Earnings call transcript Q4 2022

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Unidentified Company Representative

Thank you for joining us to discus financial results for DMS Fourth Quarter and Full Year of 2022. With me on the call are Joe Marinucci, Co-Founder and CEO; and Rick Rodick, our CFO. We posted our earnings announcement this afternoon in the press release and also on our Investor Relations website. By now, everyone should have access.

Before we begin, I would like to call your attention to our safe harbor provision for forward-looking statements in our financial results press release. identifies materially that our from provision results cause forward-looking harbor differ to the safe risk may factors actual statements. The contents of

that please more affect our results SEC a detailed of and risk For description press release our to refer factors results, filings. our financial the may

financial financial in Relations measures Investor discussed our during at to reported for Also can non-GAAP results posted call, results the have GAAP between we can other Investor be commentary management's which additional The Reconciliations to this also our and found tables on website our our of and financial press website. include be will on release, measures. non-GAAP investors.digitalmediasolutions.com. call Relations be information found this financial

Joe Now, I'd Marinucci, like to CEO. turn to over our the call

Joe Marinucci

everyone. [indiscernible] to full and quarter and call. afternoon, XXXX you, fourth good year our earnings Welcome Thank

follows. Our and at within year-over-year quarter XX.X%, Fourth net fourth revenue guidance XX% respectively. XX.X% $XXX our Gross are of to results $XXX down came was in which marketing million margin million. quarter while as and million, was variable XX margin

million, Adjusted margin came X.X within or at in also of approximately our guidance. EBITDA X%

million. guidance full $XXX second full numbers above adjusted XXXX $XX.X XXXX of million revenue the million and our our marketing and of go margin and million. call. first quarters Our into EBITDA of the generated deeper VMM over year and We for to $XXX net year Rick details of will more later dig add XX.X%. guidance XX.X% in were the results $XXX variable Gross or of margin

including health consumer This is our remain and of spent, that true education, to seen to Marketplace DMS Care Act and how continue we allows move as and insurance home spent. Medicare the to marketing diversification Brand shifts us business is and trends to and be on agile XXXX inclusive casualty Direct During XXXX, solutions. that in career auto market in is serve. finance. with finally ad also both It we diversified. diversification you're and and in the needed insurance Affordable result our can adapt And verticals our now in Property for e-commerce, focus

with verticals which include which These business. diversity agents of which monitor insurance the further along customers, enterprise serve, SMBs, we highlight we our closely encompass the our our

For we of are customer a we a This introducing, measurement spending with XXXX, which in customers represents close $XXX,XXX significant of count enterprise new excess with XXX. DMS. annually is

per million. ARPU For significant X.X XXXX, was enterprise customer

in in platform SMBs on X,XXX and X,XXX active agents totaled QX from insurance For XXXX. the X,XXX XXXX DMS agents agents up

revenue that is The what insurance technology, follows. innovate was QX QX data our also the for provide breakout continuing was differentiates to say and I'd capabilities vertical media DMS. QX and QX XX% is quarter. This which in XX was XX% revenue, the in revenue, customer verticals total total million consumer E-commerce revenue, in which for diversity for of as million is the part for total $XX and how that Health in QX Career to by of consumers invest create which quarter. and XX% for QX the for And $XX revenue is revenue, Property insurance alike. advertisers like quarter, of in and total which and of $XX revenue we finance our mix was of million solutions for revenue revenue value casualty of which the in revenue, and $XX education quarter. total XX% quarter. of revenue XX% million million in

in these to different these plan In on our to which solutions, first focus XXXX, power data growth across we continue are to verticals. developing agnostic customers

growth is performance that to base our data across it expected ROI from our will which aspects. thus the is a play focusing we serve including win choppy, is robust leveraging toolset digital Again, proprietary be customer marketing verticals believe pure our year serve. as solution diversified for on come this performance primary to those will de-risking macro the customer Although DMS we

addressable this position as the performance by and capture by Marketplace digital network. expansion. executing step strengthening HomeQuote.io diversified also market business growth Home solutions further teams this international into home growth Services services while DMS HomeQuote To the strategic home we we're advertising services is expanding our The to demonstrates business quarter, our through to this market. ClickDealer of and work excited in a international took on and Brand DMS point key with a assets in marketplace largest Direct our acquisition investing commitment to ClickDealer the to markets ad acquiring our and earlier one initiatives the U.S. leveraging

consumer access diversified DMS to countries finance, will business addition, over advertisers verticals cybersecurity, in have allow the Direct current media operates retail, will like serve advertisers domestically now DMS gaming. expand to distribution that into dozen that worldwide. will e-commerce, and and international In DMS This international a Brand

million add XXXX to $XX balance revenue acquisition in the accretive earnings. expect over of XXXX the be We to and DMS over

to growth In plan costs, of a create potential. March, designed announced implementation and save strategically we the target efficiency, restructuring also areas with

to accrue focusing DMS business resulted completed and offerings, these strategic workforce, growth in changes, our the future restructuring executing into we the DMS opportunities. on initiatives the core our in financial engine of the reduction of reigniting look benefits service which and foundational periods. With a forward consolidation XX% will Having

restructuring initiatives with new a we will closing financing on by better participation announced, be We expect to Also, process This strengthen strategic along annual between growth includes previously review, and XXXX. which we basis. million XXXX to started as total our us strategic an sheet. strategic to execute quarter, on herein position cofounders, August and our million the annual $X review savings in during closed DMS raised Investors the balance equity financing After $X from this of beyond. Company successfully

with customer acquisition average our our served investing to platform, further continuing them to our and media growing add the finally spend while along capabilities, their drive customers to in recently the per growth helping Direct to grow strengthening of To managing retain number data diversify and business customer and significant costs, Brand and for our XXXX, and in vertical SMBs base existing by summarize closed solutions. the Marketplace our focusing customers, focus enterprise our our on of integration is acquire, technology, by

I have Now, the our more the pleasure results. will who turning provide over details financial to Rick of call on

Rick Rodick

all morning focus basis a good and to Well, which year year-over-year. the QX Joe unless The revenue on year year-over-year, our Insurance insurance was revenue year-over-year otherwise comparisons results. guidance. XXXX going it noted. Thanks, as was to breakdown our Joe down shared everyone. above on results, full Full $XXX follows. for of in approximately was business I'm down XX% of XXXX, million, accounted XX% was X.X% our while total net

our business. was which of our The-commerce carrier education, industry our impact represented and insurance, reflects continues by for be XX% demand total of XX% Career Auto and up XX% of total XX%. which XX% revenue this finance of total XXXX followed contributed to The XX%. at while was of diversified accounted while X% the life approximately revenue year-over-year. home and lower was And advertising total was down was in consumer at XX% health stabilizes. up revenue XX% in revenue decline a X%. DMS performance digital

XX.X% million and compared within continued was insurance was marketing percentage decline XX.X% for margin both driven auto profit health. a versus compression to XXXX. margin XX.X% in margin XXXX, equating across margin $XXX was XXXX. by to Gross Variable margin The in XX.X%,

in XX.X% to to gross margin XX% solutions Marketplace our was results. solutions solutions margin compared now compared gross XX.X% XXXX. segment Direct in XX.X% XX.X%, Moving to Brand gross was technology XXXX compared to was margin in XX.X%, XXXX. and

at on through and in we now driving expenses, reduction operating to stay operating consolidation continue of Looking expenses. focused our efficiency business

$X.X year-over-year. amounted our while million up XXXX, During million $XX.X expenses SG&A to

was SG&A XXXX of a and of during half continued of synergies million half strong down $X.X However, result second cost, versus XXXX, second as the collections.

margin year the down for X.X% lower $XX.X and EBITDA driven was year-over-year of a Adjusted mix. profitability. discuss revenue by million, million primarily and $XX generating Let's

in intangible XXXX net assets. of $X.X net driven of XXXX Approximately was by million loss XX% the versus income Our was loss XXXX. and impairment $XX million in net the

to as million focus our with XX, the and million we with which $XXX.X XXXX. our sheet shifting that equivalents, total end, Now We revolving facility year At balance liquidity. million of $XX.X and and compared $XX had our cash was was December the million $XX in cash year ended up undrawn.

of credit requirement includes decade covenant X.X Our with times. our facility a

economic As XX, liquidity to sufficient leverage times December debt under our X.X current remain mindful of net we volatilities. we our believe obligations was the EBITDA. given have and of our facility, We

now our outlook. Turning to

million, $XX expect net revenue EBITDA million $XX to in QX, to million $X for to particular. million which and we to of excludes performance the range be For adjusted $X be

to EBITDA million. in be million expect and in For $XXX the be million adjusted million range QX, to to of between we $XXX $X net $X revenue

QX and is come for Our variable QX. is provide will to marketing guidance the organic restructuring margin for for XX% impact, guidance margin range ranks May both When announced back strategy growth XX% and will of and earnings, ClickDealer's QX in XXXX XXXX, acquisition gross we our closed recently to positive full XX% plan. which the our for we previously include year full year of impact XX%,

you the interest I'll DMS. to call in the thank turn for your Q&A. With operator that, for we over

Operator

Q&A, to Rodick go to would Please back further hand like move ahead. we I Before for announcements. to Rick

Rick Rodick

apologize for today's the this call. we with appreciate Thanks, sincerely patience in We Bruno. everyone's morning and any delay inconvenience

the or session. turn I'll Q&A call to Bruno? Bruno over the now back

Operator

you. now Instructions] Please question from your [Operator Maria open. Thank go is Our comes Ripps Maria, from first ahead. lines Canaccord.

Maria Ripps

questions. and for thanks good Great, morning, taking my

First, I ask wanted bigger a question. of sort just picture to

priority your managing you'll it'll framework all? now? it the becoming any And concluded your margins. areas about like that managing, Now there investing about your sort be in be review, if around international sort is now just that of changed maybe to can seems that then prioritized? business? of approach Are talk you you a How strategic more maybe at has And managing just talk your higher

Joe Marinucci

per speaking. is this earlier Rick's this your as morning, good Maria, Thanks patience message. morning, for Joe Hi,

how I so going think, prioritize our through we're pertains Okay, are manage review. to, now first really question strategic we business. to The the focus, question that

diversity think is, the would verticals, the inch-wide you really in, the being into Brand of the I guess of at a we're were gets And of and significant that and enterprise the verticals say those all Marketplace business. So although if at, in now where back this we're and solutions deep, the customers and side I the analogy mile what two And an international customers kind Direct the solutions. the we of have diversity. about that's we across there looking

recently as expands which solutions So the markets to really that services, solution this in it gives can I Direct the that just the want. during market be you an the it and bringing And ability going our U.S., the out answer it's the Marketplace confidence and acquisition, into But our the optimistic us closed forward. media not the out by in challenging, as is central forward. as here domestically well. but know, diversification agility pointed times around internationally home not additional when And business go enhances with spreading about Brand in we're solutions solution, in distribution

to more continuing base, to diversify forward, on than growth than in specifically earnings behave up enterprise, touched go annually, enterprise the with the then we with you will SMBs initiatives, the enterprise customers going and the the on customers. well, customers they customer spending it only the about And differently call, not because if customers, focus $XXX,XXX which acquisition the as think

to XX,XXX, we year. going said that X,XXX, around today, of we to And where still up footprint, agents. to So insurance independent have going our SMBs just we expand to by more, want year. all be goal focus from the of no revolves SMBs, about get end or that and talked revolves And the that almost which part is had of around are the we of we adding is an SMB under last and this

to we think a so on that carriers year, And network third agent we point, we brought can this major there. get

we're business So process to It's to costs, how and focused. holistic manage in the on continuing invest people technology. those a focused managing growth very we initiatives, staying the approach

Maria Ripps

you vertical you? what year for talk trajectory recovery the going as And your through insurance sort are the maybe in the we auto here? then about of secondly, can on what's thoughts And move on

Joe Marinucci

still presumably balancing year in our gets and expect rate new QX ahead, of they're them choppy. are The still property this So, be we're when their which full still guide casualty to and until market back XXXX we it's no but baked their And auto late ratios QX, the least in in virtually a come They've for challenged. gotten don't carriers it, couple through going round in year. at has here And into increases months. now, recovery we marketing there of very a recovery right spend forecast this to loss analyzing and

different carrier the call. word on carrier but it's the And choppy I accurate. use to It's

do where that here, believe at going remain QX. the to see period. QX to QX least to I So and continue through have it's And goes that choppy we'll in

Our approach XXXX. be XXXX is no virtually conservative to coming and for with in recovery to extremely forecast recovery

Operator

question next from Singular David Research. ahead. your is Our open. line comes David, from go Marsh Please now

David Marsh

Quick question that announced can be converted? period a of that? use around just holding the you preferred for the Can for you before minimum preferred about raise the yesterday. securities there guys And proceeds is talking

Joe Marinucci

this morning, Hey David, speaking. good is Joe

so sheet agreement, remain markets, on companies the forth. as compliance other to the us public our balance strengthen so with help So, public to credit our in we do company, capital look

have enabled this do will to as so raise our to was there, So, the now, the it want which companies do, in with conjunction to defer today, I'll need specific leave specifics that if help to XX-K just XX-K? and a to specific the acquisition. on cash we Rick, to if want will you to lockup you. we be us the filing in raise period. provide We us of that details more the with to raise

Rick Rodick

XX-K. a of of all things There's a think in detail the holding footnote. They'll the terms and that period, lot of out shortly, lot different David, detailed we'll a you it's give and pretty be I detail

David Marsh

facility curve the facility, Just Rick. there today? flexibility look made, forward? Would comments with are yourselves would it just the you to covenant, the you to or covenant? the debt given any to need little regard stands you Or credit secondly, bit perhaps give seek be as amend maybe a under going a refi to how the slowly then close more relief And

Rick Rodick

things look next below sheet, we're was comfortable positive that But that to the the put we're at debt always EBITDA. do That the the it's more X.X equity acquisition, the on we the cash great with balance well about that. we'll sheet are strengthen Well, over ClickDealer thing months, well that which within times of helps. rays, one balance delivering. And really XX

us debt Closing ClickDealer I said, cushion we sheet as EBITDA. our in a is strengthens de so it our really strengthens that that balance think levering and to gives operations,

times, a comfortable some right So, we're facility something negotiating future. in the the but credit to now, with headroom X.X the always potentially look in

Operator

Our go next lines Marvin from Marvin, question BTIG. comes Fong your ahead. from is now Please open.

Marvin Fong

has thanks Just second first guidance, question, up acquisition. the obviously a question the sequentially to quarter on revenue

flowing In EBITDA from any or are down due core that mean, to terms any to bit also benefits business break Any of profitability? I acquisition the entirely increasing or helpful. in is little sequentially, be through restructuring, improvement there the way the the would a that

Joe Marinucci

Thank Marvin. to the call. morning, you. on Good Joe speaking, you have good

So given. QX the that guides were

restructuring period. here just acquisition the completed So just this the we've in just closed keep mind, we in and QX

be into period. we with two arms but over items around business the these think our to how we we're trying the this, converge conservative QX have base So,

own. one we're we we've why choppiness in accretive rounding and the which like this casualty verticals the property C, acquisition insurance, key segments, is then guidance and So, now B, and completed our of of based close we holding reasons a A, today out quarter within an restructuring business

the the ClickDealer they there's items, of guidance. to releases opportunity it press these reasons. acquisitions. we conservative So us because and We all accelerate the We've to for HomeQuote come think in growth want and cited be together with the with certainly

at only said. it be owned we're conservative here. the that part acquisition optimistic better for accretive, day trying time, of a same we've see as we're So, because Rick the But to be that we'll

the is We're totality guidance can conservative, in as to just We're business the how guidance, exceed the we reflects seasonal fact So, the all markets. the these guidance uncertainty that the reflected terms at here There's the guidance. in historically. The pass. adjustment performed and that in the guidance. that's also come the have of of has hopeful point things looking

Marvin Fong

business acquisition. being bigger investment maybe great or year? your do any on. the the entering increase to as expect like mean, the the that? color a profitability you're of Or Are maintain to synergies question just an grow the also picture you on in will viewed the even the question to touch HomeQuote of existing you this And picture the And bigger really verticals vertical? new that in, be ClickDealer and This to kind just profitability actually on going get your involved I about a of entirely business?

Joe Marinucci

international investment DMS, back we've to look Well, goes agility citing been just is prior always to if tax, you and on diversity. important that growth and back

looking specifically then Direct the better we've business term time international the at has solutions. creative that certainly quite been decade. applied So, part of applies, this some been Brand and markets they've the our a of And to for operating for

with business our customer feel reach. their technology toolset at a you with, the that at we hardly look and operate it's reach, toolset highly technology, There's data to operate you we any also overlap, little at level. media and very theirs, our is if overlap They which And media data, the similar our complementary. look

the to the really diversity. and so distribution So of because we on not their drive our just be media But growth. focused And of leveraged There to savings. goes cost certainly cost because believe cost some accelerated distribution, seeing as customer lack the savings media drive base, accretive, overlap, savings we're and are growth. can much it back don't we're

but areas conscious drives cost. business growth, the of in of Investment key we're

create that advertisers. and area is at a turnaround in both So they which been about we've it while, box term solutions, for international, the talked consumers the for Marketplace Because growth investing we've accretive a consistently in certainly of the value applies. the because round checks looking

services And a home you're categories to marketplace previously, adding exists track going current have EMS a below behind Direct Brand and vertical that services because as for is home as now the we a services strategic marketplace that. as home

So as and other verticals, investing becomes we've well to in too. there us growth for focus the and drive demonstrated proficiency a marketplaces

So the and we result it's to side and round accreted, get can of lack certainly ecosystem. cost overlap benefit the media then there's from on to we the as and savings turn the and internationally the it grow measures of broader the comes believe the they resources get leverage because going a can combined business leverage that is, cost domestically, their leveraging of there customers the on the And in help capabilities. enacted the be simple just we're DMS

Operator

next ahead. question go Our your comes now Jason is with from Craig line Kreyer Jason, Please open. Hallum.

Unidentified Analyst

Thank here Kyle This for you. Jason. is on

question, to is of first move the right the So just led kind wanted in services? the seeing you're that decision kind what what to and of now time really ask into market to

Joe Marinucci

this speaking. Hey, morning, good is Joe

entered we've So the do market, The side Historically, of when and the we look both into of e-commerce, that on they seeing we that we're and consumer Marketplace segment the and inside Direct. trends Brand Marketplace all serve the business. live property at it's health, on the of finance, Direct off when and you education side. careers Brand Direct verticals casualty Brand side and

Direct of basically the been the on Marketplaces have side. execution Brand evolution

currently there we're Direct on of good execution big It's So a quote, although Home Services the category side. else the five. not Brand tracking we've in a seen And portion that's everything isn't five.

growth marketplace technology would led that's the So side. leverage media see what we and media the same Marketplace that are because believe same capabilities add can Brand media on of capabilities data there the leverage grow side execution the because that and we us we the a to It's on capabilities. Direct that to that

we're already categories kitchens So, work success with trades, working we seeing Direct. various they in doors, specific those the in already data, and and we're windows notable bath, and customers, Brand roofing, have

that So, grow into side the natural evolution marketplace the of is to the business.

about this the the acquisition general when to So, that and of direction ago. of overview supports weeks of the press we we have signing we markets, that a we release the internal data that go is talked couple the want

Unidentified Analyst

have to of a any And mentioned of but the you that you macro be then indication optimism looking you little that for lastly, conservative, the seen just any improvements I you're so understand years? gives far, kind Thanks. in

Joe Marinucci

in segment. and choppiness remains see in we property The auto and mainly casualty the that

been those consolidation. have a tort We services, products seen growth Those categories. industry a partnerships behind. finance, products the marketed seen also loans, and some consumer in with We've seen and cards, personal the debt as prominent credit mass rise lot in we've services, our heavily have ancillary legal of in of campaigns

marketing we've So seen increased spend.

in now. for and generally, at we've the around a the times over just challenges been there's when And uncertainty this Company's in and for then a And times, decade been inside of markets. while

digital the because pure As noted play for call, a customers. the for advertisers marketing, ROI, effectively performance it's delivering on we're

of ROI solution linear quote, So, the, because the there the safety and the is flight to customers. the in connectivity spend with the between

Obviously, insurance, that's that opportunities the term casualty business although creative. property on like we look bid growth generally stabilizes, consumer marketplace. talked growth. we that's to categories use internationally of continue extensively see that grow other poll, ancillary what and prices recover, believe finance. the areas until well the we the in home But see as forward, there both segment to pressure as we've does that, of of is So, at going then categories business. going for do of and auto And those outside industry about with acquisition that on pressure and outside We services we

Digital Media Solutions (DMSLQ) 31 Mar 232022 Q4 Earnings call transcript