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spk01: Thank you for your patience. The LiveSpeak first quarter 2022 conference call will begin in approximately one minute. During the presentation, you will have the opportunity to ask a question by pressing star followed by one on your telephone keypad. Thank you. Thank you. Thank you. We'll be right back. Thank you. Good morning and welcome to the LiveSpeak first quarter 2022 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 would like to ask a question during this time, simply press star and the number one on your telephone keypad. If you would like to withdraw your question, please press star followed by the number two. At this time, I would like to turn the call over to Michael McKenna, Chief Financial Officer for LiveSpeak. Please go ahead, sir.
spk08: Thank you operator and welcome to the Lifespeak first quarter 2022 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 the statements made during this call may include forward looking statements and information. and future-oriented financial information regarding life speed, its business, and disclosure regarding possible events, conditions, or results that are based on information currently available to management, which indicate management's expectations of future growth, results of operations, business performance, and business prospects and opportunities. Such statements are made as of the date hereof and Lifespeak assumes no obligation to update or revise them to reflect events, disclosures or circumstances, except as required by applicable Canadian security 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 today for additional information. I would now like to turn the call over to Nolan Biederman, LifeSpeaks Executive Chairman, for opening remarks. Nolan? Thanks, Mike, and good morning, everyone. We very much appreciate you attending our update call. As many of you will have seen following the release of our Q1 2022 results earlier today, along with an update regarding our overall business performance through Q1 2022, we have provided additional information relating to a change in customer profile within our embedded solutions platform. In our press release and MD&A, we detail what we view as an isolated short-term impact to our financial performance in 2022. Among other things, our objective today is to discuss this change within the context of our overall financial and business position and to highlight the continued strength and resilience of the overall Lifespeak business as it stands today. We remain extremely excited about our position in the market, as well as the growth trajectory we view ahead of us. Lifespeak is well positioned for continued growth. We maintain strong underlying fundamentals, both within the enterprise and the embedded go-to-market strategies. and remain resilient in the face of isolated concerns and general macro headwinds experienced by many. We appreciate there will be questions regarding our overall performance and outlook, and following our opening remarks today, we would be more than happy to address any questions further.
spk05: With that said, following our last update, the LiveSpeak team has continued to strengthen, improve, and diversify our business, attract diverse new talent,
spk08: advance product integration, cross-sell products, sign new clients, and forge ahead with the same strategy we laid out at the time of our IPO in July of 2021. Despite public market and general economic macro headwinds, we built a business that is stronger than ever with multiple paths to winning new customers while maintaining profitability. Following the acquisition of Wellbeats in Q1, We have a far more diversified base of customers, an increasingly global team of talent, and additional ways to approach customers and address competitors. We are a higher-quality company with greater downside protection, and the core fundamentals of our overall business remain strong and, in the face of a macro headwind, address very, very relevant problems. Our scale and diversity, both in terms of our geographic presence and client base, are materially stronger than they were just six months ago, thanks to the execution of our strategic M&A initiative. The integration of acquired businesses is proceeding as anticipated, and we have identified synergies both on the revenue and cost side of the business that have materialized even sooner than originally anticipated. Our acquisitions have broadened our SaaS-based offering, combined complementary client bases, enhanced cross-selling opportunities, expanded our geographic presence to further our global diversification, and provided us with a stronger moat than ever in a tough market. LifeSpeak's B2B SaaS-based mental health and total well-being platform continues to generate high levels of engagement and interest with enterprise and embedded solutions clients. We are highly confident that we are positioned to continue our growth in the near and long term. Once again, we'd like to thank you for joining the call today, and we look forward to sharing more of our successes. Now I'd like to turn the call over to Michael Howell, LiveSeek's founder and CEO. Mike?
spk03: Thanks so much, Nolan. We are pleased to be with you today to review our first quarter 2022 operational and financial results and provide an update on the overall position of the business and platform we've built. LiveSeek's SaaS-based mental health and total well-being education and engagement platform continues to experience significant growth supported by consistent long-term tailwinds, including increasing corporate spending on mental health and total well-being, digitalization of health solutions, growth in microlearning 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, which is now more relevant and diverse than ever before, continues to drive the growth of our business. Some financial and operational highlights in this regard in the quarter include Our first quarter 2022 revenue increased to $8.7 million from $4.9 million in the first quarter 2021, an increase of 77%. Our first quarter 2022 adjusted EBITDA decreased to $2.4 million from $1.9 million in the first quarter 2021. We reported annual recurring revenue of $51.1 million as at March 31, 2022, an increase of 144% over the same period in 2021. And our number of clients increased by 283% to 873 clients as of March 31, 2022, compared to 228 as of March 31, 2021. Within our core enterprise client base, select client wins in Q1 included Chartwell, MasterCare, Fujifilm America, Santander Holdings USA, S&P Global, and George Weston. And within our embedded solutions client base, which remains a key focus and driver of future growth, we launched our partnerships with Unum and the AARP in the U.S. and expanded our relationship with Humana. We remain very enthusiastic about our acquisition of WellBeats, a highly complementary physical well-being platform, which closed February 28th. It's more apparent than ever that the WellBeast market-leading on-demand physical wellness platform is critical to LifeSeek's ability to help organizations with the overall well-being of their employees. And we continue to see organic uptake in that business, as well as with potential cross-sell opportunities between it and our other tools. With a combination of acquisitions made to date and our geographic expansion, our 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. I'm also pleased to report that our cross-selling initiatives are already bearing fruit. In the Q1 quarter, we successfully closed several cross-sell deals, including with Laurentian Bank, a net new customer launching with a multi-product solution, as well as closed cross-sell deals with several existing clients, including CIBC, Questrade, and McGill University, among others. We are excited by this progress, given the short time frame that we have been pursuing our cross-sell strategy. Looking ahead, we anticipate that our cross-selling efforts will make a larger financial contribution to financial performance as the product and sales integration continues and we have more time in the market. We continue to identify and execute on revenue synergies within the existing cross-sell opportunity and with a multi-pronged approach to sales we enact given our broad product platform. In addition, we are keenly focused on identifying cost synergies and managing our cost base and in particular given the increasingly difficult macroeconomic environment. In addition to the cost synergies identified previously, we have identified an additional $2.5 million of additional annualized cost savings, which we will focus on implementing. Overall, we are very excited about the opportunity that lies ahead of us and believe that we are making significant progress on all fronts. I'll now pass the call back to Mike McKenna, who will walk us through our detailed financials following which I will provide some closing remarks before we turn it over for questions. Mike McKenna.
spk08: Thank you, Michael. Despite some customer specific nuances impacting the first quarter results, we believe the results demonstrate the underlying strength and diversity of our business. And we are excited to share more detail with you today. As Michael mentioned, revenue for Q1 2022 increased to $8.7 million. This is a 77% increase when compared to Q1 2021. Annual recurring revenue, or ARR, grew by 144% to $51.1 million compared to the first quarter of 2021, and by 44% when compared to Q4 2021. ARR for the quarter was positively impacted by the addition of new enterprise clients and clients of our embedded solutions area, yet it was negatively impacted by significantly reduced recognizable revenue in the quarter related to one client of our embedded solutions category. Our contract with that one client which at its peak represents the largest client in our embedded platform, has been extended to August 31st, 2022, with the client's customers having access to our platform during this period. A substantial portion of the revenue for the client has been recognized in 2021, with the remainder of the revenue for the contract primarily being recognized in the first quarter of 2022. there will remain revenue to be recognized over the remainder of this extended term. This extended term period is intended to facilitate ongoing renewal discussions with the client. During such period, the revenue from the client will be lower than the initial term of the same customer group accessing our platform. As a result, overall ARR from this client at the end of the quarter has been reduced And this has impacted our overall reported ARR for the period. Outside of this impact, we are very pleased to report that each of the individual and acquired business units have grown organically quarter over quarter. Turning to EBITDA, our adjusted EBITDA decreased to 0.4 million for the quarter. But during the quarter, we were able to recognize approximately 0.7 million in acquisition synergies. For synergies we have identified in Q4 2021 and Q1 2022, we expect to achieve 3.3 million of annualized cost savings. In addition, on a consolidated basis, we have also identified an additional 2.5 million of annualized synergies under a Q2 2022 plan. As we take a proactive approach to management of our cost base, these synergies will originate primarily from a refinement of processes, managing overlapping resources, and reducing general functional overlap. Turning to the net loss. Our net loss with Q1 amounted to $16.4 million. This was primarily due to costs incurred in relation to the WellBeats acquisition general stock-based compensation expenses related to the IPO, financing expenses, and some additional depreciation and amortization related to the larger asset base of the business. On an adjusted basis, our adjusted net loss was $4.2 million. Turning to number of clients, our number of clients grew to 873. This includes new clients, added with the acquisitions of Lyft, Alameda, Torchlight, and Wellbeats, with an increase of 107% quarter-over-quarter and 283% versus the same period in 2021. With respect to the geographic diversification of the business, giving effect to the embedded client impact mentioned earlier, approximately 65% of our ARR now originates from markets outside of Canada. In addition to the previously mentioned metrics, we closely track other key performance indicators to help us evaluate the strength of our business. These include gross profit. For the first quarter, gross profit increased to 7.4 million. That's a 63% increase when compared to Q1 of 2021. The resulting gross margin was 85%, which is lower than the 92% gross margin from Q1 2022. But the decrease in gross margin is largely due to slightly lower than expected revenue for the quarter. Net dollar retention rate, MDR, provides a consolidated measure by which we can monitor the percentage of ARR retained from existing clients. And when giving effect to the embedded client impact we mentioned earlier, this number was 81% as of March 31st, 2022 on a consolidated basis. Excluding the single embedded client discussed earlier, our overall NDR for Lifespeak on a consolidated basis was 97% as at March 31st, 2022. This would have been similar at year end using similar measurement metrics. We believe this clearly demonstrates the overall strength of the underlying customer portfolio that we built and maintain. Logo retention rate. The logo retention rate provides consolidated measure by which we can monitor a percentage of enterprise clients retained during the previous 12-month period. Logo retention as of March 31st, 2022 was 91%. This is slightly lower when compared to our Q4 2021 logo retention rate of 95%. However, this was due in large part to previously planned lower relative contribution of one of the acquired businesses. In turn, this strengthens the overall customer base as we move forward. We believe this strong metric continues to demonstrate our ability to attract and retain clients, as well as the resilience and long-term importance of our platform to our customers. Pipeline. With respect to an update on the pipeline, During the first quarter and subsequent to quarter end, we signed a number of new high-quality enterprise and embedded clients with strong momentum in the pipeline for both go-to-market strategies. On the embedded side in Q1, we launched new partnerships with Unum and AARP, bringing the total of embedded clients to 15 at the end of the first quarter of 2022. We also continue to expand on the existing embedded partnerships that we have signed to date. On the enterprise side, at the end of the quarter, Lifespeak had a total of 858 enterprise clients. This was enhanced both by the WellBeats acquisition and customer additions across each component of the Lifespeak platform. Coupling these trends with the cross-sell opportunity, we are highly confident in the growth of the enterprise segment. Regarding financial performance for the balance of the year, the impact of the embedded solutions customer renewal delay mentioned earlier will result in the company being at or near the lower end of its 2022 outlook ranges as previously disclosed. Overall, We have made excellent progress across the entire business since our IPO in July of 2021 and expect that to continue through 2022. The Lightspeak platform and business has grown rapidly. We know that our platform is more compelling than ever given the significant scale that we have created. With that, I'll turn the call back to Michael Held
spk03: provide some closing remarks thanks so much mike we are very excited about our progress to date and the opportunities that lie ahead as we look forward to the remainder of 2022 we believe our growth will continue as we expand in an industry where organizations are attributing greater value than ever before to the mental health and total well-being of employees We believe that our deep and diverse customer base improves the relevancy of our business, and we believe we are only beginning to realize our full potential. The scale we've reached today with over 800-plus clients and the retention rates we achieve validate our convictions that our solutions are essential to our clients and their employees. As Nolan mentioned at the outset, we are a far better company than we were just a few months ago, and we are looking forward to demonstrating that as we update you on our progress in the coming weeks and months. We'll now open up the call to questions. Operator?
spk01: Thank you. If you would like to ask a question, please press star followed by one on your telephone keypad. If you change your mind, please press star followed by two. Please also limit yourself to two questions. When preparing to ask your question, please ensure your phone is unmuted locally. As a reminder, that is start later by one to ask a question. Our first question comes from Jerome Dubrow from Desjardins. Jerome, please go ahead.
spk04: Hey, good morning. Thanks for taking my question. First is with regards to the contract that's currently being renegotiated. What is assumed in terms of the outcome of the negotiation with your guidance update provided today?
spk08: I'll turn that over to McKenna. Our approach has been to be conservative here, given the world we're in. Mike, do you want to provide what we can? Yeah, I mean, I think that's right. We've attempted to put some of the parameters in place to ensure best success to get this get this completed facilitate the discussions um that said we've been very conservative even with numbers that are currently within the arr drone it's a much smaller number than previous uh and so we've taken sort of almost full consideration of the contract down in order to ensure that, you know, if as and when we're able to renegotiate, you know, that there'll be an opportunity, you know, for some upside. You know, we've taken very much the most conservative approach possible based on the fact that, you know, this still remains a customer. We do have revenue still from the customer. And, you know, there's a significant amount of time in front of us while those while those customers will remain on our platform.
spk04: That's helpful. And then we have seen pretty strong growth in the number of customers, so congratulations for that. I wonder if you can provide a bit of color on where these customers are mainly from, what initiatives are yielding the best results here. Thanks.
spk08: Sure. Mike, go ahead. Go ahead. Yeah, so Jerome, it is across the board. And in the remarks that we made, you know, we can talk, we can look at ads in the LifeStreet business, specifically at Wellbeats, Torchlight. So we can go through all of the business units individually. And again, now that we're taking this platform approach, there's really the opportunity to add customers individually, right? As well as now with the cross-sell initiative that we talked about, there'll be more opportunities to both add customers with multiple products, as well as, you know, cross-pollinate within that base. So I think it's for this quarter, right, driven by strong net ads at each of the individual businesses. The cross-sell initiatives really only kicked off. We've given a few examples of that and where we see some of that starting to provide some success. But that's still early days. So that, you know, we sort of see that as a good opportunity for the back half of the year. Great. Thank you.
spk01: Our next question comes from Doug Taylor from Canonical Genuinency. Doug, please go ahead.
spk09: Yeah, thanks. Good morning. With regards to this large embedded customer that you're having a renewal issue with, can you speak to the rationale for that? particular renewal issue? I mean, is this related to the usage by their end customers? And is there any more color you can give into you can give us to, you know, why you're having this, this issue?
spk08: We kind of do I mean, the answer is, it is not sure there's one, I'm sure I'd call it an issue. No related, but Mike, why don't you get the color? I think it's largely timing. Doug, we've been working at this for quite some time. As we got closer to the end of the quarter and saw there being some delays in just the process overall, we always had to make the decision in terms of the revenue recognition and how it was going to factor into the quarter. But in terms of the discussions, they're ongoing. They're happening, and we just – It becomes a bit of a timing issue with reporting at the end of the quarter and the nature of sort of how those customers started on the platform. They remain all on the platform. There's a bit of a timing around revenue recognition. So I think, you know, these things take time. It is a sizable deal for us, obviously, so it's very important to us. It's important to them, and we're trying to get to the right place. on the renewal. And as I said, we've been at it for some time, but once we realized it was going to impact the quarter, that's why we're trying to be very open and transparent here today with the discussion around it.
spk09: So I'd just like to understand this renewal or extension period. Are they still paying you for use of the product? Are you providing them access to the product for continuity reasons until you figure out a new contract by which they will pay you. Um, could you give any more color there?
spk08: Yeah, I think it's a combination of both. I think there's, well, there's definitely, there's absolutely, you know, revenue recognized this quarter. There'll be revenue recognized next quarter. It won't be as much as 2021. until we get potentially to the renewal, right? And then obviously, you know, the expectation is we would be renewing the contract. So we're trying to get sort of to the right starting point there. But in the meantime, yes, during this period, the users still have access to the platform, and there is revenue attributable to the contract for us. It's just not in the same quantum as, say, in Q4 of 2021.
spk09: Could you provide us with what the revenue from this customer was in Q1 that you just reported here so we can understand what the risk profile is around this renewal over the next couple of quarters?
spk08: Well, in terms of the ARR contribution, Doug, at this stage of that 51 plus million of ARR, there would be less than 2 million associated with this customer in that.
spk09: Less than 2 million is the ARR sequential change related to this customer contract. Am I understanding that correctly?
spk08: So we're reporting 51.1 million of ARR, first quarter end of 2021. less than two million of that will be attributed to this customer and what you're saying is that down significantly or from what it would have been reported as of your q4 arr yeah and look i mean you know we've had this debate before in terms of error to make the argument like these customers are still on the platform you know they're paying for us could could we you know could that number be higher potentially, but that's not the approach that we wanted to take in this. And so, you know, that's why the number is what it is.
spk09: Okay. You speak to net retention rates outside of this one large customer. I mean, they're in the high 90s, but they've dropped down below the 100% threshold. We've seen a couple of other industry participants speak to more challenging markets for mental health solutions in particular. I mean, is that what you're speaking to when you talk about a more challenging economic backdrop, as you said in your prepared remarks?
spk08: I'll answer that. We talk about that environment because we look at what's going on literally all over the world. We have not seen that in our experience. We're just reasonably attuned to where the world is going. Quite frankly, because of where we sit in the ecosystem, both mental and physical well-being as well as a focus on employee retention and employee productivity and our price points, what we're actually finding is we have seen really not only no decrease in actual activity but an increase of activity. I think part of that is the platform synergy of putting multiple solutions in front of clients, and part of it is just we're very appropriate for what's going on. So when we talk about the headwinds we see, we just were talking generally at the macro environment. With respect to where we sit, we're still in a world where employment is incredibly – unemployment is incredibly low, and attraction and retention is top of mind for all of our employees, and mental health is a top-of-mind consideration. So we're actually not seeing that impact yet at all. So, again, we anticipate that we're – yeah, please, Mike, go ahead.
spk03: Well, I was just going to say we just came from a cross, you know, the LightSeek family sales kickoff in Minnesota two days ago. So, you know, we were in a room of 57 people who were on the front lines and, you know, read the temperature. And from that perspective, like, it was electric. Like, people are not hearing this at all. You know, I think some of the labor-based tech companies have different, you know, challenges in our world of, Everyone sees the need more than ever, and everyone's just trying to spend their dollars efficiently on products that get used and cover a lot of ground, and that's life speak. And so we really have not seen any of that, in fact, the opposite. And just coming back to the fact that all five business units grew organically, I think, really speaks to that.
spk08: Yeah, just to put that in context, not to go back, the conservative view means that when you look at our 51 and change of ARR, you know, no client's greater than 5%. So we have a very, very, very diversified ARR base, which is much more the case than it has been in the past.
spk09: Yeah, and so hearing everything you're saying about the market, and I apologize for asking more than two questions, you refer to this – as a short-term impact related to a single embedded customer that had been a more sizable percentage of your revenue in the past. The revenue shortfall versus what many of us would have been expecting this quarter was, I think, north of $2 million, which would imply an ARR of of $8 million. I'm just trying to understand, it would be helpful if you could provide what that specific customer was in terms of revenue last quarter, this quarter, so we can understand or see through that impact to the fundamentals of the business outside of that customer. Is there any more you can provide there?
spk08: So, Doug, it's Mike. Look, I don't think getting into a conversation about reporting on what is now 800 customers and each of their revenue contributions is necessarily sort of constructive for the call. I'd be happy to try to provide some more information if helpful, but at the same time, like, we talked already with the sort of fundamentals of this customer for where they were, where they are today. Again, the customer remains very active on the platform and we're working towards a renewal. So, Did it impact our overall potential revenue in the quarter by close to $2 million? Yes, it did. Again, because it's a timing issue, it's revenue recognition, and there's still parameters in place for the hope to ensure adequate opportunity for renewal. But I think the gap is due to this customer. We've added customers in other areas quite significantly. as we've mentioned. So this is a very large reason for any shortfall.
spk09: Well, I appreciate it. I mean, that's all I'm looking for is confirmation that the revenue impact to this quarter was that kind of magnitude so that we can understand the performance of the business outside of it. So thank you for providing that. I'll pass the line.
spk01: Our next question comes from Jeff Martin from Rock Capital Partners. Jeff, please go ahead.
spk06: Thanks. Good morning. Thanks for taking the questions here. I wanted to get a sense of the cadence of the ramp throughout the balance of the year on a quarterly basis, not necessarily numerically, but qualitatively. If you're going to achieve the low end of your guidance range that implies roughly 65 million revenue for the year, is that going to be more back half loaded? And if so, what are some of the most impactful drivers of that ramp?
spk08: Hey, Jeff. Morning. It's Mike. Thanks for joining the call. Obviously, the first quarter was impacted by this. At the same time, the first quarter does only include one month of the WellBeats business. That's naturally going to create some pickup in a consolidated Q2. There is obviously going to have to be more growth in the back end. And that's going to come from all the initiatives we talked about, continued growth of all the platforms, the cross-sell initiative to ensure that we're adequately servicing the customer base that we have today, which, again, now is up to almost 875 enterprise clients, servicing them with multiple products, as many as possible, obviously. And then we're going to continue to focus on this embedded business and continue to drive growth there as well. So whereas we previously had two very strong, solid go-to-market strategies, we're now able to really enact a third of the cross-sell piece. I think that's really important as it relates to what the latter half of the year is going to look like. And I can add a qualitative piece to that with respect to the initiatives. Each of the business units had an expertise in a certain way of selling that is now being cross-pollinated. So we actually see that in the cross-selling initiatives. For example, you know, we talked a lot about embedded. That isn't the strategy that the other products were particularly adept in. we're now seeing activity across the platform in each modality. And that's part of the driver that just to give you some qualitative color around what else drives this business. It's the cross pollinization of the actual products themselves. We're seeing every combination that you can think of of the different elements that we now bring to bear, as well as people who are expert in selling a certain way now having more tools to sell. So those are things that are, as Mike said, not reflected in any way in this quarter that are actually happening already.
spk06: Okay. And then the second question is on any update to the targeted ARR range exiting the year. I think you previously guided the $75 to $85 million. And then any update on your EBITDA margin range for the year as well would be helpful. Thanks.
spk08: Yeah, Jeff, I think, you know, what you mentioned on the call, and I think it's the right way to think about this, is we'll be sort of at or near the low end of the range on everything that we've provided in terms of guidance. So that's the target that we're working towards.
spk01: Thank you. Our next question comes from Paul Trever from RBC Capital Markets. Paul, please go ahead.
spk08: Thanks very much, and good morning. Sorry to beat a dead horse on this, but I just wanted to clarify, just on the embedded customer, from a previous question, it sounds like or it reads that the customer would have contributed about $2 million in revenue a quarter or $8 million annually. That would imply they're like a 30% of revenue customer. Is that right, or am I reading into the numbers incorrectly? Hey, Paul. It's Mike. You know, if you go back to the IPO prospectus, it was disclosed in the prospectus that there was one large customer even at the time. In fact, it was higher than that. It's obviously this issue aside just with our growth much lower than that. Sort of on a consolidated basis at the end of the year in terms of ARR would have been much less than 20%. uh and we we have continued to try to update that you know sort of guidance over time as to what what that you know sort of customer contributed but um you know it's something that we had identified going back to even when we went public last july obviously the business has grown quite significantly i think you're thinking about the right way in terms of numbers and contribution okay thanks uh that clarifies that and then just excluding that that customer completely like on the ndr the 97
spk07: You mentioned that it would be similar to Q4, like on the same metric. And, you know, I'm just wondering what you mean by that. Yeah, if you could just help explain that.
spk08: Really just enterprise to enterprise. Just enterprise business to enterprise business. Paul, I think the right way to think about that, that's what we tried to break it out that way. So we just look at the enterprise base. versus including the embedded. And does the 97, does it include WellBeats? Because I think WellBeats is over 100% NDR. They're right in around the range of 98%. It's all included in that number, yeah. Okay, so has there been a change, like for the enterprise NDR, if you exclude wellbees, is it lower? Obviously, it would be lower than 90%. Like what drove the change over the last several quarters in the enterprise business excluding wellbees from the NDR side? I'm not sure I follow the question, Paul. I don't see there being a big change. It's been very consistent sort of in and around the range. So 100%, as we've reported, you know, it bumped up. We explained on the Q4 call that that NDR number was higher, inclusive of various things in the embedded side. The enterprise side is sort of always sort of hovered in the same area. I don't see there having been a significant change to that quarter over quarter, but, you know, if there's something I can help you with offline after the call, I'm happy to, but I don't know. I don't see that. Same sort of trend that you're highlighting. Okay, shifting gears to the embedded segment, I think last quarter or a couple of quarters ago, you mentioned that you're winning contracts and that there's, I guess, a delay or time period between the signing of the contract and the actual ramp into ARR or revenue. What's your thoughts around the embedded business, bigger picture? How do you see that business ramping versus a pipeline for that segment? But, Kenny, I want to give you sort of a more technical, and Mike and I are happy to give a little more color on that. Anything you want to sort of describe sort of numerically that we can talk about, and then I'll sort of explain the pattern. I mean, look, Paul, I think we're consistent in the view, the approach here. Like, we're signing high-quality counterparties. There are some that are taking a little bit longer to ramp. when we think about the names across the board and even the ones we signed in the first quarter, you know, with Unum and this business, we have the opportunity with the AARP. We enhanced our deal with Humana. I mean, you know, very strong counterparties, right? It's very important. So there's still a tremendous opportunity in that side of the business. You're absolutely correct, and we've been consistent with, you know, there's the unfortunate matter that sometimes these are taking a little bit longer to ramp up. But I think the confidence level comes in the quality of the counterparties both that we've already signed up to 15 deals now in that area um which is a little bit ahead of where we projected uh on a number basis of course revenue impacted by the ramp okay so good quality counterparties and i think you know that that's consistent with both what we signed and and in the pipeline um so still lots of runway in that area Yeah, I'll give you just a little color. I know we've probably all been through this before at various times, but just to recap, part of it is a little bit the conservatism with which we report even the ARR of these. So we'll sign a contract. They then have to launch. Then once they launch, they'll start paying us, but then they'll be paying us as they grow their book of business. From an ARR standpoint, the only thing we include is is the run rate of current paying, current revenue, even though we may have information that suggests that by the end of the year, for example, they'll have 5x the number of people. We don't include any of that in our numbers. So, you know, as we've sort of said before, there's really two types. There's going to be the rarer occasion, like a large contract we've already talked about that starts at a big number and then can grow. most of them start in a new initiative or a new product and then grow and we've you know those are the ones we've had a lot of initiative on around the quality the qualitative factors this is the area that we're investing in pretty heavily in terms of finding more and more senior people to grow this business and we're bringing it across the product which is not something that existed really in any of the acquired companies. And then now when we're now in some pretty interesting discussions with multi product opportunities. So just from the standpoint of, is it important to our business? Absolutely, it is. And it continues to be and you know, continues to be a focus of growth. And just one last one for me, if I may. You mentioned in the press release and also on the call that you're seeing the hands deal with Humana. I mean, because you publicly mentioned that. Could you elaborate any more on what that involves? McKenna, what can we add? I mean, I think from a pure size perspective, Paul, it will be, you know, it's one of our now top 10 customers. You know, it's sort of four times the size of what it was last year in terms of, you know, contribution. You know, but look, as I mentioned, you know, on an earlier question, I think, you know, starting to answer questions about each customer's revenue contribution, I think it's not, I don't think it's appropriate. But certainly from the perspective of growth, you know, know it's again as i said about four times larger than it was last year and it's you know now going to be it'll be one of our top 10 customers so i think that's probably pretty good guidance on that okay thank you that's fine okay thanks paul our next question comes from adam buck and from cruscasia bank adam please go ahead moran thanks for taking my question guys um
spk07: So I'll maybe switch gears a bit here. I wanted to talk on the WellBeats acquisition and more so how you've seen the cross-selling opportunities in the U.S. grow as a part of that for Lightspeak's platform. You know, you did provide some customer wins, but, you know, any sort of early indications and demand for the overall Lightspeak platform in the U.S. and maybe how that's been benefited by the acquisition would be great. Sure. Yeah, I mean, it's pretty, again, we're very early stages.
spk08: As Mike mentioned earlier, we are formally launching the cross-selling initiative, you know, as we speak, essentially, this week. But even before the formal launch, the cross-pollination and the cross-selling activity has been very interesting. I mean, I think we've said to you guys, as we made these acquisitions, in particular, well, true of all of them, we believe we were able to arrive at very opportunistic arrangements because each of the businesses saw the opportunity to add the core mental health platform to what they offer as much as we saw the opportunity to add their platforms or their solutions to what we offer. We're seeing this both on the embedded side, where we're having joint discussions, as well as on just the peer client side, where clients are looking and saying, hey, we have a physical well-being platform. How do we access mental health content? One of the things we've done very quickly, very early, is we've actually built some integrated solutions that are actually available in market. And there are many discussions going on there. to the point where we've even, this is just in the proposal stage, so I won't talk about anything. It's not in a forecast, it's not a future-looking number, but it's an activity comment. We're already in the market with sizable combined proposals, which include both a mental health component and a physical well-being component or a caregiving component. So I don't want to give short shrift to Torchlight. It's a similar pattern as well as the others. So, I mean, Mike Held, I think maybe I'll give you a couple of minutes to see if you think it makes sense to give a little bit of color. But I think the investment thesis for us of how do we build a platform that really fits together with complementary solutions, again, early days still, as we all know, is absolutely what we thought. And, frankly, with the activity we see, we're exceedingly bullish of where it can go. Held, do you want to add any color you think I missed?
spk03: Yeah, Nolan, I mean, I couldn't feel better about it. I think, you know, the companies we bought had other suitors that may have been even offering more. But part of it is our, like, Wellbeaks and Torchlight, their clients were asking for mental health. So, you know, it wasn't just our hypothesis. There was already tangible, you know, market data in this regard. And so, you know, I honestly couldn't feel better. I think that's why, you know, the sales kickoff was electric. We have a very well-thought-out cross-selling program that's been launching now, but we're already in market, as Nolan referred to, with many proposals in the hundreds of thousands of U.S. dollars. I'm very keen. I think we'll have a lot of good news to share on our next call. I honestly couldn't feel better. And not only are we hearing so much great news, there's a real – dearth of negative uh non-interest um you know we're not getting any negative feedback um not that every every client we have through lbs and torchlights will be customer but um can be better feedback and activity to date okay great great thanks for that color guys um maybe just shifting gears a bit of a modeling question for for uh mike um you know in terms of adjusted ebitda
spk07: Would you expect Q2 to be more normalized towards your target or is that sort of back half weighted again for Q3 and Q4 from a margin perspective?
spk08: Yeah, it'll definitely be closer to the target, Adam. I can't suggest you'll be right on the lower end of that. But as we have identified, a key focal point for us, we've got to actually frankly quite a bit of acquisition synergies cost savings, however you'd like to characterize that, quite a bit quicker. We found some efficiencies quicker than we thought, and we have also got a plan to, we know that there's more efficiencies available for us in Q2, okay? So even with the revenue impact, we're going to see significant opportunity just to run a more efficient business. And that's part of what we're also very excited about, that this has come together from an integration perspective in some ways faster than we would have expected. So we're very buoyed by that, and that helps us as we look out over the next, not just next quarter, but next two to three quarters in terms of where that number is going to shake out.
spk07: Okay, great. Thanks for that. I'll jump back in the queue.
spk01: Our final question comes from Leonard Goodman of the First Financial Group. Leonard, please go ahead.
spk05: Good morning. Thank you for the upbeat report. My questions are really very simple and linked. As an investor and businessman and a portfolio investor, manager corporately my interest lay in my return on investment as I look at the statement and I see for example the net loss which is noted to restructuring of costs I wonder what that relates to that's a significant increase there I see the low share values you mentioned a substantial revenue out of Canada yet. I don't see any provision for currency changes. I don't know if that's U.S., European, but I don't see any provisions for that. And finally, I worry about this negotiations that is going on with what appears to be about a 30 percent client. In terms of revenue, what's your strength in these negotiations? Does this client have other alternatives? And if so, where would that be and how confident are you that you will retain them? That's my substantive questions.
spk08: Hey, thank you for answering my question. Do you want to go ahead and tackle it? I'll start with a couple numbers, and then we can sort of tactically talk about the latter part of the last question. So just to be clear in terms of the contribution of the customers related to our current ARR, okay, which is 51.1%, $1 million that this customer we're talking about would equate for less than 5% of that. So I think that's important as a forward-looking piece. That's one thing. The second thing you asked was about currency. So this was the first quarter that we've had a significant U.S. business because we just completed a very significant acquisition during the quarter. Next quarter, as we – report a fully consolidated quarter with our U.S. and Canadian business. We'll have a full quarter and we'll be able to provide additional insight into that. And then you asked about the restructuring costs. There were significant costs associated with said acquisition that I just mentioned, but it was significant in nature and doubled the size of our customer base, so it's very important and strategic. And so that drives a lot of the restructuring costs, which are in Note 16 of our financial statement. So hopefully that answers the technical part. And, Nolan, maybe you can just capture a little bit about our process around renewals generally. Yeah, I mean, generally, as with all of our renewals, there's an extensive process Many facets of the business are being brought to bear, and this one is only more so, as we've sort of discussed before. The only thing I would say also is on a concentration basis, as we've said, in our 51-plus million of ARR right now, no client represents more than 5%. Oh, that's good.
spk05: That's good. All right. And share value, I mean, of course, that's been consistently on the downtrend since – Since it came on the market, what's your comfort level? You have no crystal ball, but what's your comfort level there, or is there a comfort level?
spk08: I mean, I think people on the call have seen what's going on in the market. You know, we can't give our personal opinions or professional opinions. We think we're appropriately valued. You know, we're the biggest owners of the stock, and we aren't selling it for the quite the opposite. We think the markets will do what the markets will do and we're building the best business we can and we think we're building one of the best platforms in this space and changing the face of it. We think we will get recognized for that at some point in the future when we get there.
spk03: Nolan, if I could add, I think we're the best platform out there doing what we said we'd do and it will get recognized, but if If the question ever wants to be, are you putting your money where your mouth is, throughout this entire period, I've been a buyer personally of, I think I'm getting close to another million dollars personal of stock, and I'm already heavily invested, and I continue to buy. So if anyone's wondering what our view is on this company and where it's going to go in the shareholder value, I think it's going to be glorious. But at some point, we have to not be surrounded by infinite downward trend charts, which we're certainly a part of these days. But I couldn't possibly feel better about our future.
spk01: We currently have no further questions. So I'll now hand you back over to Nolan Beckerman for any closing remarks.
spk08: Well, everyone, we just wanted to thank you for joining. Again, we know you have many companies you follow, you look at, you're interested in, and we greatly appreciate that you spent some time thinking through us. And we will keep you informed as we continue to flesh out our strategy and try to build this very, very large platform. Thank you guys very much. We appreciate it.
spk01: This concludes today's call. Thank you for joining. You may now disconnect your lines.
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