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spk09: Good morning, everyone, and welcome to Q4's first quarter 2022 earnings call. My name is Sarah Pearson, and I'm Q4's Director of Investor Relations, and I'm joined this morning by Daryl Heats, our CEO, Ryan Levenberg, our current CFO, and Donna DeWinter, our current Chief Operating Officer and incoming interim CFO, to review our first quarter results. Please note, a copy of today's presentation will be available on our website. Following the prepared remarks, we will be looking forward to welcoming our research analysts on the call for a live Q&A session. To those in our virtual audience, you can use the webcast Q&A button to submit questions in real time. We need to remind participants that certain information discussed on today's call may be forward-looking in nature. Such forward-looking information reflects companies' views with respect to future events, Any such information is subject to risks, uncertainties, and assumptions that could cause actual results to differ materially from those projected in the forward-looking statements. For more information on the assumptions related to the forward-looking statements, please refer to Q4's public filings available on CDAR. During the call, we will be referencing certain non-IFRS financial measures. Although we believe these measures provide useful supplemental information about our financial performance, they are not recognized measures and do not have standardized use under IFRS. Please see our MD&A for additional information regarding our financial measures, including for reconciliation to the nearest IFRS measure. Please note that unless otherwise stated, all financial figures are in U.S. dollars. And with that, I'll pass it over to our CEO, Daryl Heats. Daryl?
spk06: Thanks, Sarah. And good morning, everyone. Before getting into our Q1 results, I wanted to take a couple minutes to speak about the value we provide to our customers and how we are seeing our platform strategy play out, both in terms of our products and services, but also in how this is impacting our financial profile today and into the future. At a high level, during the quarter, we continue to attract new customers across the business. and pursue our expansion efforts across our IR business while also making solid progress on our sell-side corporate access business and executing against our M&A strategy. Although Ryan will provide a deep dive on our financial results, I wanted to first touch on a few highlights from the quarter. We're happy to report that revenue came in just under $14 million, an increase of just over 23% year-over-year growth. We are pleased with this for Q1 as the majority of our growth typically comes later in the year. Gross margin was 57.4% for the quarter, a 300 bps improvement from Q1 last year. And when you look at the last four quarters, you can see the steady progression we are making on our way to mid-60s gross margin by the end of the year. During the quarter, we also saw customers purchasing more from us than ever before, contributing to a 3.2% ARPA growth, a nice increase over the previous quarter of 2.8% ARPA growth. In terms of OpEx, the investments in G&A now have largely been made and moving into the balance of year, you will start to see the percentages of revenue level off both in R&D and sales and marketing. We expect the operating leverage of the business to steadily improve over the second half of the year as we drive towards cashflow positive in late 2023 with positive EBITDA to follow. Just a quick comment on the impact we are feeling from inflation. something you are undoubtedly hearing across the sector. We are seeing costs rise across the board, particularly our labor costs, which we expect to be able to pass along to our clients through price increases. On that note, we are acutely aware of the impact inflation is having on our employees and have done what we can to ease their burden with the cost of living adjustment for our entire Q4 team. Finally, before getting to an update on our strategic priorities, in today's market, cash is king. And from this perspective, we ended the quarter with a very strong and healthy balance sheet, with more than $55 million in cash, giving us plenty of headroom to execute our strategy through to cash flow positive at the end of next year. Now on to our strategic priorities. We again demonstrated the durability and agility of our business model this quarter with accelerating growth of our customer base compared to the same period last year. Customer growth increased 12% year over year, ending the quarter with 2,673 platform customers. This in spite of the seasonality we have seen previously where Q1 is historically our lowest logo growth quarter for the year and the headwinds of a cooling IPO market along with an increase of M&A within our customer base. During this period, we also achieved a record 96% controllable logo retention, excluding M&A and D listings, up from 95% in Q4 21. The combination of one, our growing customer base, two, our record retention rates, and three, the record growth in average revenue per account really illustrate how we are expanding the share of wallet with our customers as they adopt more products across our platform. This tells us that our investments in technology, in our platform, and our people are really paying off. And we are executing quite well against our strategy to create differentiated value for our customers through the vast amounts of unique data that we amass and the insights that we can derive as a result. Our end-to-end platform and the resulting data it generates creates a distinctive moat for our business, which in turn provides the growth and agility I referred to earlier, regardless of market conditions. In terms of our customer expansion efforts, from the outset of this business, our purpose has always been to help our clients win in the capital markets, which is really about helping our customers execute exceptional investor relations programs and connecting the right investor to the right company. To deliver on this, we have been expanding our platform to support a wide range of use cases across our corporate and sell-side customers. We are really pleased at how we have been able to start connecting our products, our data, and our insights to help companies understand their investors better and communicate more effectively. As a result of the investments in our technology platform, specifically the unification of our data and the vertical integration of our products, we are putting more valuable solutions in the hands of our clients and supporting them with our team of IR professionals. We have been executing against this strategy for numerous quarters. We are now really starting to see it come together with achieving record expansion sales to our existing clients in the first quarter. Our customers are renewing at higher rates and buying more from us than ever before. In terms of partnerships, it's wonderful to see the continuous evolution occurring at the New York Stock Exchange to meet the needs of corporate issuers. We take great pride in having an expanded presence in the new enhanced NYSC issuer services program. This program offers new and existing listed companies access to a suite of complementary products and services, which represent best of breed IR solutions and services, and truly represent the essential components for an innovative and effective IR program. Q4 has been a key part of the issuer services program since 2012, providing web hosting and webcasting services. In the past year, we have proudly partnered with the NYSE on hundreds of IPOs and SPACs. We are thrilled to now play an expanded role in this revised program, offering a broad list of virtual events that go beyond quarterly earnings calls, including but not limited to investor days, ESG events, corporate town halls, and partnering with the NYSE on to host in-person events at the exchange with the benefit of video broadcasting. As we've talked about in previous quarters, our roadmap is focused on unifying our platform to serve all of the critical workflow and data needs for each of the three sides of the market, corporates, the sell side, and the buy side. As we connect our platform, we believe this will continue to help us drive increased adoption with our clients, along with improved renewal rates and revenue per account. I'm happy to report that this quarter had this happening with increased customer adoption of multiple products across the platform, improved ARPA, and higher renewal rates. Digging into the events side of the business, the vertical integration of our events business continues to be one of the key drivers of both our product innovation and our growth margin expansion. During the quarter, we continued the rollout of our new corporate earnings platform with almost half of our customers now migrated onto the new platform. Year to date, we have now delivered 734 earnings events with over a thousand events in total on this new platform. Keep in mind, this migration is one of the three key drivers to our gross margin expansion strategy. In addition to this, following our fourth quarter earnings in March, we formally launched our video earnings product, which we are using here again today. We've seen a great response to this product, and we're excited about the potential for our progressive customers to begin using this format in coming quarters. In terms of our capital markets event business, we continue to execute on a number of sell-side events, including fully virtual as well as hybrid and in-person events. We continue to see very strong demand from the sell-side for our investor conference platform and a wide range of use cases. Resonating most with clients is the ease of our technology and how our end-to-end solution, which includes meeting registration and scheduling, along with fully integrated video capabilities, really enables our customers to consolidate existing vendors. We're focused on enabling a free flow of data exchange for our clients between our platform and their sell-side CRMs. Finally, our web extensions related to ESG and also accessibility continue to do very well. Both are important areas for growth in our web business. From a capital allocation perspective, I wanted to provide clarity that our first priority is continued investments in our organic growth, followed by inorganic growth opportunities. And the third is to ensure that we operate with financial flexibility in an environment where we believe our stock is clearly undervalued. On this point, we put in place a normal courts issuer bid at the end of March to give us the flexibility to repurchase stock based on management's ongoing assessment of the capital needs of the business, the market price of Q4's common stock, and general market conditions. Finally, in terms of M&A, we continue to be focused on executing our strategy here and have a number of engagements underway. Being disciplined during these markets is more important than ever, and we want investors to know that we are focused on bringing only the best deals forward for the business. Before closing these initial comments, I would like to take this opportunity to speak to the recent management changes that were announced earlier this month. Ryan Levenberg, our current CFO, will be leaving Q4 at the end of May to head back to an earlier stage startup. I wanted to thank Ryan here for all of his contributions and wish him the very best into the future. Equally, I'm very excited about having Donna DeWinter, who has been with us for numerous years in the COO role, take on the interim CFO position. Her many years of CFO experience will truly be an asset for the business, and I look forward to us working closely on executing our strategy and delivering results over the coming quarters while we search for our long-term CFO. And with that, I'll now pass it over to Ryan to take us through the quarter, and then Donna will join for future outlook and our Q&A session. Ryan?
spk00: Thanks Daryl and good morning to everyone. As Daryl alluded to, we're pleased with our first quarter results and their contribution to our overall strategy and vision. Revenue for the first quarter was 13.9 million, growing by 23.1% from the year ago period. This performance was largely driven by expansion revenue initiatives and sales performance of platform services. Capital markets platform grew by 21.4% and platform services grew by 47.8%, both on a year-over-year basis. Our revenue base continues to be highly predictable based on long-term contracts. Over the last 12 months, 88% of our capital market platform revenue was subscription-based. This quarter was also our highest record of expansion sales driven by our newly ramped customer growth sales team, delivering increased customer up and cross-sell. At the end of the first quarter, ARR was 52.8 million, an 18.1% increase over this time last year. New bookings continued in the first quarter, adding 87 new customers who joined at a higher than historical average contract value, indicating strong progress with our bundled sales approach. Complementing new bookings, our existing customers continue to purchase new subscriptions, expanding engagement across our product suite. And we experienced our strongest controllable logo retention quarter of 96%, which directly resulted in more ARR retained in the business. Offsetting this, in the beginning of 2022, we saw slower SPAC and IPO markets. This impacted ARR bookings to a degree, but did not have a meaningful impact to revenue growth as we were able to focus our efforts on driving growth through the customer expansion strategy. At the end of the first quarter, average revenue per account was 18,404, a 3.2% increase over this time last year, and an increase in growth rate compared to the fourth quarter. As we have mentioned before, our customer growth team had the highest sales on record, driving further adoption of subscription products and expansion of recurring revenue. We see our platform strategy playing out as anticipated, with clients buying a higher number of services and driving increased retention, which is proving the value of our integrated platform. To better understand our ability to expand revenue within our existing client base, we wanted to provide some additional context for the level of product tax adoption across our corporate customers. Historically, we had looked at product adoption on a logo basis, which in Q1 increased to 42% for customers with two or more products. Because we also see our clients expand within product categories, the best way to capture this ARR contribution for customers that use two or more products is looking at it on an ARR basis. The chart on this slide provides this view over the last three years. As of the first quarter, 65% of our ARR is generated from customers that use two or more products, which shows our ability to execute on the customer expansion strategy. Moving forward, we will be using this revenue metric as it more accurately illustrates the value of customers adopting more of the platform. We ended Q1 with 2,673 platform customers. During the quarter, we brought on 87 new platform customers. The slower logo growth was expected in our seasonally slowest quarter due to client budget cycles. This quarter, macro conditions led to higher uncontrollable churn from greater levels of client consolidation, as well as lower new sales due to the decline in SPACs and IPOs. In the first quarter, gross margins expanded by 300 basis points to 57.4% compared to the same period last year. We continue to be focused on three pillars that will help us drive continued gross margin expansion. The first is shifting our underlying data feed to a fixed cost structure. The second is through the vertical integration of our virtual events platform. And the third are the investments we are making in product automation with how we work with our customers. The progress we made against our gross margin expansion this quarter was driven by the webcasting platform migration, as well as increased scale in our CRM products. As we communicated in prior quarters, while we expect this year to exit in the mid-60s, we do expect some fluctuation quarter to quarter, and this quarter is an example of that. This was primarily driven by the additional demand for platform services. In the first quarter, operating expenses, excluding depreciation and amortization, foreign exchange loss, and other expenses, totaled $15 million. Sales and marketing totaled 5.1 million, or 36.9% of revenue, an increase of 0.8 million as compared to Q1 last year. We've been continuing our investment in go-to-market initiatives to execute on our strategic growth plan. Research and development came in at 4.1 million, or 29.6% of revenue, compared to 25.1% of revenue for Q1 last year. As Daryl mentioned, we have been increasing our investment in the vertical integration of our virtual lens platform, as well as driving innovative new products. G&A was $5.8 million or 41.4% of revenue. We expect G&A expenses to level off as a percentage of revenue into the back half of this year as we scale and find leverage on the costs associated with going public. G&A leveling off as a percentage of revenue will be a component to watch as we move towards profitability. Our adjusted EBITDA was negative 7.1 million or 51.3% of revenue for the quarter. This reflects the greater investments made throughout the quarter to support our long-term strategy. We feel confident that these investments we are making in our platform and product set are proving to be valuable to our customers. And we are now investing in our go-to-market organization to get what we have built into the hands of more customers. Our working capital metrics remained strong and consistent with historical trends, ending with a working capital balance of $50.7 million. As of March 31st, 2022, we had $55.8 million in cash, and our operating cash flow during the first quarter was negative $7.6 million, driven primarily by the investments made across sales, marketing, and R&D. As of March 31st, we had no outstanding debt with a total revolving facility size of $22.5 million. our balance sheet continues to be well-positioned to execute against both our organic and inorganic growth opportunities. As Daryl mentioned earlier in the call, this will be my last earnings with Q4. It's been tremendous to be a part of the business's growth and transformation over the past seven years, and I look forward to watching the company continue to execute on its mission. I know I'm leaving the position in good hands with Donna taking over my role as the interim CFO. I've had the opportunity to work closely with Donna on operational and financial aspects of this business since she joined and feel confident that she will do incredibly well in executing the CFO mandate. And with that, I would like to pass it over to you, Donna.
spk08: Thank you, Ryan, and good morning, everyone. My name is Donna De Winter, and I've been the Chief Operating Officer of Q4 for the last three and a half years. After 20-plus years as a chief financial officer with a passion for building operational scale that paired with business strategy, I found the right company and exec team to develop strong client-facing experience and further depth of understanding in cross-functional operations. Now I have the exciting opportunity to take that in-depth knowledge of the business and our clients and connect it to the financial strategy. As Ryan noted, he and I have had the opportunity to work closely along with the entire finance team over the last few years. So I'm confident that I'm stepping into a strong foundation that will help me deliver a deliberate path for growth and profitability. Our outlook has remained unchanged, even with the current market conditions. We believe in the durability of the business over time. In our ability to find revenue growth and cost levers, to drive the same outcomes in response to changing market drivers. Q4 has such an amazing install base where we have only scratched the surface of our contributions to their IR strategy and their IR function. This is why our Q4 investments over the last two years have been heavily focused on building and delivering more solutions into the client base through product and services. Those investments are largely behind us, and we expect that as a percentage of revenue, they will be flat to down in the back half of 2022 and forward. The revenue opportunity lies in going to market through our dedicated client growth team and our client success team. We would expect ARPA to continue to grow as our client growth team is onboarded, bringing additional focus to ARR sales. ARPA and associated services will provide growth, and offset the tempered pace of new client logo acquisition in the current market. Gross margin is expected to be equally responsive to these investments, coupled with the continued build-out of scalable client operations. More of Q4's offerings in the hands of current clients has a positive impact on gross margin and operating expenses. You can anticipate some variability in the near-term quarters, while the investments we've been making to improve the client experience and drive efficiencies begin to manifest. By the back half of 2022 and into 2023, the margin expansion trajectory should stabilize. We've not shied away from M&A. It remains an important part of our growth strategy. We are, however, exercising discipline as we test the contribution to our critical strategic components of revenue growth, gross margin, and path to profitability across a maturing pipeline of acquisition candidates. We believe that the opportunity of expanding Q4 revenue with our current clients using our platform solutions is largely independent of the market conditions and relies on fundamentally strong execution. And shifting our investment focus to go to market, client growth, and partners in conjunction with continued focus on operational excellence is expected to deliver on our profitability targets in late 2023. And now, I'll hand it back to Daryl.
spk06: Thank you, Donna. With that, we will now switch over to take live questions from the audience. In the meantime, feel free to submit any questions via the webcast Q&A submission button.
spk02: Welcome back, everyone.
spk09: As you have noticed, we utilized our prerecord for our prepared remarks today, something many of our customers leverage through our services. To start things off, we're going to be taking questions from our live research analyst audience, and then based on availability, we'll take a few questions from the webcast. And with that, our first question comes in from Richard C. at National Bank.
spk02: Richard, whenever you're on the line, please. Sorry about that, everyone. Just give us a moment as we get Richard onto the line. Hello, can you hear me?
spk04: Hey, Richard. Hey, sorry. I just really sorry about that because I was having problems, technical problems on my end. Just wanted to sort of clarify a couple of things. When you guys first came public, you laid out a fairly cohesive growth strategy. And obviously, the environment's changed quite meaningfully. And I think you sort of alluded to that in your prepared remarks. So with this return to work, the pullback in IPO activity, Has the big sort of change in terms of that growth strategy been shifting towards increasing the ARPU? And has there been anything else in addition to that?
spk06: Sure, thanks, Richard, and thanks for joining with us here today. So maybe I'll kick off and answer that question. I think we certainly have seen the market change pretty dramatically from when we went public at the end of October through to today. And as you mentioned, we certainly saw during the quarter, I think the IPO market in terms of total new issuers coming to market, about 80% down from prior quarters. I think the key thing to understand, and you also mentioned the return to work. So maybe I'll answer that in kind of two components to it. One is that we've been running this business now for the better part of 15 years or so. So we have been through many different cycles of a hot IPO market and not a hot IPO market. And as we've talked about before, when there's a lot of new companies coming public, that certainly does drive higher logo acquisition because there are simply more logos coming to market that becomes a very fruitful market for us. However, the key thing to understand, I think we demonstrated it in this quarter, is really around the size of our client base. So with just under 3,000 clients now on the platform, the ability for us to drive expansion sales within our customer base, and you mentioned ARPU, as we refer to it as ARPA, but is a huge opportunity. I mean, that market is significant. And I think you saw that in this quarter, that during these periods when we might be slower on new logo growth, we're able to still deliver the high revenue growth because of our ability to sell into that base. And so we were really pleased to see the record expansion sales that happened in the quarter. And we think that that gives us really great sustainability and durability in the business as we go forward, no matter what kind of cycle we're in from an IPO perspective. The second part of your question, you also mentioned the return to work. The key thing to recall about our business is that the vast majority of the virtual event revenue that we derive comes from events like this that we're on today, earnings calls, investor days that have always been virtual. So the return to work has very little, zero impact on any of that business and our ability to grow it. Where we have seen a change on the return to work or in-person has been in our sell-side corporate access business where we're selling our platform to run investor conferences. But what we've been doing is we saw this coming, so we've adapted the platform to serve a virtual, hybrid, and in-person business. And we served a number of in-person events during the first quarter. We still think that that part of the business, the corporate access part, will level out where there'll be many events that will still be virtual along with in-person. But the short summary is we feel very good about the ability to continue to drive growth along the same story that we came to market with in all market conditions.
spk04: Okay. And with respect to sort of the mix of growth, so not kind of asking for any specific numbers on the growth rates for the next few quarters, but in terms of the mix, can you maybe share with us the proportion that you think is going to come from the increasing ARPA versus sort of new customers? And I guess related to that, you know, in terms of the ARPA increases, like what products are driving that? So it's a bit of a multi-part question there.
spk06: Sure. So I think so you're asking about the first part being really about the where's the growth going to come from? Is it going to come from from new logo or from from selling into into the client base? I think what the underpinning of that is, is also trying to predict exactly what the what the IPO market is going to look like in terms of new logo acquisition over the coming quarter. Certainly, we don't know exactly what's going to happen with that market. But what we do know is when we look at our ability to sell, we have historically been able to, the majority of the logo acquisitions that we've had over the years has come from non-IPO. So IPO is not the main driver of client acquisition. It is displacement and competitive displacements in the market that we've been able to build this business. So we forecast that that will continue. Our ability to do that has not waned at all. And we're continuing to be able to drive that part of the business while also driving the expansion sales. So I think We've seen historically that mix go from 50-50, like new logo to expansion. This quarter, we saw the expansion be higher than the new logo. But we see that continue to balance as we really focus on continuing to acquire as many new customers as possible, while also really delivering on the expansion side of the business. And I want to mention that as we came out of the IPO, one of the uses of proceeds that we had was to build out a formalized expansion team. And we've been able to do that over the course of Q1. And we really have that team kind of hitting their stride now. So we do think that we're going to continue to see great performance out of that team going forward. And then there was a second part to your question, Richard, that I think while I was answering, I'd forgotten the second part of your question.
spk04: Yeah, it was mainly around for the main products that are kind of driving ARPA.
spk06: Oh, yeah, yeah. So, I mean, the ARPA, as you can see from... what Ryan took us through on the 65% of our ARR comes from customers with two or more products. The kind of natural attachment is from, if we start with a web customer, the natural attachment is virtual events, and that would be earnings calls. It's an obvious kind of attachment, and we're seeing great success in selling that product to our web-only customers. So that's kind of the first one that gets us into that two-product category. As we move into the third, it really is the CRM. But going forward, we are really focused on the analytics part of the business. And we have a huge amount of data that's flowing through our systems. And we're really starting to leverage that to provide unique and differentiated insights. So I think going forward, you're going to see that sort of come into the mix as well in terms of driving that increased ARPA.
spk04: Okay, great. And sorry again for that technical difficulty at the beginning here.
spk06: No, no problem. We're glad you could join. Richard, appreciate it.
spk05: We know it's a very busy earnings day today, so we appreciate the time. All right. Thanks. Bye.
spk02: Great. And our next question is coming in from Stephanie Price at CIBC. Stephanie? Hi, good morning. Can you hear me?
spk06: We can. Hi, Steph.
spk10: Perfect. Good morning. I wanted to touch a bit on gross margins here. And maybe you could talk a little bit about the puts and takes in the quarter. And it sounds like you're expecting investments to have tailed off here and gross margins start to improve in the back half of the year. So maybe you can walk us through what you're seeing there.
spk06: Great. Thanks, Stephanie. And thanks for joining us here again this morning. We know, again, it's a very busy day for earnings. We know that because we're hosting hundreds of them concurrently with this call here this morning. Why don't Ryan, do you want to take that one? You can speak through kind of the patterns around gross margin.
spk00: Sure. Hi, Steph. Good morning. Yeah. You know, from a gross margin perspective, it's. I think what's important is to zoom out and look at gross margin over time, specifically last year. We were able to increase it meaningfully over Q1 last year. And same thing if you look kind of where we exited 2021 as an entire year versus where we ended Q1, you can still see some improvement there. And we did note over the last couple of quarters that there would be puts and takes, as you pointed out. And this quarter is an example of that. And in this case, it was driven very much by additional demand of platform services.
spk01: And so needing to kind of staff up some additional resources in order to deal with a lot more demand on the platform services side of the business.
spk02: And that's helpful.
spk10: And then looking out to the end of the year, it does sound like those investments are expected to slow potentially. And you're still kind of reiterating that mid to high 60 percent range in terms of gross margins for the end of the year.
spk00: That's right. Yeah, absolutely. You know, the investments that we've made coming out of the IPO, specifically in R&D, to be able to drive some of that gross margin efficiency is certainly panning out. And we're looking forward to two eggs in the year in that kind of mid 60s point.
spk10: Perfect. Thanks. And then maybe moving on to capital allocation. M&A has obviously been a hot topic and I'd love to get more of an update on that. Just curious around the NCIB as well and how you think about capital allocation between the two.
spk06: Sure, sure. So I think when we think about capital allocation, the priorities are first and foremost is investing in organic growth. So that's where we see the best return on our investment. That's where it's absolutely core investment. in terms of our priority. In terms of M&A, the key thing is M&A is really a key component to our strategy. Now, in the market conditions that we're experiencing today, we certainly have to be that much more disciplined to make sure that the assets or the targets that we're looking at are going to be strategically valuable to us, but also accretive. And so being disciplined in this environment is something that we've we've really focused in on. And we've we've seen and been involved in a number of processes. We continue to be highly engaged with numerous targets in the market. But we're really focused on making sure that what we bring to market now is something that is going to be is going to be accretive and it's going to drive and help us accelerate growth. and deliver on our strategic priorities and bring improved profitability to the business. So there are some great opportunities out there that we're excited on the work that we're doing. And so we'll continue to focus on that and bring those to market when they're ready. The NCIB is something that we put in place really as a starting point around hygiene. We wanted to be able to put that in place to make sure that we had the ability to buy back stock should we feel that the stock continues to be undervalued. We certainly think it is undervalued. So the fact of buying that stock right now, we simply think it's a good use of capital. That's also something that personally, so I've been buying during the quarter, And that's something that is, I think, also representative of our view in terms of where the stock is trading now and the value that we think can be created there.
spk02: Great. Thanks so much. Our pleasure. Thanks, Stephanie. Our next question comes in from Doug Taylor at Canaccord. Hi, good morning.
spk03: Hey, Doug, how are you? Very good. Just want to make sure you could hear me. I want to ask another couple questions about the growth profile in this, you know, the current landscape. I mean, previously, I think you talked about The bogey of achieving a 30% organic growth rate, and I guess my question is, given everything you see right now, both with where we are with IPOs and SPACs, but also the success you're having with cross-selling some of your other products, do you think that that kind of growth rate is achievable in the near term? Yeah.
spk06: So maybe I'll kick off with that just briefly, but then maybe, Donna, if you could also chime in with your thoughts on that, I think that would be great. I think, Doug, first off, thanks for joining us today. And it's a really good question because you look at the market dynamics change and with our strategy, can we continue to deliver the kind of growth that we think? Historically, this business is really back-end loaded in terms of where the growth comes from. The investments that we're making when we came out of the IPO and those paying off, we have anticipated that that growth would come more so in the back half of the year. You can see that historically in terms of our growth rates that we would normally post in Q1, Q2, etc. throughout the year. We continue to see strong demand across the logo acquisitions as well as in the expansion driving ARPA. Keep in mind that the IPO market is great for logo acquisition, but it doesn't drive revenue in the near term. Because those deals are kind of heavily discounted due to the kind of the partnerships that we have in place with New York Stock Exchange and others. So that revenue is really kind of pushed out into, it doesn't show up until kind of year three of those companies joining the platform. So it's not these kind of inter-quarter movements of the IPO market. They don't really impact our ability to deliver growth. So I think, you know, that's really where we look at it. We think that the growth profile that we're focused on has not changed. Our outlook hasn't changed. But maybe, Donna, do you want to add a couple of comments? I know you mentioned it in the future outlook section, and we'd love for you to be able to provide some comments to the listeners here.
spk08: Absolutely. Thanks, Daryl, and good morning, Deb. Nice to at least see you face-to-face. I think when I think about growth and when I think about the future of growth, looking really at the install base as much or more. It's not either new logo or expansion, but it's additive. And on the expansion side, inside the client base, there's expansion within the product category. I think we call those add-ons. and the add-on services, so both technology and services, and then across the portfolio of offerings. So it's really about leveraging off of this base, taking in this suite of offerings that's being expanded into differentiated analytics and really intelligent analytics for the clients on what their investors how to understand their investors and their investment story. And then taking that to market with a dedicated expansion team. So expansion has always been a strategy, but we've never put as many resources focused on what the client outcome should be as we have right now. So the largest suite of offerings and the supporting services And then the largest number of resources focused at what brings value to the clients. I see that being the propelling or the propulsion for the growth. And that, you know, additive to that is new logo. Obviously, that's a critical part of the business as well and in the sustainability. But I'm excited about what I know about the clients and what I know about what we have to offer the clients right now and how we're going to market with it.
spk03: Thanks. And for my follow-up question, you mentioned in your prepared remarks pricing as a tool that you could use to help recapture some of the margin and offset some of the increased costs of your employee base. And you mentioned the cost of living adjustment and all that. Can you just refresh us on what The pricing mechanism is within your contracts and perhaps talk to the lag between when you put through, say, pricing increases for that purpose and when we should expect that to show up in ARPA growth or otherwise.
spk06: Sure. And Doug, you kind of cut out there for a moment. Did you direct that question to Ryan? It could be for anyone. Okay, okay, great. So maybe I'll start with that, and then maybe, Ryan, you can chime in on it as well. From a pricing perspective, the way that our pricing model works is that we have core subscription ARR. Those contracts are typically initially a two-year contract that then rolls on an annual basis. So from one perspective, the pricing in terms of at that renewal point is is something that we are able to affect and we're able to adjust that according to market conditions. But then the other part of the business is these reoccurring type of add-ons. So this would be things such as virtual events. So like in particular, an investor day or an event or an add-on to an event or those types of things. So we have more kind of elasticity on pricing on those types of reoccurring types of events because they happen in between the quarter on it, you know, based on demand and whatever it is that customers need. So we're able to, pricing effects isn't just purely at renewal. We have many opportunities throughout the year to affect pricing, to be able to capture, you know, and capture that pricing increase to handle some of our increased costs over time. Ryan, is there anything you do? Do you want to add anything to that?
spk00: I think that's spot on. I think, you know, Doug, to be specific, from a renewals perspective, those happen on a rolling basis. And so we'll start seeing more of that impact from an ARR perspective as we kind of move through the year and start to renew clients on an ongoing basis.
spk01: Appreciate it. Thank you.
spk02: Wonderful. Thank you, Doug.
spk09: With that, our next question comes from Stefan Boylan from Raymond James.
spk07: Stephen Bowen. No worries. First question. I think, you know, back in the IPO, one of the goals was to use the proceeds to expand the sales team. I'm not sure we've seen a big increase in costs on that side. Maybe you could just update us on recruiting efforts. Is it going to plan or ahead of plan or behind plan?
spk06: Sure. Stephen, thanks for joining in that question. I think the thing that we're really focused on, you certainly have a plan when you come to market. And what it is that we're focused on from a sales and marketing perspective is also is efficiency. So we're looking at also making sure that our unit economics, our KPIs, And all of that is making sense as we deploy more resources into sales channels. And so I think that what you're seeing there in some of those delays is related to the fact that we're just being disciplined in terms of how aggressive we're deploying those dollars, making sure that we're going to see a good return back to the business. Having said that, certainly in this environment, recruiting and retention, the great resignation trends that are in market, is certainly a challenge for all companies that are scaling up their teams. So that's something that we are certainly dealing with, but it's really about us being much more in the driver's seat than simply not being able to hire. We're just being much more strategic in terms of how we're scaling our sales and marketing dollars.
spk07: Okay. And then I guess my second question following on Stephanie's question, maybe just on acquisitions, can you talk about any changes you've seen in valuations and targets that maybe you looked at a year ago compared to now? And is there more competitors for some of these platforms that you're looking at?
spk06: Sure. So valuations in the public markets, we all know what's happened with those. In the private markets, although we did start to see some of those valuations coming down, there really still is quite a disconnect between valuations in public and private markets. We do think that our thesis on that would be that over time, that will normalize between the two. But that's something that currently you're still seeing some high valuations in the private markets. Having said that, when we look at it, it comes back to being disciplined with these deals. There are companies out there that we feel are a tremendous fit that make a ton of sense, that are highly strategic and are highly accretive. And those are the ones that we're really focused on. And those exist both from a consolidation standpoint within our core markets, as well as new markets that we can expand into. So we are being patient to be able to make sure that when we deploy capital against an acquisition, that we have a high degree of confidence in terms of both its strategic fit, but increasingly important in this market condition is the accretive nature of the acquisition. Okay.
spk07: That's it for me. I just want to say thanks, Ryan, for all your help over the past year, and good luck in the future, okay?
spk00: Thanks so much, Stephen.
spk02: Appreciate it. Thanks, Stephen.
spk09: Our next question comes in from the Q&A from our webcast. So that question is, in light of the market's preference for profitability right now, are you rethinking strategies around investment decisions?
spk06: Great. Thanks, Sarah. And thank you for the individual that submitted that through the webcast. We appreciate it. Donna, can you take that one and talk about kind of on a forward-looking basis how you're thinking, you know, coming into the CFO role, how you're thinking about those investment decisions and what the future kind of holds?
spk08: Absolutely. And thanks for the question. It's a great question and one that we pose to ourselves regularly as well as conditions change externally. And as expectations, as the KPIs that the market evaluates, is to go back into our decisions and say, are they the right ones for the business? Are they going to generate the right level of return? Are they strategically pointed for us? My approach has always been to regularly look at the investment thesis on technology investments. Are they still applicable in market? Are they still deriving or providing the right value to the clients? that we expected at the origin of the investment and really push to make sure that we're doing the right number of leading investments while we're operating the business and that we're watching for the leading indicators of a return on that investment and sequencing investments so that we get a sequential returns and it's not all upfront with a hold your breath and wait for the outcomes. My response would be that right now we're testing all of them. We believe we've got the right investments and the right technologies to improve the client experience, to drive the expansion sales and to drive new logo acquisition. But it is a constant process and evaluation to make sure that we're constantly pointed at the right investments and right outcomes.
spk05: All right, fantastic. So Sarah, I believe that brings us to the end of our Q&A session.
spk02: Yes.
spk06: Okay, fantastic. So that concludes our call here today. We wanted to personally thank both Donna and Ryan and Sarah in joining me here on the call today. And thank you all for joining the call on the stream here today. If we did not get to your question, you have an additional question, please visit our website and you can send us an email or submit the question through the request to meeting with management. And we're happy to take the call. So thanks very much and have a wonderful day, everyone. Take care. Thanks, everyone. Bye-bye.
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