Earnings call transcript Q2 2023

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Operator

Thank you for standing by and welcome to the Digital Media Solutions, Inc.

Second Quarter 2023 Earnings Conference Call. [Operator Instructions].

As a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program, Tony Saldana, DMS General Counsel. sir. ahead, go Please

Tony Saldana

Guzmán-Clark, joining press quarter discuss on of Marinucci, relations earnings and are, for afternoon, Earlier for posted website. and we the financial on the Joe our Vanessa CEO, and second XXXX. in co-founder Interim us you CFO. our this a to announcement results call our release Thank With investor me our

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

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

commentary and measures. our In on information non-GAAP in will GAAP and be financial website. financial measures of this the our can tables be include additional between other non-GAAP financial The found Reconciliations can on found also investor discussed relations call release. addition, earnings management's

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

Joe Marinucci

afternoon, Welcome Thank and good of call. everyone. you, quarter to our XXXX Tony, earnings second

Our second-quarter results follows. are as

net X.X% year. year million, $XX.X revenue over was Second-quarter down

and third margin for from $XXX,XXX, and deeper guidance the call. the XX.X%, margin XXXX at add details, last to in more over million Our gross numbers, of go the respectively. dig year. into came came from later which in EBITDA variable $X marketing Adjusted and down XX.X% at quarter was in Vanessa's going

market prioritizing areas challenges control. progress by and QX, within In we continue to growth navigate we

strategy, scalable, our sustainable and they're QX their show to growth across create While solutions. aligned durable, not impact and our fully going will with brand-direct long-term our is the results, which marketplace both within actions

cycle, range. in we're results continued XXXX profit challenges guidance a discussing the was within adjusted for Despite due to experiencing. decrease revenue second-quarter and our EBITDA today challenging gross market net margin business Our we're QX reflect

vertical We to advertiser long-term recover and P&C insurance inside positive persist. peak believe our capture the and P&C carrier positive impact maintain as we across prices, we should maintain share see said, in that the is an That to of seeing continuing with we solutions our and we're segment this overall recover spend start This to has ratios and sped. major carrier a in continued we expect carriers, here P&C advertising and XXXX. category, therefore bid result our in outlook to believe P&C We're QX, in to pressure face trends in since surpassing do relationships loss in counts, invest ultimately DMS levels, spend. well-positioned previous this spend core strong we're since agent

We're In recent from of optimistic. acquisition. other by vertical growth our remain ClickDealer segments encouraged services our home stemming business, our in we

QX, the enrollment pull have carrier also revenue We in again periods marketing we health opening from through expect an where to see insurance in spend. increase

discussed we monitor SMBs. past, include we've our our and agents customers enterprise As insurance the the SMBs both serve. in The we

up XXX, enterprise from a For the QX, customer acquisition, last we is which quarter. count XXX with ClickDealer of significant closed including

reminder, enterprise with of spending are a As DMS. excess advertisers our customers in significant $XXX,XXX annually

QX, million $X.X customer from million, per enterprise quarter. $X.X For ARPU was last down significant

tied agents to to stability SMBs in on our the remain active agents, do active to quarter in levels totaled SMBs carrier of volatility these DMS insurance down level. XXXX. X,XXX QX, the platform Most count For reduction state insurance insurance. X,XXX from above QX expect this at the once SMB stable in returns We and recover and pauses in at various then to or is

international QX consumer revenue, along includes was with revenue, and million XX% total quarter; for is casualty was the QX follows: QX million which XX% career revenue of quarter; $XX property as in $XX XX% revenue, was and QX The of revenue quarter; which which the which million for education, of total total million in for total in revenue, million XX% the breakout of the e-commerce, in was $XX vertical $XX of total $XX XX% revenue revenue revenue QX quarter; in was the of for revenue, for health, which for insurance, revenue and revenue, which QX finance, quarter.

is prior we in an mix emerging diversity see and of in category consumer home also see comparable We services growth us. finance Outside continues the to insurance, over our what did year, customer and our DMS. differentiate the as for verticals period

growth our main significant business as following So in to in objective enterprise year our the the will summarize, plan, by here XXXX to business of we on finance, point is and high key into customers insurance. head our and core seasonal marketplaces our in and here diversification, operated foster education, QX. owned the executing existing Prioritizing be websites for insurance, and go-forward Marketplace strategies. on our health enhancing verticals home consumer P&C services, focus

going for the annualized operations operating to is team leveraging assets we're advertiser focus commissioned unification, to cost enhancing efficiency, XXXX, the create and And both advertiser. operated exclusive far value consolidation where integrations, strong and has million savings streamline build in and enhanced and so that expenses. Brand-direct across this $XX.X our campaigns our in consumer DMS-owned to on continuing finally,

amend group continued the the business agreement our we've that as note, for we majority amendment, in growth. future reached support for the conditions position to process our principle with discussed. a consent. navigate an challenging also of to to and credit this announced provide currently is company's business substantial while company will of final to finalizing group which we bank that subject agreement. the flexibility As agreement We're confidence thank the a lender unanimous their we today like we've in This lender We'd

will give turning have on I on also provide the over Now who financial more update call the details and to our pleasure Vanessa an results guidance. of

Vanessa Guzmán-Clark

are quarter basis unless and you, conclude with on second I'll comparisons the afternoon, our everyone. Thank third Joe, the year-over-year good noted. for for by financial our a discussing and otherwise guidance quarter. All begin results

$XX.X breakdown business was XX%, X%. The auto followed of revenue of for in total year-over-year. as of million, insurance follows: X.X% at at Net was Insurance XX%. revenue by life while was QX, XX% and home contributed insurance, X%, health down the total approximately down accounted our XX% which was

and was E-commerce was down our accounted XX% of which for reflects diversified lower demand revenue revenue continues advertising total X%. in and the industry declining business. our of XX%. year revenue up a year. of of flat Consumer total approximately The this was over performance while impact our digital education, XX% QX, revenue be XX% finance carrier restabilizes. Career represented DMS and to was total

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

segment which intercompany of our results, to net revenue. is on Moving

brand-direct in June three-month-ended XX.X% XX.X%, down gross And XX.X%, the up from XXXX. of QX technology solutions' of XXXX, XX, margin QX was For of solutions' solutions' from was XX.X%, in from in down XX.X% gross Marketplace was XXXX. QX XX.X% margin gross XXXX. margin

operating focus and reduction in continue at consolidation business expenses, operating to efficiency looking of expenses. on through driving Now, we our

intangible second in a million, $XX.X the year, compared the QX driven were an When operating expenses largely year, with to of non-cash drop our prior and $X.X QX, million goodwill impairments. last of of expenses the business when is result on were the increase $XX.X excluding representing by increase when $XX.X to continued items, cost million, optimization. which quarter focus reduction operating direct During and compared million of the

lower business to our on primarily net by for quarter profitability, income. $X.X Moving down was adjusted the adjusted adjustments net $XXX,XXX, to million, driven EBITDA

by Our expense the of interest from million versus same the rates, a net result increased of loss interest expenses warrants the as volatility. DMS operations expense to net voice discontinuation $XX.X million loss share the of of impact of was for driven quarter, and goodwill, related the our price the by the impairment $XX.X rising offset

Shifting the million equivalents, approximately our cash ended we sheet was and to the in million liquidity, which to compared quarter cash same focus quarter $XX.X $X.X balance down last year. with the and

most acquisition, fund close and from which did XX, ClickDealer, we March on sheet was reminder, XXXX. a balance crashed but the As our recent

was our end, total quarter At debt $XXX.X million.

we'd agreement quarters. certain among addition senior other of covenant for secure with and amend things, facility provisions including, payment-in-kind of mentioned, leverage the total lenders the majority reached of to in under principle credit option an facility, the Joe that calendar the ratio four substantial a a next As net the

the We are amendment unanimous lenders today. currently the finalizing amendment. affect with not the to and in lenders the completed the the The is obtaining of amendment consent process necessary of

Form XX-Q XX, and and the We with our currently filing August will anticipate extend XXb-XX filing Form We file XX-Q to XXXX. Commission Exchange by a obtaining amendment the deadline. our Securities

Turning our over outlook. to

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

XX% guidance we Our margin between we to is XX% in for and for margin earnings, growth XXXX. range guidance QX XX%. our will marketing and and QX for When come November year full provide XX% back variable

and we with In and heads people, initiative. on technology making, place with our have and consumer are insurance in confident growth are can strategic positive to remain our and face Still, volatile successfully focused we the our down navigate these we agile growth headwinds, execute will noted, trends. to and are coming in progress the we associated market we quarters Despite These continue the summary, behavior. in company times shifts further believe as an we believe Joe we these through pleased right initiative. be are along items control, we unsettled we the with headwinds processes, and

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

Operator

[Operator Instructions].

from line comes Our of the first from Canaccord. Ripps Maria question

Maria Ripps

Great. so taking and for my Good questions. thanks much afternoon,

challenged signs QX? seeing here head then pace may the throughout like today? any any into what on are start seasonally of recovery recovery the based trends And continue seeing XXXX we of term. stronger First, to it think seems on early thoughts near you you be as Do in we

Joe Marinucci

Maria. to have is Hi, This speaking. you. Joe Good

inside I'll with what being to of we We it's So, that will see and mean QX. head out first. into that some in as to challenged, extrapolate do property positive QX, here although casualty regards trends hard take trends

back reactivations think up. major trends to marketing and be more states rate open of XXXX go in and a into The recovery it's carriers starts more I across spend P&C seeing we're agent the insurance. increases effect as would

the early-stage we're Overall, So, shoots seeing. challenged. these are is still green category that

see We've increased brand-direct on would the have domestically. say business. businesses, I Generally, and XXXX also open P&C, expected a looking then our in seen the of would result holiday e-commerce now in periods And we'll e-commerce, and We've look what season. enrollment get That's at as we QX that internationally business for got as spend we well we the broader QX the bump that the which remainder positive both forward to holiday some trends, by historically marketing then health is see in could we've domestic us. recovery And the And got the we're international opening that in XXXX. how there expect insurance. carriers. hopefully the be across of

Maria Ripps

it. competitors shifting few health recently. very And in Can maybe the a the the That's talk exited that given about you secondly, across space for implications then the expect you of Got competitive that landscape vertical? helpful. business vertical sort any

Joe Marinucci

of that question could might the maybe there just advantage us, terms In you how rephrase or slightly.

Maria Ripps

seasonal kind just are I XX there? stronger of landscape competitive And segments what in sort heading mean shift the business of of over positioned especially you your QX? in the for Yeah, into how guess, kind does

Joe Marinucci

significant enterprise on we're have. Well, the we customers focused

So we've periods segment with active. for be of that's We're served that engaged that them. the customers last that that we've the we've in would market enrollment customers that served. been few And the the

the see that of what of saw We last that's at come some expect, we've year. expect based received an preliminary equal indications open period through we marketing to a on least feedback to as enrollment the and result that's spend we CMS,

And inclined upside there's competitors that exiting a some think of the to as positively we're there some space. result

on of what doing our policies were And in they to have insurance we're that where see the doesn't premium the two business. on various in the writing actually those the business. were as comparable segments segments. We an think side and that don't in that health they I marketing impact commission segment

Maria Ripps

Got very it. helpful. That's Thank you.

Operator

of line Instructions]. Singular the Research. Marsh [Operator The comes from next question from David

David Marsh

just, the guys. you you've I commented seeing take related late. already for any bit by could just to auto auto. Thanks you you is what Could if insurance And are the not, something apologize about, there, sorry Hey, my talk do question I to specifically think us Joe? But you on taking Maybe on. it stabilization get I'm a on asking jumped if questions. side? would

Joe Marinucci

just down we a as QX, cited. for to us in discussed reasons compared with of result the as Maria, count, substantially that it's Well, believe the as stability there's agent we although do

more across and as rate seen starts the seeing in open agent the as into Thus in quarter those and spending. would pressure We've platform. on markets up, as enterprise effect markets this as various states agent not up. become go. are up, back for again, increases until QX both major We off closed agent putting reactivations open customers. carriers back in state compression spend there go to They're they marketing and counts the and the markets dormant then those They're come effectively back agents back open start our are active

this think count. stable we're do we at So

right of line increases early. agent because into As across over noted, I it now was seeing it's that that more just how activations this active although materially quarter, give agents. network too can't sight We're X,XXX

David Marsh

color. that appreciate I Okay.

shifting reasonably and there. Could wring talk continue integrate about expense ClickDealer maybe like just to the acquisition, bit further are that little there opportunities are okay a Just to gained efficiencies as to it you seems a bit you going acquisition? there of out any things if

Joe Marinucci

business most to takeout. marketplace. acquisition focused overlap longer domestic They business, and our tremendous the the There was part. not really is for do on cost So, home The a growth business. that's an a mean, of the business opposed services over I have amount their term as in was which international

helping are, point, cost. is extent why an to we're main take from. the excites annualized And marketplace international presence media, business So, really most on others our their core current was where team to or international there this on that at here is more an focused is opportunity that that's going and domestically growth the of our customers efficient, then to basis And engaging was that's which on technology, the as services leverage what data, distribution the integrating come able look, grow enterprise an efficiency home to be assets, figures the network. nine have out our side, generally focus there to But us. is

closed we a days this little ago. just over But acquisition XX

early So, we're still days.

business. well integration the team, good momentum We're we're in underway. excited the seeing and Our is about

only However, being, got XXX we've a ways quite into here, than to less thing. go this days

David Marsh

marching Right. Understood. the and right, with well, All luck half guys, year forward. back keep good of the

Joe Marinucci

David. Thanks,

Operator

participation. Thank gentlemen, and session as Thank today's as does conclude you. question-and-answer This the well program. ladies you, for your

may Good You day. now disconnect.

Digital Media Solutions (DMSLQ) 14 Aug 232023 Q2 Earnings call transcript