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spk06: Good morning, everyone, and welcome to Q4's third quarter 2022 earnings call. My name is Sarah Pearson, and I'm Q4's Director of Investor Relations. I'm joined this morning by Daryl Heaps, our CEO, and Donna De Winter, our CFO and COO, to review our third quarter results. Please note a copy of today's presentation will be available on our website. Please be aware that today's prepared remarks are being hosted live. Following the prepared remarks, we will be looking forward to welcoming our research analysts on the call for a live video 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 information reflects the company's 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 figures are in U.S. dollars. And with that, I'll pass it over to Daryl Heath. Daryl?
spk02: Wonderful. Thank you, Sarah. And good morning, everyone. Thanks for joining us here on our Q3 earnings call. Before Donna walks us through our Q3 financial performance, I wanted to take a few minutes to highlight the progress that we've been making against our strategic initiatives as we execute our profitable growth strategy. During our call last quarter, we outlined a number of initiatives that were focused on expanding operating leverage and accelerating our path to profitability. I'm pleased to let you know that since then, we've been able to deliver some solid growth as well as rapidly improving our gross margin, implementing our sales efficiency tactics, as well as opening our centers of excellence in Latin America. The rapid implementation of these initiatives is really helping us to insulate the business from the macro headwinds that we see out there in regards to inflation, as well as the challenging capital markets. As we continue to set the expectation of delivering positive cash and EBITDA results in H2 of 2023. The successful and rapid implementation of these initiatives is really a testament to our team's laser focus on operational excellence and reaching profitable growth in 2023. The team knows that every day that they can accelerate these initiatives only sets us up better for success. As a result of their hard work, we are already seeing a meaningful improvement in the business. from the size-adjusted sales and marketing teams to refining and prioritizing our R&D investments to focus on our most successful products, all without skipping a beat. In addition, we established our first Latin America Center of Excellence in Mexico. We've already ramped up technical roles with additional transitions continuing through year-end. We expect to realize the efficiency benefits and the margin expansion improvements from these efforts in the fourth quarter and throughout 2023. Despite these changes and the headwinds of market forces, we are displacing our competition more than ever. We are winning more and signing bigger and longer-term deals that will maintain our double-digit revenue growth and contribute to our profitability next year. With the heavy lifting now behind us, we are monitoring the trajectory of our expected benefits closely and look forward to demonstrating our progression as we exit 22 and are propelled to profitable growth in 23. One of the main reasons for our ability to pivot so successfully is our innovative Capital Connect platform and how we are delivering all of our products into a tightly integrated experience. Capital Connect is the platform we've been building since we went public. It is built on top of a unified data layer that connects all of our products and is the cornerstone of our ability to deliver unique and differentiated analytics. The value of Capital Connect increases as we add customers and those customers adopt additional products. This adoption increases the amount of interaction data flowing through our platform and enables us to deliver exponentially better insights and analytics to our customers. These improved products help us attract more customers, which in turn increases the data and improves the workflow insights and analytics. At the scale we are today and where we're headed, this is a very powerful driver. This is really our network effect and it will become the most valuable aspect of our business over the coming years. This is the one plus one equals three value proposition. Customers that use more than one product gets substantially more value from us. Those that use more than two receive even more. This is the unique and core value proposition that is driving our ability to displace our competitors and continue being the market leader. And what continues to be a challenging macro environment we are very pleased to see the traction that we are achieving during the back half of the quarter following the restructuring. In fact, September was our largest sales bookings month in our history, and we're very pleased to see a significant increase in average deal size, reflecting an increase in customer adoption of our Capital Connect platform and further reinforcing our core value proposition. Along with the encouraging trajectory in the third quarter, we continue to see strong performance in our expansion sales efforts, with current customers again focused on the value that we can provide through Capital Connect and the integration of all of our products. When we combine this with our 96% controllable retention rates, our rising ARPA, and the percentage of customers using two or more products, we are very pleased to be delivering double-digit growth during the quarter while also expanding gross margin and materially improving our operating leverage. I'll now take a few minutes to provide an update on a few of our products. Our web management app today is serving over 1,500 customers and provides an exceptional experience for how customers manage their websites and their most critical updates. We expect the adoption of this platform to continue to grow steadily, serving virtually all of our 2,600 plus customers during 2023. During the quarter, we expanded the coverage of this product to include all of our corporate website and multi-website clients, as well as all of our agency partners. All client types are now fully enabled to use Capital Connect to facilitate their engagements with us. The web management app is the cornerstone of how we are delivering on our commitment to provide the best customer experience in the industry, bar none, while allowing us to scale efficiently and expand gross margin. I'm thrilled to report that we continue to receive record levels of five-star ratings across all of our service interactions. We are very pleased with the performance of our teams and how well we're partnering with our clients. Engagement Analytics is our first product that is really leveraging the vast amount of interaction data that is generated from all of the behavior of investors across our platform. Keep in mind that we have more than 13 million investors a month hitting our network of investor websites and more than 400,000 investors joining live investor calls each quarter. Engagement Analytics is the first product that utilizes all of this behavior from all of these interactions and delivers a set of analytics designed to help IR teams understand those investors that are engaging and doing work and those that are not, helping them to prioritize their targeting and outreach efforts. Engagement analytics had some great sales tractions during the quarter, and we were really pleased with all the feedback that we received from our customers. Our roadmap is focused on continuing to evolve the analytics aligned with actual insights, benchmarking, and recommended next steps. The goal being to help IR teams prioritize investor engagement and ultimately to help drive premium valuation. If you recall from last quarter, we announced a new product called Q4 Login. You may have seen it as you registered for this call. Simply, it allows an investor to choose to create a Q4 account and then be automatically logged into any quarterly earnings call hosted by Q4 in the future. This is an important step as we begin to unify all the capital markets experiences for all types of investors, public companies, analysts, and advisors across the Capital Connect platform. I'm pleased to report that this product has continued to gain significant traction over the quarter, now counting over 114,000 investor accounts. To give you some perspective, we have maintained an investor database of around 350,000 profiles over the last couple of years, so we're very pleased to see the number of self-created Q4 login accounts growing consistently quarter over quarter. We're also really impressed with this number because it highlights the scale of investors engaged in our platform and reinforces our position of being a de facto source of investor information. As this number continues to grow and as we build out additional functionality, we'll be able to help all types of investors, retail and institutional, more effectively research and engage with public companies and IR teams. On the virtual events front, we've been continuing to innovate and evolve our virtual events platform, which is what we're using here today on our earnings call. We continue to see an increased demand from customers for video earnings calls and what we call non-conference call based earnings calls. This is an aspect of the capital markets that has not evolved in many years, and we are well positioned to bring a series of innovative features that will help issuers communicate more effectively over both audio and video. while also making the experience more engaging for all types of investors. As well, during the quarter, we continue to expand our virtual events platform to serve the sell side and corporate access customers, hosting a number of investor conferences and ESG events, along with onboarding new banking customers. As of today, our proprietary virtual events platform serves over 90% of our events client base. As we've rolled it out to our clients, we've been especially proud to reduce the incident rate from an industry standard of roughly 6% for earnings calls down to under 1% for all earnings calls hosted on Q4. This low incident rate in the investor relations space is unprecedented and is part of our commitment to delivering the best customer service to all of our clients. But having said that, the other key driver to our virtual events business has been the vertical integration and the removal of third parties in how we deliver this part of the business. This has been one of the primary drivers of our gross margin expansion strategy this year. And Donna will speak more about the progress we've been making with expanding gross margins, but in general, we're just really pleased to see the positive impact that this strategy has been having on the business. Finally, in regards to M&A, while we remain opportunistic with a healthy pipeline of potential acquisitions, we are primarily focused on delivering against our organic profitable growth plan. As well, in terms of deals that we are actively working on, the bar for acquisitions to make sense for us has increased over the last couple of quarters due to overall market conditions and our priority on profitability. Having said that, during the quarter, we did make the decision to exit an acquisition opportunity in the late stages of discussions, as we determined during diligence that it did not meet the thresholds we had in place to ensure that we are making the best use of our capital. And with that, I'll now pass things over to Donna to take us through the financial results.
spk04: Thanks, Daryl, and good morning, everyone. Thank you for joining us. I'm pleased to share the results of our third quarter. A reminder before we get into the numbers that the restructuring and the cost reductions occurred late in Q3, and as such, they have a minimal impact on this quarter's results, but we anticipate a significant impact on the fourth quarter and future quarters. So looking at the results, Total revenue for the third quarter was $14.2 million, an 11% normalized year-over-year growth compared to normalized revenue of $12.7 million in 2021. This excludes one-time VSM revenue in the same quarter in 2021. Even before this adjustment, though, revenue growth exceeded 8%. This quarter's revenue growth can be attributed to the recovery of our new logo sales. our ability to displace competitors, and the continued strength of our expansion sales. New logo acquisition with higher ARR platform bundles coupled with strong value-added services into the client base resulted in September being our strongest booking month ever. Our capital markets platform revenue grew by 9.2%, excluding the VSM revenue from the comparable quarter last year. Platform revenue is important. As 94% of year-to-date capital markets platform revenue is recurring long-term customer contracts, providing more predictable revenue and expense management, as well as a strong client foundation into which we can offer additional platform subscriptions and services. Our platform services continue to expand noticeably, with 41.8% year-over-year growth driven by our clients' needs for value-added services, including website redesigns, accessibility, and ESG updates. We are pleased to see a strong improvement in ARR, ending Q3 at 54.7 million, an 8.7% year-over-year growth. ARR expansion was driven by existing customers embracing the value of aggregating all their IR needs with a single provider on our Capital Connect platform, and this integration equally resonating with new clients, driving bundled sales at higher value to the clients and higher ARR to us. Average revenue for the quarter, or ARPA, sorry, average revenue per account or ARPA was $19,154 at the end of the quarter. This represents a 5.7% increase over the prior year, driven in part by 96 existing customers adding to their subscription during the quarter. Consistent with our strategy, we have delivered steady quarterly ARPA expansion sequentially, with Q3 representing our largest increase since early 2020. We expect this trend to continue as we execute on our expansion strategy with both new and existing customers using more products on the Capital Connect platform. The trend for Capital Connect product adoption continues with customers leveraging two or more products. This quarter, 66.4% of our ARR was generated from these customers, up from 65.4% one quarter ago. As Daryl mentioned, our third product, Engagement Analytics, launched on Capital Connect, and our web management app and events platform expanded to all clients. We see clients spending more time on Capital Connect as we offer more valuable IR functionality to them on the platform. In the third quarter, we added 80 new clients on Capital Connect, of which 67 became subscribers. Our quarter ended with 2,679 customers on the platform. Uncontrollable churn tied to M&A in the public markets, along with withdrawn IPOs and delistings, continued to impact retention and the growth of our customer base. This trend continued from Q1 and Q2 and remains elevated due to overall macro conditions. However, we are pleased to see strong controllable logo retention at 96% again this quarter, demonstrating our ability to create value for our clients across all of their investor relations needs and to provide exceptional customer service in the delivery of our expertise. Pursuit of value creation for our large client base has the added benefit of reinforcing the durability of our core revenue base. Our gross margin for the quarter came in at 59%, expanding by 212 basis points sequentially. We are very pleased with this progress as it demonstrates that the gross margin expansion strategy we laid out during our IPO is working well. Broader deployment of our operating center of excellence in Mexico was deferred until the end of September to ensure the transition was seamless to our clients. Our focus on ramping up the center will continue to be accretive to gross margin as additional resources are onboarded. We expect to see the benefit of $4 million in annual cost reductions starting in the fourth quarter, contributing to margins that will exceed 60% next quarter and exit 2023 above 70%. We remain focused on all five gross margin pillars, expecting incremental improvements on a continuous basis as we operationalize each of these strategies. In the third quarter, Operating expenses excluding depreciation and amortization, foreign exchange loss and other expenses totaled 16.8 million, down from 17.3 million last quarter. The actions taken in Q3 drove marginal improvements to our operating expenses in the quarter, but these cost reductions and efficiency gains will be fully realized in future quarters. Overall, the initiatives should result in savings to the ongoing operating expenses of 9 million annually. Sales and marketing costs were 5.6 million or 40% of revenue. Compared to this quarter last year, sales and marketing increased by 1.1 million, primarily from higher employee expenses and an expanded product marketing function. The majority of the August 23rd restructuring addressed the size of our sales and marketing team in the context of growth expectations and increasing sales efficiency. We expect sales and marketing as a percentage of revenue to settle in the low 30s in the near term and decrease further as a percentage of revenue in H2 2023. Research and development was 4.9 million. or 34% of revenue. This was a 2.3 million increase from this time last year. This quarter's R&D costs continue to include investment in Capital Connect and the development of new product offerings. The reduction in force in R&D was the outcome of a strategic assessment of all product offerings with the conclusion that certain initiatives did not contribute meaningfully to the 2023 strategy and a reduction could be made. We are targeting normalized level of R&D as a percentage of revenue in the low 20s as we accelerate profitable growth. G&A for the quarter was 6.2 million or 44% of revenue for the quarter. The increase of 2.5 million from the comparable period in the prior year related to 900,000 of one-time expenses with the balance of expenses associated with operating as a public company. Our efforts will continue to reduce G&A and we expect a gradual decrease as a percentage of revenue through 2023 to attain a mid-20s level. Our adjusted EBITDA was negative 7.5 million or negative 53% of revenue for the quarter. Execution of the growth in gross profit, as well as reductions in all operating expense lines, drives profitable growth in the coming quarters, resulting in positive EBITDA late in 2023. Earnings per share is negative 30 cents for Q3 2022 compared to negative 43 cents in the same quarter of 2021. On an adjusted EBITDA basis, EPS would be negative 19 cents and negative 30 cents respectively. At the end of the quarter, we had 37.6 million in cash and short-term investments. net of negative operating cash flow of 6.6 million. Operating cash flow will be positively impacted by the material changes to our expenses and is expected to follow the same trajectory as adjusted EBITDA. The strength of our balance sheet is a critical component of our success. The aging of our current assets and liabilities is healthy, reflecting discipline in these accounting functions. and our core working capital metrics remain strong, ending with a working capital balance of 31.1 million. Additionally, as of September 30th, we had no outstanding debt, with a 22.5 million revolving credit facility fully available as needed to support profitable growth. The macro environment remains challenging. requiring us to provide for growth in a disciplined way. We have taken the steps necessary to fund our strategy at an investment level that still delivers our financial targets. The majority of these investments to increase gross profit and decrease operating expenses have been executed, but are yet to be realized in our operating results. We are committed to profitable growth and maintain our view that we will be cash flow and EBITDA positive in the late quarters of 2023. And with that, we will switch over to the Q&A session.
spk08: Thank you, everyone.
spk06: We will kick off our Q&A session with our first question from one of our research analysts. Our first question comes in from Doug Taylor at Canaccord.
spk08: Thank you. Good morning.
spk07: I'd like to reiterate what came up last quarter as well, and that is what kind of market backdrop are you assuming in your expectation of achieving cash flow and EBITDA profitability in the second half?
spk02: I'll take that one and then Donna, if you'd like to add on to it. And Doug, thanks for joining the call this morning. I think the expectations that we have when we're looking out next year is really to on a steady state basis in terms of where we're operating today. So we've talked before in terms of some of the aspects that don't exist in the market today would be namely the lack of IPOs, the lack of financings, as well as the challenging market from an uncontrollable churn perspective, delistings, go privates, M&A, et cetera. Our expectations through next year is that that market will continue and we won't see any benefits from overall market conditions. However, that's what we feel good about the plan that we have in place that should those conditions improve. We do see that as being a tailwind, which will be additive to our growth during 23. But we're not making any of those assumptions when we're planning out for next year.
spk07: And so assuming that the market backdrop doesn't change, I think everyone does. What factors here? Can we look back to high activity levels a year ago with the public company formation? Is that one of the events we should be looking forward to?
spk02: I think the again, it's the same thing. If we see the market conditions improve, that's only going to be a tailwind. I think what we're assuming not only from a forecast perspective, but in terms of how we're executing. And we saw this in our in our sales results for the third quarter that that really just showed up in September with our strongest sales bookings month in our history. is that we've been as we went through and made the changes in terms of sales efficiency and reorganizing our sales and marketing function is really around being much better from a segmentation standpoint in terms of who are the customers that we can provide the most value to and who are the types of customers and in what markets that really benefit from our platform approach. So that's where we're seeing that the actual net number of customers that we're acquiring from our sales efforts are lower than they were last year we're getting close to being able to deliver the same amount of bookings that we did during 21 when we had immense tailwinds happening. So we feel really good about that restructuring and we feel like our sales and marketing capability in this market from a displacement standpoint has gotten substantially stronger over the last quarter. And so we're continuing to really focus on that and being able to deliver some great results in future quarters. Again, assuming that we don't get any help from the market in achieving that.
spk08: Great.
spk06: Our next question is coming in from Stephanie Price at CIBC. Hi, good morning.
spk05: Donna, thanks for the color on the OPEX lines. I'm just hoping you can talk a little bit more about the cadence of EBITDA margins and how to think about some of those recent cost savings initiatives kind of ramping up here.
spk04: Stephanie, great question, and thanks for joining us this morning. We sized at the front end of my commentary as being about $9 million in annual savings on the initiatives that were taken alone in Q3. And so those initiatives are behind us. There is, however, the continuous five pillars on gross margin savings. which will continue to deliver that increasing spread on gross margin and growth, the continued adoption of the Latin America centers. And then when we think about each of the individual lines, the sales efficiency and the number of bundled sales and the bundled sales approach is actually allowing higher return on lower sales costs. So With revenue increase proportionally, sales can get to those target levels in the low 30s. R&D will also benefit from the Latin America expansion. And as we discover talent and ways to fulfill our product roadmap and our productivity with a full geo hiring strategy. So I think we were able to articulate the 4 million in savings on COGS and the 9 million on OPEX. as being already executed and able to speak to. Initiatives that were laid down or the tracks that were laid down in the quarter will deliver incremental from here, but the largest amount has already been executed.
spk05: Okay, thanks for the color. And then maybe just drilling down on gross margins a little bit. It looks like the gross margin cadence has changed. It's now to plus 60% exiting the year from kind of a mid 60% in the past. Just curious about the puts and takes there and the path to longer-term gross margin targets here.
spk04: I still hold true on the, Stephanie, on the, you know, we had expected 60%. And we had sort of prepped everybody. There'd be a six in front of it for the third quarter. We delayed the movement into Latin America, the larger movement until late in the court in the third quarter to make sure that it was not disruptive to the business and not disruptive to our clients. And I think we managed through that extremely well. We saw the main, main, maintenance of our five-star ratings on the service levels and on the delivery of high-quality websites as well. So that did put a little crimp in positively impacting the third quarter, but that has been executed at this point. So confident that it's over 60 in the fourth quarter and confident that you can draw a line between over 60 and over 70 over the four quarters gradually in 2023. Great. Thanks so much for the color.
spk08: The next question comes in from Stephen Boland at Raymond James. Morning, everyone. Can you hear me okay? We can hear you. Good morning, Steven. Thanks for joining.
spk00: Thanks. Maybe just on the customer count, you mentioned the number of new customers, but also that there were some losses because of mergers, privatizations. Would you say that the sales environment is also being impacted in terms of getting new customers because of recession concerns, things of that sort, not just lower IPOs and financings, but just an unwillingness of companies to convert?
spk02: So I think when we look at what we saw during the quarter, certainly in July and August, the activity levels were kind of noticeably lower. Now there's lots of different reasons that we think about that kind of post COVID vacation period was certainly very high. So people were certainly away, but seeing the ability for us to deliver a very strong month in September, It comes back to our ability to be better from a displacement standpoint with our competitors, as well as the core value proposition that we have. One of the main things that we did in adjusting our go-to-market is really focus on platform, focus on the value that comes from Capital Connect, not only in terms of how it can help customers, but also in terms of cost savings, that customers being able to kind of bundle more things with us that we provide, we can provide significant savings to them rather than them buying things independently in the market. And so that adjustment for us and our focus on displacement is, And what I'm quite pleased with from a sales perspective is that we have effectively replaced the hole that has been created from the lack of IPOs. And we're doing that through segmentation and through our core value proposition. So we're really pleased with that. We think we can continue to deliver along those lines. That's what we're seeing in markets. So we're not seeing the fears of recession really impact purchasing because of our ability to kind of pivot our value proposition and focus on what matters most to customers in today's market.
spk04: And perhaps, Daryl, I can add that. Stephen, our sales, our bookings numbers are really a balance between new logo acquisition and expansion into the base. selling into the client base. And so we saw roughly 80 clients coming in through new logo, but we also saw another 96 of our clients taking additional subscriptions within our client base, as well as driving some 42% growth in one-time services to that same base. So it is a durable model. that is able to balance in any market as to whether it tilts a little more towards new logo or it's propelled a little more by our expansion.
spk02: Yeah, very good point.
spk00: Okay, and then I guess because you mentioned IPOs in the past, I think you've kind of said that was a secondary source of new customers. Would you say then that in terms of distribution, like direct to customer has been the biggest win for you as opposed to some of the partnerships that you have to gain new customers?
spk02: Absolutely. Um, uh, Steven, that's, that's exactly it. That the, the strength in our, in our go-to-market and our sales execution now is entirely in direct with customer, um, for new logo. And in addition to what Donna's mentioning in terms of expansion, um, and, uh, Typically, you know, we would see kind of new logo acquisition and maybe 30% of that coming through IPOs. So the fact of where we're executing now and our ability to deliver at the level that we are now without those IPOs is what gives us, you know, great confidence as we move forward in executing in this current market as it continues. But in the future, when the IPO market becomes healthy again, we think we're going to be very well positioned to benefit significantly in that point as well.
spk08: Okay, thank you. Great, thanks, Stephen. Our next question comes in from Kevin McVey at Credit Suisse. We're not able to hear you, Kevin. Hey, Daryl, can you hear me now?
spk03: Yeah, very good. Great. Thanks so much. And thanks for the call this morning. Hey, can you give us a sense of what type of revenue we should assume kind of in Q4? And then, you know, I know it's a little bit early for 23, but just what type of revenue objectives we should think about within the context of, you know, the really nice work you've done on the expense management.
spk02: Sure, maybe I'll let you.
spk04: Absolutely. Kevin, we still feel that In this in this environment that we're probably we're probably in the range of half of what we had seen as historical growth rates. And so, you know, in the past, we've been able to deliver on 30 ish percent type revenue growth and and our expectations and the way we're planning our our quarters in this environment is is in around that that range.
spk03: So it'd be about half that, Donna, so in the 10 to 15% range, something like that.
spk04: That's how I look at it, yes.
spk03: Great. And then it looks like on slide number eight, the number of investors connected to events each quarter, it's about 400,000 this quarter versus 500,000 last quarter. Daryl, is that just a function of the macro or is that some of the kind of clients obviously the uncontrollable client retention and anything to call out there.
spk02: No, I don't think it wouldn't read anything too much into that particular number that those ranges that we provide kind of like over 400,000, 500,000, the actual delta between those two numbers quarter over quarter fluctuates a little bit in terms of kind of tens of thousands each quarter, depending upon market cycle, where we're at over the course of the year. So we would, when we look at that number, we see that it is substantially the same kind of quarter over quarter. So we wouldn't read anything into that.
spk03: Super. And then just if I could, one more. Donna, what type of revenue run rate is the business sized for today, given the cost actions? How do we think about just the kind of on a go forward basis? What type of revenue can the business support based on the expenses you've really nimbly kind of adjusted?
spk04: Yeah, really, it falls, Kevin, in line with what I what I just gave you. looking at the growth expectations for, we didn't cut below what we were forecasting as revenue growth for the upcoming four quarters. And so the sizing was really to support that outcome, the types of growth we just spoke of on revenue and recognizing that a good portion of that was going to be ARR and multi-product ARR.
spk08: Great. Thank you. Thanks, Kevin. Our next question comes in from Richard C. at National Bank. We can't hear you, Richard.
spk06: We're just going to give Richard a second to get his audio working. In the meantime, we'll take a question from the webcast. We have a question that came in through the webcast platform asking, could you please provide an update on headcount figures? Any commentary on the mix of employees between Canada, US and LATAM?
spk08: Thanks.
spk02: So don't have that those specific numbers at the ready at the moment. So but what we can say is that the our total employee count remains When we're thinking about the balance of LATAM versus our North America and European teammates, we're looking at kind of north of 500 in total across the entire business and Latin America making up kind of in and around 10% of that number. So we do see that. Over time, that may increase somewhat, but the vast majority of our team will likely continue to reside in North America and in London and other areas of Europe.
spk08: I think that's fair. All right, we're going to give that another shot with Richard. Here we go. Can you hear me now?
spk01: Yes.
spk08: Very good.
spk01: Great. Thanks for that. Yeah. Too many different conference applications here. So on the acquisition, what you walked away from, I'm kind of curious to be maybe share like the order of magnitude of of that transaction. And perhaps, you know, was it to add logos? Was it to add IP? Just curious if you can give us the color there.
spk02: So I think what we can share is that we continue to look at opportunities from an acquisition standpoint. And what we shared in the past was we had kind of two main buckets that we were focused on. One was around consolidation within our industry, and the other was in expansion opportunities to accelerate our kind of capital markets platform approach. This opportunity that we did walk away from was on the consolidation side of that in terms of those two buckets. It's something that I think, as I mentioned during the prepared remarks, is while we continue to be opportunistic and looking for those acquisition opportunities, it really is the bar continues to be quite high and has moved up in terms of what are the key metrics, what are the What are the fundamentals of the businesses to make sure that they would be highly accretive in this market? And so in this case, we felt the best decision was to walk away from that deal and focus on organic execution of our profitable growth.
spk01: Okay. And then, you know, we've been hearing that you've been taking some prices up across the board. Actually, I'm not across the board, but I guess I'm asking a question that's sort of across the board. And how has that been resonating? Sure.
spk04: I can take that one. And good morning, Richard. We had disclosed, I guess, in the last couple of quarters that inflation impacted us as it has pretty much every business, and that we had taken a position of price increases as part of that strategy to absorb the cost of inflation, particularly wage inflation, but across all providers, and that we were on point upon renewals, we're issuing price increases into our renewals. It also reflects, the price increase also reflects the amount of investment that's gone into the product and the increased functionality, particularly functionality on the platform. The acceptance of that price increase has been really well received. And so our clients have an expectation because it is pretty uniform in the marketplace that inflation is recognized and prices are going up, but also recognizing it on the value front. They see the investment in the offering and in the web management app that allows them to do far more in a self-controlled way as well as with lower issue or incident challenges on the events platform. So it has been a well-received strategy and it's been impactful to us on our revenue and ARR. Okay.
spk01: And just one last one for me. No doubt we all have seen sort of the benefit of the past two years in a weird way on sort of a lot of businesses. And I think, you know, what you're doing obviously is ideal from a cost standpoint. But as you kind of reset and look at things going forward, when you went IPO, you sort of had this trajectory of 30% organic growth. Do you think that once we cross this chasm, a lack of a better term that you know we'll get back to that trajectory or do you think the business kind of resets you know maybe in the 20s or the high teens just kind of curious to see what you're thinking that on that sure i'll take that one i think
spk02: As we commented earlier with one of the questions, you know, currently right now when we're looking at our expectations into 23 are about half of what it is we've kind of been looking at before that 30%, you know, cutting that in half. So kind of mid-teens is something that we think is a reasonable expectation. The... When we look at the market conditions improving, what I'll point back to is looking at 30% of those IPOs coming back in terms of our sales activity, as well as a material improvement in the uncontrollable churn that we're seeing. So the uncontrollable churn, which again makes up for companies that are delistings or go private or M&A, which we're seeing like an unprecedented level of that happening in the market. when you bring those back into the model, um, the answer to your question is, is yes, we believe that the business, we continue to be focused on a profitable growth path. And we believe that the, the growth trajectory of the business will get back to those norms. Um, you know, and we'll certainly set those expectations when we get there, but we think in that kind of like, um, mid to high twenties into thirties is, uh, is a reasonable expectation when market conditions normalize. And, uh, I want to also say with that, that we're not talking about market conditions like 21. You know, 21 was certainly out of the norms in terms of the amount of market activity, IPOs, financings, et cetera. But this is more in kind of normal market conditions like we saw in the kind of like 17, 18, 19 kind of period.
spk08: All right, fantastic. Thanks, Richard.
spk06: We have one final question come in from the webcast. The question is on churn. If you could just, Donna, give us a little bit better understanding on the overall churn levels, both controllable and uncontrollable.
spk04: In addressing churn, and we've not really provided total number on that, we've talked about the controllable retention being at its record high, holding at 96%. In a typical market, the 4% would be about half of the churn rate, and the other half would be uncontrollable. In this market, we're seeing uncontrollable be a little higher than our controllable churn. And that is really driven. We've not seen a particularly level of withdrawn IPOs and delistings. There are cycles of M&A. And so M&A has somewhat of a cyclical but somewhat predictable pattern across uncontrollable. It's been really the delistings and IPO withdrawals that have impacted. So assume in this type of market that the uncontrollable is running a little hotter than 50% and that our controllable The benefit for us has been bringing the controllable to these levels, and we expect these levels to improve on our controllable side.
spk08: Great. Great, thanks.
spk06: That is the end of the questions that we've got, so I'll pass it back to you guys to close out.
spk02: Very good. Well, just want to thank everyone for joining us on the call this morning. And thank you, Donna, as well. And also just a big thank you to all of our teammates at Q4 and the exceptional execution during the quarter. It's an honor to work with all of you each and every day. And then finally, last but not least, is a big thanks to all of our customers. both in terms of working with us and our business together, but also in your engagement with us as we continue to innovate on all of our products and our Capital Connect platform. We truly feel blessed to be able to work with all of you each and every day. So thank you very much. And with that, we will see you next quarter. Thank you so much.
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