Earnings call transcript Q2 2023

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Operator

Good afternoon, everyone, and welcome to SpringBig's Fiscal Year 2023 Second Quarter Earnings Conference Call.

I would now like to turn the call over to SpringBig's Investor Relations, Claire Bollettieri. Please go ahead.

Claire Bollettieri

Thank you. Hi, everyone, and thanks for joining our Q2 earnings conference call.

call and Jeff Paul the Founder our on Chairman; and Sykes, me today Harris, are CEO, Joining our CFO. should everyone now, have our to By earnings access announcement. Investor is website. on announcement our This also Relations

make forward-looking and over plans, time. may strategies These predictions During this expectations goals. call, statements, statements of business long-term on about based are change as including comments and outlook, our our which we'll today,

to in a the Our XX-K number risks materially actual results SEC including outlined could and XXXX. the risk with due factors XX, our differ filed uncertainties, March of on

certain Also context not during of GAAP this website on non-GAAP substitute Please call, additional financial financial be release non-GAAP metrics. to to our These we for are Relations as will on measures to a GAAP well Investor as results. discuss our refer for non-GAAP reconciliation a measures, operating our measures. key intended earnings our

entirety Relations be and webcast call this being from is finally, our on available audio Investor our few an in website in hours. And a www.investors.springbig.com, at replay its website will

With to the to turn call Jeff. like that, over I'd

Jeff Harris

and and thanks be with quarterly market are a company the the with progress that across again our and in the joining areas. be second everyone call. to we We making Thanks, Claire, had for earnings number solid to continue throughout teams conditions I quarter to continue challenging once our way impressed of are performing a

on key full-year provide will and for details business third guidance I our provide you quarter and the and Paul XXXX. you call, today's initiatives results, second During update on quarter

of of delivered to pleased report $X.X I we right Jumping results, into million, growth representing year-over-year. QX revenue XX% am that

trend we see tenet of weigh for concerns budgets discretionary. on macroeconomic growing and our existing a digital continue central continue spend, budget marketing remains platform, less a and maintaining Although somewhat consideration customers, to to whereby broader

by again second the in was in quarter XX% grew which year-on-year. subscription driven revenue, Growth QX

into visibility business, which results. vertical increases provides are predictability and a SaaS subscription-based primarily We

the recent We saw XXX key of cadence customers performance continued all quarter, in We of our metrics. quarters. strength across added maintaining new the

within XXX% range innovative to at revenue net offerings. the develop retention environment, rate remained we Our macro our continue and launch new and target product despite

are committed close. our driving While we top leverage goal we and to to in focused to execute our and invest are growing line, is of which during breakeven also tantalizingly now continuing continue towards XXXX, EBITDA

two business: our have retail brands in We segments our platforms. and primary

Our and program, engage customers. they how retail connect the instituting and to create their successful merchants approach loyalty manage data-driven platform digital with and set along provides they tool marketing to need with a a

brands brands ] campaigns, with last suited of in their and platform. of directly year, selling with during compared platform more benefiting we the uniquely motion X,XXX an consumers retail by XX% of the through Our brands, both excess increased have cannabis helps of through year, retailers and [ consumers XX directly and well influence. traffic and the brands, store awareness brand to easily first half retailer seen connecting We're increase the driving connect our

have repeatedly high-growth consumers. million our monetize between I about revenue present platform pillars a and retail and publicly first, initiatives our and revenue in talked in of a platforms; and year, we is that growth: June more second, powerful that our than and a smartphones effect the of we three XX retail locations company becoming the brands Since flywheel is the the our opportunities component over marketable predictability feel new that increases last a unique listed present key third, of and in fact stream; in network X,XXX leverage subscription to have

feedback front that our investments opportunity the us. to from our and our confident in for provide SpringBig. sound, and I'm growth capture our clients both positioned introduce base ever as reaffirming right with long-term the that meaningful to we making of that are offerings clients uniquely as to We're client strategy partners opportunities is

SpringBig We grow launch by subscribers. launch opportunity Subscriptions as a other Subscriptions clients consumers earn continue to special customer for in rewards, retail to our develop our loyalty and additional and their to innovative enables program, annual recent a of most or including VIP promotions bases, subscription, to loyalty and clients monthly SaaS-based return to by the offer perks enable offerings our to SpringBig. retain access VIP

having digital to with seeing offering contracts offerings, are conjunction we launched and having the few already profitability new time. revenue see already retail these growth was expanded as and with launched standpoint This June, SpringBig several for other program, and both interest our incorporate in and programs SpringBig clients over from and our communications this potential meaningful launched both operating in their subscription a We meaningful a VIP loyalty mature partners programs. VIP get from subscriber and

that cannabis to the the These alcohol, in As clients we clients growth payment ability we products current existing and offerings previous including loyalty are of take will also in given the going stores, sale. especially point discussed to redemption potential time the and present smoke markets offer newer time, in that with enable our fuel environment, we believe complement our they method expanding the but our to the significant combine initiatives beyond vape offerings. are stored to to calls, rewards macro developing consumers evolve, will with to at their are a of is confident

making progress breakeven who results over to detail, stated comment we the our current financial during through quarter second Paul, walk Before in I I year. hand are of the to our the do EBITDA want towards for will goal on excellent

a in EBITDA the of impact combination expense a $X.X growth loss initiatives, adjusted significant with was revenue the million and of expect QX losses of and QX. Our we during reduction reduction

to half fiscal the adjusted of positive For we year, expecting the EBITDA. second are generate

macro challenging industry-specific we the performance QX factors Overall, control business are managing for current Our and the encouraging. is and our our within realities. recognize efficiently

base. initiatives have strong subscription rich of We revenue revenue-generating pipeline a high-growth and a

over outlook. our to walk in With Paul, things through quarter that, to turn results will and I'd financial the Paul? for who discuss second detail greater like our

Paul Sykes

again and everyone for to thanks Jeff, Thank joining us. you,

a delivered solid company we as the the the second along adjusted move the EBITDA reduction further quarter with path to key in our profitability, towards we objective fiscal year. mentioned, in for continue current loss, during As a result

I quarter will start by on providing brief a of results the our moving for XXXX. balance our before of quarter overview guidance and second to third

by in million, year-over-year Our growth at QX $X.X revenue revenue of of subscription XX%. year-over-year, growth XX% came underpinned representing

half being SpringBig contracts, the of our business from last primarily XX% second revenue and SaaS is compared of auto-renewing a year. technology year-to-date vertical XX% in now first derived annual with quarter with

increase excess replace are with revenue percentage subscription this seen we and as larger both have predictable to continue quality. We more higher use that contracts

byproduct careful success expenditures of their in in used revenues converting in being the subscriptions, macro within also environment, clients and excess X%, into budget. reduced revenue managing Our of a more a current our by sign

reduced primarily XX%, revenue QX, XX% XX%, has this QX, increased XX% started year-over-year strongly. increased by Year-to-date a of which of has brands Although number QX, revenue timing year-over-year. which brands due by campaigns in grew to after and was strong has and the campaigns by

the and to of XX new strong brands added added customers annualized in new continues growth we with subscription QX, terms within installed line upgrading customer million through retail acquisition their revenue as in both expansion top the XXX subscription In on $X.X platform, customer million, by $X.X demand, revenue of as well driven subscriptions. annualized be and was further customers base. a Our

We discrete States with X,XXX platforms and ended use X,XXX in United in quarter are the the Canada. retail second across client installed and locations

despite the customer solid retention continue challenging see We to environment. macro

although Our than QX XXX% to consistent the lower revenue quarter, with year-ago the XXX%, last metric XXX% in net period. we rate this Recall, to rate moderate range. retention reported expect XXX% to was the the

products is we ongoing see our upsell drive existing Subscriptions platform, As to by we of and good an The opportunity a customers. SpringBig add functionality to recent launch with example. more

due million, gross $X.X margin was gross in with XX% improvement which higher total push in representing was XX% grew XXX increase margin our the ago. QX year in services, our yield year-on-year for almost The in profit of within profit including XX% to and is messaging basis year-on-year compared of year-over-year notifications growth volumes, in an XX%, quarter mix a points QX. Gross in

leverage focused while Total year-on-year time, operating our representing the the sequentially. a expenses we at same a growth. sustainable $X.X highly QX in XX% to for reduction our reduction Moving with investments improving X% remain operating business, on expenses, this million, balancing on and in were

to Sales, the cost marketing servicing rationalization in and Sales marketing due towards representing for by lower the quarter, expenses million were headcount. revenue. XX% measures $X.X XXXX, year-over-year expenses employee XX% resulting of end decreased total of and

contractors offshore development associated costs. a to software expenses also the savings the and with These of representing million revenue. attributable quarter, in $X.X with XX% expenses in lower reduction year-over-year use decreased the XX% of being were Technology employee expenses and

XX% for the year, this in a year-over-year reduction. with of was total revenue quarter representing expense quarter million, is same the $X.X expense the compensation for million compared G&A in primary was last the million $X.X The the and and cause XX% $X stock quarter, reduction.

expense, the to impact with stock non-cash company. of full the by our being administrative and incurring public compensation a general Excluding increased due expense a X% associated additional quarter expenses

equates as to EBITDA, most closely flow. this believe adjusted is we operating metric earnings cash key Our

$X.X $X.X the loss QX of Adjusted is margin EBITDA million improvement year. in million $X.X sequentially adjusted an represents XX%. second lower EBITDA and QX loss than loss million, EBITDA in reported an The was loss representing last the adjusted with quarter the EBITDA in significantly negative adjusted adjusted EBITDA compared

our fiscal period during compared months first is of the the loss year, year. EBITDA million last with For the adjusted six $X.X same million, $X.X

was issuance note flow million in the in of at cash end cash our the the of year comprising repayment Free $X May equity of from received million and and negative operations, negative exercise stock the the options. million, for million convertible of stock fiscal of from of our $X.X half first $X.X completed $X.X raise used

for to of guidance regard turn I now I include our updated outlook, would the usual our to With shall year. our balance caveats. the

industry-specific coupled general experience Our to clients continue with spending in environment. by a discretionary given the headwinds, macro consumers, slowdown

long-term these current the these transitory have prudently the industry, and think we considered continue do we to rate Although issues guidance. in of as trends reflect building factors not the view our intrinsic growth

million. For the million to of XXXX, expect fiscal in we the quarter third total of range $X.X revenue $X.X

the We adjusted $X.X expect XXXX. for in to of $X.X range loss the quarter third of EBITDA million an million

EBITDA The of adjusted full-year positive is of half EBITDA of revenue we a generate loss range XXXX, implying to $X.X For total $XX year. year year-on-year and midpoint, of million to expect second loss the we adjusted in fiscal of the million, million. expect the $X.X first the that implication EBITDA adjusted XX% following for EBITDA million, $XX a for growth million an to our guidance adjusted at $X.X half the full

like With that, Operator, please for I would to it for up Q&A. questions. open poll

Operator

the from line Scott coming [Operator Fortune question ROTH we of Instructions] First, with have a MKM.

Your line is open.

Scott Fortune

good is XX% the guidance in far $XX growth what's Real new a and quick thanks middle initiatives? and question. for afternoon spend, market your range, follow-up Yes, million year-over-year new implied implied consumer million cannabis here. and again, What on to the now the $XX of guidance 'XX I challenging but right as the -- know it's here, as using

that? going the to the in but and that the to I improve of of improvement guidance the that know sense operating just time savings there continue kind of and and is that's out, side give that a to leverage, on from play cost of expense to savings and some EBITDA efficiencies and potentially guidance just take additional the some initiations what's sense

Paul Sykes

Paul Hey thanks Thanks Scott. It's question. the for Sykes.

terms the the moment. around there's of feel guidance, In just of revenue at uncertainty lot a we

half full in the for the XX% we've year, year. guidance of The of year-on-year. us gives So first the grown XX% the midpoint

quarter with as fourth any the there. appreciate, retail Obviously, important being business, of the all the the events in largest, -- that is year, you'll particularly quarter holiday most fourth the quarter happen typically

side, anything just and quo. on changes from status current assuming we want to the So cautious the not be we're

and Subscriptions momentum. In the you say new recently forward. think as while as which is we one terms in recently potentially a call, to launched SpringBig, is by a significant moving of initiative rightly, initiatives, take crucial very that we said they we really We've quite get launched --

for monthly, consumers a accumulate obviously, time individual consumers [ph] programs, now pay subscribe to subscriptions. got we've of it's -- those they and development that, take mass although going clients live the in with But subscription, to

impact revenue through revenue revenue be in impact A XXXX, So primarily XXXX. that. in slight impact to the the we see but coming is going of

our yes, the costs In terms of guidance, manage EBITDA to continue we efficiently.

We obviously to QX our a and continue that well. rationalizations and as got in few of those in in effect we've make some QX into a come are full to quarter base, expense terms through going of

Scott Fortune

And of new kind of XXX follow-up time those coming then balance congrats, are a frame. you retailers, then, larger And Were a of you sheet these new obviously, smaller that base -- existing customers a during from this address of detail. you to adds, the the look but MSOs? appreciate this states? -- I new there's cannabis or Thanks. coming. at had ones, going for customers, the the standpoint, velocity when challenging customer And into deeper especially sales states from pressure number lot kind

update us smaller customers. of the side on kind churning for these And

Just a new larger focusing clients on the base adjusting little more you're upgrade and the color clients on? that towards

Paul Sykes

Yes.

incremental opposed revenue. into upgrades, large quarter, in contributed clients, million reflected $X.X clients, XXX done, upgrades, contributed revenue, the incremental where So that's we've XX to second we're definitely they and in going and annual in of as deeper $XXX,XXX the

relatively They to their database platform. and seeing. upgrade quickly, how then, we're in a and customers and typically they a start low loyalty So, that platform. build that the we using They base. on the enter used clients what get is They indicates, fairly way,

So good country. a across we're say the any there's new others. mix where seeing we're more than particular board. getting across wins It's I client states wouldn't the

new clients. are Some

SpringBig, that Some with are changes deeper coming larger and stuff and them, we're and going vendor MSOs. then we're relationship and upgrading to our certainly the in they're expanding and like

but Scott, there. it's terms given terms the quite number churn of moment. the the the spectrum end challenges, is huge, terms, at churn, not at retailers, of reasonable In the there conditions of and of your with a clients, particularly in question dollar definitely, market of this churn on amount In happening smaller obviously, lower

Scott Fortune

to it and adding obviously, 'XX, customers. of to continue Appreciate XXX you'll out assume, I that customers be from within looking range to XX anywhere

licenses, deeper, launch of is, new kind dig store come question last into the customer 'XX. maybe Subscriptions As you recent states using to that will But it in really by on seems, just new start base, can of Jeff, SpringBig? board

That potential consumer kind you're base loyalty, it Who and to? kind that of around that of did business to opportunity -- that, that more around you launch metrics opportunity, from just excited standpoint? drive

Paul Sykes

the Yes. are which are retail The most toll get and subscription, additional by going their more going buy-in in exists which for many exciting who pay perks, customers clients annual greater a dollar and that a from will in are can get or them spending is by leverage status, subscription these the Subscriptions SpringBig to additional retailer's retail our another even about from customers thing an result it's sectors, on loyal basis, like monthly them they discounts, perspective, that to VIP store. ideally will give and dollars in because

up. We already clients the signed different launched got XXX first launch the lag and a weeks, programs the little got in to getting signed and we've between actually about we've already two already sign-up June, in We've couple it there's consumers retail of bit Obviously, up late have about program got and of eight live. live only a program.

to month think have from encouraging. significant it's I the and are months signs market or time take the So in a the our on revenues. incredibly impact traction first But going to two get

Scott Fortune

positive. I to appreciate to and the congrats pathway color, get your on EBITDA

Paul Sykes

Thank you, Scott.

Operator

Thank you. at no will see time. questions any And I for now Paul this the in Sykes Mr. call closing queue back further remarks. over turn to I

Paul Sykes

for your And for attending Thank support SpringBig. continuing thank of to you. today's call everyone and you

look good progress call progress, good to making quarter. to our we're particularly and very path this able evening. profitability think you I towards forward next Thank along and I on in much our you, update being continuing

Operator

you conference our participation. conclude does your today. that gentlemen, Thank for for and Ladies

You may now disconnect.

SpringBig (SBIG) 10 Aug 232023 Q2 Earnings call transcript