LiveVox Holdings, Inc.

Good afternoon, everyone, and welcome to the Livebox second quarter 2023 conference call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for operator assistance. This call is being recorded on Tuesday, August 8, 2023. I would now like to turn the conference over to Alexis Watt, Vice President, Head of Investor Relations. Please go ahead.

Good afternoon, and thank you for your participation today. With me on the call today are John DeLullo, CEO, Executive Vice President, and Chief Financial Officer. Before we get started, I would like to remind you that comments made during this conference call and webcast contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and are subject to risks and uncertainties. Any statement that refers to expectations, projections, or other characterizations of future events, including financial projections or future market conditions, is a forward-looking statement. The company's actual future results can differ materially from those expressed in such forward-looking statements for any reason, including, without limitation, those listed in the risk factors section of our SEC filings, including our 10-K filed with the SEC on March 2, 2023. LiveVox assumes no obligation to update any such forward-looking statements. Please also note that past performance is not a guarantee of future results. Certain information discussed on this conference call was derived from third-party sources and has not been independently verified, and accordingly, the company makes no representation or warranty in respect of this information. During this conference call, the company will discuss non-GAAP financial measures as defined by SEC Regulation G. A reconciliation of each of these non-GAAP measures to the most directly comparable GAAP financial measure can be found in the earnings press release, which is available on the Investor Relations website, investors.livebox.com. A recorded replay of this call together with related materials will be available on our Investor Relations website, investors.livebox.com. LiveVox's earnings release and Form 10-Q for the quarter ended June 30, 2023, will also be available on the company's website. With that, I'll turn the call over to John to begin.

Thanks, Alexis, and thanks to everyone for joining our quarterly earnings call. As you may have seen in our press release earlier this afternoon, LiveVox delivered a strong second quarter, which broadly met or exceeded expectations on nearly every key metric. It was a quarter full of accomplishments. of which we are extremely proud, including, most notably, winning more than a dozen new customers, growing our installed base sales, winning three meaningful international orders, and exceeding the high end of our guidance for revenue, gross margin, and EBITDA. For these achievements, I'd like to thank our customers, suppliers, partners, our supportive investors, the LIVOX Board of Directors, and especially our dedicated LIVOX employees. In a few moments, our CFO, Greg Clevenger, is going to share with you more details about our financial results and provide guidance for the balance of the year. In the brief time that I have today, I'd like to share with you color on our results and progress against our many initiatives. Our successes in Q2 were punctuated by the achievement of important milestones against our 2023 strategic plan to accelerate growth and to reduce costs. Despite continued uncertainty in the macroeconomic environment, In Q2, our team grew ARR 8.3% year over year. Gross margin grew approximately 600 basis points year over year. And adjusted EBITDA grew from a loss of $5.6 million to a gain of $1.1 million, an improvement of $6.7 million of quarterly adjusted EBITDA year over year. As I alluded to above, during the quarter, we won 15 new customers. More than half of these wins were outside of our heritage verticals and arose from pronounced sales and marketing efforts to grow both emerging domestic and overseas channels. Bookings in the quarter were stronger than expected, and we are currently ahead of our internal bookings target. What's more, a combination of aggressive performance management and excellent sales and marketing execution has seen our pipeline grow to record levels and sales attainment is substantially ahead of where it was this same time last year. We entered 2023 with less than 2% of sales deriving from international markets. Over several quarters, our sales, customer success, and engineering teams have been working hard to support our international expansion plans. As a result of these efforts, our bookings internationally jumped dramatically last quarter, including winning a $2 million annual revenue contract in the United Kingdom for a large inbound MSP opportunity. a mixed-use inbound and outbound solution in Dubai, and the expansion of an existing U.S.-based BPO customer into Monterrey, Mexico. We also enjoyed several important wins from our newly established channel organizations. I'm proud to report that we have now onboarded six value-added resellers, five cloud service brokers, and have in recent weeks engaged our first third-party distributor, Jenny. Jenny is one of Avaya's largest distributors, and we believe that their extensive reseller network, together with our recent admission into Avaya's DevConnect program, will bring market momentum to our channel efforts. The team has broadly embraced our strategy of opening the aperture and serving the needs of a growing number of prospects anxious to shed themselves of traditional contact center limitations, including costly upgrades, difficult expansions, arcane closed architectures, and rigid old-world pricing schemes. We have been listening to our customers attentively and now offer several new commercial models, including agent-based pricing, consumption-based pricing, and simple global contracts for enterprises and BPOs alike that want to reap the performance and economic benefits of moving to our public cloud-based CCaaS platform. Momentum in our go-to-market efforts is building. Q2 was another record quarter for sales-accepted leads and pipeline opportunity creation. Closely watched marketing metrics such as organic website traffic and social engagement also hit new records year over year. In June, we set a record for billable minutes on our Livebox platform, and our first half new logo bookings in 2023 have already exceeded the new logo bookings from all of fiscal year 2022. As we head into the second half of 2023, we look forward to normal second half seasonality tailwinds and the potential for a recovery in the consumer credit cycle. We are excited by the energy in our order flow and customer interactions. However, it is a structural reality of our business model that bookings acceleration takes a long time to manifest itself in revenue growth. We understand this process well and continue to be prudent in our investments, carefully matching spending with actual revenues. Improving COGS and controlling expenses have both been a major focus for the team. You may have noticed that in Q2, we successfully hurdled the 70% non-GAAP gross margin milestone for the first time in the company's history. Similarly, we enjoyed a dramatic improvement in our adjusted EBITDA margin, which surged from negative 17% of revenue in the second quarter of last year to positive 3% of revenue this quarter. Last quarter, I reported that we had retired version 13 of our product. I am happy to say that we are equally close to retiring version 15 of our product as well. Each time we retire a platform, it has a profound impact on COGS and support costs. Maintaining fewer releases has been a centerpiece of the efforts that brought us nearly 1,000 basis points of margin improvement in the last five quarters. As I detailed in last quarter's call, in the early days of Q2, one of our SMS text aggregators unexpectedly notified us of their decision to significantly reduce delivery of messages originating on the LiveAux platform. Although this issue did have a meaningful impact on our Q2 results, most of our customers have now been migrated to other carriers or aggregators. SMS traffic modestly improved in both May and June, and the business disruption from this unexpected event appears to be stabilizing. Lastly, we continue to enjoy a brisk tailwind in pipeline growth from inquiries related to our newly introduced AI solutions and have been characterized as an AI beneficiary by several industry analysts. Our recent platform upgrade to release 19 introduced to our base new transcription capabilities, automated call wrap services, real-time sentiment analysis, virtual agents, and proactive agent assist features. Many of our customers continue to struggle from persistent staffing shortages. LiveOps' usage-based AI pricing model, hardened API integrations, and auto-scaling cloud infrastructure provide purpose-built, easy access to these transformational AI technologies. It is virtually impossible to leverage AI tools in legacy, on-premises contact centers, and we believe that the popularity of ChatGPT Large language models and other similar tools will only serve to accelerate migrations to our public cloud-based solution. The macro trends that LiveOps enjoys are powerful and enduring. Innovations in AI, the market's acceptance of our new leading capabilities, and our commercial flexibility have created a catalyst for success in the potential migration of more than 10 million competitively held legacy contact center seats. Together with our committed employees and our obsession for customer success, We believe the future for LIBOX is very bright. Thanks again for your time today. It's my pleasure now to introduce Greg Clevenger, our Chief Financial Officer, who will walk us through the numbers.