LifeSpeak Inc

Good morning and welcome to the LiveSpeak fourth quarter and fiscal 2021 results conference call. All lines have been placed on mute to prevent any background noise. And after the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press star and the number one on your telephone keypad. If you'd like to withdraw your question, press star two. At this time, I would like to turn the call over to Michael McKenna, Chief Financial Officer of Lifespeak. Please go ahead, sir.

Thank you, operator, and welcome to the Lifespeak fourth quarter and fiscal 2021 results conference call. Before we start, we would like to remind you that all amounts discussed on this call are denominated in Canadian dollars unless otherwise indicated. Please note that statements made during this call may include forward-looking statements and information and future-oriented financial information regarding LifeSpeak and its business, and disclosure regarding possible events, conditions, or results that are based on information currently available to management. which indicate management's expectation of future growth, results of operations, business performance, and business prospects and opportunities. Such statements are made as of this date hereof, and Lifespeak assumes no obligation to update or revise them to reflect events, disclosures, or circumstances except as required by applicable securities laws. Such statements involve significant risks and uncertainties and are not a guarantee of future performance or results. A number of these risks and uncertainties could cause results to differ materially from the results discussed today. Given these risks and uncertainties, one should not place undue reliance on these statements, and information. Please refer to the forward-looking statements and information and future-oriented financial information section of our public filings without limitation, our MD&A, and our earnings press release issued earlier today for additional information. I'd like to now turn the call over to Nolan Dieterman, LifeSpeaks Executive Chairman, for opening remarks. Nolan? Thanks, Mike. Good morning, everyone. We really appreciate you pending our call. 2021 was a truly transformative year for LifeSpeak. Not only did we increase our revenue by 130% year over year, but we materially scaled and diversified our business through highly strategic M&A. We broadened our geographic presence and deepened our management team, all in the short time following our IPO on the Toronto Stock Exchange in July of 2021. Over the eight months since becoming publicly listed, we've been working around the clock. As many of you will already know, we've successfully closed four accretive, synergistic, and complementary acquisitions, including Lift Session, Alavita, and Torchlight in the fourth quarter, and subsequent to quarter end, our acquisition of WellBeats. Each acquisition met our highly disciplined criteria, which include a strong strategic product fit to broaden our SaaS-based offering, a complementary client base to promote cross-selling, a broadened geographic presence to further our global diversification, deep bench of unique talent, and a financial profile capable of producing profitable growth. While still in the early innings, of course, the integration of these businesses is progressing according to plan. Our customer base is expanding globally. We are enhancing and augmenting our service offering, and we are adding to what we believe is already a world-class team of employees and managers. As we've discussed with many of you previously, the foundation for all of these developments is our B2B status-based mental health and total well-being platform. Our high levels of engagement with corporate clients allow us to position LifeSpeak as the front door for digital mental health and total well-being education. And it allows us to synergistically add highly complementary components to better serve our growing client base, which provide a significant amount of added value for these corporate clients. We believe we are extremely well positioned to continue our profitable growth in both the near and the long term. Once again, we'd like to thank you for joining the call today, and we look forward to educating you more about our business and our progress. Now I'd like to turn the call over to Michael Held, Likespeak's founder and CEO, for some remarks.

Thanks so much, Nolan. We're very pleased to be with you today to review the 2021 operational and financial results, as well as several recent and exciting developments for Likespeak. LifeSeek's SaaS-based mental health and total well-being education and engagement platform continues to experience significant growth supported by consistent long-term market trends, including increasing corporate spending on mental health and total well-being, digitalization of health solutions, growth in micro-learning content as a means of well-being education, and increasing corporate spend on remote access tools. Our high-value, holistic mental health and total well-being solution, coupled with targeted strategic M&A, are driving scale in our business at a very rapid pace. As evidence, I'm pleased to report that our fiscal 2021 revenue increased to $23.3 million from $10.1 million in fiscal 2020, an increase of 131%. Our fiscal 2021 adjusted EBITDA increased to $6.6 million from $3.2 million in fiscal 2020, an increase of 105%. We reported annual recurring revenue of $35.5 million as of December 31, 2021, an increase of 98% over the same date in 2020. And our client count increased by 98% to 422 clients as of December 31, 2021, compared to 213 as of December 31, 2020, and prior to the addition of WellBeats. Examples of client wins within our enterprise customer segment included Banner Health, Ruth Power, and New York Presbyterian Healthcare Systems. On our embedded customer segment, we added Safe Harbor Health and Unum joined as significant client additions during our fourth quarter. In addition, we also finalized a very significant program for Lyft with the AARP subsequent to quarter end. In addition to continuing to add a strong set of new customers, we have further diversified and strengthened our business during the reporting period with successful acquisitions. We are very pleased with outcomes of our growth strategy for 2021. We are even more excited for the future when we include Wellbeats, our largest acquisition to date, a highly complementary physical welding platform based in Minnesota that closed subsequent to year end. Wellbeats provides us with an extremely well-recognized, market-leading, on-demand physical welding platform, which broadens and deepens our core B2B offering. The connection between mind and body is increasingly recognized as being critical to overall well-being. This makes the addition of WellBeat's highly strategic LifeSpeaks growing portfolio of digital health offerings complements our existing physical well-being platform with additional tools and topic areas and brings with it a portfolio of over 400 net new clients with strong growth and retention metrics. With a combination of acquisitions made to date and our geographic expansion, our one-of-a-kind platform generates a unique opportunity to cross-sell total welding tools to our 800-plus clients and partners around the world and has significantly increased our market presence and geographic diversity. We are thrilled with the quality of assets we have acquired and the team we have assembled, including the fact that all of the founder CEOs of the acquired companies have joined us to take on increasingly important roles in executing on the opportunity set before us. We are eager to capitalize on this compelling opportunity and believe that our financial results demonstrate that we are making significant progress towards this goal. I'll now pass the call back to Mike McKenna, who will walk us through our detailed financials, following which I will make some closing remarks before we turn it over for questions. Mike.

Thank you, Michael. We believe our 2021 results demonstrate the strength of our business, and we are excited to share these results with you today. As Michael mentioned, we're also very enthusiastic about our four recent acquisitions. So in addition to discussing our quarterly and annual comparative financial results, I will also aim to provide everyone with additional information on the pro forma business, with the objective of continuing to provide a detailed understanding of our new combined businesses. First, to touch on our 2021 results. Revenue for Q4 2021 increased to over 6.8 million, a 115% increase when compared to the same period for 2020. For the year, revenue increased by 131% to $23.3 million. Our annual recurring revenue grew in Q4 by 48% to $35.5 million, or by 98% when compared to the same period in 2020. Adjusted EBITDA reached over $0.9 million for the quarter, a slight decrease quarter over quarter. However, our overall adjusted EBITDA grew by 105% to over $6.6 million for 2021. Net loss for Q4 amounted to $6.9 million, primarily due to the cost incurred in relation to our recent acquisitions and share-based compensation costs, which are related to special one-time grants in conjunction with the creation of a new omnibus incentive plan at the time of the IPO, and the accounting treatment for shares issued in conjunction with acquisitions. Our adjusted net income for fiscal 2021 was $5.7 million, which is an increase of 92% year over year. Our total client base in 2021 grew to 422 clients. This includes new clients added with the acquisition of Lyft, Alavita, and Torchlight, and represents a 56% increase quarter over quarter and a 98% increase versus the same period in 2020. Each of our acquisitions to date are making important contributions to our consolidated business. And we are excited to continue to integrate them into our product offering while generating cross-sell opportunities within our broad client base. In addition to the acquisition strategy, we have also taken a full review of the cost structure of the business units and platform and have identified approximately 1.9 million in cost synergies from the Lyft, Alavita, and Torchlight acquisitions. For the quarter, we recognized approximately 0.4 million of these synergies. Overall, we have made great strides across the entire business since our IPO in July of 2021, significantly enhancing our scale adding adjacencies diversifying our geographic presence all while being mindful and attentive to our profitability metrics with the inclusion of wellbeats and as at december 31st 2021 our pro forma arr equates to 54.7 million compared to 21 million at the time of the ipo an increase of approximately 165%. Our total number of clients now exceeds 800. This compares to 228 at the time of the IPO, an increase of over 250%. And of the 54.7 million in ARR, 52% of the business now comes from US-based and international clients. This compares to approximately 8% at the time of the IPO. Overall, this is quite a transformation of our business in a six-month period. Our business has grown rapidly, and we believe that our platform is more compelling than ever, given the significant scale we have created and the profitable nature of our overall business. In addition to the previously announced metrics, we do closely track other key performance indicators to help us evaluate the strength of our business and to better understand our corporate development and progress. These include gross margin. Gross margin for the fourth quarter of 2021 was 87% compared to 88% in the fourth quarter of 2020. Gross margin ended fiscal 2021 at 90%, directly in line with the metric in 2020. Net dollar retention rate. NDR provides a consolidated measure by which we can monitor the percentage of ARR retained through our existing clients. This number grew to 112% as of December 31st, 2021. This was an increase from 102% at the end of Q3 21 and is primarily due to our ability to continue to upsell products and service our clients and the growth within our embedded clients due to the land and expand nature of product rollouts. Logo retention rate. Logo retention rate provides a consolidated measure by which we can monitor the percentage of enterprise clients retained during each period. Logo retention for the 12 months ended December 31st, 2021 was 95%. This is the same as our Q3 2021 logo retention rate and continues to demonstrate our ability to retain clients as well as the resilience and long-term importance of our platform. Now moving on to the pipeline. During the fourth quarter and substance quarter end, as Michael mentioned, we are pleased with the success in signing new enterprise and embedded clients and continue to see positive momentum within both go-to-market strategies. We launched new partnerships with Safe Harbor Health and Unum in Q4, bringing the total embedded clients to 14 at the end of fiscal 2021. Substance quarter end, Lyft Session launched an exciting partnership with the AARP. the U.S.' 's largest non-for-profit, non-partisan organization dedicated to empowering people 50 and older to make accessible the Lyft platform to AARP's 38 million members. This is a very exciting opportunity for Lyft and LifeSpeak more generally as it continues to demonstrate success and opportunity within the Invented Solutions model. On the enterprise side, At the end of the quarter, LifeSpeak had a total of 408 enterprise clients, and now we have over 800 when adjusting for the WellBeats acquisition. Finally, in regards to our capital structure, following the WellBeats acquisition, as you may recall from the transaction announcement, we believe that we have structured a very attractive financing package for the acquisition of WellBeats. With the previously announced and closed concurrent private placement, we continue to maintain a healthy capital structure with flexibility to operate our business going forward. With that, I'll turn the call back to Michael Held to provide some closing remarks. Michael?

Thanks so much, Mike. We are very excited about our progress to date and the opportunities ahead. As we look forward to the remainder of 2022, we are highly confident that our growth will continue as we leverage our leadership position in an industry where organizations are ascribing greater value than ever before to the mental health and total well-being of employees. We believe that our deep and diverse customer base demonstrates the efficacy of our business model, and we believe we are only beginning to realize our full potential. The scale we've reached today with over 800-plus clients the pace at which we've grown, and the resulting retention rate we achieve all demonstrate that our solution is essential to our clients and their employees. We are looking forward to updating you on our progress in the coming weeks and months, and we'll now open the call to questions. Operator?

Thank you. We will now begin the Q&A. If you'd like to ask a question, you can press star 1 on your telephone keypad. please ensure you are unmuted locally when asking your question. Our first question for today comes from Doug Tyler of Canaccord. Doug, your line is now open.

Thank you. Good morning. On previous calls, you talked about a number of embedded wins that you'd signed but are not yet included in your ARR as of quarter end or were slated to ramp in the periods ahead. Can I perhaps get you to update us on the progress of the rollout of some of these large deployments you've signed with these 14 embedded clients over the past few months and quarters?

Thanks, Doug. Thanks for the question. McKenna, you want to talk about what we're able to disclose at this point? Well, yeah, Doug, there still are a couple of those opportunities. I mean, even we mentioned the program, for example, with – AARP, you know, as an event on the quarter end, like that's not included in our ARR, nor are a couple that we know that are, you know, sort of slated to launch in short order here. The ARR metric is stuff that only we would have had in progress as of December 31st. We have had good success with a couple of events. deals that started out on the smaller side. In Canada, for example, Industrial Alliance is one that's continued to grow month over month over the back half of the year. You also see in terms of the net dollar retention rate being a little bit higher this quarter. That is due in part to some growth in some of these deals on the embedded side that are ramping up. So I think overall, progress remains very positive there are probably some larger deals out there that have taken probably a little bit longer to get signed. But I think the pipeline remains strong, in fact, probably stronger than ever. And so very good, consistent opportunity for us to continue to grow this space. And then we're also seeing some opportunity now with the addition of the broader sort of platform. to enhance some of these embedded deals into 2022 that way as well. So lots of opportunity. But again, consistent methodology Doug used on the ARR calculation in the sense that it's only deals that were in progress as of December 31st.

Okay, that's helpful. Can you speak to how you expect the EBITDA margins are expected to progress towards your guided ranges from the levels we are seeing here at Q4?

Yeah, so I think the key point there is that, you know, we've identified quite a significant amount of cost savings that comes just from this initial set of acquisitions. We probably got to those a little bit quicker than we had expected, Doug, and that was largely due to, you know, sort of seeing where the margin profile was. It's just a bit of a cost-heavier quarter with absorbing all the businesses, but when you get When you think about the quarter itself, obviously, you know, significant projected revenue growth in 2022 and good, strong management of the cost base. You know, I think it's largely in line with where we guided. I mean, it was 28% for the year. We've already identified, you know, significant cost savings, more to come with the well-being systems. We're not trying to create a synergy story here. But at the same time, you know, it is important that we do manage this cost base to manage towards those guided EBITDA margins. I think we take the combination of all the factors that I've just outlined, you know, we clearly see a path to that guidance.

Okay, and perhaps the last question for me, you know, with the guidance that you provided around the wellbeats, you know, you've done a lot of acquisitions here that have kind of obscured what the organic growth rate is for the business. So, I mean, the question is, if we look at the... The ARR growth that you project in your guidance for this year, which works out to roughly 40% to 50%, that should be considered a good underlying organic growth rate expectation for your business once we look past the machinations related to M&A.

Yeah, I think that's right. And I think we see opportunity for that to probably grow further. you know, when we start talking about things like cross-sell opportunities and the like, Doug, you know, we're seeing good progress on that factoring in. Appreciate that's not specific to just the LightStreet business, but the LightStreet business and the platform there creates those opportunities. So we're certainly, you know, seeing even further positive momentum on that for 2022.

I appreciate the color. I'll pass the line.

Thank you. Our next question comes from David Newman of Desjardins. David, your line is now open.

Good morning, gentlemen.

Good morning, David.

Just digging into the back of Doug's question on some of the cost factors in the quarter, it looks like to me, if I had to frame it properly, that it is sort of a timing difference where you guys are investing in G&A and sales and marketing to build out the platform. And, of course, I've been extremely busy, but... If you look in just the sales and marketing line and the G&A line looking out for the full year, are we kind of at the run rate plus well beats to kind of get into that margin target range of 30% to 40%? Kind of just drilling down those two line items in particular.

McKenna, you want to answer that more specifically? I think that's a good way to think of it. In other words, our business scales very well. So go ahead.

Well, for sure. I think absolutely, especially in the G. N. A side, David, I think, you know, sales and marketing costs, frankly, in that line. Uh, we do hope those increased quarter over quarter. So some of that's where the commission, um, gets, uh, gets put, you know, so, so we obviously would see, you know, that increasing with increased sales. But I think from the perspective of people, the footprint, The service offering, frankly, we're very well placed now with what we have. We probably will see some additional savings with integration on the WellBeat side, just with potential overlap there as well. We've already talked about that on the quarterly call. Sorry, on the announcement call, excuse me. But yeah, I think, David, you're right. We've got to a place where we've invested in the business. The platform is ready and focused for growth in 2022.

Very good.

To add one color to it, when you think of it just to your point, we now have a plainer way to put it is we have a management team and an employee profile that can support all of this year's growth already. Got it. On a run rate basis.

Plus well deep, sort of framing it that way. Correct. Correct. As a personal company. Yeah, yeah. Got it. Okay. And then we live in this kind of weird world where we're all going back to work, taking masks off, et cetera. Have you seen anything at all in terms of gaps or deferrals as organizations kind of deal with people getting back to work? And how would you frame that against your sales pipeline and the trends in enterprise versus embedded utilization, all those sort of things? Have you seen any blips at all? Or potentially is this like so sticky now with enterprises and companies just embracing the physical and mental well-being?

So I'll give a quick answer. I'm not held at any color. The way we see it is we've always sold into organizations pre the COVID workplace disruption. The one thing we're definitely seeing in this world is a hybrid return, whatever that means to every individual organization. In almost all cases, there's a component of hybrid. Our model is so democratically available, no matter what your, call it, reinstituting of physical work is.

that we haven't seen any negative pressure at all from that, quite the contrary. I think our solution is so flexible that one of the big advantages is no matter how you choose to re-engage with your workforce, our solution fits all of your employees.

And whether you change that in two weeks because some new mask mandate comes or goes, Once we're installed in all of our products, we're ubiquitous. And so I think that's one of the strengths of the product. You know, anything you want to comment specifically on, things you've heard or seen from specific anecdotes even that corroborate that?

Yeah, and hey, David. Yeah, I mean, it's definitely busier than ever. I think part of it with people going back to work is there's, the combination of there's a bit more certainty, you know, life's going to continue, they're back to business. I think if anything, there were some, as much as we've grown, there's still holes like what's happening to the world, and now people are back to business, we're getting more meetings, and coupled with that, you know, there's the transition back, there's more anxiety, like how does it work, how do we keep people safe, how do we keep people calm. The Ukraine is certainly not helping anyone's, you know, mental state, so there's a lot of I hate to say this, but the world's not getting any less anxious. And so I think that recognition that, you know, if it's not COVID, then it's the Ukraine. If it's not the Ukraine, it's something else. And I think we're now being purchased in, you know, almost in risk mitigation mode. It's like we don't know what's next, but it will be something, and we need something in place. Again, we don't want to be caught flat-footed. When COVID hit, we didn't have anything in place. So, you know, our experience now is definitely, like, continued up. I'm sure there's some, you know, there's some strain on some, you know, HRM benefits, but it's kind of, lost in the shuffle of kind of overwhelming uptick and if anything when we hear it it's you know just give us another month not you know we need two years kind of thing so so far you know all really positive um and uh it's hard with so many things driving so much anxiety um and and the one thing we've seen which, you know, we're backing up with these acquisitions. There's more requests around this mind-body connection, like we want people to be physically healthy because it'll help with their mental state. So I think that is certainly helping with the uptick as well.

Okay, and last one for me, guys. It's early days. Sorry, Nolan, you were going to say something too? Nope, nope. Okay, last one for me. Just the... It's early days, but you've cobbled together quite a good platform here in terms of the ability to cross-sell various things. So any sort of cross-sell that you're seeing across the various platforms and geographies, I mean, obviously the potential there could be very, very significant. So maybe just some color there.

Sure. So we're not yet able to disclose any – but what we are seeing and what makes us very happy, David, is it's not one way. We sort of hoped that we would see it this way, and it has definitely emerged that we're seeing clients of each of the different, call it now, sub-brands. generate interesting opportunities for others across the spectrum. So it isn't just a case that we can go to our clients and sell out. We're seeing it always. And what really, really matters to us, and this is, I think, the core theme, you know, The issue with our one product business before, I wouldn't call it an issue, is if you go in to pitch a client, as we know, and for whatever reason, that isn't the thing they're spending money on. So, for example, physical well-being may be their first move, and mental well-being may be their second. There's no way we could, in the old world, have won that sale, so we would have been able to maintain the relationship and come back to them at some period of time in the future and hope that they would broaden their spend. And that happened all the time. Now we can actually address whatever it happens to be that they need now, and we're seeing that type of effect as well, which isn't obviously necessarily cross-selling. It can be net new clients. So we're seeing it in both areas. We're seeing cross-sell across the platform, and then we're seeing an ability to win business that in the old world we just wouldn't have won at that time because there was no open to buy, so to speak, for us.

And we're seeing evidence of all of these. We're also seeing it at the small end and in larger organizations. So we're sort of seeing it across the board is the best way to put it.

Excellent. Well, I look forward to an exciting 2022. Thanks, Chase. Got you.

Thank you. Thank you. Go ahead. Sorry. We're not just seeing it at the enterprise level. We're actually seeing cross-signal activity at the embedded level as well, which I thought would take longer to get those conversations going, but they're not.

Does that, like, in terms of the curve and in terms of getting to, I think it was average, you're kind of expecting $6 million per embedded. Does that get you up the curve quicker, too? Does that actually facilitate an expedited pace?

There's two reasons for that. Yes, an expedited pace because they're embedding larger chunks. But also, as we've discussed, some of our embedded deals have taken a longer time to launch, but we're bringing in new products. at that transition time. So, you know, maybe something's taken two months longer to launch, but now we're talking about launching with other products so we don't have to restart the whole, you know, process of getting somebody up and running. So I think there are two ways in which this is going to activate that element. Excellent. Thanks, guys.

Thank you. Our next question comes from Paul Traber of RBC Capital Markets. Paul, your line is now open.

Thanks very much, and good morning. Just wanted to focus on the enterprise clients at the end of 21, just looking at it on an organic basis. What was the number of new enterprise clients that you added on an organic basis in the quarter?

Okay, I'm on your line.

Yeah, sorry, Paul. I was on mute. It was about 25, Paul. Okay, great. And net dollar revenue retention jumped significantly in the quarter, and it seems like it's an uptick versus the prior trend. Can you just elaborate further on the drivers of that improvement from Q3 to Q4? And then also, could you speak, like, is it a one-time bump, or do you think it's sustainable at these levels? Yeah, good question, Paul. Obviously higher than we had seen previously. That is related to some upticks, some increased ramp up on some of our embedded programs. And so the embedded contribution was strong and growing. So I think overall, you know, are we going to always be at that, you know, sort of level? I think that's a lofty goal. But I think, you know, generally speaking, as we continue to see ramp, you know, I think we're going to be able to certainly be at levels higher than we previously were. And then part of that comes to with value added services, right? So as we do more cross sale, as we add some things with lift into the livestock, et cetera, right. We're, we're getting a bit more sort of uptick in terms of, of, of some of the upsell opportunities. Okay. And so that, that really helps on the, uh, on the client level as well. So will we always be at 112, uh, probably, uh, you know, not every quarter, um, but we're consistently seeing enough growth that we're going to be able to be obviously surpassing the sort of one or two, one or three, you know, we were at coming out of the gate. Right. Okay, that's helpful. Looking at your talent base or your employees, obviously with the acquisitions, you've significantly expanded your talent base. It sounds like, is it a lower priority now to expand your employee base, maybe organically, just given all the talent that you've onboarded through acquisition? How should we think about that through 2022? Yeah, so the way we look at it, and if you think of what we're all facing, you can call it the great resignation, but one of the biggest challenges organizations face is both retaining and then finding new talent. We've reported back to you guys, I think, on our strengths of retention. What these acquisitions have really allowed us to do was attract both at the senior and in, frankly, all levels of the organization, really amazing talent in chunks that otherwise is just very, very, very hard to come by. So, again, we didn't do the acquisitions for those particular purposes, but it's been an amazing side benefit.

So we think we've got a fantastic array of folks in this company who can take us to that level.

That's not to say we're not going to continue to hire selective people. growth-oriented people we absolutely are. But this gave us a real boost in terms of our ability to hire a high-quality people with very observable track records, kind of on mass capacity. So it's been incredibly helpful for that, on that score. And just lastly for me, just on acquisitions in general, I mean, obviously you've done four in the last six months or so. A lot of new people joined the company. There's integration work that needs to be done. How do we think about the pace of acquisitions maybe in 2022? Do you expect to continue that pace or do you think you take a little bit of a pause here? Not four and six months. That's the best way to put it. No, I think we have a lot of operational work to do. We've got a lot of organic growth opportunities in front of us. We're always going to be opportunistic on M&A. But I think the best way we characterize it, Paul, and we've been very consistent, is we never viewed ourselves as a roll-up. We think we happen to find for very unique acquisitions opportunistically, and what we decided was work around the clock and get them done because we thought they were transformational. We feel that way sitting here today. We definitely have a strong M&A pipeline, but we are not required to, nor do we feel driven and compelled to do M&A. So I think what you'll see is some, you know, a handful of M&A this year. Definitely, it would be very shocking to us if it's the pace of last year. If that's the case, it's because some opportunistic thing has befallen us where we happen to find some amazing companies and we just go after them. But I think a more moderated pace would be our expectation.

Okay, thank you. I'll pass the line. Thank you. Our next question comes from Gavin Fairweather of Cormac. Gavin, your line is now open.

Oh, hey, good morning. I wanted to start on the list in AARP partnership. Can you just provide a bit more detail on how that's going to work in practice?

Is the platform going to be accessible by all 38 million members right away, or will it become kind of accessible to new members joining that association there? Hey Gavin, it's Mike. I think the best way to think about it is in a staged rollout. We will see opportunities for that platform to be accessed through the balance of 2022 to I realize even in my comments on the script there, to think that it's going to be 38 million members out of the gate, that was a lossy number. That's their total membership, obviously. People need to sign up for the platform. They can all access it. okay but there is a there's a there's a trial period there's a sign up methodology etc so we will see uh working with arp rafi and his team at lyft are working closely with arp to create a ramp strategy uh through the balance of the year and so we'll see consistent ads uh to that platform uh through the course of 2022 and beyond of course um but it's not that we would expect um you know uh It's not that there's a certain sort of guaranteed number on day one. It's a phased rollout which creates opportunity for the program to grow and build through the course of the year. That's helpful. I'll make a note to ask you next quarter. For sure. No, no, for sure. And we should. As we get more and more opportunities like that, I think it's helpful to check back in on it. We're happy to try to provide updates with as much as we're allowed to disclose. That's great, thanks.

And then just on margins, sometimes you see companies kind of accrue sales commission throughout the year, but then require a bit of a kind of top-up seasonally in Q4 as the annual numbers are finalized. I'm curious if that was a bit of a factor here in your Q4.

There was a little bit of that. I wouldn't call it a significant impact. I mean, I think, you know, Largely speaking, as it relates to cost, you know, obviously we did absorb some additional costs with the acquisitions, Gavin, and you saw we have obviously then, you know, acted very quickly to sort of right-size the cost base, right? So there were a couple things, as you rightly pointed out, in terms of some catch-up on some commissions, but it wouldn't be considered to be a super significant amount. But it's the right thought. There always is some catch-up at year-end. That's helpful. And then just on recent M&A, I'm curious kind of what surprised you from the due diligence period to kind of post-close. It sounds like you're having maybe a bit more traction on the conversations with some of your OEM partners or some of the new platforms that you acquired. Maybe you can expand on that and any other kind of surprises that you've identified. Sure. So I think, yeah, in early days, I'd say there's two buckets of surprise. The first one you identified, I think we're, you know, and again, we're not providing numbers on this yet because it's too early, but the level of interest and ability to seamlessly move From a discussion of one product to a discussion of another within the client base, we're very pleased with. That was obviously our hope and our belief, and we did a lot of diligence around that, but that's a really interesting component. I think the other biggest wild card, and Mike held touchstone a little earlier, and I sort of briefly mentioned it, is We knew we were getting good management teams. You know, we assumed that. We did diligence around that. But, you know, quite frankly, the quality of the people, you know, and this goes a little bit to Trevor's question before, too, has exceeded what we thought, and has been more culturally similar to our business than we had even hoped. You know, there's always cultural risk. I think, frankly, the biggest risk in these acquisitions is the cultural side. I think we did a pretty good job of vetting that. And then, quite frankly, on top of doing good vetting, I think we've also been fortunate that each company has come to us with some really unique talent, and some very complementary skill sets. And we've been, I think, humble enough or smart enough or maybe some combination to take advantage of that and bring those people into the organization in broader roles. That's been a very pleasant surprise for us. Again, it wasn't a core thesis to the acquisitions. We always had hoped it.

We're very pleasantly surprised. So our team has grown in talent, you know, pretty exponentially, and we feel very good about being able to build a much bigger company without the need for a lot of new talent. Again, we'll obviously always be on the lookout for talent, upgrading talent is a core thesis, but we've been very pleased with that.

Great. That's it for me. Thanks, Max.

Thank you. Our next question comes from Adam Buckham of Scotiabank. Adam, your line is now open.

Morning. Thanks for taking my question, guys. We've spoken a decent amount about the solid KPIs in the quarter, the NDR of 112, logo retention at 95%. Both seem to indicate pretty strong underlying demand for the Lightspeed platform. In terms of 22 sort of contract renewals

you know, on a consolidated basis, are you guys able to share any color in terms of what you're seeing in terms of current negotiations for those that are set to renew?

They can anything we can add?

Well, yeah, I mean, I think, Adam, look, I mean, we're showing every month with renewals that come up that we're being very successful with that, right? So I think that's, from a renewal perspective, you know, that number's been very consistent through our time since we've IPO'd. You know, gets marginally a little bit better every quarter. So I think overall the renewals are in good shape. We're seeing pretty good opportunity while on the embedded side with, again, deals that, you know, some of these deals that we talk about in terms of, you know, you know, the sort of more land and expand model, right? Seeing some expansion in those, obviously that helps some of those underlying fundamental metrics. So, you know, I think overall, in terms of the context of anything we're seeing in that area, you know, you pointed it out rightfully, you know, that the underlying fundamentals are strong and we would expect those to continue into 2022. And once we get rolling with well-being, you know, it'd be even stronger. Okay, great, thanks. You know, second, just to sort of shift gears here on sort of the increase in SG&A, are you able to share anything on how these sort of incremental investments, you know, have increased sort of the broader growth opportunities for Lightspeak and then, you know, the customer acquisition pipeline that was kind of outlined at the IPO? Yeah, I mean, the best way to put it is we now have a much deeper bench of senior investors relationship originators, strategic partnership go-to-market folks, and salespeople. So on that side, a lot of the expense is there. And then on the marketing side, there's a substantially beefed-up expenditure that we have now on marketing.

So in those two areas in particular, in the G&A, they're really directly related to future sales. McKenna, anything you want to add there? I think that's sort of the best summary.

Yeah, and, Adam, at the time of the IPO, you know, we provided color on both the enterprise pipeline and the embedded pipeline, you know, touched upon that again on the call today. Obviously, the enterprise pipeline looks significantly different now because of the fact that, again, you know, the enterprise base is much stronger, right? And so not only, obviously, now do we have continued growth of that enterprise base through the multiple product sets that are a part of the platform, right? We talk a lot about this cross-sell opportunity. That's really what's going to continue to help companies energize and grow that enterprise platform in 2022. So we're just scratching the surface there in terms of opportunity really to harvest that enterprise base, okay? That's important, right? And then continued, you know, the embedded pipeline continues to be, you know, as strong or stronger than ever. Some of the deals, I think we've rightfully pointed out, are timing issues. Some of them have taken a little bit longer to sign, a little bit longer to ramp up in some cases. But the pipeline still consistently remains strong, and that's still going to be a huge driver of the business in 2022. So I think they've The focus hasn't changed, right? Obviously, enterprise pipeline now looks different because of just the product suite and the fact that, you know, especially once we add WellBeats, right, we've just got a much larger base to cross out into, okay? But on the embedded side, we're continuing to still focus on that as well and grow that and look forward to some good opportunities in 2022 there as well. Great. Thanks for that, Collier, guys, and congrats on the quarter. Thanks.

Thank you. As a reminder, if you'd like to ask a question, that's star 1 on your telephone keypad. Our next question comes from Jeff Martin of Roth Capital Partners. Jeff, your line is now open.

Thanks. Good morning, everyone. Wanted to touch on the progress you've made with respect to selling into international and U.S. markets. I believe you made two key hires mid-year last year. Could you provide us an update on the progress that they're making?

Hal, do you want to provide a little color on just general activity there? I don't think we can speak specifically to clients.

You know, McKenna just slapped me with what I'm allowed to share and not share. But, you know, I feel great about it. I mean, the Middle East is obviously our newer venture. Mike, I don't know if I'm allowed to share, but we've signed our first contract out of the Middle East this quarter. We have, and that was out of Israel, we have a great pipeline. Nancy Murad, who we've added, is a very senior person. So it's a faster pace of ramping up and feels really good in both enterprise and embedded. I think we'll see great success there. In Europe, we've been around, I was going to say a lot longer. I guess it's still only a year. But, you know, we've landed, you know, a number of embedded, you know, we're in the process of launching. We've been having clients at a good pace. The person that's been around the longest, you know, has has a lot of traction that continues to grow. We added two new people at the end of last year. One has already just literally this week inked their first sale. So I couldn't feel better. And, you know, we have a great lead there. There's not as much noise in Europe as there is in North America, and there's even less in the Middle East. So, you know, if we can you know, move like the wind, I think, well, we can really own those spaces. So feel really, really, really good about it. And it's interesting. You know, we had one opportunity in the Middle East with Embedded where when we announced the WellBeats acquisition, they said, oh, we already have traction with them in the U.S., so now we have proof of concept. So we're actually seeing in the weirdest and most awesome ways – you know, support from these acquisitions, you know, all the way across the pond. So, you know, it's still, you know, it's only a year in Europe and a fraction of time in the Middle East, but definitely the ramp-up feels a lot, lot faster than, you know, it took us a while to get rolling in the U.S., so very exciting.

Great. Sounds like good progress, yeah. I wanted to also ask with respect to the embedded pipeline relative to your guidance for 2022, I believe, at the time of the IPO, you assumed some larger embedded clients would come in. That's obviously been a longer process than expected. With respect to your 2022 guidance, how are you – factoring in embedded wins on an average size basis relative to maybe what you had kind of factored in at the time of the IPO.

McKenna, you want to comment? The key theme is it's portfolio-based, but Mike, why don't you break that down a little for us? I think, Jeff, what we're seeing is that – Some of the ones that we're winning are smaller up front, a little bit with some ramp. I think we've been consistent in that message. But we already have a couple indications of extensions of projects that were done in 2021 that will ramp significantly into 2022. So we're seeing some good visibility on some of those ramps, which I think is very encouraging. you know, where we probably thought we might have had a couple more sort of sizable day one upfront deals in 2021. The general trend has been a little bit more on the land and expand, right? We're okay with that, right? Because as Nolan mentioned, we're certainly continuing to manage this like a bit of a portfolio. And so I think what we've tried to really make sure we factor into 2022 is frankly timing and ramp. And, you know, good quarter over quarter growth for the deals that we have and, you know, will continue to sign. Doesn't mean there's not another sort of big chunky day one deal out there. There's some of those in the pipeline, right? they're just harder to pinpoint as to what that exact day is. And so that's why I think the approach that we've taken to show some ramp within the embedded deals and sign consistently more deals that will ramp over time I think that's a much more safe and consistent approach for 2022, just based on the trends that we're seeing. And still a very good, strong pipeline. So we're very pleased with it. It's just, you know, we're learning a little bit, too, as to timing and execution and how long things take. Great.

And then I have a question for you. When I speak in January of this year, I was just wondering if you wanted to touch on that, you know, how impactful do you anticipate that will be going forward?

I mean, I think on a specific basis we don't forecast anything per se because of it, but what it does is unlocks. a whole host of additional features and additional capabilities and even more global deployment. So I think, frankly, it facilitates the growth that we have. I think that's really the best thing to say. We're trying to make the point to folks that we're constantly innovating the platform. We aren't sitting back and relying on any old versions of anything, and we're trying to push the envelope in. functionality and features, and then ultimately flexibility in terms of what additional products you can have. So I think it's worth calling out. I appreciate you mentioning it. I think from a specific forecasting standpoint, you know, it's really more of an embedded capability of the business that's required to move forward as opposed to something that we specifically think will generate a specific revenue stream.

Great. Appreciate the time. Thank you. Thanks, Geoff.

Thank you. Our final question for today comes from Justin Keywood of Stiefel. Justin, your line is now open.

Thanks for taking my call. I was just wondering if there's been any change in the competitive landscape, if you're seeing any new competitors come up. And then also just trying to understand the guided EBITDA margins, because it's quite high for a SaaS company, and the question becomes if it makes sense to invest more in growth versus letting the business optimize with higher margins.

So, Justin, great questions. I think from our standpoint, there's nothing that's particularly new. I mean, as you can imagine, you know, I mean, we're evidence of it. the industry continues to consolidate.

We think that's a theme that obviously all of you guys as investors and as analysts are well aware of. We think we're taking advantage of that in the right way for us. So we think that that's just the natural course of the industry. Over a long period of time, that will continue. So there's nothing we've seen that's come up on our radar that's been new, per se. We worry about and other competitors on the inordinary course. So that's sort of status quo. I think with respect to your comment on margin, I mean, look, I think I'll sort of recap, given this is the last question. What we set out to provide, and I think we've sort of tried to deliver this message consistently, is a high-growth company with lots of really interesting, very strategic M&A opportunities. and do that profitably, we are not afraid of investing in any way, shape, or form. We think we can do all that and still maintain a profitable business. You know, whether we get recognized for that in the short term or the long term, you know, we just think it's a better way to run a company. Having said that, wherever we see investment opportunities, we're not afraid of them.

You know, I think as you can see from some of the fourth quarter imaginations, we certainly have to – put the businesses into that shape.

But as we get bigger, the one thing that the comments read across all the platforms we have and have looked at is we do scale nicely with size. And so that's just the truism of everything. It's our business and everything we've acquired. So we don't feel like we're skimping on any investment. Quite the contrary, we've put a lot of investment in. And to your point, if we saw... a massive investment that would generate massive returns with high confidence, we would jump on it. So we're not afraid of that. We just think we have a pretty good balance of both significant ability to do targeted strategic M&A and the right investment in people, which is really where we spend a lot of our money. Good to hear. Thank you for taking my call.

Thanks, Brad. Thanks, Justin.

Thank you. We have no further questions, so I'll hand back to Nolan Biederman for any closing remarks.

Thanks very much, operator, and everyone. We appreciate your continued support, interest, willingness to dig in, and hopefully we've given you guys some good color. Obviously, we're always available and happy to discuss anything we're able to discuss. And, you know, just a parting shot that we sort of just said it, you know, a minute ago, but you know, I think our mission is to deliver solid organic growth, really interesting strategic M&A and do it profitably and, and keep looking to the long term to build a fantastic company in this space. But the world really needs this stuff, especially now as Held described, the world's not less anxious than it was a year ago, only more, um, you know, so whatever we can do to contribute to that and do so profitably, um, you know, is our mission.

So again, thank you guys. Um, we'll, you know, we'll keep at it and, uh, you have access to us whenever you need it.

Thank you all for joining today. You may now disconnect.