Kaleyra, Inc.

Welcome to Calera's fourth quarter and full year 2021 earnings conference call. After the market close, Calera released unaudited results for the fourth quarter and full year ended December 31, 2021. The press release as well as a replay of today's call can be found on the company's investor relations website at investors.calera.com. Please view the release for additional information on what will be discussed today. Joining us today are Calera's founder and chief executive officer, Dario Calogero, and chief financial officer, Giacomo Dall'Alio. Following their remarks, we will open the call for your questions. During today's call, management will be making forward-looking statements. please refer to the company's SEC filings, including company's annual report on Form 10-K, for a summary of forward-looking statements and the risks, uncertainties, and other factors that could cause actual results to differ materially from those forward-looking statements. Calera cautions investors not to place undue reliance on any forward-looking statements. The company does not undertake and specifically disclaims any obligation to update or revise statements to reflect new circumstances or unanticipated events that occur, except as required by law. Throughout today's press release and on the call, we'll refer to adjusted gross profit margin, adjusted EBITDA, and adjusted earnings per share. These metrics are not determined in accordance with generally accepted accounting principles and therefore are susceptible to varying calculations. A definition, calculation, and reconciliation to the financial statements of these non-GAAP measures can be found in the tables included in our press release. We believe these non-GAAP measures of Calera's financial results provide useful information regarding certain financial and business trends and the results of operation. Now, I would like to turn the call over to Calera's CEO, Dario Calegero.

Sir, please proceed.

Welcome, everyone, and thank you for joining us today. For those who are new to our story, I'll begin with a brief overview of our business. Calera is a communication platform as a service or CPaaS provider. From a high level, we provide our global partner base with an omni-channel suite of powerful APIs and visual tools to bridge the communication divide between businesses and their customers. Brands worldwide often face coverage gaps when trying to communicate with their customers, especially in industries that require security and must prioritize reliability, such as financial institutions and healthcare. Our mission is to help build lasting relationships between brands and their customers across channels, and to do so while providing services that our clients can trust. Today, our success in bridging the gap between businesses and their customers has enabled us to move closer to our long-term vision of being the trusted global CPaaS provider for our partners worldwide. While we have made substantial progress towards realizing this vision over the past few years, our work over the last year in particular has accelerated our roadmap. Today's version of Calera has increased capabilities and influence across our global footprint and channel offerings. Combined with consistent execution in our existing operation, we now have a more diversified approach to growth that will enable us to compete in more markets and at a greater scale. Our Chief Financial Officer, Giacomo Dallaglio, will discuss our financial results shortly. But before I hand over the call, I'd like to recap a few recent highlights from our stellar quarter and year. Looking at some of our key operating metrics, in the fourth quarter, we delivered 15.1 billion billable messages and connected 1.7 billion voice calls, both representing new quarterly records for Calera. In our largely volume-based business, this is a display of our ability to leverage the benefits of scale, and is an area in which we hope to drive continued growth in the future. Financially, our fourth quarter results were a direct reflection of the new Calera that we helped build throughout 2021. Even through what was an uncertain and chaotic time for our industry and our partners, we remained consistent and outperformed even our own expectations, highlighted by our first quarter in which we were EBITDA positive in our time as a public company. For both the quarter and year, we once again set new records for revenue, adjusted gross profit, and adjusted the DBA. Our full year revenue was $267.7 million, with $90 million coming in the fourth quarter. Even while only accounting for seven months of engaged revenue following the acquisition date, this represented an 82% increase versus the prior calendar year. and a 103% increase for Q4 2021 versus Q4 2020. Our 2021 adjusted gross profit was $61.4 million with $22.8 million coming in the fourth quarter with a 145% increase compared to the year-ago period. Our adjusted gross margin in the full year and the fourth quarter improved as well. with 22.9% and 25.3% respectively. Our fully adjusted EBITDA increased nearly five times to 18.6 million, 7% of total revenue, compared to 3.2 million, 2.2% of total revenue in the comparable year-ago period. In the fourth quarter, adjusted EBITDA increased 498% to $9.6 million, 10.7% of total revenue, compared to $1.6 million, 3.6% of total revenue in the comparable year-ago period. In addition to the above record KPIs, our full-year adjusted earnings per share achieved a new milestone by reaching $0.16 per basic share and $0.13 per diluted share based on 37 million and 48.1 million weighted average shares outstanding respectively. We are encouraged by our ability to remain stable through choppy waters in our space and expect to continue achieving new milestones in the quarters ahead. In addition to our standard measures of success within our business, this quarter we are introducing a new KPI which is our dollar-based net expansion rate. In line with standard industry definition, our dollar-based net expansion rate is the metric that says the identified rate at which customers' accounts increase their usage of a product, extend their usage of a product in new applications, or adopt a new product within the Calera platform. We think that dollar-based net expansion rate will be a meaningful indication of our effort to increase revenue from existing customers. In 2021, our dollar-based net expansion rate was 130%. Before I pass it over to Giacomo in just a moment, a few operational highlights stand out as well. As many of you listening today will know, in 2021, we successfully acquired and integrated Engage, bolstering our United States customer base and infrastructure network, and added new products to our offering, specifically MMS and RCS messaging. A key consideration in our combination with Engage was their existing messaging presence that immediately provided greater reach for our business. Much of the Engage footprint is in the united states and they have direct connection to all tier one carriers with this expansion into american markets through engaged infrastructure for the fiscal year 2021 we were closer to having around a third of our revenue from each of the americas approximately 29 percent europe approximately 36 percent and asia approximately 35 percent a favorable balance that makes Calera one of the most prominent and geographically diverse CPaaS companies in the world. We also successfully integrated Bandir, now Calera's video offering, as one of a multitude of investments toward expanding our omni-channel capabilities. One of our main goals for the year was to further develop our omni-channel services offering, and in doing so, improve our margin profile as well. Beyond providing the most robust suite of services to our partners, new channels such as video and audio calling have better margins than our traditional messaging channel due to the additional costs associated with messaging networks. This year, bolstered by investments including the acquisition of Mandir, Calera Video and made significant progress, highlighted by the aforementioned record volume in those channels. We have already seen the impact of this progress on our margin profile, and while we have worked ahead of us before our platform is truly omnichannel at the global scale, these advanced early progress points in our ongoing commitment to creating an omnichannel platform. The combination of a steadily growing core messaging business along with new evolving channels underlines both the problems and opportunities available in our legacy business as well as the opportunity to grow our omni-channel offering. Our 2021 first quarter was our first full quarter with Engage and Bandir completely integrated into the business. And we now believe we have reached the point in our integration where these businesses are part of Calera. Now that our integration are more than a quarter in our rear view mirror, our continued growth rate and margin expansion indicates to us that our growth strategy within our traditional businesses unit remains viable. We have a few other updates to share as well. First of all, in August, we successfully atlisted from the New York Stock Exchange American to the New York Stock Exchange. Graduating to the NYSE, a premier worldwide market, was a significant milestone. Being able to meet these more selective criteria is a testament to our improvement financially and operationally over the past few years. This year, we also launched applications on both the Shopify and the Salesforce marketplaces, connecting our CPaaS channel to a potential addressable market of over 1 million users of their software and service platforms. This year was another strong year for the industry recognition as well. During the year, we received the following notable distinctions. CPaaS provider of the year at the Juniper Research Future Digital Award 2022. Representative vendor in Gartner's Market Guide for CPaaS. Established leader in global SIPAs by Juniper Research. One of the top chatbot solution providers by CIO applications. Best RCS provider at the Future Digital Awards by Juniper Research. We were also recognized as trusted vendor by Crossdesk and Software Suggest Customer Choice Award in 2021. Lastly, we were recently awarded the Platinum Mover and Shaker in the Technical Industry Award at the Juniper Research Future Digital Awards 2022. We very much appreciate the recognition we have received from such respected sources over the course of the year, recognition that validates the work our team is doing to build a more comprehensive platform of services. In aggregate, the growing number of industry accolades we are receiving underscore an increasing awareness of Calera as a major player within the CIPAS market. In summary, 2021 was a transformational year for our business, one that represented reaffirmation of our deliberate growth strategy. As we move into 2022, we continue to believe that our growth strategy will drive sustainable long-term growth. As a reminder, that strategy relies on three main pillars. One, we are focused on expanding our geographical footprint. As mentioned, Calera revenue comes from global customers, and we are working to both expand our footprint and maintain our diverse revenue split among geographies. This ambition is driven by our view of the CPAS market as a whole, which is very fragmented and underpenetrated in many parts of the world. We believe we are well-positioned to expand our footprint to other geographies that would benefit from SIPA support. Two, we will continue to invest in our omni-channel suite of services. It's our goal to meet our partners on whichever channels they require to best connect with their customers. As video and voice communication proliferate globally, expanding into new communication streams remains an important area of investment for our teams. And lastly, we remain committed to secure, trusted service. Our business tries in industries that have the highest standards for security in their communication with their consumers. Banks, financial institutions, health care are examples that all need to be able to trust that their interaction with consumers are handled with the utmost security and consistency. Calera delivers on that in a way that no other industry player does. While other players strive for partner volume, we know that our expertise in trust principles influences customers' retention, and that with the right partners, this is an era in which we can excel. And with that, I'll now turn the call over to our Chief Financial Officer, Giacomo Dallaglio, to discuss our financial results for the quarter in greater detail. Giacomo? Thank you, Dario. Turning now to our financial results for the fourth quarter and the full year ended December 31st, 2021. First of all, let me set the tone by saying that for both the quarter and the year, we once again achieved new records of our KPIs, revenue, adjusted gross profit, adjusted EBITDA, and adjusted earnings per share in our time as a public company. Our total revenue In the fourth quarter, it increased 103% to $90 million from $44.3 million in the comparable year-ago period. For the full year, total revenue increased 82% to $267.7 million from $147.4 million in the comparable year-ago period. And this only accounts for seven months of engaged revenue following the acquisition date. The growth during the quarter and the year was driven by the complete integration of the Engage and Bandera business, as well as strong organic revenue growth across channels and a well-balanced portfolio across geographies. Gross profit increased 169% to $21.1 million from $7.8 million in the comparable year-ago period. Gross margin for the fourth quarter increased of 2021 increased to 23.5% compared to 17.7% for the fourth quarter of 2020. For the full year ended December 31st, 2021, gross profit increased 135% to 57.5 million from 24.4 million in the comparable year-ago period. Gross margin the full year 2021 increased to 21.5% compared to 16.6% for the full year 2020. Increases in gross profit were driven by increases in revenue for the quarter and the year that outpaced the cost increases. The increases in gross margin were larger due to the engagement by the year integration and increased performance by Calera Video and Calera Voice, as well by the campaign registry, our software is a service offering that has developed over the past few quarters. Net loss totaled $7.3 million, or $0.17 per share, based on $41.9 million average share outstanding, compared to a net loss of $4.5 million, or $0.15 million, per share based on 29.7 million weight average share of standing in the comparable year ago period. For the full year 2021, net loss totaled 34 million or 92 cents per share based on 37 million weight average shares of standing compared to a net loss of 26.8 million or $1.09 per share based on 24.7 million weight average shares outstanding in the comparable year-ago period. The increase in net loss over the year was mainly due to transaction costs, fundraising costs, and increasing amortization of acquired funds. Adjusted gross profit, a non-GAF measurement of operating performance increased 184% to 22.8 million, from $8 million in the comparable year ago period. Adjusted gross margin for the fourth quarter of 2021 was 25.3% compared to 18.1% in the comparable year ago period. For the full year 2021, adjusted gross profit increased 145% to $61.4 million from $25.1 million in the comparable year ago period. Adjusted gross margin for the 2021 pool year was 22.9% compared to 17% in the comparable year-ago period. Adjustment in net income and non-GAAP measurement of operating performance increased 3,056% to $3.9 million or $0.09. per basic share and $0.08 per diluted share based on 41.9 and 51.9 million weight average shares outstanding, respectively. It's an increase from $124,000 or $0 for both basic and diluted share based on 29.7 and 42.8 million weight average shares outstanding, respectively, in the comparable year-ago period. For the full year, 2021 adjusted net income increase 1,023% to 6.1 million or 16 cents per basic share and 13 cents per deleted share based on 37 and 48.1 million weight average share outstanding respectively. This is an increase from loss of 656,000 or $0.03 per basic and diluted share based on 24.7 million weight average shares outstanding in the comparable year-ago period. Adjusted BDA, an ongoing measure of operating performance, increased five times to 9.6 million, 10.7% of total revenue, compared to 1.6 million, 3.6% of total revenue in the comparable year-ago period. For the full year 2021, adjusted BDA increased nearly five times to 18.6 million, 7% of total revenue, compared to 3.2 million, 2.2% of total revenue in the comparable year-ago period. The increase in adjusted BDA was primarily due to the impact of the business combination with Engage and Bandir and cost synergy between the two legacy businesses. At the end of the four quarter, cash, cash equivalent, restricted cash and short-term investment were 97.9 million compared to 37.8 million on December 31st, 2020. Our solid financial position at the end of the four quarter is also reflected in our net current assets, which exceed 80 million and in a significant reduction in our loan facility, reducing to 38.7 million at December 31st, 2021, from $48 million at the end of the previous year. Our debt financial structure is only marginally exposed to a foreseeable raise in interest rate with over 80% of our financial bearing a coupon interest rate and an average variable interest rate under 3% bearing on our loans with Italian banks. For the full year 2021, net cash use in operating activity was 11.9 million, primarily affected by over 22 million transaction and fundraising cash outflows. Before I turn the call back over to Dario, I'll now take a few minutes to provide our financial outlook for the remainder of the year. As a reminder, at this time, Calera provides quarterly and annual revenue guidance as we believe these metrics to be key indicators for the overall performance of our business. Moving to our guidance. As a reminder, our fiscal year for 2022 ends on December 31st, 2022. As of today's calls, we have now spent revenue for the first quarter to range between $84 million and $86 million, and for the revenue, for the full year 2022 to range between $400 million and $405 million. Overall, we remain highly confident in the financial health of our business, as well as our ability to sustainably grow for the foreseeable future. This completes my financial summary. I'd now like to turn the call back over to Daria to ramp up our remarks for the call. Daria. Thanks, Giacomo. Looking back, we believe this past year and the fourth quarter will serve as a bellwether for the future direction of our business. Our geographical footprint has materially expanded into a healthy global balance that we will look to maintain moving forward. Our inroads into new growth areas, including Calera Video and Voice, along with promising results from the campaign registry, have begun to drive leverage into our operating models. Combined with the record and growing volume we are driving across our global customer base, we see a clear path to scale and increase profitability over the long term. Above all, we have remained consistent in our ability to deliver on our promises and to execute against our growth strategy. Moving forward, we will look to build on our steady track record and positive momentum as we advance along our journey to become the trusted partner in the rapidly expanding and evolving CPaaS market. And with that, we're ready to open the call for your questions. Operator, please provide the appropriate instructions.