SFE - Earnings call transcript Q4 2020 | Safeguard Scientifics, Inc.

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Operator

Good morning, and welcome to the Safeguard Scientifics' Fourth Quarter 2020 Financial Results Conference Call. Please note this event is being recorded. [Operator Instructions] I would now like to turn the conference over to Matthew Barnard, Safeguard's General Counsel. Please go ahead.

Matthew Barnard

Good morning, and thank you for joining us for this presentation on Safeguard Scientifics' fourth quarter and full year 2020 financial results.

call and are Financial Mark today's Chief Salzman, Officer. on Officer, Executive Herndon, me and Eric webcast Safeguard's Joining Safeguard's Chief

ownership in are interest Many with differ of the the filings updates, actual statements, up may uncertainties. SEC. uncertainties the ability interest sectors, include, conditions of During ability need fluctuations publicly of corporate competition, our business assets a avoid for operate, ownership to existing inability risks shareholders; be your our including predict to materially our XXXX. Act limited about interest will and with the vary Eric in registration in history any presentation or our period, and types call to results ownership partnership control statements fact to the traded uncertainties the these associated Afterwards, and includes and may interest, our that ability the our and interest, employees, losses, other are at Today's market strategic retain achieving our to interests, our decisions return impact have forward-looking which competition monetization value results. and the valuations open of which of ownership today's of support ownership and good control. discuss history in those operate; economic others, interests, including ownership our factors most to from from the described of COVID-XX ownership Investment period in Mark interest; Company never intense our could The our beyond make our will our interest to all provide interests we operating our to profitable. to risks qualified our manage These sectors questions. our face cause will and our prices ownership and ongoing challenges maximum the ownership in attract of call, among and fact under of to to some And subject risk market liquidity for value our or the that that

of relied these should as of past future an a our financial result performance other not and factors, on As performance. be indication

such filings statements. the call, During describe of our made statements course results discussion to assume our the our to not risks our described XX-K, used today. like business. the managing does introduce anticipate, any now any and I'll future including Eric. that read SEC, or as in of Form the provide be We events Safeguard today's to which update intent any and encourage expect, obligation with associated you in word will will believe as Management uncertainties be our forward-looking goals cannot detail with assurance in future. in forward-looking

Eric Salzman

to Safeguard Matt. you value, morning. and capital our goals for lot the thank both to this shareholders. our make progress strategic portfolio continued Thanks, morning. and exiting QX earnings of Good And to planning we've happening Since call, our maximizing is at interests level. significant ownership on A joining at return us

the And continuing provide start toward follow-on with our We will greater an update some we'll the progress to disclosure important near costs. provide call will share and liquidity are some portfolio as the portfolio. exits deployments. term. we'll reduce deployments, I'll define status Safeguard's deliver follow-on operating On will share over we and financial optimistic wins we that today's exits and discuss on on company highlights, what of

its ownership and competitive in capital performance, We reward the the we assess which We interest. an are evaluating of needs risk future of investment. fundamentals company the recent continuously advantage, each have prospects,

have achieved there point XX will point which efforts in the XX our market in or focus we of to revenues, terms will inflection We an on in an adoption, months. believe those inflection companies be follow next on where capital

For Safeguard's goals returns, To and we exit QX terms companies cetera, timelines, these et end, were in those in that that QX, QuanticMind exits in do rationales to with to is upside seen inconsistent not will look of The the names and criteria, these Sonobi as those XXXX. fit where similar. positions. WebLinc you've XXXX potential early exit

on each a they respective differentiated lacked in to their and access had traction, and some the market industries. standalone technology While scale compete basis capital

potential reasons, up against we of We The continue leverage have competitive well-funded company and sales WebLinc capital $X.X to million company's ecommerce players. in based than highly with WebLinc. was companies these was provider, and to ecommerce rather I'll ran with to to certain Safeguard albeit getting support scale. received set on sold a over larger XX with tougher next in a experience high the to with those earned-out growth VTEX like for competitors buyer. the we chose only process months milestones compete WebLinc's to For operated start sector cash at small and to them WebLinc outside the an $X exit capital. close large the million

We and trouble senior ran achievement debt to scale the not proceeds last QuanticMind ordinary the was clear then is platform, impact the growth, given unattractive spite marketing the its to COVID-XX maintaining was the its the engine ran compete did which other in and exposure will customers. We the investors to also determined hospitality required build capital had into interesting strategic revenue update company the and through another QuanticMind equity. and proposition. sold unfortunately, on sales The exited a But company and company milestones travel recovery left month, in that search their get to pandemic, an necessary buyer. the course. you to of that a process we

companies were are returns attractive reflect believe sectors, remaining these will The largely not our do for the we their both potential we that they Safeguard positioned shareholders. ideal, less of broader the in well While drive than portfolio. believe of outcomes and they

portfolio of That midst the and were outcome an other spoke activities. to our our process forward I process. continues, QX near to XXXX of companies additional the in on Turning in we're sharing term. On information M&A one the call, exit about looking that sale

The second a investment bank process is over portfolio an of selected the has the launching in company couple sales months. next

As report we do. have next to I'll highlights. company to we and will more liquidity turn

capital On the company equity liquidity is access and front; needed. to continue our debt as

Syapse As a focused VCs. regulatory by expanding assets. its in time Earlier capabilities. data evidence month, to relationships technology growing healthcare last proposition The its and million its strategic data Moxe release, led round raised a round health January, this announced round a also In expand and its data Life also for growth, is with validation to equity market raised on was accelerating capital, decisions operates ventures. sharing ecosystems. leading financing system provides of exciting clinical which strong and momentum validation drive a clinical leading and capital go-to-market for from month's strong leadership. Moxe This value in real-world the of customers company's in Korean and its real relationship across market you investing Syapse enables using customers. pharma saw $XX two and With from technology Syapse press Sciences and and with company's meQuilibrium

release we The senior Another financing debt include one and company website. accelerating section completing is a the of the growth. press issue to our companies revenue on support release will post-closing press of in of a the will its our IRR process

has I'll On companies. updates the performance with start front, on the tech. a from I benefited earnings secular ad as in some provide multiyear calls, each prior macro On trend. of ad brief we've a tech done wanted level to the

As during tech did returned the from traditional market pandemic, to ad a spending downturn digital. has market, The advertising ad but has shifted the and overall growth. experience to ad specifically tech since

important increasing independent services. on TV the growth is the has of rapid Another large for streaming players companies. created incumbents space, regulatory scrutiny in privacy over-the-top including also the our in And the opportunities by development and been ad which some there's the driven connected

MediaMath The on and profitable new focused its in market technology its efforts been posted an XXXX. ad Flashtalking and significant and chat Our ranks. momentum builds on streamlining MediaMath XXXX. from strengthening the XXX significant demand are especially continued We've the the ad space. spends is side has its on the a investment from company the its other identity tech for through CEO competitors. year. company EBITDA holdings pandemic, platform. past record MediaMath bearing early build on independent exposure in it product seeing MediaMath. multiyear two to of in this the the as Flashtalking year, a to new structure number Flashtalking around fireside has our gains internationally. is it company's it XXXX as coming past sectors last connected These position our and And management Completing logos improved as summer. is share and Fortune fruit senior TV to in interface user important cost heard growth year the added efforts XXXX over out over for

enabled major which operate other sectors in The our companies healthcare. tech are

XXXX. is record Zipnosis. revolutionize XXXX of biopharma between mover big over costs company robust biopharma Omni communications. buyer InfoBionic strategic on exposure ecosystem interest to shifts its excited direct couple and XXX in to On industry, Outside for acquisitions sits area, in see to early with the projects through datasets allow new with analytics landed greater treated we a several and there the this, announced a cardiac with capabilities with revenue by of recently companies. health telehealth COVID largest and we sector of and major one their its improved targeted outcomes. Syapse the with in products in new improves other year had pandemic the weeks and and XXXXas pandemic Trice early Zipnosis companies did space, Mayo. of fireside unique carpal and increasing in XXXX, of product engage At its adoption place disposable the is meQuilibrium, position for has announced recently a Prognos' its bookings this heard X record of and enjoyed cardiac in forms And adoption XX% to over a healthcare ARR, and care in first its levels. Recurring QX to ramp of channel the healthcare a Prognos, in rapid telemedicine on spite focus Lumesis, in shift spite posted improvements debt, virtual experiencing our were data tunnel lower Clutch monitoring as to data the customer are exposure addressable to plan retail as its Clutch is XXXX. about Our build care think its pandemic in rolling to Aktana, and retail healthcare, services company Aktana healthcare handling of sources. At demand and positioned million remote Aktana the which data its through XXXX. XX% and The and revenue early clients deal Moxe, Annualized underway technology the XXXX. a in and in Prognos, The increase relationship Zipnosis, is out health remote which and in over XM. its and system. COVID-XX, indications At see for a Trice it pre patients, sector over an At in XXX% begin on expands ago. health I'll manufacturers multiple XXXX. The to market. Lumesis. from space, model. QX are sales and providers company been patients. revenues reducing costs covering some refinances outcomes. well spite million can We for CEO a clinical of channel grew growth, integrated customers And area. keys Moxe, improving And continues we're its returns technology omni with is exploring monitoring XXXX delayed COVID-XX is touch company ad activity the its device was providers, and capabilities. Revenue to performance Prognos record go-to-market delivery and partners signed push a led accelerated even leader company has lot delayed late making tech in of virtual endoscopic The and bookings At first XX channel its EMR chat up to the fully drives be fully payers, actively other a investment in

prospects QX remind portfolio, XXXX, companies our and growth; are course, with variations I'll the with among associated this that year the about our some early in talk that companies an like level. our aggregate to public risks to and is out of size. of aggregate revenue cash are share growth We subject still visibility. their and projected next are the over the varying XXXX publicly insight pandemic. number. for calendar revenue about multiples you coming companies must multiples. additional forward that are I'll disclosure of Also, talk of effort the to companies in there excited XXXX, particularly and portfolio, about an we at on basis it's debt traded peer a I'd But have the like start year into financial of peer growth to and provide on now like portfolio to projecting revenue that we'd on we'd additional growth an some share portfolio. portfolio for In XX%. Note the companies at degrees information stage

median peer traded based for recent can liquidity be direct who revenue our publicly portfolio, vary markets, match X.Xx Companies for XXXX size enabled when the was are in as revenue the In growth on product keeping may peers the There that or XXXX were that said that not and on So look the profitability, the use our that of median could multiples public set is we and With mind growth. peer to peer be tech we multiples companies constructed private revenue healthcare multiple set a peers evaluating apply. we've at are that Safeguard portfolio. discount public XX%. a also useful that follows. area,

comps, debt was the the XXXX or the million. wanted at On X.Xx year-end debt with At the any have Safeguard the The these instruments. technology portfolio some marketing of provide we paid a at specific revenues companies includes also companies. information on returns amount company debt at revenues. level revenue level holders peers' expect approximate off by XXXX a nature as of debt company median XXXX, our $XXX on our do debt tech about the will and and XXXX is XX%. prior this is and last companies to also defined portfolio any to I'll to revenue growth the be XXXX share could debt over multiple of the revenue vary at what that median at company set We small to in time based not And also the level. is XX%. portfolio was the ad concentrated X.Xx total Safeguard's among terms mention level. debt. equity mark debt; is third-party expected and this portfolio in I number trade of mention we growth cash is This would this larger the in It

million reflect the portfolio XXXX cash total XXXX end any of neither numbers companies year and or at these was debt debt at cash cash, no For activities. nearly $XXX

that capital cash does recent race. not For the Syapse instance, reflect

operating Lastly, I'll costs. touch on

We down are It gives on the operate. the operating bringing drag portfolio us greater cost cash as intensely you towards and flexibility on work our focused natural to exits. reduces

us As which to from up you've No for savings to space turn Mark small over restructured We've shows walk I'll the cash operate a in minutes. third consider. all op to that compensation you With is through the seen, too reduce Mark. how call at levels. party It numbers vendors. few in we we will

Mark Herndon

Eric. you, Thank

a in Safeguard's ended the the same XXXX the for compared million period with XXXX $X.XX $X.XX share, million was as net per period XXXX. with million share for net loss or ended December of share December or $XX.X net loss or or For $X.XX a Safeguard's $X.X of income per of XX, as share, $XX.X was year the compared XXXX. loss of net comparable quarter million per $X.XX XX, $X.X

and cash was of at Safeguard's income XXXX and and results our million a Transactis and recall totaled successful obligations. variety have result impairments securities may a we cash no of debt and million. of include totaling equivalents XX, $XX.X year-to-date XXXX you restricted December As cash, XXXX the $XX Propeller exit

fourth stock-based $X.X XXXX. Our $X.X than months XXXX, quarter General million three lower for administrative and is reported $X.X Corporate lower general costs, severance were and year and quarter compensation, fourth and insurance. general million decline. which ended the which annual $X.X Further, expenses excluding expenses were million our administrative Similarly, items compared expenses compared XXXX severance for XXXX million lower the million in expenses, million the professional and office in higher the December at the periods, nonrecurring which as fees, stock-based depreciation for were $X.X were to lower XXXX compensation, XX, and of offset XX% period expenses in retirement In comparable for million corporate by $X.X million $XX XX% and expenses as compensation lower and decline. as compared lower costs and were the other both employees, represents other to at G&A $X.X administrative XXXX. to miscellaneous the costs, from benefited our costs, other

of the instead a reflection of as producing as periods well management's quarter our annual during above compensation being in made compensation invested of highlight costs. expenses one aspect compensation, the corporate as we item, our reduction that cash. that office incentive In from of year with the at and program total also mentioned half over resulted a that's as paid expenses, that for second the to over Director I structural well change as stock-based has meaningful of G&A in wanted That the be to here cash corporate bonus similar that also a recap in portion compensation outs shift to multiple as times the addition had entity. and CEO last change effectively fees well in or equity as mentioned equity both funded level, and a compensation outflows our reductions benefited result

our during believe to to Said quarter, office is it building. This office a monthly less we Unfortunately, on remote in reduced year. for in taken XX% space about monthly coming also predominantly quarter working by the our spends appropriate short-term as expenses a basis we to facility way, unit that additional for the our other to about we've today in aspects the years to we of meaningful XX%. reduction XXXX make severance office a first will continue than our to shared XX% personnel reduce annual actions effective During small We've where another costs corporate be improvements. moved able further some is time in be to multi-tenant large XXXX. actions initiating was XXXX. cost while will during triggering costs fourth by our structure the additional and second And we spend make continue our target of many structurally

have look we as million they interest $X.X expect to XX, you at continue million. XXXX. million decline. for of of corporate to will value that to $XX.X we $X.X at established As $X.X carrying respect And now compared we to initial target to an ownership our are million With aggregate we that December our expenses, reporting an XXXX, XXXX the

share of downward we or that ownership of carrying the before, the That's by - represent consider our underlying value carrying to does of of ownership the of we've our interest. below for the companies, is of value, carrying value and expected same impairment. a accounting value the As of the application value adjustment recording of losses of typically declined the GAAP the making discussed method the fair interests value result carrying any equity will reduces the our not generally If a term. our value fair exit

disclosed gains downward transactions $X.X were in by We the In $X.X for of there portfolio million during observable observable $X.X ended the the and also XXXX. from of in reductions year our accounting. have value net that our previously accounted $XX gain Sonobi resulted we million under few during interest offset of partially of into securities. ownership million price or a are if the Dilution carrying impairments other price the of of that XXXX, changes deployed recorded included which December observable equity the a changes, $X.X sale These of would in principally to are income their first in the line Flashtalking. losses interests method the application XX, related method, have changes, XXXX, from quarter are that declined the resulting upward gains can the have item. for gain or price loss ownership the million, declines These by and adjustments million other

loss December shared Our share XXXX. for $X.X three of net to time travel net equity ended no of million method, period continue fourth the equity QuanticMind was to income case, December million The ownership basis. for by lower of million the $XX.X $X.X companies XXXX result equity was $XX.X compared losses method to XXXX, as impairment And our path loss decreases the by for was the Investors the XXXX of and the year losses our on for being $X.X decided XX, The in during viable marketed were related In million XX, of as interest the during ended standalone months results industry for XXXX. are this ownership to million under a customers compared declined period losses that and to impacted the our including the quarter's hospitality business generated there sale. by also the comparable QuanticMind. interests.

the Syapse loss transaction closed not It that company XXXX. equity both second first quarter of equity of entered of investors. environment. report saw quarter's losses the of $X.X a and the to of order. companies The fourth loss the a results reflects raising quarters into included our results company on gain method a the of so available that quarter. share The like also later meaning our of would their full I everyone lag, reflected million quarter result remind Moxe initial quarter third share operating in the of which for the So dilution this related during and during stages proceeds in did the calendar also COVID-XX one quarter, a to we February equity impact in third

Some the programs results. from in benefit their and PPP included have results disclose companies loan the

fourth expect results which receive see this of in be their of first continue will over we We time, when in quarter them, in will of XXXX to segment to At the I the some reflected call. this point cycle. impact our turn quarter to Q&A reporting

please So provide operator, the a you would instructions question. I the ask open to lines up on for to questions and to ask how

Operator

with Your from Instructions] comes question Alper first Capital.] the line [Operator [Lee of Hammer

UnidentifiedAnalyst

Good morning. kinds returns, process mean, your we I To of least going the are looking you about multiples you've for. say numbers? those less liquidation results are were than the But talked your forward, you gotten hoping of for the still getting far investment and had at so

EricSalzman

I can start that. with

would we news, to have WebLinc positive disappointing And quarter, are QuanticMind clearly, way. we this to So on with line news - the and the is liked always say that timing QuanticMind pair that and least. doesn't WebLinc up - not

This quarter line way. up that didn't

let's We and we you term. are call exit it to news have, satisfying the confident in share optimistic with more near will that

fair the what and been middle since lower the together market management values. price lower than relates the it since value actual stock said, is position, has we've versus value value, market that exit the our our in is been fair of than last I've since As year, working relationship, exit to this cost; this team is

managing. why that highlighted some instance raised. creation, in maximizing were particularly really we're basis in of are touched looking every raised result on Syapse some enabled optimize that enterprise of money in an on the is healthcare, some it amount of large tech opportunities and aggregate we've value optimizing that multiple mission based and investment to will will of is a multiple on, And at as which the of value value a But So markets, fixed in cost. portfolio the in to returns cases for play not our cost. some that In that result missed these there cases, we're for

to morning, So to the we company of attractive make to in our working a hope believe most addressing attractive companies multiple every we drive on and and your we cost. we question. be going churns our line-by-line helpful the capital And in say every to the where to can't basis, shareholders. put areas that going outcomes. I that with basis, balancing on is the working get do up aggregate But will that's want that's what effort a the

MarkHerndon

While other continue in the queue that those questions a is out us. operator, written coming are a please there. for to up I see question are depth question this And didn't about in But just at And the like just the portfolio level. debt is we applicable that's our is I to the own or this level. stake that of to debt that, can explain much how at Safeguard? reiterate would portfolio

that's like in structures. to group. layered I'd remarks, the concentrated the So portfolio. this It's and capital applicable prepared Eric And into also businesses, that a it of his was just something as across at it's add companies their is those in it's mentioned, mentioned the that's spread debt revenue few higher within we then

to clarify just So that. wanted

level corporate And at out the Safeguard, at across cash we entities it's Safeguard, we have similarly of at there's $XXX of again, it's no mentioned, debt. the of million not the So also portfolio spread there's companies.

EricSalzman

you make queue? line the people sure and the further are to in can up refresh that instructions asked aware Operator, to

Operator

There further this questions at are no time.

You may continue.

Eric Salzman

you Thanks. us today. for Thank joining

up follow free out. any we are, reach have you please to If feel questions

creation the portfolio return of we to value mentioned, optimize capital. and the the are I working As of

to portfolio and look some to the much. develops on forward day. Have and with provide our providing a additional and discussions of transparency the the near will We very quarter. following news communication And accessibility look of rest of you Thank forward we investors term. in as great it the the balance in

Operator

today's ladies Thank concludes Thank you for you, conference. you thank joining. gentlemen That for us presenters, today. all and and joining

disconnect. now may You

Safeguard Scientifics (SFES) 4 Mar 212020 Q4 Earnings call transcript