer. During today's call, we will review our financial results for the second quarter of 2022 and discuss our guidance for the third quarter and full year of 2022. In addition, our earnings press release, SEC filings, and a replay of today's call can be found on our investor relations website at investors.zvent.com. Today's call will include forward-looking statements, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including but not limited to statements regarding our financial outlook, including our guidance for the third quarter and full year 2022, our market opportunity, market position, product strategy, and growth opportunities. Forward-looking statements involve known and unknown risk, as to the uncertainties that may cause our actual results, performance, or achievements to be materially different from those expressed or implied by the forward-looking statements. Forward-looking statements represent our management's belief and assumptions only as of the date made, and the company assumes no obligation to update these statements, whether as a result of new information, future events, or otherwise. Information on factors that could affect the outcome of the matters covered by these forward-looking statements is included in our periodic filings with the SEC, including in the section titled Risk Factors in our quarterly report in Form 10Q, the quarter ended June 30, 2022, filed with the SEC today, and in our most recently filed annual report on Form 10K, along with other filings the company makes with the SEC from time to time. Additional information is available in the cautionary language included in our earnings press release issued earlier today. In addition, during today's call, we will discuss nine GAAP financial measures, which are not prepared in accordance with generally accepted accounting principles. Reconciliation to the most directly comparable GAAP measure of the non-GAAP financial measures discussed on this call, including adjusted EBITDA and adjusted free cash flow, are included in our earnings release issued today, along with the definitions for those terms. The release is filed with the SEC and is available on our investor relations website. And now I'd like to turn the call over to Reggie.

Thanks, April. And thanks, everyone, for joining today's call. I'm excited to share our Q2 2022 results. We started the year with a strong quarter, beating our Q1 guidance, and I'm pleased to say we continued that strong momentum in Q2. Our revenue for the quarter was $161 million, which was $6.8 million above the high end of our guidance, representing 31% revenue growth year over year. Our strong growth was driven by a healthier and more dynamic events industry, where in-person events are quickly returning while interest in virtual events continues. Additionally, better than expected cost containment enabled us to exceed the high end of our adjusted EBITDA guidance by 7.3 million and adjusted EBITDA margin guidance by over 400 basis points. We also increased our adjusted EBITDA margin by 750 basis points when sequentially compared to Q1 of 2022 on a normalized basis. In addition, we generated 17.6 million in adjusted free cash flow in the quarter. We continue to land new logos, retain existing customers, and grow our share of wallet within our base through cross-sells and upsells. On that note, our net dollar retention rates increased to 114%, up from 109% last quarter. So the business is delivering on both the top line and the bottom line. In this new and more complex events ecosystem, organizations are increasingly looking for one platform to support their total event program across all three event formats. in-person, virtual, and hybrid. And unlike those that offer point solutions for just one event format, our new and integrated platform addresses all three, which really helps set us apart from our competition. We're excited about our strong 2-2 performance, and it's especially notable when compared against the challenges our competitors have been facing. Now, for those of you who are new to our story, here's a brief overview. Cvent is a SaaS platform that is comprised of our event and hospitality cloud solutions. Organizations use our Event Cloud products to plan, market, and organize engaging events of all sizes across what we call their total event program. And our Hospitality Cloud offers a marketplace that enables meeting organizers to find and book event space at hotels and unique venues. In addition, hotels and venues use our software solutions to promote, manage, and automate their meetings and events business. Fundamentally, our platform helps our customers grow their top-line revenue, drive engagement, and deliver leads. while reducing OPEX and ensuring greater compliance. Now, before I dive more deeply into our Q2 performance by cloud, I'd like to discuss some trends we're seeing. First, it's become increasingly clear that in-person events are the bedrock of the event industry. Nothing beats face-to-face human connection and interaction, which is why we're starting to see in-person events return so quickly. Now, this is reflected in our sourcing data from the Cvent Supplier Network, which is our global marketplace where planners can source and find meeting space at more than 290,000 hotels, destinations, and special event venues. The data shows our RFP volume has been steadily increasing since the beginning of the year, and in a few weeks during the quarter, we actually saw RFP volume approach their 2019 levels. This is important because in 2019, it was a record year for CBET when more than $18 billion was sourced through our platform. The other trend we're seeing is that organizations are looking for greater flexibility as they build an event program that takes advantage of a mix of event formats to maximize engagement and optimize their budgets. Let me give you an example. We have a customer that hosted a 4,000-person in-person event where the total hard event cost was about $9 or $10 million. Then they did the same event virtually where they had over 10,000 people and it cost about $600,000. A year later, they hosted a hybrid event where they had about 10,000 people attend, about 2,000 in person, and 8,000 were virtual. And that hybrid event cost about $6 million. Now, from the CMO perspective, this example shows that you can go all in person for $10 million or go all virtual for about $600,000 or somewhere in between. With the digital transformation from the last two years, organizations now have the option to deliver events that can match their business goals and increasingly just as important, their budgets. This kind of flexibility and budget elasticity just didn't exist pre-pandemic. And that elasticity is extremely powerful when CMOs want to continue to host events while CFOs want to control spend. And it's also a powerful growth opportunity for Cvent because no matter which format that our customers choose they need to invest in a robust event technology platform like Cvent. This is why we believe that the event technology spend will continue to make up a disproportionate share of overall event spend moving forward. Now in short, the return of in-person events combined with the need for one platform to manage the total event program plays back to Cvent's historical strengths as a longtime leader in the space. Now I'll dive more deeply into the performance of our two clouds. First, let's discuss the event cloud and the competitive advantages we've implemented through our decades of product development and experience. We believe customers no longer want disparate point solutions to manage their events, one for virtual, another for in-person, and a third for hybrid, because this approach adds complexity and cost to their event programs, and it negatively impacts the attendee experience. So they're turning to Cvent's platform to manage their total event program, which is all the events that they host or attend, whether it's in person, virtual, or hybrid. For example, in Q2, a leading national business media company selected Cvent because we were seen as a truly unified platform. While most of their events are now in person, they wanted the flexibility to pivot to virtual as they build out a more event, a more robust event program. They're starting with a 200,000 annual contract value, or ACV, and a $578,000 total contract value or TCV account. And with more than 20 other media brands under the account, this new logo offers continued opportunity for growth. From a global perspective, one of the most renowned universities in Australia liked our product so much that they 3X their Cvent investment and grew their account from an ACV of about 100,000 to an ACV to about 360,000. In addition, they signed a five-year agreement for a TCV of 1.8 million as they decided to move from having multiple event management systems to the Cvent platform. Another example is an organizer for a large conference that turned to Cvent to run their hybrid event. They're using Cvent for event marketing, registration, on-site solutions, attendee engagement, and our virtual solutions to broadcast the conference live and on demand to attendees. Now this new logo, which we closed in just about three weeks, is starting with using Cvent for just one event for nearly $300,000 of ACV, with plenty of room to grow. One area in particular of our platform that continues to benefit from the return of in-person events is our on-site solutions. Let me give you a couple examples. A global professional networking association that had a $700,000 ACV just increased their annual spend by almost 50 percent in Q2, bringing their total ACV to over one million. Another example is a Fortune 500 publicly traded financial and analytics company that had a $400,000 ACV that grew around 50 percent to almost 600,000 ACV and now has a TCV of almost a million. Both these organizations bought more of our in-person solutions, something we saw repeatedly across many of our customers over the quarter. The final point I'd like to make is that our event cloud performance is how our platform enables organizations to increase engagement opportunities even outside of event dates, further extending the overall impact of the event. For example, our Cvent Attendee Hub, which was initially used primarily for virtual events, is now also being leveraged for in-person and hybrid events as organizers look to use the solution to digitally engage with attendees before, during, and after an event takes place. Let me explain. Even for an in-person event, if an attendee flies, let's say, to Vegas for a conference, they may still want to digitally engage by networking online with other attendees prior to the event. Maybe they want to stream an early morning keynote online from their hotel room, watch sessions they missed on demand at a later date, or share a favorite session with their colleagues. Each of these touch points offer deep attendee insights that organizations can act on. This opportunity of year-round engagement just didn't exist before. We believe we're still in the early, very early stages of this growth opportunity. We're investing heavily here and in other areas across our platform with the support of our 1,300-person tech team. So to wrap up my comments on the event cloud, there are four key things driving our growth. First is this more dynamic events landscape, organizations, have more opportunities to engage than ever before through in-person virtual and hybrid events, which we call the triple threat. And now that in-person events are back, that triple threat is real. This presents vastly more opportunity than just 15 months ago when most people just thought about and used virtual. Second, our platform is more important than ever because in this changing environment, organizations need greater flexibility and efficiency to manage the complexity of their total event program and maximize ROI. We have the all-in-one solution organizations are looking for. Third, as in-person events continue to gain momentum, our platform is perfectly positioned to serve this market where we've been a leader for more than 22 years. And finally, our scale. We have a global sales and marketing engine thousands of developers and customer service professionals, and a strong global brand. We have the resources and the streamlined processes to take advantage of our $30 billion TAM. Now let's pivot to the hospitality cloud, where we grew almost 30% year over year, demonstrating renewed strength coming out of the pandemic when it was heavily impacted. Today, there are several things driving our hospitality growth. First, the return to in-person events, the lifeblood of the hospitality cloud. Second, pandemic-driven digital transformation has turned hoteliers into tech-savvy buyers who now embrace technology more than ever to get their job done. And third, as hotels face staffing shortages, teams know they need to work smarter and more efficiently, which increases their reliance on Cvent technology. Let me talk about these a bit more in depth. As in-person events return, hoteliers and venues want to increase their marketing efforts to get in front of planners before the competition. In addition, given the market fluctuations and travel patterns that impact leisure travel, hotels want to lock in both short and long-term group bookings for operational stability. All this is driving demand for our sales and marketing solutions. For example, a national property managing company signed a one-year $270,000 ACV deal to leverage our marketing business transient solutions to help them meet their group business goals for 2023. And one March, Dallas Hotel had an AC of $235,000. And this past quarter, they just signed an additional upsell for $110,000 to attract even more meetings and group business to their newly renovated property. There are many hotels out there that are spending tens of millions of dollars on renovations, and we plan to continue to target newly renovated hotels as the pandemic eases. In addition, we're seeing record engagement from destination management organizations and convention and visitor bureaus. Just about every major city and most small to mid-sized cities have these organizations to bring meetings, tourists, and consumers to their city. For example, we had several large city DMOs purchase our advertising solutions to support their group marketing efforts, helping us increase deal sizes by tens of thousands of dollars. Another driver of our hospitality cloud growth, as I mentioned earlier, is the continued hotel staffing shortages. Sievent technology can fill these gaps and help hoteliers automate and reduce manual processes across nearly every aspect of the group meeting process, from sourcing, to managing room blocks, to diagramming meeting space, to responding to group leads. Some examples are a leading global hotel chain signed a $486,000 ACV contract to use Cvent's interactive floor plan and 3D diagramming solution across a number of hotels. A nationally recognized operator of special event venues, another target market for us, signed a three-year contract for a TCV of $811,000 for Cvent's 3D diagramming across nearly 100 of their venues. And one large Las Vegas hotel that had an ACV of $600,000 invested another $300,000 for just our business intelligence software to help their sales team prioritize what RFPs to bid on to see how their bids compare to their competition, taking their total ACV to $900,000. It's worth taking a pause and just focusing on the fact that this one hotel is now spending $900,000 annually on Cvent products. This really highlights how critical technology has become to group and meeting-focused hotels. So as you can see from the examples above, hotels are continuing to buy not just marketing packages to get in front of the growing interest in in-person events, but also our software to automate, streamline, and more effectively manage their meetings and group business. In summary, we have momentum across our business driven by our strong competitive position and changing industry dynamics that work in our favor. But I'd be remiss if I wrapped up our call today without discussing the possible impact that the current macroeconomic uncertainty could have on our business. Now, despite the macroeconomic conditions, we continue to see our customers invest heavily in their total event program. And after being deprived of in-person events for so long, Organizations recognize more than ever that they offer a highly effective way to maximize engagement, generate leads, deepen relationships, and build brand loyalty. So even with the potential economic downturn, we believe events aren't going to go anywhere because organizations now have the flexibility to run event programs with a mix of formats which optimizes their budget. Our robust platform provides customers with the flexibility they need and our total event program go-to-market approach enables Cvent to power the event landscape regardless of what comes our way. In short, we built a business that is positioned well to capitalize on the triple threat and that now has been bolstered by the return to in-person events. Our experienced leadership team has successfully led the organization through the 2001 and 2008 recessions, which enabled us each time to distance ourselves from the competition. And we are confident in our ability to adapt, grow, and come out stronger no matter what the environment is. Now I'll turn it over to our CFO, Billy.