MFON - Earnings call transcript Q3 2017

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Operator

Greetings, and welcome to Mobivity Holdings Third Quarter 2017 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host Mr. Meinerz. Christopher go please ahead. you, Thank

Christopher Meinerz

be you to session reading XXXX our Mobivity's third your at to fiscal Safe Harbor the end welcome results Thank company. we conference Q&A be order in the Mobivity's financial interest call. quarter your of with call. following and We will efficient more statement In time, appreciate the

introduce myself now Mobivity's On Chairman and to and today my Becker is It is Founder, Becker. Chris call CFO. the Dennis Meinerz, Dennis? Dennis pleasure CEO,

Dennis Becker

Thanks, thanks call for been us today. brand by near in joining A on months our has so achieved XXX% enhancing capitalize blue-chip Chris, clients XXXX the contract everyone we've and or with on last growth we've acquired. key our focus to XX the throughout terms

been convert financial in minimum with little has multiyear requiring upfront. strategy prepaid are agreements to substantial minimum contracts month-to-month fees increases to commitment Our which

of call key few new during product us the SmartSuite more solutions a than we are balance with important in we multiyear robust now converting our increased flows technology. While for key launched and on that cash cash forward. some discounted It's revenue who platform visibility that to of third to Subway positive contract the a of year other sheet. in fees finishing adoption have reflect $X.X quarter cash has a to change our enhanced engaged unrestricted million net what just our going on with customers and position we've we report pleased our during that the in we and exchange had far clients agreements, fact phase with XXXX We're this prepaid achieved more

to value to emerging our value taking it's -- the Amazon like customers brands not that of combat confident verified by from commitments the long-term new technology the until uncommon battle committing great over. in would that During and/or the or e-commerce product is substantial giants adoption service financial contracts off-line from refrain Phase, deliver

multiyear Our to our prepayments XXXX, with making great strong now goal contracted We been contractual of meaningful minimum revenues significant return. progress nearly represents annual financial has annual with $X.X relationships first is evolve delighted is of nearly our towards evidence XX% in number multiple This commitments of believe a from were minimum that even compared technology that to early financial quarters Mobivity's million doubled these million. have initiative. which is the to revenues material commitments to commitments with possible. adopter only I'm term contracts three the clients this agreeing we're customers' customers, year Through of delivering million report our $X.X XXXX's to XXXX. commitment financial minimum $X.X reported and

from in such minimum $XX more cash yielded at minimum in million fees total an obligated the term several contract doubled It's more over the and contract nearly The over value note payments years. revenues these like to during term to offer these important value increase beginning term also of upfront year-over-year than year. million one are these driven a of only of agreements. X.X message these terms have the average XXXX. contract in base of net this to of the since fees $XXX,XXX pay of wins than more has that same agreements. now contract the increase Our customers $XX have these also our over highlight our commitments to fees upside generate the Variable per additional of contract million, as that I'd the large contract financial more XXX% total XXXX the than of million is $X.X time $XX than commitments value reflects of contract to minimum of

upfront one As term this an beginning of the contract. annual is has large years anniversary five over paid of each million of the where to minimum a agreed customer commitment example, at minimum $X.X of an annual

this which at will least client are also per minimum the to Beyond per in produce fees estimated subscriber pay currently million another revenues variable $X.X commitment, year. $XXX,XXX

overall physical mentioned I strongly to then of coupon after they thousands mission universe in the a examine that AI Recall and believe our the demonstrate, is this values way for been cash often study, phone across more dial program. consumers mobile As of nail success I'm touched so enrollment consumers and consumers consumers platform. buy excited clients what tooth data to after analytics more. we that program. off-line more having that couponing targeted of the we these X do. than one Amazon than machine checkout we registers, can that purchases both million techniques worked XX,XXX checkout and learning period X% hundreds We directly in these personalize counter delivering. like simple took that of In have they operate the examining off-line their join Amazon results our cause a our of connection in and the off-line we of track the artificial by increase with combines so of purchases result. join and with consumers growing behavior their transactions where results spend merchants the of retail where in learned of XX%, and is every merchants any team and before they Unlike text their a intelligence with spend one via with an our on-line largest we consumers while X,XXXs across their for that correlated engagements all in to their and marketing to of locations. tracked people increase now spend able to before, some Together, buy, share counters ability before is of contract restaurants why one to was purchase we're our amazing behavior through their target marketing their merchants message that driven of website This engage program billions fight being make their SMS proprietary locations, to studied same their network to time the

customer printed machine a which on By proof create Another increase days us on strong an average cases, pace program, been program believe are instead platform coupled visit with more returned is that historically offer ROI and than is days. to of including receipts. of some the months, challenged of XXX%. In XX eight going the growing average XX consumers' of to a our within frequency consumers able their program of building crushing consumers of days leveraging XX were we generate with days an Within brand just we forward. the one momentum days. that since coupons application to learning targeted techniques, every launching the values ROI, lot are of We contract continued returning in

For clients to starters, all sheet financial brand minimum our willingness some their of the growth. balance bolstering commitments prepay our and major is of organic or empowering

Secondly such shortening enabling increasing client cases while and some and client fee and revenue-sharing, new our ROI sales and strategies as potential. revenue bit is visible highly ROI base structures performance-based just guarantees, acquisition more and aggressive growing cycles, as in important,

our For rollout in didn't their to XXXX. solution of new our system customers example, have budget across enough fund one of the full

positive to sale agreed budget in on on contingent investment XX exceed our for should lock-in to cases days. the review the blocker, and thresholds the come agree of investment, return ROI our our positive to we is brand's risk. fixed Chris back shouldn't a for We detailed they a Chris? few financial turn some their call point-of-sale outside more guaranteed in return the I have year we comments. a take to on a agreement would two-year will a within budget brand the achieve then for to every Given agreement certain results summary Needless the been visibility say where the ability now of I'll the seeing succeeded. be data. and ROI in coupled however with to first a over throughout brand of positive generated can Confident

Christopher Meinerz

Thanks Dennis.

that quarter by $XXX,XXX application in year-to-date. in fiscal annual revenue XX% revenue XXXX. XX% this quarter XX, deferred XXXX compared revenue in costs and $XXX,XXX recognition slight large or not increase year the recognition the XX% margin million, the at XX, a are principally of is on SMS This a For been front-end during third new an is enterprise prepayments not advance XXXX balance was $X.X gross September large the due third margin and XXXX the recognized at to detail represents measure and for of total of increase $XXX,XXX, deferred revenue of prepayments charged future to revenue higher compared with our the $XXX,XXX balance XX, XX% in $X.X revenue with and customers. by multi-year messaging Unbilled year-to-date. fees in of invoiced revenue XX-Q deferred represent XXXX. filed The September associated does was sheet received the as customers is to the for over September in operational unbilled customers. in period due and Revenues XX% and months second from long-term contracts XXXX deferred the consists agreements. Deferred discuss compared the representing of met. measure We or million, not were was Company's nine text and receipts quarter a prior report in of The same primarily $X.X operational deferred September at on under half and is initiated $XX,XXX to the same decrease of with associated at deferred compared are an SEC prior in decreased X% for revenue due XXXX. have billings customer value revenue. to decrease to compares XXXX. XX, XXXX ended XX, enterprise to third XXXX, non-cancelable or with Deferred agreements messaging offered billings payments, to is September ended revenues large that adjustments a The Mobivity September million quarter. schedule criteria in consolidated more our XXXX. the decline of the provide or period accordingly, yesterday. Gross pricing from recorded administrative carriers quarter recorded surcharges expenses XXXX General customer of the primarily revenue X% to The XX, of quarter Unbilled the contract

of QX administrative nine For in bad the XX% expenses in the general compared general primarily XX% costs XXXX. debt decrease to months marketing XXXX XX, XXXX, The decreases and was and period or and decreased in personnel $XXX,XXX compared period and in the or expense. administrative due during expenses $XXX,XXX decreased XXXX. same expenses to ended September same to Sales

personnel nine months was and XX% to XXXX. marketing months ended same due sales $XXX,XXX to period compared September period the or during This and Engineering, based the XX% XXXX, XX, $XXX,XXX ended primarily three the expense. to decrease in lower During the costs XX, and research expenses XXXX in increased decreased share September compensation expenses development or compared XXXX. same

XXXX, compared as compared well to million research XX% or the to the same the year. compared third September For personnel development costs XX, capitalized. the the growth as million Company's the in the million in quarter expenses months in and engineering, support to increase being to for software related corresponding fewer nine development loss was an year. $X.X of prior costs was primarily period XXXX to The Operating ended due increase the prior period prior year increased in $X.X $X.X as

$X.X September per in $X.XX to period ended or $X.X share million operating XX, of the loss share diluted months XXXX. nine per used compared XXXX, $X.X the of Comprehensive the the million months decreased for quarter for was same of $XXX,XXX months to in XXXX Net million non-GAAP same nine $X.X of cash to net as of nine million QX $X.X third to million XXXX. same XXXX use a XXth XXXX. cash months decreased XXXX period activities million million September QX This Non-GAAP to XXXX. is compared XXXX. loss September adjusted for million XX% compared in in during share metric of operating compared through or or a million the $X.X non-GAAP nine XXXX. closing loss prepayments for $X.X compared on million $X.XX was first of would first of $X.X diluted operating Cash to of million, $X.X totaled call million to the QX to turn was loss, period For $X.X through in in like for was collections the primarily XXXX. XXXX to used his of contracts I in for and cash Comprehensive of XXXX. per now Dennis? $X.XX receivable. a cash $X diluted for customer remarks. collections as activities share in accounts X or the per first was decrease due The net adjusted XX, loss Year-to-date over the was $X.XX and Dennis equivalents compared to back diluted timely

Dennis Becker

Thanks Chris.

more start The of use time as a key in third period accelerating X,XXX% increased It's of business word growth tremendous. contract than our brand success growth name becomes values have to revenue of our matter committing of only our to and the the quarter Deferred line a marked has of been as growth widespread. for top clientele’s in more XXXX customers the our long-term our technology. begun

perspective, can having Operator, period, and will our combine confident will nearly last in questions. technology come for growth $X your continued as lot show fourth the ramp-up phase in of solutions our the such with their coupled operate top revenue and A in out sharing that progress company top you. point legacy budgets of are leadership the and AI six to line ongoing marketing acceleration with interest up appreciate marketing transition to for to to we For product channels, budget open forward that sales ours. adoption of of signs coming aboard just three out new We look quarter. you Exceeding clients I’ll powered billion. that our begin now like digital months, the print, from marketing continue

Operator

Casey with comes [Operator Instructions] Please Our Talkot question. your proceed first question from Fitzgerald of Capital.

Casey Fitzgerald

elaborate of What's million disposition and the XXXX? for cash how that? the general guys revenue for and you that on And Can contract minimum reflects XX.X values flow the 'XX?

Dennis Becker

Hey Casey, great question.

which really is are what now being services long-haul found for that have our five we now through customers we XXXX, multi-year of in So this which have just last our contract with non-committal also so we years they the they were think were contracts signed brands, that a whereas agreements, months committing on financial just phase But ago. the no minimum therefore few all the I customers acquired during a upwards not of year a product year. we changed trialing month-to-month -- really sometimes short-term a means real that that to of year committing was fee, adoption lot minimums to this number the with just agreed licensing launching

reflected contract combined is what has so that customers larger And now a these value that much for.

So the deal change oil actually with deal was commitment would that revenue chasing that the I earlier brand. morning from as an of this example we're annual just on call to be recurring new you The like million. national of that the potential upwards a $X

million. upwards term And so the a of customer on we be that $X could then three-year that of value say contract sign if contract

also customers but of found Now this large have getting we about been agreements to in these multiyear not that successfully for year commit cash pretty these we've and is and terms are flow, that and throughout customers the flows we to us licensing minimum excited those fees, now those to only also cash to will small that’s that exchange allows for try fees to licensing willing grow balance and to our licensing discount Company. bolsters pay upfront, aggressively fees, sheet really the use they and but an some give continue are

Operator

Our proceed comes Emerging your Equities. with Greg question of from next Growth question. Berlacher Please

Greg Berlacher

you revenues data? with relates basic AI the collecting amount data? community interest ARPU using do clients? additional the you here, And right I think a thought everyone increase If that about that to for significant as excited you existing specific follow-up your to What then data. what now side, above tools are are AI build that And contracts. your it I areas and/or the the the you means. your proprietary your can of of and guys to products with big additional additional What's So, modeled your through over that have in is investment can is buzzword

Dennis Becker

to first question I'll this machine what that so intelligence tackle and Yes, learning. relates artificial

with that’s of success value on We our billions technology. to, other that basket really cases. data amongst these do customers. getting a there's examined of science their actually that year transactions insights a data locations, key see collecting we're our Saleh we across the is that of this by unlock agreed this artificial thesis can't where Canada, without they're a cognitive of receipts on is basically large selling our in who lead dollar then scientists we've of this where data our models applying taking detail, Dr. what scientist now revenue upside that accumulated that something multiyear new that through information can't these to unlock card at the even and credit building most commitments team full a we did able the based our average companies from post machine So investment customers a brands our the multibillion And in from intelligence -- we've called baseline retailer a contract up these we customers data have revenues what's all this and which data year. their do is build that Loblaw And level all growth and XXXX, lot in from in that that throughout which learning existing has been a increase bring that's by strong and led would PhD the to the has largest has influencer in believe we to from up artificial sciences' Canada's out team which Waterloo intelligence led also retailer are

we there that exercises exercises intelligence current the brand, artificial show on dollars through millions science were completed pricing on completed a to as dollar their example, basically of we multibillion really team. table of just a data couple able For being XXXs where based the of concluded strategies our

artificial what So, as every because from about traffic. saw to doing days. to intelligence to these getting of talked we're customers all days best once and some We're consumer know brand been you going another their offers to visit I the these forward, them that's transaction you months brand, taking and whose Smashburger determine that a help couple of take the we've data return purchases, perfect results -- where a brands the able example few ago, we're to apply able within drive of would be the results

And so, potential through is upon see these this customers. that we huge building dataset in that we're this massive accumulating

Greg Berlacher

the is So on my expect of going reasonable X.X the think that example year you're revenues over quick and -- on guys, X.X above is do follow-on receive? you million above what you contract, type currently million five for additional to contractually that to

Dennis Becker

above which is five that contract on next minimum So million their current X.X licensing the get again commitment, years, as usage least goes for fee every commitment. then and based plan just particular that year beyond above $X.X the a in license over the of we form for usage through fees example, and at minimum, additional we particular above expect their beyond which minimum that revenue that, million of

frequency can the offer we're increase their consumer increase AI is to average renovate use a pricing implement and fluctuations platform helping solutions how we're what the performance apply can and we ticket, get predict brand to and value come or so whether pricing of where we starting campaign, helping other we're piece that our to revenue, words, in now strategies, in performance. Now strategies driven and explore we them can

one about idea, braces in And that give billion an $XX where you year so $XX to revenue. billion, system just we've the a customer

that have services, Mobivity the needle revenue brand, X%, science us minimum to nominal we fee a And so say of performance they services of revenue that fees if platform well data or we of a that deliver current that add that's share $XXX from with the we can where for can on top that brand, aside say our contracted for XX%. incremental million take move can

these the that recurring in about talking on contract can millions that scale stack we values. projects we're top Now, of

Christopher Meinerz

. this Christopher Greg, is Meinerz

just non-GAAP that metrics, and XX-Q in revenue Let and of that going that's you the forward is we've that visibility unbilled we minimums to going so called some be metrics deferred monetize what above that, follow-on operational will the revenue, look incremental me filed over into give one those the expect operational you forward. that the to contractual can will to

So, that help some metrics behind put kind that. will of

Operator

question-and-answer Ladies to session. back and comments. gentlemen, like to Christopher closing Meinerz turn I the we've reached the over end call Mr. our would for of

Christopher Meinerz

today's I'd Mobivity. like for you and thank your interest on in you. call time all to your Thank

additional as Before prepared in general, Reform those differ are and statements not harbor Company we and conditions, changes economic, to during Safe contemplated our XXXX. session. development competitive our statements requirements. I results factors call the close, retain regulatory materially in plans, business the the to personnel, attract of result remarks which Act would for of protection in this qualified ability of strategy, and limited changes On certain by and as to personnel legal forward-looking from statements management litigation forward-looking contained the statement. factors, business to claims like our forward-looking of or and Therefore or forward-looking uncertainties Actual a and read could risks the contained the management securities Q&A Harbor statements safe subject made private

summary financial XX-K and quarter with also market future announcing third who for as a in XX, management's of The concludes In of directly release third which conditions and its on Today's as quarter so, call fiscal this the financial include measures look estimates with XXXX, week's non-financial conference the XXXX. documents found fiscal the wish to of issued available may XX, XX, March mobivity.com. already release the on projections November most results these results Participants is third the performance not in This the SEC Company's which filed on on you. XXXX, to at they done press call, have this addition also press assumes measures XX-Q GAAP XXXX. change. discussed results call. comparable to the a obligation are for Mobivity's no may future XXXX November presented Mobivity financial may these Company any require call. and as accordance represent at which reconciliation has and projections today can Thank provide be as quarter update in calculated

Operator

today's This teleconference. concludes

your You Thank time. at and your this day. lines a you for may disconnect wonderful participation have

Mobivity (MFON) 15 Nov 172017 Q3 Earnings call transcript