Wishpond Technologies Ltd.

Hi and thank you everyone for joining us today and welcome to Wishpond's 2022 fiscal third quarter financial results conference call. My name is Angelica and joining me on the call today are Ali Tashkander, Chairman, Founder and CEO of Wishpond, as well as David Pais, the company CFO. This call is being recorded. We will be having a question and answer session at the end of the call. which will be limited to analysts only. I trust that everyone has received a copy of our financial results press release that was issued earlier today. Listeners are also encouraged to download a copy of our quarterly financial statements and management discussion and analysis from cedar.com. Sorry. Please note, versions of today's call, other than historical performance, include statements of forward-looking information within the meaning of applicable security laws. These statements are made under the safe harbor provisions of those laws. Forward-looking statements involve known and unknown risks, uncertainties, assumptions, and other factors, many of which are outside of wishbone's control, that may cause the actual results, performance, or achievements to differ materially from the anticipated results. Performance or achievements imply such forward-looking statements. These factors are further outlined in today's press release and in our management discussion analysis. We provide forward-looking statements solely for the purpose of providing information about management's current expectations and plans relating to the future. We don't undertake or accept any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements to reflect any change in our expectations or any change in events, conditions, assumptions, or circumstances on which any such statement is based, except if it's required by law. We use terms as gross profit, gross margin, adjusted EBITDA, annual revenue run rate, and monthly recurring revenue on this conference call, which are non-IFRS and non-GAAP measures. For more information on how to define these terms, please refer to definitions set out in the management discussion analysis. And with that, let me turn the call over to Mr. Ali Tashkander, Chairman and CEO.

Thank you very much, Angelico. Good day, everyone. We hope that you're all keeping safe and healthy. I truly appreciate everyone for joining us today. We are very pleased with our third quarter results, which proved to be the strongest quarter in the company's history. Wishbone achieved record revenue of $5.5 million in Q3 2022. representing approximately $22 million in annualized revenue run rate, driven by the company's continued focus on organic growth and successful integrations of its acquisitions. I'm especially proud of our team for the cash flow performance in the third quarter, with the company generating about $700,000 of positive cash flows from operations. As part of the cost reduction initiative launched in Q2 of this year to drive profitable growth, WishBond continued to scrutinize all new expenditures with the intent to optimize operations and achieve cost savings synergies. As a result, the company was able to achieve record positive cash flows from operations and record positive adjusted EBITDA in Q3. WishBond has now achieved positive cash flows from operations for the second quarter in a row. a tremendous accomplishment allowing the business to further strengthen its balance sheet. Consequently, WishBond can continue to invest in organic and inorganic growth initiatives without the need to raise additional capital. Our outlook continues to look promising for the fourth quarter and into 2023, with increasing sales, improving margins, and positive cash flows. We continue to experience increasing demand for our products and have not witnessed any slowing down or negative impacts due to external macroeconomic conditions. Our outlook remains positive as we head into 2023 with increasing sales, positive adjusted EBITDA, and positive cash flows. We expect to continue to grow rapidly as our sales pipeline remains robust and we begin to introduce bundled solutions to our customers. I will provide additional details on our outlook later on the call. But first, I would like to turn it over to our CFO, David Pace, who will review the financial results for the third quarter. David.

Thank you, Ali. I'm pleased to report that we had very strong Q3 results for the three months ended September 30th, 2022. Wishpond achieved record quarterly revenue for $5.5 million during Q3 2022. compared to revenue of $4 million generated during Q3 2021, an increase of 38%. Revenue growth in Q3 2022 is attributable to the company's expanded sales team, new product introductions, and acquisitions. Wishpond achieved gross profit of $3.6 million in Q3 2022 compared to $2.8 million during Q3 2021. representing an increase of 31%, driven by an increase in overall revenue. Wishpond's gross margin percentage in Q3 2022 was 66% compared to 69% in Q3 2021. The gross margins are within the company's historical average of 65 to 70%. the United States remains our largest and fastest growing market, generating 68% of our total revenue in the quarter, with approximately 15% and 17% of revenue generated from Canada and rest of the world, respectively. During Q3 2022, Wishpond recorded positive adjusted EBITDA, of $593,000 compared to an adjusted EBITDA of $204,000 in Q3 2021. The improvement is primarily driven by higher revenue and continued cost management initiatives and operational efficiencies initiated in the latter half of Q2 2022 that are expected to result in more than $1 million in annual cost savings. In Q3 2022, Wishpond generated net positive cash provided by operating activities of $671,000 compared to cash burn from operating activities of $134,000 in Q3 2021. I would now like to provide some additional commentary on our recent cost reduction and optimization initiatives, which resulted in record cash flow generation for the company. During the second quarter, the company implemented several cost reduction and operational efficiencies designed to conserve cash, which have resulted in the company realizing more than $1 million in annual cost savings. Some of the key cost cutting initiatives were We reduced the company's legal fees, professional fees, and corporate development expenses. We implemented a hiring freeze in most areas of the company. We implemented a number of optimizations and workflow improvements that allowed us to maintain our sales and customer acquisition costs while revenues grew. We implemented AI, or artificial intelligence technologies, to run certain campaigns, thereby eliminating manually labor-intensive processes and costs. We consolidated some of our subscription and software costs across all our acquisitions and also optimized our AWS and cloud storage costs. Our commitment to having a focused mindset and realizing cost efficiencies while still achieving growth is what permitted us to generate record cashflow and EBITDA in the third quarter. The company's financial success is predicated on increasing our revenue while running the business cost effectively. We continue to have a clean and healthy balance sheet. As of September, 2022, Wishbone had $2.7 million in cash and short-term investments, and the company had no debt. Wishbone has a $6 million secured revolving operating line of credit with National Bank of Canada's Technology and Innovation Banking Group, which remains undrawn as of today. In summary, Wishpond is in a very strong financial position with a healthy balance sheet, solid monthly recurring revenue, and very good visibility on revenue and cash flow for the current year. Wishpond is able to continue to grow comfortably from its cash flow from operations without the need for any additional equity or debt capital waste. I will now provide an update on our normal course issue a bid or share buyback program. On June 15, 2022, the company announced the renewal of its normal course issuer bid, or NCIB, was approved by the exchange. During the third quarter of the company, the company purchased 22,500 common shares under the NCIB for aggregate consideration of $17,685. The board of directors of Wishbond believes that the recent market prices of the company's common shares do not properly reflect the underlying value of such shares and that the purchase of the shares would be a desirable use of corporate funds in the best interest of the company and its shareholders. Hence, we will continue purchasing shares under the NCIB program in the coming months. This concludes my financial update and I will turn the call back

Thank you very much, David. One correction, you know, David mentioned it correctly, but on this slide, it says 12,000 common shares on Daren CIB. As David mentioned, there's 22,500. Thank you very much, David. Moving on to the next slide. Well, I would now like to share with you some recent business highlights. On July 12, 2022, the company announced the launch of our all-new website builder product. that includes lead tracking and segmentation tools, personalization abilities, advanced forms and pop-ups, integration with Wishbone's email marketing tool, referral marketing, calendar functionality, pop-ups, and more. The website builder is expected to increase customer retention, reduce churn, and increase customer satisfaction. On July 20, 2022, the company announced three new awards from Gartner, one of the world's most reputed platforms for business software reviews and research which one received the get app category leaders award for content marketing the software advice front runners award and was included in the capterra shortlist for 2022. on october 3rd 2022 the company announced that it had completed The integration of this recently acquired subsidiary viral loops resulting in improved growth in the combined business due to greater cross selling and bundling opportunities with larger deal sizes. The complete integration of Viral Loops with the Wishbone platform allows contacts and data to be synchronized between Viral Loops and Wishbone, enabling Wishbone customers to grow their business with referrals and Viral Loops customers to use Wishbone's platform for their marketing activities. On November 2nd, 2022, the company announced that Lloyd Global had joined its board of directors as an independent director and member of the audit committee, effective November 1st, 2022. Lloyd has over 15 years of experience building technology products and companies from conception to scale. His deep experience in sales, marketing, and scaling a business will be a valuable asset as we enter Wishpond's next stage of growth. We welcome Lloyd to the board and look forward to having him be a part of Wishpond team. Which one's outlook for fourth quarter 2022 and heading into 2023 remains strong and resilient? The business has felt no impacts due to recession, inflation, supply chain, or other macroeconomic effects. Instead, the company's performance is better than ever and extremely positive across all of its acquisitions and the entire company as a whole. Wishbond continues to experience strong performance across all its businesses with robust demand for its products. Based on current MRR trends, monthly recurring revenue trends, we are very optimistic about the outlook for fourth quarter and for 2023. Based on our progress thus far in Q4, we expect the company will achieve record revenue adjusted EBITDA and cash flows in fourth quarter. These positive results are driven by the increased size of the company's sales team, positive contributions from its acquisitions, increased bundling of its products and services, new product related revenues and favorable seasonal effects in the second half of the year. Wishpond expects to maintain a strong organic growth profile into next year as its revenue and earnings growth are projected to continue in 2023 with further integration of its acquisitions and an increase in cross-selling opportunities, new product launches, and higher customer retention. Wishbone's objective heading into 2023 is to continue growing its business both organically and inorganically, and to continue demonstrating a disciplined capital allocation strategy to maintain profitability and increase its cash position while increasing sales. Wishbone has a robust sales pipeline and will look to drive revenue growth in 2023 by investing in the company's sales and marketing functions. cross-selling the company's products and services, and introducing bundled packages of its product lines to new customers. One of the reasons for our organic revenue growth is the success of our outbound sales team. Last year, we increased the size of our sales team from 12 to 24 account executives. This year, we are currently at 43 account executives, and we plan to have 45 account executives by year-end. The sales team's calendars are very booked for demos and no slowdown in sales activity so far in Q4. In line with the company's focus on profitable growth, WishBond will continue to scrutinize all discretionary expenditures across the organization with the intent of optimizing operations and achieving cost-saving synergies. The cash flows generated by the company will continue to be reinvested in the business and allocated in a disciplined manner. which may come in the form of future acquisitions share repurchases or to accelerate organic growth wishbone has a clean balance sheet and can continue to fund the growth of his sales team and new product launches from cash flows from operations without having to raise any additional equity or debt capital now an update on our acquisitions we've successfully integrated all five of our acquisitions we've created integrations between the different products across the acquired businesses and we've implemented cross-selling capabilities we've recently developed bundled pricing plans that bring the most value for our customers our development team is working hard to build additional integrations single sign-on capability and single dashboard for all the products in one integrated platform Going forward, we do not expect to be making acquisitions at the same pace that we have been doing in the past due to the current economic environment and the weakness in the capital markets. We are not expecting to close any additional acquisitions this year in 2022. However, with a strengthening balance sheet and improving cash flows, we anticipate the possibility of making additional acquisitions next year. We continue to remain in contact with several potential targets and receive new inbound acquisition opportunities on a regular basis. Wishpond is an elite software company with profitable growth. Technology companies are known to burn lots of cash for many years before becoming cash flow positive. Very rarely do you find a software company of our size with $22 million in annualized revenue run rate that is generating positive cash flow from operations. It's also rapidly growing with a 30% to 40% organic growth and maintains gross margins of over 65%. Wishbone truly is a unique, high-growth, profitable company, and we remain committed to delivering profitable growth in the future. Wishbone has the most complete and comprehensive integrated marketing platform available for small, medium-sized businesses. Our customers benefit from the range of online marketing options that we provide under one roof. We have a solution that is unique, integrated, and cost-effective. making it more appealing to small businesses than ever before instead of having anywhere between three to six different marketing related point solutions small medium-sized businesses would rather have just one solution from wishbone wishbone is also recession resilient in an economic slowdown companies often reduce or freeze their budgets under in-house marketing and sales staff or on individual fragmented marketing solutions However, they still need to acquire new clients to keep their business afloat. And so businesses looking to cut costs find value in Wishbone's all-in-one consolidated software platform, which costs a fraction of all the individual products it would replace. Furthermore, businesses keeping a close eye on their costs or looking to cut costs find Wishbone as a much cheaper alternative to an internal marketing person Wishbone is an effective, low-cost alternative that is thriving in a recessionary environment. Wishbone's products are essential to SMBs. All small, medium-sized businesses, including e-commerce, business-to-business, and bricks-and-mortar businesses, need to have a digital marketing strategy to attract, nurture, and retain customers. The success we are achieving indicates that our products and services are valuable tools for our customers who rely on Wishpond to generate leads and increase their sales, especially when operating in this uncertain business climate. Wishpond has a diverse customer base of more than 4,000 businesses. Wishpond has very little concentration or financial dependence in any one industry. We serve a wide variety of industries, which provides us with the ability to shift focus quickly if market conditions adversely affect any specific industries. Wishbone remains a low-cost culture. Wishbone maintains a low-cost culture. Wishbone embraces a low-cost organizational structure with a virtual head office and a remote team which allows us to operate with lower overhead costs. We are scrutinizing all discretionary expenditures across the organization with the intent of optimizing operations, achieving cost-saving synergies, and remaining cash flow positive. Before closing, I would like to comment on the recent decline in the share price. Next month will mark our second anniversary as a public company. Since listing in December of 2020, we've achieved numerous milestones and growth that we are very proud of. For instance, Wishpond more than doubled its customer count from 1,700 at the time of going public to over 4,000 customers today. We increased our revenue from $7.9 million in 2020 to our current 22 million revenue run rate. We completed five acquisitions over the past two years, and now the company is generating record cash flows. As everyone on the call is aware, our share price has experienced a decline since the beginning of the year. We do not believe this drop in our share price is warranted, given our fundamentals remain extremely strong and we are very positive on our future outlook. We believe the general poor capital market conditions are the primary cause for the weakening in our share price. and small cap tech stocks have suffered the worst in this market correction. We believe that Wishpond remains well positioned for continued growth with increasing revenue and improving cash flows in Q4 and into 2023. Despite the current challenging business environment with high inflation, increasing interest rates, and recessionary concerns, thus far we have not noticed any slowing down in the demand for our products. Our sales pipeline remains robust, and our revenue growth shows tremendous resilience despite the current uncertain economic conditions. In closing, I want to thank all the employees of Wishpond whose hard work continues to elevate the company to higher levels. We want to thank our customers who rely on us to help them with their digital marketing needs. Also, I'd like to thank you all for joining us on this call today. We look forward to providing you with another update next quarter. Thank you. I will now hand it back to Angelica for questions.

Thank you, Ali. With that, we will now open the questions, the call to questions. Just a reminder that questions will be limited to analysts only. And with that, we're going to have the first question from Chris Thompson of PI Financial. Please go ahead, Chris.

Great. Thanks, David Alley. Congratulations on a strong quarter. A two-part question, if you don't mind. My first one is just sounds like you're pretty excited about the visibility and just help us kind of gauge what's behind that. Can you talk about the trend of your revenue mix in Q3 in terms of self-serve revenue versus fully managed revenue and how that kind of compares to Q2?

Yeah, Chris, thank you very much. Good question. So the reason we're very positive about our outlook is that, you know, obviously we are already halfway into Q4 and we can see the demand for our products. We can see the health of our pipeline in terms of the demos that people are booking with our sales personnel. And it remains very strong. Our outbound team is doing extremely well. In terms of the mix between self-serve and fully managed, it remains mostly consistent with what we've seen in Q2 now heading into the future. And next year, as we roll out more of the bundled packaging, all-in-one software platform, that will gradually start to shift towards higher margin packages as well. David, if there's anything you want to add to that.

I know, Ali. I kind of agree with everything you've said, Chris. I think the business is just doing well overall. Both sides of the business are growing, and I think it's going to go the same way in the next quarter as well.

Okay, fair enough. And just again, in Q4, are you guys seeing an increase in demand for the self-serve solutions? I remember last year, you know, the holiday period was really strong. And then we had a sequentially, you know, lower Q1 because Q4 was so strong. Are you seeing that same trend this year? And, you know, just looking at consensus, you know, the quarter over quarter growth is looking for 17%, which is a little bit higher than this year or this quarter, which is up 10%. So just want to get a handle if you're comfortable with, you know, that outlook.

I'll try to answer that. I mean, you know, what we have most visibility over is the organic growth, you know, based on our outbound sales and everything else. The effective seasonality, some of it is harder for us to predict up until the end of the holiday seasons and, you know, towards the end of December. It is harder to predict that. I'm not entirely sure if, you know, the positive seasonal effect will be as great as it was last year. So we're more counting on our normal organic growth, you know, quarter over quarter that is going to be very solid. But whether there will be any positive surprises that will, you know, make Q4 have as big of a jump as we had last year is harder to tell. But the other thing that I would also add is that You know, the company, you know, we made an acquisition, for example, via our loops that doesn't have the same seasonal effects. So going into Q1, we expect to have less seasonal negative effect than we did last year. Overall, my expectation is, and David, please correct me, you know, if you see differently, but my expectation is a smoother Q4 and Q1 numbers than the very high Q4 of last year and the very low Q1 of this year that we experienced. Anything you want to add, David?

No, Ali. I kind of agree. Like, internally, what they're projecting is somewhat flat Q1. Definitely no growth in Q1, but flat Q1, not so much negative downtrend as we saw in Q1 of 2022. That's right.

Okay. Great to hear. Very helpful. Thanks, guys. No problem. Thank you.

Thanks, Chris.

The next question is from Miha Upadhyaya of AI Capital Markets.

Thanks, guys. Congrats on the strong quarter and thank you for taking my questions. So what are some of the growth levers that we can expect to wish to pull beyond M&A? And then including M&A, what does the next target look like for you? Is it more about acquiring tech that you currently don't have in your solution suite? Or are you looking more on requiring a larger customer base?

So I'll start with the first part of that question. In terms of levers for growth, it is similar to what we've had before. Not as much on the acquisition side, but on the organic side, our outbound sales engine is a substantial part of our revenue growth. And that's what we were talking about that last year we grew from 12 salespeople to 24. And this year from the 24, we're heading towards 45 by end of the year. And as we add more salespeople on the team, the organic growth continues quite strongly. And similar to that, we're investing in our inbound marketing and demand generation as well. Those are two of the major points. And increasingly with you know, the bundled packages that we're creating where it is including all the companies we've acquired under one umbrella, we are able to charge higher self-serve prices and have more sticky product offering. And that increasingly improves churn and increasingly makes it you know, easier to grow even faster. So I would say those are some of the top ones that I would I would mention. Perfect. Yeah. The second part of your question was related to acquisitions. You know, if you look at the past five acquisitions that we did, I think it paints a pretty good picture of what we would look for. We want to have a margin of safety. What that means is that we want it all, actually. We want companies that are profitable, that are recurring revenue businesses, that do fit and fill certain product gaps that we have, that we wouldn't overpay for them, and financially they would be good investments. uh so we want the strategic value as well as financial now at the same time we're opportunistic so if we come across certain opportunities that maybe it has less of the strategic value but a lot of customers and the cash flow is great then we'll uh look into that it's really a case-by-case uh situation but you know i i think the criteria that i've mentioned uh probably is a is more or less what we're going to continue operating with into the future

Perfect. Thanks. And then maybe just one last one for me in terms of gross margins. How do you see that profile playing out over the next year? And what range do you think you can get that to in the long term, especially considering the focus on providing additional managed services over self-services?

And David, do you want to take that one?

So over, you know, like over the next few years, like as revenue gets to much higher levels, we expect to break out of that 65 to 70 percent gross margin band. In the near future, like you know we already at 2,022,000,000 annualized revenue run rate. You know next milestone that's soon looming as the 25,000,000 revenue run rate and 30,000,000, and so on. So you know, I guess what we see in the next couple of quarters is to stay within that band. But, you know, in the longer run, just because of economies of scale and so on, and the way we actually want to move the business towards people, you know, using our bundled services, and, you know, we can actually realize higher price points as we get to selling bundled packages, we expect the revenue of the gross margin to improve at that point.

Yeah, perfect. Thanks, guys. I'll pass the line. And again, congrats on the solid quarter. Thank you very much.

Thank you. The next question is Daniel Rosenberg of Paradigm Capital. Please go ahead.

Thanks for taking my questions. Hi, Ali. Hi, David. Hi, Daniel. My first question is a continuation on that M&A theme. I was wondering if you've seen valuations change in the dialogues that you're having in the market. And then secondly, to that, just given where the share prices are, have your thoughts around use of capital change, because it's just quite accretive to buy your own shares rather than another company. So any color there would be appreciated.

Yeah, Daniel, good questions. There are multiple elements in that. I'll try to touch on them. And David, please add anything if I missed them. You know, in the private markets, we do see some of the expectations have, you know, been lowered, but I would say not to the same extent that we've experienced in the public markets. And that creates a bit of a gap between the expectation in the private market, you know, in terms of acquisition opportunities and ourselves. And our stock price is not trading at a multiple right now that would make it easy for us to have accretive acquisition opportunities. And that's part of the reason that we're holding off right now. I think no one really knows when the market will turn around. When it does and the stock price corrects itself, then it will be easier to go back, potentially even raise some money for the purpose of acquisitions. and make more of those acquisitions. Currently with the current stock price, those larger acquisitions would be harder to justify for sure. And in terms of share buybacks, yeah, it's definitely something that it is available and top of mind for us. We're not in a hurry to buy back substantial number of our own shares right now. I think more than anything, the market has to correct itself and we're more than happy to reinvest in the growth of the company. But in the future, there could come a time where we're producing so much cash flow that it just makes sense to do a more aggressive buyback.

Yeah, I would agree with everything Ali said. You know, if I can emphasize a couple of things, just looking at our history, you know, the five acquisitions we did since we went public. You know, I think it's important to emphasize Wishpond's been extremely disciplined. You know, it was not any one thing that made us do an acquisition. We actually had to check a number of different boxes, you know, being accretive, being one, you know, obviously we wanted product, we wanted products. ebitda positive we wanted a company to come with an established revenue stream and customer base you know all that stuff so it was you know it was not easy to close to find those deals uh but we did right uh right now even though we're not actively looking we still get a lot of inbound companies that come in or you know we have a network that sends us leads and we're finding a little less of those opportunities to check all the boxes but obviously if we do find them and we really get excited about them know we might come back you know to the market and say this is something that we might want to raise capital on or whatever but but having said that it's you know there's nothing on you know right now on the radar that's making us do that but we are looking but we're being very very disciplined and in regards to whether we spend the money on ncib i mean my opinion is that there's still a growth stage cat you know software company so you know we'd rather just invest in growth rather than our stock so yes we are buying back stock But at the same time, my growth is very, very important as well.

Thanks for that. My next question is around the Salesforce. It's nice to see you guys kind of you're doing more with less in this quarter. So I was just wondering if you could comment around the sales strategy, how you're organizing things. And you mentioned a bundled product offering. Does that change how the Salesforce is trained? Is it by the customer base? Is it by the product base? And then if you're offering a suite of solutions, how would that work?

I think the some of those questions require at least an hour discussion. Very good questions. I'll try to answer the best I can. So we are definitely trying to do more with less. So that goes across the board. in terms of lead generation for example in q2 one of the things that we did was a lot of automation use of artificial intelligence and you know generating the leads and generating the personalizations and everything that we need and that resulted in a lot of cost savings as well as improved performance in our sales development team or some companies called bdr team where they're booking the demos with our sales people we've also brought a lot of optimizations and helped our sdrs um be more empowered and one of them to be able to you know do as much as you know maybe one and a half or two in the past used to and not not have to constantly add more headcount to that a lot of automation a lot of you know optimizations that we've done there in terms of our sales resources also uh we are very actively right now working on improving uh closing rates that they have beyond the historic numbers that we've seen so that one account executive, one salesperson can do as much as maybe 20%, 30% more account executives so that they themselves benefit from that, obviously, as they bring more, but the company also benefits and we don't have to have as many account executives and the base salary savings would be there as well. Some of those are the things we're doing. In terms of the bundled packages, One of the initiatives that we've been working on and now we have enough traction actually on, we're going to release some more information about it soon, actually. But high level of it is we're creating this, we have created this bundled offering, you know, of you can call it, you know, which one is smart marketing cloud or all in one package. where it is all the software packages that we've acquired so wishbone wire loops versus iq win back and so forth so that when a client comes to us we can say listen your website will run on wishbone Anyone who wants to book an appointment with you, the calendar functionality is using WishBond. The emails that are going to them, newsletters, all of those are through WishBond. Any pop-ups and forms are through WishBond. If someone leaves without making a purchase, SMS marketing that goes to them, shop regard abandonment is through WishBond. You want to get more referrals through the customers that you already have. That referral marketing is through which one in that case? I mean, viral loops. And we set all of that up as part of the onboarding in the first month. And then, you know, the whole system, your whole growth engine is set up, but then pass it on to you and train you so that you can continue with it. And that's more of a self-serve offering. And that is going to be more of the future of our sales team. Um, and you know, price points are going to be comparable to our fully managed, but the margins are going to be greater. Um, and the stickiness would be greater. So the way currently we're thinking about structuring that, and we've done that has been a mix of some of our salespeople will continue to sell the packages that they've sold in the past. And some of the newer additions to the team would be trained on, uh, this bundled offering. Um, and so far it's looking very, very promising.

Thanks for all that detail and congrats on a good quarter and a tough macro. I'll pass the line.

Thank you very much, Daniel. I appreciate it.

Thank you.

The next question is from Neil Bakshi of Canaccord. Please go ahead.

All right. Thank you for taking my questions and congratulations on the quarter. Thank you. So the first question, just building off of the discussion around the sales team, I guess given these investments in kind of optimization and training and using AI, has there been any change in the expectation around future hiring cadence, looking into 2023, above or below where it was before?

Currently, our expectation is to go from the 45 or so salespeople that we will have by the end of the year to you know 60 to 70 by end of next year um now as we continue to optimize we'll see where we end but currently that's where we expect to land

Very good. And then just a question with regards to, you mentioned before the, the viral loops acquisition has helped has smoothened out some of the top line profile. Just wondering then looking at conversion down to, you know, cashflow from operations and free cashflow conversion, should we expect, You know, looking into early next year if there's not necessarily a big step down on a sequential basis in revenue should cash flow generation be pretty kind of stable or how should we be looking at that kind of conversion for cash flow next year?

Is your question mostly around you know kind of adjusted EBITDA margins those kind of things?

Yeah, we could look at just even a margin. Are we seeing the earnings profiles smoothing out commensurate to how the top line seems to be smoothing out a bit?

David, you might want to take a stab at that first.

Yeah, you know, I mean, at a fairly constant revenue base. So, you know, there's a couple of different ways I can answer that question, Neil. So obviously, you know, we are planning for growth, right? So like Ali did mention that we are, you know, we raised the number of AEs from the beginning of the year to today. In fact, between Q3 and Q4, you know, month to day, quarter to day, Q4, we've already added some headcount in our AE component. You know, so if you go into Q1, I can foresee that we're probably going to keep adding some AEs. I think it might be safe to say that. So maybe if you're saying that if revenue doesn't keep up, will that impact our bottom line? Yes, perhaps.

Well, I think the question was more if revenue is going to be less choppy quarter to quarter, is profits all going to be more smooth as well?

Yeah, I mean, I think that would be safe to say that, you know, as the revenue line smooths out and we've always kind of matched, we've walked that fine line matching line. costs or additional costs based on the revenue growth or the forecasted revenue growth. So, so long as we see revenue at a certain line, we're not going to overstep or we'll be very, very careful to overstep. And so we kind of see that bottom line smoothing as well.

Yeah. And I think, Neil, you know, the guiding philosophy that we're operating with is we want to have profitable growth. So going into the future, I think I think the profits that you saw for this quarter, and you know cash flow positive from operation last quarter are not one offs, but they're more of. Part of our disciplined approach going forward as well, and now, will it be you know. You know that if, for example, this month was in this quarter was 10% you know I just said it with a margins is it going to grow or not, I think you're going to see some up and down, you know. You know, maybe around five to 10% and a long term, we want to get that to above 20% and I think based on. the performance you saw in Q3, it is easy to envision that even that 20% adjusted even the margin, it is within our reach. But as David said, we are walking that fine line between growth and profits. So we want to grow profitably, but invest in the growth of the company. So probably around that five to 10% would be where we would be looking at.

Okay, thank you. I really appreciate the color. Just one quick question just about the customer mix, you know, e-commerce, B2B, trying to split. Just wondering if there's been any kind of changes in the last few months as part of the outbound sales, any impact on that mix more towards B2B?

It has been mostly consistent and similar to Q2. It hasn't really substantially changed. Okay, great. Thank you and congratulations again. Thank you, Neil.

Okay, the next question is from Gabriel Young from Beacon Securities. Please go ahead.

Hey, guys. Thanks for taking my questions. Hi. Just a couple of things. First, a question of clarification. Ali, did you say in terms of organic growth, you started targeting 20% to 30%? Or was it 30% to 40%? I just missed that. 30% to 40%. Gotcha. And as it relates to... the additional sales reps you plan to hire over the, I guess, over the coming year, I guess, let's call it rather than just about 20 additional sales reps. You know, you did a similar sort of strategy this past year, and it led to sort of negative EBITDA contributions in the first half of the calendar 22. So would you anticipate, you know, maybe going back to a negative EBITDA position in the first half of next year as you ramp up these sales reps?

We're not planning for that to happen. We're planning for each quarter to remain profitable and positive. It might shrink a little bit and then expand, but currently, barring anything unforeseen, we don't anticipate that there would be a bigger investment in sales growth in the first half and less in the second half. We expect it to be a smoother addition to the team.

Gotcha. And maybe one more question on the sales team. I appreciate that they're being offered more products to sell now, and it takes time for reps to get up to ramp up. But I'm curious, with some of your more mature, I guess, sales reps, guys who've been with you longer, are you able to quantify... know what's their revenue expansion been like i mean just in terms of uh you know on an annualized basis how much more revenues are they able to bring into uh wishpond versus when they first started i'm just trying to think of um traffic operating leverage amongst the uh amongst the sales group um david do you have anything on that i i definitely know anecdotally that um the salesperson that starts

Now, after three months is fully ramped up but there's a big difference between their performance and closing rates and one of the things that we crack internally is average value of each demo they hold. You know, between that person that is just three months into the role, and you know one year two years into the role there's a difference there's a big difference, you know, but. I don't know if we want to quantify that per se.

Yeah, I agree with what you're saying. I think the only thing I would add to that is, you know, irrespective of whether they're new or even if they're more experienced, there still is some month to month variability, perhaps some close rates, you know, of the average dollar volume of each sale and stuff like that. So even, you know, an experienced sales guy may go, may have variability up and down. And, you know, the newer ones a little bit lower, obviously, in average revenue per month. But there's that same variability. And you guys, we've been surprised with you guys having great months as well.

Yeah, gotcha. Maybe I'll ask another way. Could I say that, you know, someone that's been there a bit longer and has all the tools and the belt, are they able to double their revenue generation or is that too aggressive way of thinking about it?

I would say that might be a little bit too aggressive. You know, probably 30, 40, 50% more in their ability to generate revenue would be more in line, I would say. Gotcha. That's super helpful. But if you want to use that to update your models, keep it more conservative. Gotcha. I appreciate the feedback.

That's it for me. Thanks a lot. No problem. Thank you.

Thank you. And then the last question is from Christian's girl of eight capital. Go ahead.

Hey, good afternoon, Ali and David. And thanks for taking my questions. The first one I want to, the first one, the last one, it's similar to Neil's question. He asked on strength by verticals. But maybe what I want to ask is across your customers, are you seeing the size of customers change at all? And are the average contract values changing?

know changing maybe moving up with with newer bundled offerings how do you see that the size of customers in the contract size is changing uh i think we see two trends um one trend that we see is uh b2b businesses generally have higher average revenue per month and ltv and uh you know especially persis iq does more selling to b2b customer base Um, so that, that, that has been one trend that is going on and we're gonna invest more in, in that in the coming year. So there's gonna be more push towards B2B businesses and generally they're more established businesses compared to some of the business to consumer, uh, you know, or e-commerce kind of, uh, players. So there will be some push towards that. Um, and then the, the bundled offering, it is less of. Hamed Nademiya, increase in monthly average revenue that they would pay us and more of an increase in long term value, so the LTV would be what we expect to be substantially higher because of increases stickiness and also the margins are going to be greater because there's more of a self serve element to it.

That's helpful. And then I'll follow on there with your comments on stickiness and retention. Are you seeing contract lengths increasing? Are there ways to get customers to subscribe to a one-year minimum as opposed to a month-to-month? Has anything changed that way? Or is the sales approach evolving that way with the length of the contract?

We have been pushing more towards successfully towards annual contracts. And that is more or less the norm that we have. right now for majority of the cases in the bundled offering it is pretty much you know kind of required uh to go with annual contracts um and you know it's working quite well we're not really getting any substantial um you know objection to it either that's all holly it was just those two questions from me congrats on the momentum and thanks for taking my question thank you very much thank you christian thank you everyone

There are no further questions. I'll pass the call back to Alitesh Kander for closing remarks.

Thank you very much, Angelica. I think in closing, I want to just thank everyone for being here. Really appreciate your time. The capital markets have been very supportive of us. The team has done a tremendous job. And we're going to continue executing in a disciplined, responsible fashion with aiming to do that 30%, 40% organic growth going into the future and do that profitably. And our balance sheet is strong. And there's tremendous opportunity in the market in terms of the size of the audience of millions of small businesses that we can serve. We have a profitable way of reaching them and a strong solution that is really the best in class for small businesses that we cannot wait to put in the hands of our customers. So we're going to continue on that. And we're very appreciative of the support that all of you here on the call as well as uh markets have provided us uh thank you and um stay healthy and uh safe take care