Wecommerce Holdings Ltd.

Q3 2021 Earnings Conference Call


spk_0: when you will make forward looking statements on to these call and that are bees and the assumptions and therefore subject to risk and uncertainty that could cause actual results to differ materially from those project them the company undertake no obligation and of the the statements except as required by law you can read about the risk and uncertainties in the press release issued by the company this afternoon as well as in our filing on feeder note that the interested financial measures the companies because today or not i fr as measures which are not substitute for i have far as much financial measures reconciliations of these measures to i have for as measures are available in the company's earnings release and most reset and d n a oh out during the gone over to chris farley
spk_1: radio operator good afternoon everyone on joined today by alex jersey our president and dave sharon our new chief financial officer who joined us on november first as as our practice of is called will make a few opening common and an open the floor for question from her and with and shareholders lot of start with the financial review of the quarter day
spk_0: thank you chris and good afternoon to everyone on the call i'm delighted to be here and as a reminder to everyone we report in canadian dollars and all references to announce on this call and indoor published financial reports unless otherwise stated our in canadian dollars in the third quarter of twenty twenty one regenerated revenues of ten point nine million of eighty eight percent year over year and one hundred and one for sadler constant currency basis
spk_2: or adjusted he began of the third quarter was three point four million or thirty one percent of revenue up seventy percent from two point all million reported and que three of twenty twenty that was on the third quarter was three million compared to a net income or four hundred and five thousand in the prior year
spk_0: or net loss and que three include certain noncash items such as depreciation and amortization cost of three point one million mostly attributable to our acquisitions of stamped archetype and for sixty
spk_2: there's also a foreign exchange loss of one point six million most people are u s t denominated credit facility that as market canadian dollars on a balance sheet
spk_0: our professional fees were hired the third quarter due to some are recruiting fees and approximately one hundred and fifty thousand of costs associated with tax preparation to receive seven hundred and sixty thousand of tax credits under the s r and edi tax incentive program and as of the end of the quarter we have over forty eight million dollars of liquidity which includes twenty four point six million of cash on hand as well as available borrowings under our credit facilities and the to provide a bit more color or at segment generated six point eight million of revenue this quarter and three point three million of operating income representing a margin of forty eight point five percent for sixty contributed approximately one point two million a revenue into three reflecting a twenty three percent increase in organic growth year over year excluding purchase accounting adjustments and on a constant currency basis
spk_2: on all it over to alex for a business update
spk_1: think they're great haryana all our our type acquisition clothes on august twenty fourth and were buried that about that business for the years ahead we recently hired comic kelly he been six years and eternal thinking in a shop thought to be archived new video and work alongside the code banners partner all after remains the most popular for butter cream theme and we continue to see good the man or the open store to buy know catalog beans remain focused victory dick and harry cash generated isn't for it and them up in two months of the club yeah condition or covered gun or department one point three million in cash flow or about ten percent or equity investment on the to he died between do that shot the find out of the united oliver conference earlier this year you that as an evil and agree more famously and as a result allow for better merchant experience them one at the stuart lee been the case the change of into a large growth opportunity for a for them have been segment of the rug and or my job make it easier for merchant dad cut my featured an application to their for them in particular theme to the top of the final product for merchants and we're spending more time increase in the l t v of our current portfolio of the brands either through it in specific condition which is fiery support the not gator are helping a merchants discover relevant out across or golia turning the fans a leading provider of reviews rating loyalty our work solution and the next month as the activation code in april we debated businesses fail customers success marketing and executive function are increasingly theme merchant convert to the full three product language both reviews and reading and loyalty nord driving average revenue per customer are retention of knowing continue to be strong despite temporary ecommerce edwin as an apple id have a treated like a delays and a treat and but got all of which been widely discussed by other ecommerce participants or sixty or leading provider social palmer product of an active have you not rolling out new products including about your shop that integrate chabal ambassador gallery into a merchant store to make it easier for their customers to shop right from their favorite pointers and mentioned earlier or six eat organic revenue growth the treated twenty percent year over year and the businesses operating with high margin and free cash flow conversion turning to our acquisition pipeline and the overall and an environment we continue to have a very strong pipeline of a kind of african me you well north of one hundred million revenue in a pipeline mostly it out or visiting hundred million to potential transaction nine we're tracking large ecommerce pop on company nice provider the potential talkin that would comment on the thing for are accompanied my foot a permanent capital structure facilitate by discipline reactors owners because we are loners he love not having a three year investment period that being said with a pipeline of hundred eighty nine dollars for clearly capital constrained by an opportunity concerned they're over seven thousand lifted application in the shop by after today we're actively tracking over fifteen hundred opportunities and in many cases are centralized analytic infrastructure allows us attacking company in overtime eating both company and third party data were able to cover almost the entire sector with a in the deal thing because all we do the calmer software you know about the clock looks like and are be able to act quickly and decisively and mention are teaching remark we thought run up and valuations across the board in two thousand twenty one which we believe the greatly softening an economic growth normalizes and year we year com dark look at get less attractive this is the ideal time that cash on the bouncy i we commerce we've invested significantly in our leadership team poor foundation or without you know we integrate fewer had kind of different at the corporate level going into two that and twenty two bravo invested significantly and or new portfolio operate stand up crawford for collaboration the everything and been by and help enable data driven decision making he was shared it with intelligence and analytic layer once again it's been a very active porter the week honors a leave it there and back to back to grip eight dollars just a few comments before we up and question first out fate how excited we are that dave on the game we randomly exhausted process and what we met the immediately knew that he was the right man for the job or delighted to have them onboard second i think it's worth emphasizing just how much we transform the desert that's going public with added to remarkable companies are you from truly exceptional people to the family at the same time we have built out strong management teams across the portfolio and had offered and as plan they've already shifted to majority recurring revenue it's been exciting and i believe are just getting started to what that a it back to the operator to facilitate the kid it
spk_0: and ladies and gentlemen as a reminder to ask a question you will need to face are one and recounts on to me join your question press the pound key he stand by well we compiled human a roster for our first question we have daniel chan from td security danielli a line is anything
spk_1: hello sex or think my question is tom out she talked about an uncertain the dharma given all the advertising changes gets a speed apple's a cheeky changes have you checked on any of your apps and maybe your i'll look at what you want acquire i went there is a direct impact that i could eat it and regarding the changes ah or change in the outlook and what will keep your choir now
spk_3: hundred as the indirect and back into as an act merchant but had to change our thinking on the street exact
spk_1: in the press release you guys provided for sixties growth excluding for spicy counting the other metrics or stamps ah we haven't disclosed that for a key three because it was a year over year comparisons with have of the only own stamp or a part of order and q two and a full quarter producer it i'll get
spk_4: i'm like to see a recovering a digital good segment do think there are still merchants waiting to do the upgrade or do you think that's mostly done
spk_1: i'd say for our archetypal philly a method of updates were gonna make our gift for pixel union which had a much broader he portfolio were still processing some other upgrades to the end of the year there may the merchant your really on the fine line for a chameleon and out of the fan by the i think it all worthwhile mentioning that while he was they upgrade you can point out complaint themes he was still call it a version one point no version of those the and so both of our i it's all three of our brand and be adding additional functionality to the themes made possible by the changes in the theme store sounds good and i will nice one for me and we talked about potential changes uncle aligned potential changes on pricing in a in a theme store have you made any adjustments to themes pricing and if so what has a result than yeah i say most of our theme pricing and for the to point out complaint themes have increased nipping at my and if you take an example are looking at our type beans and those without month from hundred eighty dollars per unit to three hundred ten dollars per unit feel that a seventy percent increase
spk_5: the and week out of the haven't seen a corresponding and can represent decline and in unit sales that we think those can he'd be strong and there's significant price not you know activity fourteenth
spk_0: great thank you
spk_1: and our next console me have and robert young from concurrent to the roberts around i am the the discussion the had a little bit about go about that evaluations normalizing unless i mean you're seeing today or that funny that you're expecting to see where the comps game tougher i just trying to get a sense of well that actually happening now yeah i'd day i say some of that happening in real time rug certainly ah what people expected in our pipeline caught six month ago and not necessarily playing out for of company ah the and for some of that normalization is happening today and week at that he continue in the coming month as well okay
spk_3: and then none on the pipeline he said it was well north of one hundred i think you'd been you said it was hundreds of pages
spk_1: and oh trying to get understanding what's the size the by the royal today i will bark yeah sure so and term the revenue ah it's been worth of honor million and that reflect hundred million the potential transaction value okay okay and then he said that the pipeline he adds that spending a lot of different sizes lot of different let is dirty we had some context around and he gets it was mostly app
spk_3: maybe the up a little more color around that and i've started getting attention to that types of businesses that yeah prioritise in the pipeline
spk_1: yeah the worked when are prioritizing a third and size of academic and you we're gonna looking for a track company the know can be a millionaire the they are are are twenty million dollar the they are are crop different doctors and actually pay there's there's a bit of a barbell today and meaning there is significant number while caught stamps or greater pipe acquisitions in our pipeline rather than one by the barbell and then on the other side there are a lot of very attractive either nice solution that are no called less than five million dollars of arrow are as well as potential talk target acquisition and then certainly new companies targeting the he didn't different functionality unveiled by shot the fi or her the path of a quarter or just new type of behavior after me we're seeing an increase in applications and developers trying to take advantage of the fact that know with apple infrastructure changes they did mean the
spk_6: first party date our own data for a customer is increasingly important and so collecting that meeting some for that and
spk_1: using that data through whether it's marketing automation analyze and winning it increasingly important and it just goes to show that as a merchant you can necessarily depend solely on unpaid awkward pay cuts max addition the best customer the customer you already have okay the mixer and then slots by some just around a you said cash in hand in that release was at shy of twenty five million then i just curious like know what how much capital do you have available for and a and and the numbers capital the required or going the business just in rough you know numbers during in any color you i am now past like yeah so of i'll take the the second part your question first which we don't require any incremental capital into our businesses all of our operating companies for the gonna look at the four year are are profitable and for one not funny cash from any specific portfolio company the on the and an academic inside the bulk of that liquidity frankly is available to deploy to acquisitions in part of that is were subject to to certain covenants for credit facility into reality to keep that in mind
spk_0: that if you look at the cash on hand we have today of around twenty four point six million get outstanding standing around sixty two the yard net leverage allows us
spk_1: pretty valuable comfort and should we need to a long as there out of the a path at the lever that when you like it that forty eight million liquidity financial part of that is available frankly for for acquisitions okay great thanks for all that of have fun again if you'd like to ask consenting are one on your come from
spk_0: we don't have any concerns had been through and through and that's cool over to funding for clothing work

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