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spk00: Greetings, and welcome to Mobivity's second quarter 2021 earnings call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. At that time, if you have a question, please press the 1 followed by the 4 on your telephone. If at any time during the conference you need to reach an operator, please press star and zero. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Brett Moss of Hayden IR. Please go ahead.
spk04: Thank you, operator. I'd like to welcome everyone to Mobivity's second quarter 2021 earnings call. Hosting the call today are Dennis Becker, founder, chairman, and chief executive officer, and Lisa Brennan, chief financial officer. Before I turn the call over to management, I'd like to call everyone's attention to the company's safe harbor policy. Please note that certain statements made on this call will be forward-looking statements, which are subject to considerable risks and uncertainties. We caution you that such statements reflect management's best judgment based on factors currently known and that the actual results or results could differ materially. Please refer to the documents filed by the company from time to time with the SEC, and in particular, its most recent filed annual report on Form 10-K. These documents contain and identify important risk factors and other information that may cause actual results to differ from those contained in the forward-looking statement. Any forward-looking statements made during this call are being made as of today. If this call is replayed or reviewed after today, the information presented during this call may not contain current or accurate information, except as required by law. The company assumes no obligation to update these forward-looking statements publicly or to update the reasons actual results can differ materially from those anticipated in forward-looking statements, even if the new information becomes available in the future. Today's call may include non-GAAP financial measures, which require reconciliation to the most directly comparable financial measures, which are calculated and presented in accordance with GAAP and can be found in today's press release, along with our recent corporate presentation, which also is available at mobility.com. With all that said, I'd like to turn the call over to Dennis Becker. Dennis, the call is yours.
spk05: Thanks, Brett, and I appreciate everyone on the phone for taking the time to join us on our call today. I'm pleased to report that revenue growth resumed in the second quarter as our team expanded our sales and marketing efforts to capture growing demand and continue expanding into new markets. Our team has successfully penetrated the convenience store market, including the addition of the second largest convenience store chain in the world. This has diversified our market focus and greatly expanded our sales pipelines. Convenience stores are an ideal market for us to leverage our experience and success from the restaurant industry. In the U.S. alone, there are approximately 70,000 convenience stores generating more than $21 billion in annual food service sales. We have built a significant pipeline with other convenience store brands who have seen the impact of data-driven SMS marketing programs on both direct sales and the promotion of CPG brands that sell through convenience store chains. Mobivity's long-term strategy has always been to deliver our products and services beyond the restaurant industry. And in just the first six months of this year, we have proven that we can penetrate another lucrative vertical market at scale. We believe there are several market dynamics that make the convenience store industry a tremendous growth opportunity, while also setting the stage for further expansion to other vertical markets. First, while several industries suffered during the pandemic, the convenience store industry saw inside sales increase to a record $255 billion in 2020, according to an NACS State of the Industry report. In summary, the C-Store industry is focused on growing food service, is focusing on technology to aid in that growth, and is enjoying strong financial performance due to changing consumer buying behaviors imposed by the pandemic. I'll also add that the vast majority of C-Store locations are corporate-owned, meaning the adoption of the new services and technology can be executed at scale more quickly. All of these trends have combined to form a rapidly growing sales pipeline that now represents several large name brands. In the second quarter, we began executing nationwide deployments of mobile messaging programs for our largest customer in the convenience store space, and the consumer response was incredible. Several SMS text messaging programs, such as contests, special offers and promotions, and direct marketing designed to drive sales of various products drove more than 1.7 million consumers to subscribe to recurring text message communications. This is more than 20 times the new consumers we saw join SMS programs in the first quarter of this year. We believe our business will further accelerate as the success of these programs gain publicity throughout the industry and consumer behavior demands SMS text messaging as the de facto communication channel. While we're very excited by our progress in the C-store space, I also want to point out that there are several other closely related industries where we can parlay our success and pursue additional growth. For example, there are more than $77,000 in variety stores in the U.S. The legalization of gaming across the country has opened new avenues for loyalty and customer engagement, where we are primed to capitalize and have had some early success. Add the drugstore, grocery, and even mass merchandiser markets, where Target has opened 100 urban-focused small-format stores, and the long-term addressable market for our products and services is massive and exciting. Our long-term vision has always spanned several industries where data-driven, personalized SMS messaging programs can deliver exceptional outcomes for brands. and we believe that our cornerstone in the restaurant industry and expansion into the convenience store space is the beginning of an inflection point for our business. We are encouraged by our pipeline, which is up 700% since the start of the year, and we believe that with this success, we'll be able to move even more quickly to markets beyond these two core verticals. Zooming out, broader market trends are further supporting the outlook for SMS marketing across several industries. In January 2020, 51% of retail marketers in a Commerce Next survey said they planned to increase investment in messaging or SMS marketing, and that figure grew to 56% by June. A study by Grandview Research reported that the U.S. SMS marketing market size was expected to register an annual growth rate of 20% from 2019 to 2025. Their analysis included a report showing that SMS has a better average click-through rate in comparison to any other leading marketing tool. Additionally, text messages also fare better in other parameters, such as higher open rates and a lesser number of customer complaints. These benefits are anticipated to drive the demand for text message marketing for several years across a number of industries. It's clear that this channel is poised to go mainstream, and we are better positioned than ever to capture that growth. I will now turn the call over to Lisa for a more detailed view of our financial results And then I will come back for a few summary comments. Lisa?
spk03: Thanks, Dennis. I'll kick off with our cash position. We ended the second quarter with approximately 1.9 in cash, and our accounts receivable was approximately 1.6 million, which we believe is sufficient to support our operations for the foreseeable future. Also note that we were granted PPP loan forgiveness in July on our loan of $891,000, which will be reflected in our third quarter financials. Our revenue and gross profit for the second quarter of 2021 was roughly flat on a year-over-year basis at $2.8 million and $1.5 million, respectively. I'd like to point out on a sequential quarter basis, comparing the second quarter of 2021 to the first quarter of 2021, revenue and gross profit increased 14% and 7%, respectively. I'd like to point out that our sequential growth was primarily a result of our first customer win in the convenience store space. We expect this customer to continue growing as we continue expanding in the C-Store vertical. Total operating expenses for the second quarter of 2021 increased 33% to $2.9 million, compared to $2.2 million in the same period of 2021. Most of the second quarter year over year operating cost increase is from cost reductions in the second quarter of last year due to the COVID crisis. Additionally, we began increasing our sales and marketing investments during the first half of this year in anticipation of the COVID recovery and our expansion into other markets. Finally, I would like to point out that our sales and marketing expenses in the first half of 2021 increased to $2 million versus $1.3 million in the first half of 2020. as we began to invest in expanding our sales and marketing efforts to capture the revenue growth from the recovering restaurant industry, as well as expand into the convenience store space. In contrast to the increase in sales and marketing, we've reduced ERD expenses in the first half of 2021 from $2.2 million to $1.4 million as we completed several product development initiatives last year and are now primarily focused on customer acquisitions. I'll now turn the call back over to Dennis for his closing remarks. Dennis?
spk05: Thanks, Lisa. We were very pleased to resume growth in the second quarter as several key indicators pointed to the rebound we believe would ensue following the peak of the pandemic. The restaurant industry is increasing marketing budgets, millions of new consumers are subscribing to mobility-powered SMS marketing campaigns, and our success serving the second largest convenience store chain in the world has expanded our market focus and greatly expanded our sales pipeline. Additionally, our team has done an amazing job expanding our sales and marketing efforts in anticipation of growing demand and expansion into new markets. We executed a variety of marketing events during the second quarter, including two very well attended events in partnership with Greg Creed, former CEO of Yum! Brands. I'm also very proud of the fact that customers like Barbecue Holdings publicized the incredible results our team has delivered in driving guest frequency and spend for our proprietary products and services. As the restaurant industry resumes its recovery from the pandemic, coupled with our aggressive expansion into new markets such as the convenience store industry, we believe our increased industry visibility and proven success will result in accelerated growth throughout the remainder of this year and beyond. I thank the entire team at Mobivity for their continued dedication to building value for our customers and shareholders despite the historic challenges of these times. Thank you for tuning in and for your continued interest in mobility. We'll now open up the call for Q&A.
spk02: Thank you. If you would like to register for a question, please press the 1 followed by the 4 on your telephone. You will hear a three-tone prompt to acknowledge your request. If your question has been answered and you would like to withdraw, please press the 1 and the 3. Once again, to register for questions, Please press the 1 followed by the 4 on your telephone now.
spk01: And Mr. Becker, it appears we have no questions at this time, sir. All right. Very good.
spk05: Well, I appreciate everybody dialing in and look forward to updating later in the year on our next quarter.
spk02: And that does conclude the conference call for today. We thank you all for your participation and kindly ask that you please disconnect your lines. Have a great day.
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