ProntoForms Corporation

Good day, ladies and gentlemen, and welcome to this Pronto Forms Corporation fourth quarter 2022 earnings conference call. Today's conference is being recorded and all participants are in a listen-only mode, but later you will have the opportunity to ask questions. To get us started with opening remarks and introductions, I am pleased to turn the floor over to our host, Mr. Alvaro Pombo. Please go ahead, sir.

Thank you, Jim. Thanks, everybody. Good morning and welcome to our company's conference call. First, David Croucher will summarize our financial results.

Dave. Thank you, Alvaro. Good morning, everyone. Before we begin, I will read our cautionary notes regarding forward-looking information. Certain information to be discussed during this call contains forward-looking statements within the meaning of applicable securities laws, including, among other statements concerning the company's objectives, the company's strategy to achieve those objectives, as well as statements with respect to management's beliefs, plans, estimates and intentions, and similar statements concerning anticipated future events, results, circumstances, performance or expectations that are not historical facts. Such forward-looking statements reflect management's current beliefs and are based on information currently available to management and are subject to a number of significant risks and uncertainties that could cause actual results to differ materially from those anticipated. Also, our commentary today will include adjusted financial measures, which are non-GAAP measures. These should be considered as a supplement to and not as a substitute for GAAP financial measures. Reconciliations between the two can be found in our MD&A, which is available on CDAR.com and our website. And finally, note that because we report in U.S. dollars, all amounts discussed today are in U.S. dollars unless otherwise indicated. We'll now go through the financial highlights for the fourth quarter and fiscal 2022. Total revenue in Q4 2022 was $5.6 million, a 3% sequential increase from Q3 2022 and an increase of 12% compared to Q4 2021. Total revenue for the full 2022 year was $21.3 million compared to $19.4 million in 2021, an increase of 10%. Recurring revenue in Q4 2022 was $5.3 million, a 1% increase from Q3 2022, and a 10% increase from Q4 2021. Recurring revenue for the full 2022 year was $20.4 million, compared to $18.3 million in 2021, representing an increase of 11%. Our annualized recurring revenue base, or ARR, as at December 31, 2022, was $21.6 million, representing an increase of 3.3% sequentially and an increase of 9.1% from December 31, 2021. Customers with greater than $100K of ARR represented 43% of our Q4 ending ARR base, up from 41% at the end of Q3 2022. Revenue from professional services was $321,000 in Q4, an increase of 35% compared to Q3 2022 and an increase of 52% from Q4 2021. The Q4 increase in professional services revenue related to an increase in sales and delivery of larger engagements with enterprise customers. Revenue from professional services for the 12 months ended December 31st, 2022 was 952,000 down 8% compared to the same period in 2021. Professional services revenue has been affected by our transition to enterprise sales, and we expect this to generally trend with ARR growth going forward. Gross margin on total revenue for the fourth quarter 2022 was 87%, which is up 2% sequentially and up 3% compared to Q4 2021. Gross margin on total revenue for the 12 months in 2022 was 85% unchanged from the same period in 2021. Gross margin on recurring revenue in Q4 2022 was 91%, up from 90% in both Q3 2022 and Q4 2021. Operating expenses in Q4 2022 were $5.3 million, a 7% decrease from Q3 2022 and up 1% from Q4 2021. Operating expenses for the 2022 year were $22.5 million compared to $20.6 million in the same period for 2021. representing an increase of 10%. Non-GAAP loss from operations for Q4 2022 was $180,000 down from a loss of $850,000 in Q3 2022 and down from a loss of $620,000 in Q4 2021. Non-GAAP loss from operations for the 2022 year was $3.1 million down from $3.3 million for 2021. The decrease in Q4 loss was due to higher revenue and lower operating expenses caused by lower variable compensation and commissions and the foreign exchange effect on our Canadian denominated expenses. As we mentioned in the MD&A, we expect an increase in our 2023 first quarter losses with additional costs related to organizational changes, but we expect this will be followed by decreased losses for the remainder of 2023 as we continue to invest in product and sales in a controlled manner relative to our revenue growth. Our cash balance at the end of December 31, 2022 was $6.1 million, which was flat from a year ago and up slightly from $6 million even at the end of Q3. We also have $1.4 million still available on our bank line, and we recently extended the commitment on the bank line through October 2024. In summary, our Q4 showed strong progress for loss reduction, and produce a small increase in cash for the quarter. We are pleased with the trend that we're seeing both operationally and financially within our business, and we have sufficient cash and liquidity for the foreseeable future and the capacity to deliver enterprise growth. With that said, I'll pass it back to Alvaro.