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spk00: Welcome to Clara's fourth quarter and full year 2022 earnings conference call. After the market closed, Clara released unaudited results for the fourth quarter and full year ended on December 31st, 2022. The press release as well as a replay of today's call can be found on the company's investor relations website at investors.clara.com. Please view the release for additional information on what will be discussed today. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. Joining us today are Calera's founder and chief executive officer, Dario Calegero, chief financial officer, Giacomo D'Aglio, and VP of Investor Relations, Colin Gillis. Following their remarks, we will open the call for your questions. I would now like to turn the call over to Clara's Vice President of Investor Relations, Colin Gillis. Sir, please proceed.
spk04: Thank you. Before we begin, we'd like to remind everyone that during today's call, management will be making forward-looking statements. Please refer to the company's SEC filings, including the company's annual report on the Form 10-K, for a summary of the 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 statement. The company does not undertake and specifically disclaims any obligation to update or revise the 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, adjusted gross margin, adjusted EBITDA, adjusted earnings per share. These metrics are not determined in accordance with generally accepted accounting principles. Definition, calculation, and reconciliation to the financial statements of these non-GAAP measures can be found on 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 operations. Now, I'd like to turn the call over to Dario for an overview of Calera's fourth quarter. Dario?
spk01: Thank you, Colin, and thank you to everyone for joining us here today. Our fourth quarter started an exercise of forward momentum for Calera, with revenue exceeding the upper end of our guided range as we build on our existing customer base, develop new valuable enterprise partners, and gain success layering in higher margin communication channels. The fourth quarter was highlighted by record revenue of $93.7 million, an increase compared to the $90 million in the year-ago period. When adjusted for fourth quarter 2021 foreign exchange, the quarterly revenue would have been $97.7 million. Fourth quarter revenue showed healthy seasonality with over a 10% sequential increase when compared to the first quarter of 2022. Results for the fourth quarter also exceeded the stated guidance range of 86 to 90 million. Full-year 2022 revenue marked a record year increase in 26.7% to $339.2 million from $267.7 million in the comparable year-ago period, or 32% to $353.3 million when using fiscal year 2021 foreign exchange rates. Full-year and quarterly record revenue was driven by growth with existing customers, ramping volume with new customers, and the constant focus on the enterprise businesses that deliver a large amount of volume of communication. As we discussed previously at Calera, Part of the way we measure success is with the following key operating metrics. One, billable messages, two, voice calls, and third, dollar-based net expansion. For the fourth quarter, we delivered 12 billion billable messages connected over 2.2 billion voice calls, and the dollar-based net expansion rate was 98.1%. But looking at Calera's top 30 customers, our dollar-based net expansion rate was 139% in the quarter. In 2022, our technology managed 51.5 billion messages and 8.1 billion voice calls, utilizing our relationship with over 1,600 telecom operators, including all Tier 1 US carriers, directly connected. When we discussed that Calera is a global business with scale, the 51.5 billion messages delivered in 2022 is over 5 million messages delivered per hour for every single hour of the year. As it relates to margin expansion, in order to change the sale mix with products with higher profitability, we identified three different strategic initiatives. to help our customers in delivering safe, effective, and efficient communication. Focus on global enterprises, focus on global connectivity, and focus on intelligent CPaaS new products. During the fourth quarter, we managed to make significant progress on all the three initiatives. We announced strategic partnerships with global enterprises like Amazon and Oracle. and with telecom operators in key markets like PLDT in the Philippines and Claro in Central America. We also achieved significant growth in our registry business with the campaign registry, and we acquired new customers for Calera Video like Flowey in Italy, and we launched new products such as chatbots that will help our customers in developing conversational capabilities across all the communication channels. While we are positive on the quarterly results, we are also aware of the uncertain economic environment facing global companies in 2023, including Calera. The management team has created a value creation program that started in January and is focused on reducing costs to invest in the free strategic programs that will drive business at higher margin. Our chief financial officer will have more comments on the program shortly. To finish this portion of the call, it has been two decades since cholera's infection, and I'm very proud of how far we as a company have come. From a startup to our current status as a global leader, I look forward to continuing to be part of the bright future I know is ahead. With that, I will now turn the call back over to Colin.
spk04: Thank you, Dario. Brands want to communicate with their customers. and are going to use multiple channels to do so. We are a communication platform as a service. As our customers' needs change, we change with them in the most cost-effective manner, giving our unique ability to be agile. This is very much a fragmented market with only a few global players, which is why our partnership with over 1,600 operators and direct connectivity in over 100 countries is an advantage to our enterprise customers that can use Calera as a single source to leverage their global needs. Regardless of the economic environment, this industry is expected to grow, but it's hard to judge the long-term growth curve as we take into consideration economics across the globe. Giacomo is going to run through the financials in detail, but before he does, I'm going to address our first quarter expectations. We remain focused on delivering on our promises throughout the year. We expect the company to grow revenue in 2023 when compared to 2022, but the exact rate for the full year is difficult to forecast at this time. Therefore, we're giving specific guidance one quarter at a time for the near future. With that, we expect first quarter revenue to be in the range of 77 million to 81 million compared to 80.5 million in the first quarter of 2022. Before I turn the call over to Giacomo, I also wanted to touch on the December 22 board enhancement. As previously announced, the company added two new independent board members, Kathy Miller and Karen Joyce Taizan. Both Kathy and KJ bring extensive experience in previous leadership roles, including CFO, chief operating officers, as well as skills in corporate finance, accounting, financial planning and analysis, treasury, regulatory filings, tax, procurement, and investor relations. We are very fortunate to have their experience, and we welcome both to the Calera Board. I'll now turn the call over to Giacomo to detail our financial results.
spk02: Thank you, Colin. I will now run through our financial results in greater detail. As Dario noted, our total revenue in the full quarter was $93.7 million, an increase of 3.7 million versus 90 million in the comparable year-ago period, and again above the previous provided projections. The four-quarter and the full year were both records for revenue. We have a global revenue footprint and a well-balanced portfolio across geographies and sectors. Further supporting this revenue is a solid customer base with virtually zero churn within our top 10 customers, which accounts for 43.3% of revenues during the fourth quarter. Gross profit for the full year was $17.1 million, a 21.9% increase when we compare to $57.5 million for 2021. For the fourth quarter, gross profit was $17 million compared to 21.1 million in the comparable year-ago period. Gross margin for the fourth quarter of 2022 was 18.2% compared to 23.5% of the fourth quarter of 2021. Q4 net loss total 57.8 million or $1.28 per share based on 45.2 million weight average shares outstanding. compared to a net loss of $7.3 million, or $0.17 per share, based on 41.9 million weight average shares outstanding in the comparable year-ago period. Net loss includes an implement loss of intangible assets of $49.4 million. For the full year, net loss totaled $98.5 million or $2.25 per share based on 43.9 million weighted average shares outstanding compared to a net loss of $34 million or $0.92 per share based on 37 million weighted average shares outstanding in the comparable year-ago period. Adjusted gross profit, an on-gap measure of operating performance, reported $19 million in the fourth quarter compared to $22.8 million in the fourth quarter prior year and increasing $1 million from the third quarter 2022. Adjusted gross margin for the fourth quarter of 2022 was 20.3% compared to 25.3% in the comparable year-ago period. For the full year, adjusted gross profit increased 24.9% to 76.6 million from 61.4 million for the full year 2021. Adjusted gross margin was 22.6% versus 2021 adjusted gross margin of 22.9%. Adjusted net income, a non-gap measure of operating performance, In the fourth quarter was a loss of $4.4 million or $0.10 per basic and diluted share based on 45.2 million weight average shares outstanding compared to $3.9 million or $0.09 and $0.08 per basic and diluted share based on 41.9 and 51.9 million weight average shares outstanding respectively in the comparable year-ago period. For the full year, adjusted net loss was 1.2 million or 3 cents per basic and diluted share based on 43.9 million weight average shares outstanding compared to a net income of 6.1 million or 16 cents per basic and 13 cents per diluted shares based on 37 and 48.1 million weighted average share outstanding, respectively, in the comparable year-ago period. Lastly, adjusted EBDA, a measure of operating performance, was 2.5 million compared to 9.6 million in the fourth quarter of 2021. For the year adjusted EBDA was 18.7 million versus 18.6 million in the full year 2021. At the end of the four-quarter cash equivalents, restricted cash and short-term investment were 78.6 million, compared to 97.9 million in December 31, 2021, or 82.2 million when using 2021 year-end foreign exchange rates. The company has also announced the beginning of its 2023 financial restructuring and cost reduction program. The program is designed to position Calera to serve the demand from global businesses to interact with their customer base using existing and emerging communication channels while driving labor and cost efficiency that are available to Calera from its geographical scale. The program seeks to achieve the following goals. One, Adjusted BDA to exceed 20% growth in 2023 compared to 2022 with additional growth in 2024. Two, organization streamline aim to reduce monthly cash payroll cost by more than 15% in 2023. Three, increasing net cash provided by operating activities by 2023 year-end compared to 2022. Four, continue to focus on R&D investment to always provide high-quality service standards and offer new products to our customers. This completes my financial summary. I now like to turn the call back over to Dario for his closing remarks.
spk01: Thank you, Giacomo. In summary, we are pleased with the record top-line results we achieved during the fourth quarter and full year. Though the broader global economic landscape continues to provoke uncertainty, Calera provides the needed suite of products to its customers. By focusing and investing in ways to layer in our high-growth channels to existing customers, maintaining success within new customers, and consistently expanding our operating footprint, We can expect to keep our new momentum. And with that, we are ready to open the call for your questions. Operator, please provide the appropriate instructions.
spk00: Thank you. We will now begin the question and answer session. To join the question queue, you may press star then 1 on your telephone keypad. You will hear a tone acknowledging your request. If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star, then two. We will pause for a moment as callers join the queue. The first question comes from Mike Lattimore with Northland Capital Markets. Please go ahead.
spk03: Great, thank you. Congrats on the strong revenue growth from the Cost controls look very logical there. I guess on the top 30 customer net dollar base expansion rate of 139%, can you give a little bit more color on that? Are these customers seeing growth in their current applications, or are they launching new ones, or is it more channels coming on board? What's driving that top 30 in BB&A?
spk01: Hello Mike, this is Dario. I'll take this question. Well, the key driver for the net dollar expansion rate is the increase in volume and revenues per customer, per existing incumbent customers. We are still experiencing a very significant growth in most of our customers. uh and and that's the key driver obviously also upselling new channels is part of this but it's not really much affecting the top line it's more affecting uh the mix of product is more affecting the uh the gross profit i would say okay and um sorry last quarter you talked about sales cycles elongating a little bit um
spk03: Any notable change this quarter? Did they elongate more or improve, or what's the general view on that?
spk01: Well, frankly speaking, the demand seems to be still a little bit weighing on decision-making processes because of the uncertainty mainly. we experience overall, I would say, a slowdown in the demand, which is not very much related to the lack of need for these kind of services for the enterprises, but more for the attitude of enterprises in slowing down investment and innovation in their digital transformation processes. So nothing is really changing, but even though I feel pressure, on the business, and they feel that there is still a significant room space for growth going forward, depending on the overall macro scenario that we are experiencing in this weird period.
spk03: I guess this is the last one. The R&D cost was down sequentially quite a bit. Was there a one-time benefit there, or how should we think about that?
spk07: I'm not sure I have a question.
spk03: Just the R&D costs, I think it was 2.8 million versus 5.2 in the prior quarter. Is there a one-time benefit in there or something?
spk07: I'll leave this question to Giacomo. Jack, you're on mute. Oh, sorry. Sorry.
spk02: I was talking on mute. Sorry. So one is the one-time benefit, and the second is the capitalization. So you have to see R&D not only in the line of expense, but also consider the capitalization that we have improved this year compared to last year.
spk06: Okay. Thank you.
spk00: Once again, if you have a question, please press star, then one. The next question comes from George Sutton with Craig Hallam. Please go ahead.
spk05: Thank you. Good evening, gentlemen. So I wanted to clarify the two numbers that you gave for dollar-based net expansion. You mentioned your top 50 customers were 139%. Your overall customer base was 98%. My assumption is you're taking the Brazil customer out of the base. That's what gets you that higher number indicative of strength across the rest of the top customer base. Is that why you gave those two numbers the way you did?
spk01: Well, a clarification is the top 30 customers, not the top 50. This is important. And then I'll leave to Giacomo to answer because there is some... You're correct.
spk02: In the top 30 customers, Brazil is not anymore present. And also, there is an effect of FX in some customers that we have in Europe in particular compared to last year's.
spk05: Gotcha. Okay. One other thing. Colin mentioned that you have... you're really working off of a global macro challenge. You want to be the single source for global needs from customers. Can you just help us how that message is resonating? Are you finding customers coming to you as a single source, sizable companies coming to you as a single source, or are they still very aggressively looking at each market opportunity distinctly?
spk01: Well, I'll take this one. In general, large accounts, all of them are going through a vendor consolidation process because since the messaging space is extremely fragmented on different geographies, in the last years, you had maybe 15 to 25 vendors to sell the same service, but to be sure, the geographies, if you are a global service provider like most of the U.S. large companies, especially digital ones or the software service ones, Single sourcing is typically in some specific industries, especially in banking and financial services, because it's a very significant piece of integration and software middleware. So switching vendor implies also to run a very significant migration project that is somehow cumbersome. But I would say as long as the sector, the market is getting into the maturity phase, there's more rationalization of the partnership and vendor list. So many customers that were using 15 or 20 providers in the last years, now they are consolidating on three to five. And we obviously run to be one of these three to five, because we tend to provide high-quality services, especially towards the routes where we have zero-op, one-off interconnection, and we are best of breed in terms of quality.
spk06: Understand. Okay. Thanks, guys. Appreciate it.
spk07: Thank you very much for you, John.
spk00: At this time, this concludes our question-answer session. I'd now like to turn the call back over to Mr. Collagero for his closing remarks.
spk01: So, thank you very much, Operator. Thank you all for joining us on today's call. As always, we would like to thank our extensive worldwide network of partners and investors, as well as our employees, for their continued support. Operator?
spk00: I would like to remind everyone that a recording of today's call will be available for replay via a link available in the investor section of the company's website. Thank you for joining us today for Clara's fourth quarter and full year 2022 earnings conference call. You may now disconnect.
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