Earnings call transcript Q4 2022

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Operator

Good afternoon, everyone. My name is Lisa, and I will be your conference operator today. At this time, I would like to welcome everyone to the Q2 Holdings Fourth Quarter and Full Year 2022 Financial Results Conference Call. [Operator Instructions].

I would now like to turn the call over to Mr. Relations. Investor Yankovich, Josh ahead. go please Sir,

Josh Yankovich

are Thank Vice you, joining year thank for and Jonathan call everyone, conference Mehok, Development. CEO; our Business CFO; of Good for our Emerging morning, and today the us on full our With and Flake, fourth our call. David Executive you Price, me operator. Matt President quarter XXXX Corporate and Businesses,

statements for respect materially the results prove to be contains operating significant are risks give to that expectations forward-looking our will forward-looking including uncertainties, may contemplated no call performance expectations This financial such can to these subject or with future Actual and and forward-looking of from statements correct. and Holdings. of we any statements, assurance by that QX those differ our

cause of our on afternoon Important in regarding the subsequent are will press statements results SEC. this distributed Copies Relations filed may factors annual release these filings financial materially of and website, results and XX-K filed the to included Form section discuss in the reflected from we with today could Investor which actual found on the report our today. including that those forward-looking our reports periodic differ be

update a Forward-looking at only later statements based will time, assume such not make we date statements any call discussed. should forward-looking this operative on call. this and as no are that we on assumptions Investors the discussed statements to obligation of that remain in undertake these

filed section to use measures Investor which additional the on in a related non-GAAP with materials the is this published our may of SEC basis. GAAP today's X-K Form be Relations our Relations results found discussion our website on most website. non-GAAP included the otherwise stated, afternoon. this A also and financial press measures We've in call our discussed Investor all the and we release, on will why comparable unless financial be of to measures on Also, measures reconciliation of a non-GAAP

me Let Matt. to call the turn now over

Matthew Flake

quarter he detail financial Thanks, well will Josh. business. year I'll discuss as over start our and emerging guidance results as look today's then into I'll fourth from businesses XXXX. more to the the I first Jonathan a you call highlights more sharing full hand the call then quarter and full our year to give insights by in for results David oversees. the ahead organization conclude with to before and across

X% we up of quarter, In fourth generated EBITDA and $XXX.X sequentially. year-over-year up $X.X the million, of of XX% representing X% adjusted revenue. revenue non-GAAP million We generated non-GAAP

we want positively but financial impact, pleased had revenue As international that mentioned will outcome impacting further to had I finance quarter our in to adjusted XXXX. and the customer, by this EBITDA with that margin results, by $X.X financial on strong an the million contract a contribute impact million. from press of our the will David of expansion I'm release, $X.X results the alternative quarter. discuss this in this a emphasize termination with mutual in Outside

with resiliency meaningful positioned to interest we forward. rates, company, Rising inflation our we're attractive operating believe Even influence across expansion executed and and profitability economy, and performance With business in complex created that, has going the uncertain high communities an well model QX. a of we the demonstrates customers face impacted XXXX. our looking that why deliver of back other growth by let and start our at the me global environment

and in Like managing environment where prioritizing on us rate the capture portfolio demand. a sheet. weather financial are deposit us technology positions lending in we have side substantial We allows the addressable a both spend growth that cyclical loan gives believe institutions a to and mature rising First, of us balance to differentiated changes financial the current deposit and industry. product institution's banking fluctuations in market this

higher our banking which contracts, of from bulk subscription-based, over are largely have digital revenue the an our and X average margin years. Second, comes length of

spite slowing vast the majority -- the predictable, remains our from spend demand our and transactional discretionary So revenue and in some resilient, of recent revenue from within for and our of of is margin headwinds customers, our strong. higher solutions

and clear a key For of it's across than are to growth quarters more over credit institutions year, environment enterprise exiting changing our at able the our ourselves least X utilizing profitability. we U.S. X at and of customers top prioritize bookings And alone, and we subscription believe solutions. portfolio, financial year And are the performance in drive XXXX. the increased will continuing full XXX quickly past in added customers to the been accelerate our the you reason economic to to us adapt finally, XX% with that X Tier position to XX X,XXX largest the transformation, the banks when and look unions X we've digital revenue

flow doing investment fourth delivered in XXXX record of we quarter we all cash began free quarter drive third flow and meaningful and and can the strengths to global we on leverage business hiring, moderate focus beyond. EBITDA core and we the In adjusted our so, highest more opportunities. improvements and to our certain units, in effectively workforce our to deliver cash believe XXXX, In rationalize return

the the in a into share I depth, dive more year. to I full fourth want highlights Before key few quarter from

trillion billion digital X.X banking and in digital with we billion supported loans record relationship to logins engagement deposits. $XXX through more in $X levels pricing our solutions to XXXX utilized in were and of our over than platform First, customers manage

meaningful availability driver new opportunities. as businesses it recognized differentiator innovation of we and Studio, with development expansion consistently aspects substantial key and ecosystem. of QX emerging both deliver now our provided with customers customers various award-winning a to gained partner for and net software kit system as our for on also side, throughout it's security the our product the continued Innovation partners by Javelin portfolio traction in year, and -- Consequently, cited likes and the and and record best-in-class We IDC,

in And largest I the the a across with a launch Helix had ago, moment verticals, embedded signing supporting throughout into performance our portfolio, finally, And alluded every to year customers key programs. navigated in significant our and record-setting backdrop, our as fourth product new that customers securing fintech bookings successfully and dive execution I'll a culminating of renewals finance sales of we the solid now. with team through quarter, some client improved complex quarter

both and of was booking breadth. the before largest since it in performance in volume Our in strong number the new pandemic. And quarter sales value, sales company terms history. of quarter terms was customers in QX, highest added the in of We the

and we the space, the a X key On of digital historically a Tier has Tier wins, spot customers. of in business. banking been had X side, the of and I new Tier performance particularly X several the the net addition number sweet pleased which was our specifically, including with X

a retail fact, an from more digital a resembles In create quarter including to I this continues grow contracted our competitive serve able single largest the X deals booking of because products serve banking to commercial. bank and our ability our example Tier within to how bookings retail the and Tier differentiation of XX% deal deal average the impact the included, its to digital over X the a platform been end-to-end us. years. for of closely of breadth commercial price And sales the X a of highlight suite we've Because from from for customers entire both last this came that banking customer as customer. by base,

driven were complex have nearly clients in drive our commercial clients. pricing, are macro included us and Additionally, of lending Commercial positioned grow relationship environment curve, our needs several and offerings all inherently portfolios. more loan their including X deals in income We functionality. base commercial enterprise dynamic of the deposit their X where banking deals digital cost Tier Shifting our and the financial or ahead through across Banking to by require solutions the and to institutions our X from especially fee-based this signed origination commercial that of side. investments effectively modern serve quarter years presents looking

usual, As new mix deals cross-sell these and net from a of came expansion wins.

volumes our our products to beyond to use portfolios deposit just tools and Today, reprice new clients pricing treasury use origination existing and optimize for even critical are price loans. relationship commercial pricing pricing and slowing, relationship bankers low our cases loan several support their Although their services.

we So prioritizing differentiated such solution volumes institutions even in lending may well based as other we're environment positioned our areas where believe be a on rate continued to demand financial rising deposits, growth and pressured in generate set. are

businesses strong emerging a also a out solid quarter, rounding Our year. had

this the between scale. side technology investments we've made the continue bridge about business pleased institutions to the we're see excited them. are financial surrounding And and ecosystem valuable We of to partnerships to

talk over hand So through more these highlights to now call in I'll detail. the Jonathan to

Jonathan Price

Matt. In embedded key and emerging us and QX for kit their finance that shifting Helix, parties early I'm and was drive had fourth quickly, to development year and start highlights profitability leads will Innovation platform. allows comprehensive Studio engagement Innovation our it deliver digital doing new that a growth of in Studio to software business. high third forward. partner a deeper in market develop XXXX our QX quarter and At so, award-winning before our easily banking contributor fee-generating Innovation to Thanks, offerings. digital is differentiation its our level, helps full innovation products QX customers ecosystem I'll extremely integrate new it to in first and XXXX businesses with improved overall. our and and Studio, to going add our impact proud the the the customers within be believe traction

Studio our new platform, a has banking XXXX, key playing of over banking it be cited as vital a differentiator digital considerable wins. a digital XX% role expand net of and our was for Innovation QX in First, to driver In our land strategy. proven

saw existing customers. banking our we base had Innovation QX over X/X leveraging financial the In We of with and the year adoption adopt alone, exited it. existing XX customers Studio, over we also quarter digital fourth customer institution substantial with

Second, our Innovation and we drive stickiness believe engagement QX with Studio helps customers.

customers increasingly their and institutions partner financial digital customers. vast customers end their and unique millions positively deeply their we long-term to churn banking hundreds add more embeds financial enables journeys of rate. to our our to their consumer our more this add, solutions of of more them of as business a users holders. that potential Studio The ecosystem platform overall leverage partner has into for integral Innovation Our believe and the QX them digital impact solutions ecosystem, platform, array large the becomes And account the

providers Studio drive can participants platform. creates digital meaningful And platform product development technology our QX finally, across by partners which banking an to customers, all and innovation in up our opening Innovation third-party ecosystem

coding developers organization. external As QX's platform, of X,XXX our to the end more XXXX, entire we have than engineering developers digital of banking than more

During we're quarter, adopt Innovation environments. long to added for to the we through launch, partners, new offer signed Studio share, another technology utilization. And Innovation pre-integrated our Studio. usage-driven more customers applications and their partner its deeper revenue fourth we XXX QX we in the starting continue now drive see more And utilize Since the much customers a margin revenue QX these as than XX higher XXX than solutions from which we over expect term. digital banking participate for to business solutions, meaning

And as these account majority have platform. to deliver XXXX. partner us Studio third-party this strong and A a is in vast our our we a model to on the new innovate, place, digital they applications giving product built We digital banking powerful foundation holders. how increased deploying cost through way effectively Innovation have a profitability, banking customers robust technology we've evolving QX ecosystem. now focus We their are in innovation best-in-class increasingly of

long-term to for in we materialize see XXXX, Studios business. to Innovation of So our potential QX begin expect more

enables which The XXXX many wasn't fintechs and establishing move to in the driving expectations Now strategies in platform, its Helix in market of created from in to drove rapidly our offer of and XXXX launch and fintechs finance Helix, and embedded brand in over towards complexity. the the to But changing profitability, successful without the growth environment. away brands uncertainty by to banking market We turn economy product customers their our launching over year, the growing proved brands the February, directly. products and that reprioritize shifting their began business I'll awareness demand course driving and meaningfully the pipeline. differentiation

there this and In aspects backdrop, well executed spite we are position business, challenging of a the we of believe model that key new for paradigm. several across success us our in

and brands and our is First, wealth but large, go-to-market retail. like just major management fintechs, insurance, on established strategy in focused companies verticals not

As long-term their organizations customers. are been year, changes cyclical And finance larger strategies a are from primarily relatively more strategic market secured our in customer conditions. with result, our and embedded renewals revenue to have insulated and comprised base the of committed we throughout largest that

One was embedded of the few And with after owning was finance acquired months, line an existing much business of a the Helix acquiring a by was in phase new client of a the provider that the the multiyear quarter wins they strategic right company fourth decided a support for the renewal. and brand. business larger growth, through to Helix that signed

renewals opportunity spite especially demonstrates this their conditions, of economic continue to the programs in us to long-term it for Helix It Securing is client's reasons, with growing climate. few in critical a gives them. the and powered commitment

customers between and curb to partner XXXX, controls drive revenue response helping drive granular sustainable mentioned help programs, we previously, losses. our including of banks, capabilities fraud fraud in user have and designed shifting facilitate I clients to we new admin dynamics to market that Second, functionality And record demonstrated enhanced card our quickly and in profitable a customers personalized drive prevention profitability. more to track both engagement their and launched collaboration

we differentiation fintechs largest is was the with support And several Helix of XXXX. pipeline to this users Helix a market client critical fintechs the clearer Through where renewed now in client in remain finally, platform. the at Key product some brands the market programs will end with support we environment became target. In was launches and scale Helix while I positioned large million And closing, the ability remain, our strengthened. XX brands our believe agreements we challenges the to significant States, clients, and successfully we multiyear over XXXX in United year navigate well on to believe and

detailed at with And financial look call our hand to David you. over a Thank results. I'll the that, for

David Mehok

Jonathan. Thanks,

of quantification Before observed I provide of first some begin more results impact and this The commentary let the deferred a were of and revenue contract outstanding me million our to to of from previously Matt in quarter reduction clarification expenses receivables related the termination $XXX,XXX of operating in sales cost on approximately termination detailed asset the financial balance expenses addition previously contract results, $X.X commissions. in $XXX,XXX the around and mentioned. from

to approximately quarter. is and a result, to discuss reduction EBITDA note $X.X the impact our termination. million will appropriate, our the a this for impact adjusted results of where results As net I from financial the

our are engagement our We this this also positive our margins the given factoring profile. impact overall and in outlook, dilutive to development will have margin was on XXXX

and accretive of important opportunities efforts outlook. our our growth Focusing aspect is an resources on margin

As for we look going growth optimize forward. profitable to

to flow. which our by and solutions, market us the our efficiencies to encouraged more results. are positioning booking continued for and success Moving We're our we're driving, demand expand the cash margins generate

$XXX.X of for year XX% up by with customers was million, increase Total from prior and the non-GAAP non-GAAP revenue revenue increases in organic full of million, was new Total up X% continued sequentially. sequential for revenue an the the were increase from deployment $XXX.X year-over-year quarter driven primarily the fourth associated quarter subscription and growth for an year-over-year year. customers. existing the The and XX%

I impact to of As contract $X.X the previously the termination mentioned, revenue million. was

subscription-based our revenue seen strength XX%. for subscription of year for representing of the year-over-year accelerate our subscription we have our total will expect full on bookings, in year XX% of growth Our Based XXXX. revenue was growth revenue, the the we

was quarter, expectations the the in entering For line with fourth services our quarter. revenue

associated monitor we with in professional projects discretionary more continuing services are to discussed As we're that engagements nature. previously,

environment. be the have macroeconomic current which could continue been in of to suppressed and Some

year from previous the consistent prior the revenue Transactional total revenue quarter. and for XX% of XX% with the quarter, represented period down of

which year year decline generated revenue of prior full a products. XXXX, due XX% at the pay from transactional in XX%, total For represented of revenue, down in to our bill from is the revenue part

of with the the our We Based an quarter, attributable the to on stream during observing users business, in largely growth what -- was similar user ending go-lives The transactional the revenue the we're be nearly we year over rate XX.X observed by trends half outlook full anticipates XXXX the year approximately million added registered XX% driven our XXX,XXX we in growth. overall to year XXXX. transactional largely year-over-year users users, increase to and user organic new the organic X or second year-over-year. increase was throughout of concentrated growth sequential million increase The of customer year. our in

commercial XXXX. go-lives mix customers banking our as XXXX, second the to of anticipate of we half result increasing platform a on in strong of an of Looking bookings the the number

our drive number the users in carry to user. retail discussed revenue we've past, of commercial per also go-lives go-lives, lower a higher compared but a As

revenue, million end at or ARR, recurring year-over-year $XXX.X XXXX. the up of grew million, XX% Annualized to from $XXX.X

Our largely growth partially and transactional cross-sale ARR by offset by bookings, subscription-based new a in driven was the for decline year revenue.

observed ARR growth booking customers. also in sequentially X% observed was rates run due the quarter from to subscription up associated In strength fourth addition, the primarily we with resulting third ARR increasing existing from quarter.

renewals. billion approximately bookings. net increase to backlog to year, net sequentially ending a sequential year-over-year. The Our of $X.X both of backlog in across or the equated by attributable bookings by primarily strongest quarter and new year-over-year our and X% was $XXX The increase increase new X% was increased million driven

net new Target. well in of as reminder, driver a bookings as Renewals are changes to backlog of As opportunities biggest number the the and in are subject seasonality renewals.

quarter believe growth opportunities As deliver backlog year full to sequential decline a of backlog see we possible will renewal being given in XXXX. year-over-year in while any the due a we for it's result, less we could available,

XXXX. in trailing retention net revenue was down XX-month XXX% XXX% XXXX from Our for rate

on total in most for year prior that prior our customers The revenue compared the of implementations year any implemented been those in rate significant taking revenue drivers is retention of of growth our customers new revenue each prior the the rate and year timing the calendar change of have that number in year retention new solutions of were to any year. net net the Our by calculated in the customers.

take we given our late previously down of the we number go-lives, discussed, that in half had place year, would As come rates anticipated the of particularly the reduced we in XXXX. XXXX, in back

quarter, XX increase by for offset year-over-year contract partially was X.X%, within was which digital revenue XXXX. our in associated X.X% Our our customers, concentrated This The total added revenue including institution during roughly a our churn churn reduction in the XXXX revenue to up from the with was in churn. nonfinancial basis churn banking customers. points termination the

improvements were XXX full for the XX.X% fourth margins benefits Gross revenue partially year. impacted contract by mix The and points for for approximately XX basis the the negatively fourth of a the expense gross quarter impact continued was XX.X% termination points lower-margin productivity for full by of offset in reduced basis and areas the This quarter from and year. margins reduction. pass-through

marketing half Total The was of million, of $XX.X quarter the quarter the revenue operating fourth year-over-year of of additional fourth fourth quarter $XX.X and as revenue onboarding XX.X% of R&D or well XXXX revenue million within concentrated XXXX. in were revenue increase as in expenses year. million sales and by the third in percent of for XX.X% during the the or quarter expenses as the first a XX.X% of primarily to or driven $XX.X compared of employees operating

compared prevalent of in Sensibill, We place acquisition more partially marketing an as increase of X. quarter up percent employee expenses off taking events a the year at and year. prior the was the with coming the in previous took half became COVID with the XXXX, with place of prior to addition, restrictions from increase year majority as year. hiring of the in expenses employees, of The in-person revenue associated the ended events saw operating end the from first travel we In October in vast XXXX the driven by of on X,XXX period which

for reduction negatively adjusted measures, for Total the for headcount The sequential and year-over-year our impacted utilization the expenses. and year. and million EBITDA EBITDA observed cost fourth of million in quarter by of global adjusted year. was quarter the a net for year The result well the reduced proactive adjusted workforce, as months $XX.X XXXX. full $X.X hiring $X.X from final a the benefit million we X lower EBITDA fourth termination As contract our the activity facilities full of change effective as contractor in meaningful saw expenses reduced and a

end year $XXX.X quarter. with of cash, ended of $XXX.X up million from million, and cash the third the We equivalents investments the at

Our million. primarily the as from revenue percentage generated we CapEx the year from spend had of as in $XX.X flow fourth observed X% We capital seasonality. approximately and strength for attributable full and cash prior was facilities lower in of operations the infrastructure year reduction the to quarter X%, a a in favorable flow working expenses. operating management good was cash The

We free also flow during quarter. the cash million generated [$XX.X] of

translate cash this flow $XX.X flow of the for of higher improvement full continued For delivered $X.X cash focus year will generated from in million full of year, for the million. XXXX. profitability operations We the we conversion our flow cash continued year record full performance and free into on and

me in $XXX $XXX growth by XX%. million the year-over-year non-GAAP million sharing quarter first full year year $XXX revenue to range full $XXX Let guidance. up and range of forecast non-GAAP revenue of to million, quarter first XX% of the We representing to and million, in our wrap

stream. million, in bookings quarter With forecast for and the revenue subscription-based our mix $XX.X XXXX $XX EBITDA the year. $XX in full will of of XXXX the first increased million year full We XXXX, revenue adjusted of million this representing to XX% for higher-margin adjusted non-GAAP we to EBITDA year of strength approximately $XX an of revenue anticipate have million

combination well adjusted deliver as define total to positioned which entering XX for a balance summary, XXXX, In and operating meaningful and of a growth confident late our we're fourth XXXX. to in in rule our in the revenue profitable and quarter, expansion of adjusted ability margin. free believe we delivered goal cash strong growth being the company to towards non-GAAP Looking revenue the in resulting of EBITDA ahead, sheet show I EBITDA record We for solid years a full generated come. year, results feel flow we

call With back to turn his remarks. that, the for closing over I'll Matt

Matthew Flake

Thanks, pipeline, In product XXXX technology prioritize history suggesting financial and entered quarter a the with that bookings and ended spend is we year with institutions differentiated portfolio resonating with David. to our closing, the best in our company robust continue market.

hyper for are positioned and we capitalize We investments thank delivering of experience profile on business continue believe XX We ahead on focused late our a the made growth an innovation we've us. customer line prior favorably have market plan profitability, the customers to goal managing best And with emphasis delivering opportunity a to improving company in while years a XXXX. strong best-in-class maintaining us increased the and to on -- the continue top you. in become with rule substantial

I'll that, for operator with And over the questions. turn to it

Operator

Instructions] [Operator first Andrew from question take will We our Schmidt, Citi.

Andrew Schmidt

versus Matt, want XXXX outlook last just outlook. quarter. bridge help with Maybe David, the Jonathan. to revenue I the start off

just in in there's versus if would particularly subscription helpful. at any point, be a reconcile transactional differences, that us other. revenues curious Bridge Just and Help certain

David Mehok

items Andrew, yes, a outlook happy since and that the high-level key provided that months of XXXX. have X course There's we over do for the last to talked changed few that.

over of is contract -- which to we million there's termination $X first The impact discussed, that XXXX. that

all information the at account previously that transactional we've you regards guidance We're what well, which the that discretionary that the into to business take that the services, account as look the incorporates the of relative also business, So was to into you for we taking outlook have space. monitoring certainly X months to spending environment the over course as acquired the we're last and in Helix provided.

it's we've We in an is course that we had the approvals. page cycle of of last for and changed And there's the X talked what of elongated really slowed last over And the today the incorporating reference. final of months, terms M&A that -- guidance. into X seen dramatically the few number over all I'd we're the environment that about it's And is the next down the has course transactions. the know that fact months

lowest which January fact, only for In transactions, is institutions, there's X January M&A XXXX. alone, X the transactions since financial

to for in absolutely been call that to that emphasize guidance feel is the XXXX. XXXX. in rate to And and we So of activity going is X certainly heading something good the services reduction and the think impact important, tried combined. roughly and to into going We is that has is really thing subscription our this in that that's going growth I be about into is revenue about XXXX. for that our subscription accelerate Xx growth transactional rate And factored

Andrew Schmidt

helpful. about talk a No, Maybe obviously, sort various XX. And just of little could the comments appreciate on that's super you rule to -- bit I there's there. ways get

rule over Just still when the X just thought seen And term thought But obviously, rate, on a changed past how that long-term the lot process on we last sort XD just is way a think adjusted preliminary the changed. right Or company? just thoughts maybe about interest out, is over for dynamics some few based there. other the of longer the has have algo what we've But it little but and you get then years. historically, investors of company years?

Matthew Flake

combination towards the August objectives That out in direction set feel have all there still the this We're a profile were into out profitability can laying of will we long-term manifesting of and and towards optimizing back this end since XX, end in actually step is at of rule referenced -- just ours. ultimately that in the you that EBITDA, to the we going going we're which of we And of was growth we XX acceleration EBITDA getting of And see doing through step which that is of we've at. the forward absolutely. be to objective to where direction XXXX. of Rule combination or P&L tell ability XX rule like are Yes, towards in a certainly X the that believe XXXX themselves we continue to the And in guidance. XXXX. that from in our

Operator

a Vruwink, take Joe we'll from question Baird. Next,

Joe Vruwink

think speak you exiting certain I'll at kind guess looking second incremental start this really FY cost in a a as sequencing that structure optimized at maybe nice the Are you looking I of there EBITDA having things year this if think margin. pretty half the out about one. end. XQ, of knowledge step-up is of kind of can Great. to? just Or 'XX, I you're of of

higher you it run And savings, half? drives to some the the started of so in you and second rate improvements those have to step-up

Matthew Flake

We're of of started early tried a to standpoint. now the Joe. we from talked well cost Thanks, X in P&L. summer, the into seeing business component was as It's in the both next we've OpEx, from terms revenue this it about late accelerating We been the very the benefits fall. of mean we've mixed as Yes. there of proactive I year. things the articulate subscription terms really well. of that measures taken in a I as is COGS coming

a As And we of as of footprint, that resources profile XXXX. of terms we of deliver that over us effectively. more add into terms giving you we're find some margin as the sure also more we revenue be have. carry We're the highest proven know, to We've favorability couple trying any making efficient XXXX. we quarters. work terms can going reducing facilities resources how global subscription head utilize revenue cost also to into streams last in in that do is and has workforce we our which then backfill of and doing lot we're to of that as We're the we optimizing in our resources, of ways

continue products to we're to those value that and certainly products we finally, is how out the of pricing and market And extracting our packaging, we're as and have going how selling. optimize which we're marketing basically with we ability think to

Joe Vruwink

great. of XX, XX the this framework. And to back that rule of call inputs rate lot That's assumption rule the the I guess then to today, revenue growth. a of and kind goes Okay. of And the traditionally about XX% ultimately of of kind the within but spoke you gotten normalized on you that

if today would you variables? organic growth. the of do put You're But talking a about kind across cross-selling And inputs? about of those Obviously, those about you talking the guess, consideration. I is each how where revisit suite, think some construct you of user churn

Matthew Flake

look, are those I XX the for Yes. And trying look is is, X the that consideration last And lot into that of things has a changed we're sure. Thanks, would to world the at Joe. changes. take in it the way months

that things that we're the our the are in that discretionary institutions foremost, spending transactional resources. We're the financial efforts those -- revenue. That's on at return. where making areas and sure digital to to we're some have and highest of of focusing strong. dedicating remaining and our of generating behalf But resources transformation terms happened the the First time, is same move

of the as cost marching So months proactively relative towards towards we're terms as the in things. seen we made And our that is combination some also XXXX XX changes in the end what of to growth communicated of some changes profile. we've ago you've you of terms profile, optimizing those referenced, X

Operator

Tillman, We'll Truist Terry go to Securities.

Terry Tillman

you hear Can me okay? Yes.

Matthew Flake

got we've you, Yes, Terry.

Terry Tillman

I'm on going sorry spot. spot the Matt, the David map, and question, you put but I on Jonathan. first to put guess the you to and

pace. During this earnings I about heard selling talking continues companies record haven't a quarter. which season, a

I mean pretty it's So notable.

as here? for up on how I And activity keep the feel heading it's bookings about broadening around just And top can you've kind you have or of kind funnel David. a the and dynamic just gen vibrancy loans the of I general? unique I'm But what so of in just do curious about side? you then new this got kind into platform. deposits of that bookings and qualitatively And know whether And a we're follow-up demand 'XX

Matthew Flake

Yes. Thanks, Terry.

that If legacy to in that pandemic. financial functionality required, momentum on pressure with the And think X QX, have the didn't attention what It's the the technology to the to they've seen than we're systems the age things. -- The the and I've feature executive QX were coming engagement dealing banking of you really digital more institutions see last raised opportunities side. began out is of of of look leadership on these ever seen. is is, that the I and a quarters, couple at the the you

there. butter pandemic good lot so Tier of those Tier business, we they it in signed had in long that X just more that deals a in bread the in culminates and in quarter, time X, the nice QX of volume a a And record a with X, Tier signed this deals,

is well. in put commercial strong. activity deposits has Every The that had on So banking deal it. this pressure around a as focus

banking so [RSP]. higher for And drives a commercial drives ARPU, us higher

them, because have long-term depth It's with the better customer a off and you integration to switch of the very difficult and it's system. the

And pushing union, credit products. those really so whether are as or a a bank we

side it time. a as strong And of house I've demand so seen as the the in long the deposit is on environment

months you those know to it X to takes the business, that revenue. For of that to come XX know

of it and the So most look of third, in at 'XX, you'll of it, of you're some 'XX. going in quarter late this half fourth back most of get to then

encouraged So by that very activity.

we similar slowed of the side Obviously, it and at to think, success going somewhat, of end customers happen, of of pricing the is will pressure precision the the on the delivery have we're like but of originate business, you and house, and there's that see first saw to product And expansion still technology on to beginning to expansion so but had tool, this I with a we year, then -- loans. need lending half customers what existing then side the the begin the going be relationship that service into deals couple lending on for of the lender, But that's the the -- quarter. in the that year. the

ourselves to relationship feel differentiate rising in this drive about weather of side we're on valuable and pricing good able the we're unique like So rapidly side. lending where the very the can we interest banking enough environment digital on have kind feel that. able I products really And the to and rate to the tool demand we is environment to are where

buy pipeline, the forward. encouraged to we're things So look moving and the about excited way

you So David, I think. X I question. had for appreciate the And

Terry Tillman

did. Yes. I

kind sounds So it's -- of yes, very mean, situation. David, like fluid macro a I it

it M&A items rule and the last revenue, then Could then exit further? relates your Or same and Helix kind in of you subscription to And transactional of -- like you XX those question. changed the most X on as at of X-part so revenue, X rank that rate 'XX? 'XX stack to discretionary a it has since as moving So it services parts sounds it some environment. Could -- you then to accelerate get accelerates that does the the it is update?

David Mehok

Yes. Sure, Terry.

would was last And so to impact, quite months. all contract The the changed over the have ranking, stack course to sort the frankly, of I to do of termination. say biggest them X that guide of an -- extent the

As FY was than said, $X to a I that greater impact million 'XX.

would -- of that and Sort Helix changed at environment that the I rank has certainly there, what's changed looking environment top. the probably say I would stack and the at fintech

which revenue, XXXX. would relatively next. terms it is year-end on pay, going in I of transactional is impact sort has small to other say, that The be M&A in revenue of our in bill the

Terry? the else, So sure but relatively I actually would spending today. aligned then we that the making that that based discretionary I next. the we expected, we're most was heading I say what know we QX what And something guide did on that's mentioned part, think we're with finally, just there for into that factoring rightsize Is What in And impacts into call. QX. came upon fully

Terry Tillman

stays ends X-parter that second that about or so in the accelerates it and level? asked Yes. in out for kind at getting of aspirational it there's to whatever I'm like a me. or you asking by a 'XX just that where questions about rule the up the shaking if terrible I accelerates level unfortunately, of maybe of on definitely revenue further multiyear 'XX. 'XX? Because XX of it progressing say yes, your kind Would it's that from I strength related same because so booking But in was mean, the I'm subscription towards just acceleration David, question, end 'XX, it of the that's goal

David Mehok

Yes. get for variables 'XX. of to that Thanks, late a Terry. in rule There's of XX place lot us to in

and from in that which to start to start look variables we exactly delivering for 'XX going subscription -- those the subscription-based some not point executing exactly at to come So to on not how want commentary business, get going Certainly, from. much XXXX certainly say result at of booking in the going on going we're we're to of focus relative provided individual guidance on going some our the to to to the We point and come strength and yet. it's that. out accelerated revenue to parsing it's But in to future. it's where

Operator

Sklar. James Next up from Raymond is Alex

Alex Sklar

can answer composition high Terry's versus it unit you us Matt, you pipeline like having where I your you terms to Every commercial in wanted now your and said kind first seems question. commercial what to on -- of rates your retail follow win banking tell other up opportunities deal banking of have solutions? about banking

Matthew Flake

Those an from up are XX% are year-over-year. pipe the think, year-over-year. perspective, it's quarter-over-quarter, opportunity demos Alex, RFP up Total big created. year-over-year, I quarter-over-quarter, year-over-year. is up,

those commercial to is and because X is the them. So to retention for banking commercial a that those you'd happening is a are. deposits the to you is stat related technology the it, to I and deposits say, make of do literally lot have on to reach XX%, the customers And going I tools upgrade of what's them but we're sure would technology the until them that it's of had -- those I side And where activity. reason the are a activity for I better lot just want And critical. don't our experience. conversion, is out we're telling the the those increasing. hold we going banks on be because to digital have see think commercial banking there's XX% obviously on those that's of understand of

have credit to have hiding small space take that that are banking a a the driving of So as lot product. signing they in lot because of unions up commercial opportunity credit are we well on there's that the what's midsized of lot union retail and that's really of for advantage as businesses a

ability is to product our commercial functionality differentiated. so highly on demand turn take retail on and And our

that's so a And that's well. of that X driving activity of lot the things as

Alex Sklar

better gross about mix XX% -- the that benefit renewal and kind that's buckets margin margins or you the David, of X have? XXXX, subscription or think we going margin. then, gave it But gross some you gross And of heard what you on I in year of terms that was about for the stat improvement tell a line kind over of other can to us the in of past, us next to sight

Matthew Flake

little we We mix the do Yes. with revenue to the that a just on bigger that context margin of subscription with have you certainly see have revenue the drivers mean give that. X is services. behind associated implementation I of recurring expansion that on the combined

a So services those process, roll margins. lower renewal implementation through off, when you those are go

higher been top get the you that from incremental on solutions users are of result, uplift and that you've margin. which a typically as adding, margin incremental a So

revenue So terms expansion. lower customers, we we forward, do the a expansion anticipate combined margin as broadly EBITDA provided as scaling, in in gross OpEx that we profile renew coming the in get expect guidance of OpEx higher that we speaking, to then to continue gross margin going with just from come we both percentage of margins. so

to EBITDA of going you're see accretion. towards So both items that line those deliver

Operator

The next Blair. William Napoli, question is Robert

Robert Napoli

lending business termination your within on business. just contract maybe Question, on and I lending first, your -- the guess, overall

is And that could be be I that? aware then your Cloud anything how guess. in know of in I How -- the acquisition you a Lender, else but First there portfolio of that that update of -- overall get Lending. lending it's do we happened, you reversal just like how just to all, this should as well. Precision did I on any not was this the made relates business part know what

Matthew Flake

Yes, Bob.

And focus we it just we finance, it into alternative mutually, a were I going. we our growth contract direction international we like it Part a wheelhouse ways really in back is the it was that It didn't of was said, wasn't looking at company. becoming this company, a before. as where now are profitable looking had deal So was on legacy now. the fit on

on we've so from to us business and we from both had the to forward And had both on on And with us -- we moved -- it's a terms. make of it. moved moved decision good so of make -- it,

to that of you're earlier, happening rise far goes, loans. People like that I this are when the thing. The workouts As are and as said lending fast. rates asking going see type not for business pressure on

that's banks going something their still have process, down. need to process. because you still need to it You slow but automate to going origination is servicing They're automate to still their

good in has the activity you'll back the far going the relationship the now. have. As momentum, that is deal said the think about digital banking half the now, attention of obviously, that carried getting see the to engaged And it's of is a it right earlier, is distraction side in we as and demand, the momentum the people's and the a of I right precision but year, lot feel of pricing customers, pipe lending as in opportunities. on and I you're seeing quarter grow is into has but where way I lender, existing within a kind that lot what team really 'XX, right

Robert Napoli

think be I it XXXX. David. for -- targeting would maybe. for, Yes, revenue, by million I question believe, probably a you Helix, But on And guess, Jonathan were $XXX your then I in

and opportunities Helix environment -- finance in seeing that what this may was update just is But reasonable on reasonable fintechs that I as past. number know a BaaS far think had slower for in growth. given I And target as pass? a And you area? embedded What or the any be that the target? the is you still are the

Matthew Flake

Yes.

as -- certainly has haven't that's true last the XX lot business. changed months, and within over obviously, David We Helix said, the a

are opportunities we're outcome about, filled feel talked certainly really their the is we've set when haven't you platform for a that look at better view as on for What very in the economic us. of long-term the of We is given the looking say it. scale vendors. has But of pipeline now that a revised changed. pipeline front we fintechs, composition of opportunity the the good composition about I'd focused conversion bigger still Right now, But still a looking from opportunities. can that with are

as how We're growth really larger Really, seeing of just a we're the the existing about view so lot of I important. different seeing script, within very also a on customers, And our fintechs are behaving. talked

year a have multiyear of clients, meaningful these to continue that of lot was large We and this by renewals a that drives in business. Helix characterized growth

with think changed and And brand can of we focused got we're QX, the strategy verticals And where we're win. X especially marry say what's course side. you so 'XX, the I'd more things the we brand is over our on there now those into seeing what in much we as

rewind And a I think win I be us through prudent X works. opportunity. and to of we're aggressive environment, we mentioned, the a after where this If and strong you sort verticals. where clock, we we across pretty say of we're what large bunch going and X learned opportunities were I'd our in And the can where model months, on navigating focused, business still we're lot's in changed, environment, for that about this It's still very as to and excited but certainly, just, that's can bullish do.

Operator

Charles is up next And Nabhan, Stephens.

Charles Nabhan

Two-part question.

new secondly, the about is your pricing into comment user have to ability and in new coming big of or versus on environment from and the impact, logos? might a up expected cross-sell contracts? could give the growth, renewals, those positive negative -- acceleration it much you pricing think of those those any as come deals we into products you add of growth cross-sell these new us on you new sense And could if First, subscription how versus

Matthew Flake

sure. Chuck,

momentum net subscription it's lot second next it's saw split. breakdown, to of new, some subscription relatively by year, year. the we and quarter, both. coming really carry seeing on And of going that's half into and really So in really and momentum varies good a cost the both from good evenly forward it with We're

equal an of from X really areas. there's those So each driver coming

about asking environment you're pricing we're standpoint, seeing? pricing the the On that

Charles Nabhan

Yes.

David Mehok

Yes. Yes.

a of -- right is rates high may I One couple there, points. I very mentioned have So -- we're that and know, don't just win Matt few some that things now. I a seeing

of half was win at XX%. rate year, our second the The

when we're look So we winning. positioned, at playing feel really of where good where about the the you deals particularly and how we're composition we're

to deals rate. higher win to a increase breadth, As continue continue these we in see

in of the through terms certainly in XXXX. all look is 'XX, -- when in that we deal important XX% participate at for from deals that you fact, FY deals the won up process that an size going we've net screening we're the average bookings was the that on year-over-year variable new So

a more of of is X being there. part. there's -- bigger the products is the few commercial and contributions and that's contribution breadth contribution One So a

well second definitely win really screen win that. share. of to we're XX% the like the deals positioned So in feeling saw we're half certainly that we our And effectively the rates exhibit

Charles Nabhan

And just as a follow-up to.

specifically the Sorry. transaction drill Helix I Helix how subscription as much versus wanted a drill or -- to user-related? for follow-up, wanted of get my driven within in that revenue and is revenue I to mix sense into

Matthew Flake

Yes.

includes extent that includes Helix And and talked revenue, disputes platform any and to way to revenue, perspective, the like. fraud it's think fees. that lot share terms bucket in transactional call talked a roughly to us revenue business float the Then -- analogous interchange of pass-through call the user fee, but like program a be the there's or David is of subscription the everything the you would So and would that we've from the then a a would what help manage, from deposit of pass-through would fraud and that it impacts control revenue margin what on monitoring about other things actual how navigate solutions XX% we call about revenue, subscription fee I fees. where I either broadly have I deposit excess

makes up balance of And it. that so the

than digital much it's digital or more the So a banking inherently transactional business lending business.

Operator

next. William is McNamara from BTIG

William McNamara

of going thinking and kind into things you're just margin a bit of increasing In to know year. little that headcount But XXXX? last to the terms about of thinking you about talked of improvements how slightly compared wanted headcount nature,

Matthew Flake

late important footprint, And that Sure. that all think headcount. took at is to we That whether I and included data summer. the of note is spend, areas proactive areas actions third-party contractor it's facilities that spend, look some referenced, we the point I X when said starting you

the end end Our was through standpoint net down from of of August a the December. actually headcount from

into to in areas for where really FY as we headcount, some the certainly be 'XX, we add areas that's feel some forward there's important products. the that Now and touch as well look going us to as customer typically it's

the So the where and to product, going areas the invest. customer we're

basis Global point our Resources. We're also that add have more heads too net doing find on efficient still though. to my of cost much. And on overall going profile ways an can overall and We move that was not

we that heads make how is that adding and things cost reduce head, will one; sure looking have. customer product. specific the heads per then really are those with So we areas we're at the that touch efficient two, three, in we do be then the And the and we're the

William McNamara

Great. the I if of from about your guys deals then churn is in or you in thinking terms rate that of there that fit to doesn’t – Okay. are you criteria it just disclosed, that And things more of terms you can color any guess nature? away walking just maybe add

Matthew Flake

scope those which we’ve looking continue pricing that year really the the return. based of and mentioned last I the by going to the making are that XX% are opportunities the now screening after of that Do them going with upon to evident the to increase job to as in that’s of I that deals referenced. And really is customer transform doing digitally. we have we’re opportunities course Yes. grow. the done be good we’re they a that yield as opportunity. is over question, Is expand going really the And highest sure job good that to

feel how for really screening about we So deals existing now good we’re customers.

if existing certainly them to on expand going going grow use expanding there’s or us, we’re to to their continue an We’re us And products or that with through have we’re the that as find to well. by with that to opportunities opportunities for capitalize they continue customer inorganic with to that. going

Operator

Holdings as call. and Good At full does financial you that as quarter bye. disconnect. fourth question-and-answer well session and conclude ladies And XXXX results the time, this our gentlemen, year QX may

Q2 (QTWO) 21 Feb 232022 Q4 Earnings call transcript