ServiceSource International, Inc.

Ladies and gentlemen, thank you for standing by, and welcome to the ServiceSource third quarter 2020 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you will need to press star then 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star then 0. I would now like to hand the conference over to your speaker for today, Chad Lyne, Head of Investor Relations. Sir, you may begin.

Thank you, Operator. We appreciate everyone joining us today and welcome to ServerSource's third quarter earnings call to discuss our results for the quarter ended September 30th, 2020. On the call today are Gary Moore, ServiceSource's chairman and CEO, and Rich Walker, our CFO. As a reminder, our SEC filings and the earnings released we issued yesterday after market close are available on our website at www.ir.servicesource.com. In addition, we have posted earnings slides to accompany our comments today. Shortly after this call, we will post an audio replay of this call and a copy of our prepared remarks to our website. Before we begin, I would like to remind you that during the call, we will make projections or forward-looking statements that involve risks related to future events. All statements made during the call reflect our views as of today, October 29, 2020, and are based upon the information currently available to us. All projections and forward-looking statements should be considered in conjunction with the cautionary statements in the earnings press release and the risk factors included in our SEC filings, including our report on Form 10-Q. These documents contain and identify important factors that could cause actual events and results to materially differ from those contained in our projections and forward-looking statements, and we disclaim any duty to revise or update any forward-looking statements. In addition, during the call, we will also be discussing certain non-GAAP financial measures, which we believe provide additional information to enhance the understanding of how management assesses the operating performance of the business. The reconciliation of the GAAP and non-GAAP measures can be found in the earnings release that accompany this call. And with that, I'll turn the call over to Gary.

Thank you, Chad, and welcome everyone to our earnings conference call for the third quarter of 2020. We demonstrated operational resilience and financial discipline in the midst of a challenging and dynamic macro environment in the quarter. Although the headline revenue numbers reflect a tough year-over-year comparable, I am encouraged by the progress we continue to make throughout the organization. We won new business on both the new logo and installed base client front, are doing a better job executing on our brand promise, and are moving forward well with our virtual first operating model. We improved profitability sequentially from Q2, generated free cash flow of $3.4 million, be leveraged as the balance sheet further and accreted net cash in the quarter. Looking forward, I have conviction that we are aligned to an attractive long-term market opportunity with multiple avenues for us to accelerate our strategy, enhance our growth and profitability metrics, and transform our valuation profile. We recently hosted a virtual executive roundtable with more than a dozen executives from market-leading technology companies, including a mix of current clients and those with whom we are working to partner. The discussion with these leaders was representative of what we've been seeing and hearing in the market more generally. Regardless of whether a company is selling hardware or software, delivering on premise or through the cloud, or monetizing through licenses or subscription and consumption-based billing, the challenges and opportunities are the same. Go-to-market transformation and customer-centric initiatives are at the top of the C-suite agenda. The unifying priority for these companies and their leaders is they focus on delivering a better experience throughout the pre- and post-sale customer journey. They need sales representatives that are technically savvy and digitally enabled. They need customer success managers that are product experts and outcome oriented. They need renewals representatives that are consultative and growth focused. And underpinning all of these roles, they need data, processes, analytics, and insights that make every single interaction with their customers more efficient and effective. Commentary from experts at leading strategy and consulting firms validate these needs. In a recent article from Bain & Company, the headline was, and enterprise software renewals and retention have never been more important. And then in October, McKinsey & Company thought leadership piece on COVID-19's impact on B2B sales organization. They identified that more than three quarters of B2B buyers and sellers now prefer remote human interaction and digitally enabled sales have now become the next normal. These things are at the core of what we do at ServiceSource every day, and we are the market leader in terms of our scale and global presence, our solution scope and capabilities, and our client results and impact. Allow me to share some recent examples where our strategic differentiation has resulted in success in the market. In the third quarter, we secured our fourth new client logo win of the year to support a leading provider of software-related services for the $94 billion health and fitness industry. Operating in a competitive environment and facing market disruption caused by COVID-19, the company saw an opportunity to accelerate their go-to-market activities by leveraging service sources, demand generation, and conversion capabilities. In a testament to our virtual first operating model and our focus on moving with greater speed and agility, we were able to go from contract signing to being live in production with a remotely hired and trained team within 30 days. We are thrilled to welcome another new client to our software and SaaS vertical and look forward to supporting their ambitious growth objectives. In another third quarter success, we were very pleased to extend and expand our multi-year partnership with Qlik, a provider of an end-to-end real-time data integration and analytics cloud platform. Since 2016, we have played an integral role in supporting Qlik's customer growth and retention initiatives. We have managed the holistic global program across a variety of customer success motions to allow Qlik to achieve a more predictable and on-time renewal rate. In addition, our partnership has driven continuous innovation, promoting deeper customer insights and higher end-user satisfaction. It is this consistent performance, co-innovation mindset, and strong partnership alignment that allowed us to renew our agreement with Qlik for another three-year term. We are thankful for their ongoing partnership and are excited to continue to deliver results that will accelerate their strong momentum. The last story I'm going to share is evidence of our land and expand strategy and our ability to grow with our installed-based clients. In this case, We already managed and influenced approximately $1.5 billion of annual revenue for one of our clients through a large-scale global renewals management program. This cloud and software company has experienced strong organic growth rates, and they have further complemented their growth with strategic acquisitions. Given our multi-year relationship and consistently strong performance in their core business, This client turned to us to launch a new program for one of their recent acquisitions, a cybersecurity company growing in excess of 30% annually. We designed and implemented a solution and launched a remote team of professionals that went live within weeks across North America, Europe, and Asia. Our client can now focus their internal resources on larger enterprise deals knowing that they have a trusted partner and service source to enhance the renewal rate and lifetime value of the acquired company's small and midsize customers. These wins and expansions highlight how we are well positioned to address a variety of client business challenges. Looking forward, we can't speculate on how the pandemic will play out or exactly when the economy will return to a more normalized environment. However, success stories like the ones I shared and viewpoints from third party experts underpin our conviction that our strategy, solutions, and capabilities are strongly aligned to current and emerging market opportunities. Before I turn the call over to Rich to cover our financial results, I want to personally convey my heartfelt thanks and appreciation to him for a job well done. As we announced yesterday afternoon, Rich has decided to step down as CFO. And as of November 1st, we'll pass the baton to Chad Lyne, who many of you know personally and who is on the call with us today. Two years ago, Rich accepted a request from our board to fill a vacancy in the CFO seat. Since that time, he's been a trusted business partner and a tremendous asset to the company. Together with other members of my leadership team, we moved some heavy rocks and strengthened the business and made important strides on our long-term transformation. Rich, it's been a great pleasure having you at my side for these two years, and I am thrilled that you will continue to be involved as a board member. With that, let's turn to the financials.