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spk02: Good day and welcome to the Accela Technologies earnings update. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on a touch-tone phone. To withdraw your question, please press star, then two. Also, please limit yourself to one question and one follow-up. Please note this event is being recorded. I would now like to turn the conference over to Vince Condavetti, Head of Investor Relations. Please go ahead. Thank you, Dave, and good afternoon.
spk04: Welcome to our earnings call to discuss our fourth quarter and four-year results for the period ended December 31, 2023. Our presentation has been posted to the IRS section of our website. Speakers on today's call are Par Chadha, Executive Chairman, and Matt Brown, our Interim Chief Financial Officer. Today's agenda will be as follows. Paul will provide an overview of our results and update you on our strategic initiatives. Matt will then walk you through some financial metrics. Finally, we will end with Q&A. We expect this call to last well under an hour. Some of the matters we will discuss in today's call are forward-looking and involve a number of risks, uncertainties, and other factors that could cause actual results to differ materially from those in such forward-thinking statements. Such risks and certainties are set forth in our presentation. So with that, I'll turn over the call to Par, our executive chairman.
spk01: Thank you, Vin. Good evening and thanks everyone for joining our Q4 and full year 2023 business update call. We ended the year with many positives, but as always, there's more work to be done. Excel is in motion. We have said in the past, our goal is to convert actions into results. We are poised to do just that. May I suggest everybody take a look at slide number four. It's my pleasure to share some highlights of Q4 and full year 2023. Some of the key accomplishments that we did in 2023. Well, we did accomplish many, but not all. Our revenue for 2023 was 1.064 billion. It was lower by 1.2% year over year. Some of the revenue decline was due to network outage in 2022. and also due to the sale of our high-speed scanner business. Our accelerators worked hard and won incremental business even with some dark clouds. We expanded some existing customer contracts. This all helped mitigate some of the revenue declines. We were Our efforts to work with the industry research organization were also well received and paid off. We received several recognitions from the best industry research organization that cover us. This speaks to the strength and value proposition of our business model. Our customers like it and it's nice to also have the growing recognition All of the hard work we put in in 2022, we started to see benefits in 2023. Business and cost management focus continues and we have much more to accomplish. For example, gross margins in 2023 improved by $31 million. How is, in prior calls, we've talked about automation. And that's what has allowed us to deliver 1.2 less revenue with 1,900 or 11.8% less employees. That means our strategy of automation and delivering more with less is working. Our adjusted EBDA was just 60 million. we did have a fair amount of expenses related to 2026 debt exchange that completed in 2023 in the summer. Also, XBP Europe expenses. We were successful in reducing our debt. We built in some flexibility in our documentation. We also completed the listing of XBP Europe, which now trades on NASDAQ under XDP. Let's take a look at slide number five. The message I would like to leave on this slide is a strategy that paid off well in 2023, continues in 2024. I really see no reason to change what's working. So we plan to just forge ahead. We did good by optimizing revenue and cost, and we'll continue to go down this path and make more progress in 2024. We won $198 million in annual contract value in the past year. Our renewal rates were impacted partly by the 2022 event that I mentioned before. To serve our customers better, we continue to make investments. These investments are broad. We have made investments in people. We continue to invest more in automation. We are doing many things to improve the user experience, such that our customers make it easy for them to do business with us. We're making investments, as Matt will talk about in his talk, in cloud operations. And of course, yes, in artificial intelligence, in AI. We want to expand our wallet share. To do that, we are also adding new services. Two of our newer growth initiatives, one is FAO Services, and the other one is Reactor.ai. We've included links to these services that are available on their respective websites. These are very exciting areas for growth for us. Check them out. We are very excited about our solutions. And we are grateful to our team and grateful to our customers. We want to be a very valuable solution partner with our customers' journey, not in just digital, but also now in AI-enabled services. With that strategic update, I'll hand over the floor to Matt Brown, who has done a great job After Matt is finished with his talk, we'll open it up for Q&A. Take it away, Matt.
spk00: Thanks, Parth. Good afternoon, everyone. This is Matt Brown, Interim CFO. We reported revenues of $1.064 billion for 2023, reflecting a slight decrease of 1.2% year-over-year. At the segment level, ITPS declined by 4%, offset by growth in our healthcare solutions and legal and loss prevention services segments by approximately 5% and 11% respectively. ITPS decline was primarily driven by the sale of our high-speed scanner manufacturing and maintenance business in June of 23, impact from the 2022 network outage, and lost renewals. Offset by continued cross-sale and 130 new logo wins. Q4 FY23, while down 0.9% year-over-year, grew sequentially by 4.5% quarter-over-quarter, primarily driven by a large new logo and growth in our top customers. Full-year gross margins improved by 31 million year-over-year, or 310 basis points. Profit improvement was driven primarily by increased automation, headcount reductions of approximately 1,900 employees, and reduced administrative spend. Cost savings are partially offset by investments in talent and cost migration from CapEx, which is down 10 million year-over-year, moving to OpEx as we shift from our data center infrastructure to cloud computing. We have made good progress on savings initiatives, but still have significant opportunity for margin improvement in 2024. Our net loss narrowed to $124.4 million, an improvement of $291.4 million compared to the prior year. And cash flow from operations turned positive in 2023, with more than $90 million in improvement over 2022. In our EBITDA reconciliation, you can see our walk to $60 million in adjusted EBITDA, removing non-operational gains and adding back transaction and certain one-time costs. We've simplified our EBITDA adjustments and are not including at-backs for optimization and restructuring or any historically recurring costs or savings initiatives. For 2022 versus 23, our year-over-year adjustments are coming down significantly, and our EBITDA and cash EBITDA are converging. I'll point out that the drop in Q4 EBITDA was primarily driven by a number of charges we've taken for litigation settlement, bad debt reserves, and dark facilities. On the balance sheet, we achieved a significant reduction in current liabilities year-over-year by over $115 million. While we saw partial benefit in 2023 with a $25 million reduction in overall interest expense, our Q4 interest expense is down nearly 40% year-over-year. In 2024, our focus remains on driving revenue stabilization, margin improvement, and strategic growth initiatives. We are optimistic about the opportunities ahead, especially with our investments in emerging growth areas. In closing, I want to express my gratitude to our dedicated team, our customers, and our investors for their continued support. We're executing diligently on our path to recovery and growth, and we look forward to sharing our progress in the coming quarters. Thank you, and we will now open the lineup for questions.
spk02: We will now begin the question and answer session. To ask a question, you may press star, then 1 on your touch-tone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star and then two. Also, please limit yourself to one question and one follow-up. At this time, we will pause momentarily to assemble our roster. The first question comes from Craig Colosi with Algebras. Please go ahead.
spk03: Yeah, hey, guys. Thanks for holding the call and... It's been a while since we've heard your corporate vision. I guess first and foremost, can you talk about where liquidity is and how you feel about liquidity and levers you can pull to potentially improve liquidity, asset sales, or really how you see bridging the cash flow needs of the business to the point where operationally the business is in the place to sustain itself? Thank you.
spk01: Matt, if it's okay, maybe I kick it off, and you can add to it. Sure. Okay. Craig, thank you for asking the question. You know, history is a great... We believe in history, and it's a great way to look at what we have done in the past to predict what we'll do in the future. This last year, we did not really raise any equity. under the business, take down a lot of the servicing of the debt in using both, as Matt pointed out, increasing our cash flow, but we stayed within our swim lanes. And at this time, we have, although we have many levers to pull, and we will continue to both expand liquidity and pull levers. But it will be premature for us to talk about what we will do and when we will do at this time. Thank you. Okay. Thank you.
spk02: This concludes our question and answer session. I would like to turn the conference back over to Parichatta for any closing remarks.
spk01: I'm very grateful to all of our stakeholders, employees, customers, and I wish everybody a very happy Wednesday and the rest of the week and look forward to covering and discussing Q1 results in the next coming few weeks. Thank you very much.
spk02: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
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