Q4 2019 Earnings Call

Ladies and gentlemen, today's conference scheduled to begin shortly these computer standby thank for your patience.

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Ladies and I think its standing by welcome to the cartilage fourth quarter and four years 2019 financial results Conference call.

At this time, all participants are in listen only mode.

After the speaker presentation that would be a question answer session.

It's a question on assess your need to press star one of your Touchtone telephone.

Please be advised today's conference is being recorded.

I would now what kind of concept you host for today Mr. Curtis Palmer. Please go ahead.

Good evening and welcome to Karlix fourth quarter and for your 20, Nike financial results call before we begin let me remind everyone that today's discussion will contain forward looking statements based on our current assumptions expectations and beliefs.

Including first quarter 2020 financial guidance for your 2020 financial outlook executive changes future growth of financial measures. The rollout of Wells Fargo grossing financial institution monthly active users were endpoint and may use in 2020 expansion into new verticals number purchase transaction.

Using United States. The addition of marketers and merger spend in 2020 impacted investments on driving revenue and margin growth achievement of future goals. The evolution of our platform to a highly automated platform and our expectations regarding 2021 ARPU levels.

A discussion of the specific risk factors that could cause our actual results to differ materially from today's discussion. Please refer to the risk factor section of the company's 10-K for the year ended December 31st 29 team that we filed earlier today and in subsequent periodic reports that we filed with the Securities and Exchange Commission.

Also during this call we will discuss non-GAAP measures of our performance gap financial reconciliations and supplemental financial information are provided in the press release issued today and the 8-K that we filed with the FCC today today's call is available via webcast. A replay will be available for two weeks you can find all the information I just described.

On the Investor Relations section of Karlix Web site. Please.

Please note that a supplemental presentation to our fourth quarter and for your 2019 result has also been posted to our Investor Relations website.

Joining us on the call today, it's called literature leadership team, including CEO and co founder Scott Grimes C. O <unk> co founder Lynn <unk>, CFO, David Evans, and that's VP and controller and descriptions.

Following their prepared remarks, well open the call to your questions with that let me turn the call over to Scott crimes, Paralytic, CEO and co founder Scott.

Thanks Kurt.

Thank you to everyone for joining us on our fourth quarter and for your 2019 earnings Conference call.

29 team was a strong year for Cardtronics.

I'm proud of what our colleagues have accomplished not more confident than ever in our ability to achieve our goal was going forward.

I'm pleased to announce it who delivered fourth quarter results, which exceeded all key metrics from the guidance in Q3 earnings call it or consistent women are results we delivered in January.

Some of the highlights.

Total billings for the fourth quarter was $100.9 million, an increase of 44% year over year.

Total revenue, which is equal to belief net consumer incentives was $69.3 million up 45%.

And adjusted contribution was $31 billion growing 40% year over year.

And we generated adjusted EBITDA positive $6.9 billion.

In the fourth quarter, we can teach rode the reach of our platform. We restart what's the average impart you maybe to 133.4 billion up 60% from Q4 2018.

We continue to expect to reach 150 million if I am at you and the first happened this year.

And at that point, we see in analyzed roughly one out of every to purchase transactions you there.

We believe the skill places us on equal footing with other major U.S. advertising platforms provide highly differentiated solution for mark.

Marketers continue to adopt an expanded use of our platform.

Our increasingly confident in our ability to realize our 2018 RP levels by the end up 2021.

In addition to announcing our financial results today, we're announcing several senior level executive changes that I have made it positioned the company will teach them success.

We have noticed substantial business and are moving towards the next phase of growth I basketball, where most talented senior leaders take a news in marketable homes to help us air and scale.

Effective may 15, 2020, my co founder then they'll be will assumed the role of CEO.

We will become the executive chairman and our current chairman John Balan will become the lead independent director.

12 years ago, then and I founded the company and they've taken this amazing journey together.

Over the past he or she is increasingly taking on additional responsibility.

I truly believe that she is the right leader to drive our next wave a growth as we continue to realize the value of the knee unique platform we have built.

Well continue to be involved with the company focusing on strategy in intubation and most importantly in any way I can't.

Additionally, I've asked several other senior leaders in the organization to take a new roles to build our leadership capacity going forward, David Evans will move into newly created role as chief administrative officer overseeing key corporate functions in driving critical cross functional change four years ago, David stepped into the CFO role brought us public indeed.

An exceptional job preparedness to be high performing public company.

I now want is energy and intellect focused an important processes and capabilities, we will need as much larger company.

Andy Christiansen, our SVP and controller will become Chief Financial Officer, Andy It's been our controller for more than five years and was also hugely instrumental in bringing card that's public and delivering results. Since then.

Of course, David we worked closely with Andy to ensure a smooth transition.

These announcements today foreign lines. The transit transition that has been underway for some time is part of the board's long term succession plan it.

These moves along with a number of senior hires in sales and product over the past few quarters card lakes is never had such great executive bench strength.

I'm confident in our plans in the field. These moves best position carbon Ics to execute against significant opportunities that we see in the future.

I'll now hand, the call over to land to provide greater detail on a recent accomplishments and our initiatives for 2020 men.

Thanks, Scott before I start I'd like to Protex I did I am about the teacher cardiac and I look forward to assuming the role as CEO. After the Q1 2020 earnings call.

Graduations, just got David and Andy on her new role. These moves further cements strong leadership team it hardly there and I'm thrilled to grow the company with them and artist to talented leaders.

For today I'd like to highlight a few success story since the last earnings call and provide an update on some of our 2020 initiatives.

We launched Wells Fargo, Q4, 2019, and have completed the rollout through 35% of their customers. We expect the wells Fargo launch to continue into say this into the first half 2020.

Now I would like to discuss our four key long term priorities to drive future success.

First it increased the number of marketers, we kind of course, when a client and to increase the amount that was marketer spend on our platform in 2019, we had a 21% increasing the number of marketers with more than 1 million of filling when compared to 28.

These results reaffirm our belief that we will see increased spend for 2020 marketers we understand the attack.

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Second is to expansion, new verticals, including E Com travel and entertainment grocery and luxury in 29 T.. We added 30 net new advertisers in our growth.

Also made significant investments in our sales team, including hiring Ross Mcnabb and several other senior sales.

Third as you continue evolving coarse litter platform, we are making a multiyear investment to move to a highly automated platform that reduces buying friction extends to third parties that supports richer media spend another area of an investment and much like our sales team, we brought on numerous hires and leadership position, including Michael Ackerman.

Our new chief product and strategy I'll.

We're also extending our platforms reach beyond bank in the U.K.. We've recently launched a pilot Sainsburys Dexter loyalty program.

He opened baking <unk>, you're analyzing customer purchases you break targeted cashback offers naturist digital channel.

While early results are promising and we will update you in future quarters on the implications UK and other international Mark.

And finally airports priorities continue to demonstrate operating leverage in the business once you've already made for over 200 million.

With the addition of Neutrolin on her leadership team solid hires there for each of our company. We spent the last few months evaluating couponing or strategy to be sure. We have the right team and go forward market.

As a result, I feel confident we're positioned incredibly well execute against furnished as we remain focused on strong topline and margin growth over the long term.

With that I'll turn it over to state.

Thanks Lynn.

First I want to say congratulations to land, Scott and Andy on her new role I've worked directly with Sandy for a number of years. He's the right see I spoke with this next phase of broke workloads personally I'm excited to begin my new role and I look forward to helping.

Realized.

And this new capacity alongside our other leaders.

Now onto the results as Scott mentioned, we delivered excellent fourth quarter and annual results that exceeded our prior guidance I want to highlight that in the fourth quarter, we saw true incremental budget increases outpacing the pull forward of budgets we saw in Q3.

This acceleration on the back half of the year aligns with our comments on guidance beginning of 2019.

In addition to our results we're confident that we won't reach our long term operational and financial goals I'll begin by commenting on our fourth quarter, an annual results and then discuss Q1 2020 guidance and our approach to the full year 2020 financial outlook.

Total billings, which is the gross amount billed to marketers inclusive of the consumer incentive for the fourth quarter increased 44% year over year to $100.9 million total billings for the year worth $316.1 billion up 44% year over year.

Total revenue for the fourth quarter was $69.3 million, representing 45% year over year growth over the fourth quarter 2080.

Our U.S. revenue was up 50% year over year in Q4, and our UK revenue rose 15% for the full year total revenue was $210.4 million, an increase of 40% over 2080.

Our fourth quarter, 2019, ARPU, but 52 cents down 9% from 57 cents in the fourth quarter of 80, primarily reflecting the impact the chase and Wells Fargo wants it we'd like to note that ARPU as increase sequentially for three straight quarters supposed to chase long, but we'll likely experienced some pressure in 2020 due due to the wells Fargo watch.

And resulting in make your gross.

Proceeds associated topline growth.

Full year 2019, ARPU was $1.72 cents compared to $2 and 37 in 2018.

Total adjusted contribution was $31 million in the fourth quarter of 2019 up from $22.1 million in the fourth quarter of 2018.

For the full year 2019, adjusted contribution was $95.2 billion up from $69.5 million in 2080.

Adjusted EBITDA was a positive $6.9 billion in the fourth quarter 29, keep compared to a positive $308000 in the fourth quarter up 28.

Full year 2019, our positive adjusted EBITDA was 6.1 million dollar improvement from a negative $6.6 million adjusted EBITDA in 2018.

Our strong adjusted EBITDA improvement in the second half of 2019 is reflective of the operating leverage in our business model as noted in prior quarters, we expect to see the benefits of operating leverage on our profitability before but we will also continue to make strategic investments in the business to take advantage of future growth opportunities that present themselves as a result, there may be.

Fluctuation in our ourselves from quarter to quarter in 2020.

Average F. I invite you grew 60% from 83.2 million in the fourth quarter of 2018 to 133.4 million in the fourth quarter of 2019, primarily reflecting wants to chase and phase launch of Wells Fargo consistent with our recent commentary we expect if I am I used to gross 150 million in the first that was 20 point.

Once we are fully launched well Fargo, we expect additional I thought it might you broke through 2020 from phase well launch the natural maturation on our platform our ongoing effort with five partners in digital adoption.

We ended the quarter with $104.5 million, an unrestricted cash and cash equivalents on the balance sheet compared to $95.2 billion unrestricted cash cash equivalents at the end of Q3 2019.

Our total cash and cash equivalents lots available dollars in our facility as of December 31st 20, Nike is approximately $144.5 million.

We ended the quarter with 26.5 million shares outstanding important to date weighted shares outstanding of 26.1 million compared to weighted shares outstanding the point 3.6 million in the third quarter. The change in weighted shares outstanding relative to the third quarter reflects exercise options, Betsy and delivery of restricted stock in D.S.P.T. purchases.

Before we turn to Q1 2020 guidance I want to provide an update on full year 2020 got it much like the first quarter, a plenty 19 with chase we're still in the early stages of measuring our performance in analyzing what steady state looks like with well Fargo. The wells launch as well as new sales talent continued acceleration of platform investment research.

Range of possible scenarios, where our 2020 result.

Like many companies. We're also trying to understand the current and future impact. The current of our we've studied our consumer purchase history closely infancy clear indicators of changes in behavior. We think it's possible that the viruses impact first quarter results and it's likely that the buyers will continue to impact overall economy into the first half 2020.

As a result of where we are on the Wells Fargo watch and economic uncertainty related to the granola bars, we're deferring our full year 2020 guidance until we can better gauge impact on our business. We will continue to provide quarterly guidance throughout 2020.

Now Q1, 2020 guidance I want to remind everyone. At Q1 is always our seasonal low point, but we have high expectations for this year and are focused on continuing our growth.

For the first quarter, we expect going to grow 9% to 18% year over year between 6400 $69 million, we expect GAAP revenues to be between 43.5 and $46.5 million and we expect adjusted contribution for the first quarter to be between 19 and $20.5 million, representing 21 to 20.

9% revenue growth and 8% to 16% adjusted contribution growth year over year.

Finally, we expect adjusted EBITDA for the first quarter to be between negative 4.5 million negative $3 million.

Echoing Scotland, we were very pleased with our strong fourth quarter and full year 2019 results. We're encouraged by the progress in our business driven by expansion the budget with existing advertiser and the growth of new advertisers in our new verticals and continue to expect strong execution against our key growth strategies, while our expectation for Q1 may see moderated.

Infinite work that has taken place positions us well execute against our long term do you plan.

We're all looking for QSR 2020, <unk> and beyond with that I'll hand, it back to Scott for his closing remarks before we open the call to your question Scott. Thanks, David 29 team was without a doubt an exceptional year for card Lititz. It's been just over two years. Since we went public in London I couldn't be more proud of what our team has accomplished and we read.

We're excited about what they would deliver going for it.

It has been a true honored to service to your card, but since founded the company equipment 12 years.

I'm really excited about breadth depth leadership, we haven't played.

The company going forward and to become one of the most frictionless effected platforms available to Mark.

We have never been were strong with position and our squarely focused on delivering strong results 2020 and beyond.

With that I'll open the call for questions.

Thank you.

As a reminder to ask a question you need to press star one on your telephone to draw. Your question. Please press the pound King please standby will become polishing many roster.

Our first question Crossan Youssef Squali Suntrust. Your line is open.

Great. Thank you very much high guys and congrats Royalton do [laughter], the new rules I guess two questions from me David maybe starting with you can you just still the on in a little bit more on the Q1 guidance just looking at it from a seasonality standpoint relative to Q4, I think last year, you saw that 25% sequential decline.

This year, you're guiding to about 35% is the Delta primarily explained by what you just said about the current a virus or is there is there anything else in Q4, maybe that drove that business.

That may not be there in Q1, and then Lynn I'm interested in you talked about now looking to expand beyond financial institutions with the Sainsbury deal. Maybe can you just help us I understand you're thinking around that that opportunity. How aggressive are you gonna be pushing it does.

Here and maybe you know kind of what's baked into your thinking for at least this year on that thanks.

Use of Oh I'll take the first one on the Q1 guidance. The answer is no nothing from.

From Q4 that would've fallen from Q1 per Se I think a couple things that I would point to number one you mentioned the Corona buyers, obviously, given where we said we see a tremendous amount of of data that comes that comes through our our network and platform with regards to changes in spend Bavier. As you know we are we make money.

Based on that pay for performance based on spend and so there is a little bit of an approach of not knowing exactly kind of how the thing is going on fold that is that they put me in a position of providing a guide that I did you willing to that I think is really important for people to understand is that we have brought on a half a dozen news senior.

Executive leaders that we are extremely excited about who just got through with their hundred day plans and we are very positive about kind of how we feel about the rest of the year as I as I reiterated in my prepared remarks that being said you know I think it's I think it's also fair to say that you know when we hit the ground running on January.

Yeah, we had a couple examples of advertisers that were slow to get going into first quarter, but that being said, we're we're very much managing the business for 2000, 2021 and beyond and we feel really good about that.

Yeah I'm used to this is Glenn I'll just answer the question that you had about open banking suggests everyone understand opened banking is a phenomenon taking place in most of the rest of the world. The premise is essentially consumers on their transaction data and so a in countries in the world where this had been rolled out if the consumer ops to give permission the banks.

Yeah, I need to allow access to their transaction data and it's pretty robust set of transaction data similar to what we get in the U.S. only going back seven years. So we have the pilot with NEXAR, which is the largest loyalty program in the UK.

Where consumers it basically think about Nektar is as I just like another F. I. The differences, we don't have to go through a bank to get access.

To to access the customer we go through their loyalty program and the economics are pretty favorable for us.

So we're very excited about this it is early days. Our biggest question was would consumers actually you know allow somebody besides the bank to have access to their transaction data and the early indications are quite frankly super exciting with what we're seeing in terms of adoption rates and take up rate.

So to answer your question Gary typically about this year, we are going to continue to push this card in the UK book with Nextera and potentially some other partners.

Got it likely we continue to see results that were seeing that we will actually start investing in this not just in the UK, but in other countries I'm in the World, Australia, and Japan being sort of the next big one.

So yeah, I don't Wanna get too far out over our skis because the pilots only been my first couple of months now, but I'm pretty excited about what we're seeing.

Good.

Thank you very much.

Thank you.

Thank you our next question, Doug and much of JP Morgan Your line is open.

Hey, this is due to the on for Doug. Thanks for taking my question.

So first of all you're pulling back to the won't you guys. So you're not just one kill just sort of its all guy for those margins compression component for many years ago parents, just curious what's driving that and how we should think about the adjusted EBITDA trajectory and plenty told me in light of the positive salary, but how you achieved in 2018.

Then just secondly I'm.

Just wanted to get your latest thoughts on starting your testing for automated tools, where marketers to secure and what's the do you expect to access Tony Tony from that perspective.

Sure. Thanks, Dave So on your point around margin compression is we've got webs up to that we pay attention to one is.

Our billings margins, which is ultimately how effectively we're able to drive spend based on the amount of consumer incentive is go out the other margin I look at as well what I referred to as my contribution margin, which is which is kinda isolates. The F. I share for sure you know as I've said many times, we will see some fluctuation on the contribution margin meaning.

If you isolate that up if I share as a percentage of revenue I think I've also always maintained that it's a couple of hundred basis points, one where the other I think going forward, what we're going to see some improvement Oh, Oh, we'll see some improvement in around that area as it relates to the billings margin I think we found ourselves.

With chase in a pretty decent steady state I think going forward with wells, it's no different than it was a year ago. We're gonna be monitoring this very closely here over the next you know two to four to six months as well as comes on online in full with regards to how effectively we can continue to to run that an optimal state.

From a from a billings margins perspective, so nothing nothing there by way of of of a trend up significant no different than we've been running in the past.

And can you repeat the second question I'm sorry.

Yeah, I'm just a bit itself on your plan to start something called them at a told me out that or is this year about what you should expect to Cook. Your yeah. Yeah. So we already have an automated tool lie in the hand up a couple of our very long term close advertisers.

Where they're testing the tool and giving us feedback both in the U.S. in the UK. Our intention is to get some more feedback on that tool to continue to sort of tone. It down and then as I have said, we expect to had an a partner or two or maybe more piloting this from an agency perspective.

In the back half of the year. They intention of course is always to reduce the friction and able to self service. So that we can actually start to work with agencies, but we thought it would be best too you know use this tool first with existing friendly customer so it isn't basically beta.

We'll need some work, but we do expect that in the back half of this year, we will have an agency partner or more a using this tool in in some capacity to do their own analytics and start to run some of their own campaign.

[noise] got it thank you [laughter].

Thank you. Our next question comes from Tim Willi of Wells Fargo. Your line is open.

Hey, Thanks, and good afternoon.

Question, if I could let me first start with I guess, Scott Congrats on everything and it's been great sort of see the story over the years I've watched faced that make a logical question from people is just going to be why now right savings are humming, you're still young and I guess you know if you can just give a little bit more color about.

You know your move out of anybody questions you know the new roles for when David et cetera, but I think people are but taken back by seen whose so quickly after IPO I can see this success you've had.

But so 10 states part first of all thank you for saying I'm. So young I appreciate that [laughter], but from a bit more seriously. They the answer why now.

There's really sort of two parts to that answer.

For three first of all I think our board as we've done succession planning throughout the years have always.

When was the largest logical successor to me and I think the company very much agrees with that yes, why now from my point abuse. The company has never been stronger.

Let's go this is a great time to transition to land, where we're at a position the strength and she is a ton of energy around driving this next big wave of growth over the next years and you importantly, Tim.

We've been operating more and more this mode over the past year in a lot of ways. What we're kind of doing is finally formalizing the way that we've been operating around the company, but you know what I really and then upsides and everybody is I will go into this executive chairman role I expect to still be very very ball with the company beer very involved with the strategy and.

And our innovation agenda and of course as a resource out there available to let and so I'm certainly not going anywhere.

Okay. Thanks, Thanks for them. It then my my next few questions are.

Around the one guide and I know, it's probably art not science, but you mentioned you know Corona virus, you mentioned wells Fargo reminded us about last year with JP Morgan in that variance is there any way to just sort of give us some color about as you think about the once you guide you know how much of that you take a little bit more about the wells Fargo.

Ramp up and uncertainty and the timing of that versus what you were seeing in the data around consumer spending that you might point, you as being an impact to the virus.

Yeah. So let me let me tell you what we're seeing sort of in the data and anecdotally and then David might want to add some color to it certainly as you guys know our data pretty granular. So we can see impacts that the ZIP code level, and we have kind of evaluate its travel spend across the country and we are definitely seeing the impact of travel start in the.

West and move East. It is the west is probably a couple of weeks ahead of the east in terms of actually seeing true impact and decrease spend we are seeing it not just an airline space, but in lots of other travel related kind of.

Advertisers.

And you know I will tell you that a couple of them have called us and asked us to proactively will help them understand whats happening see if we can help them sort of stem the tide of cancellation. That's the good news. The bad news is they've also asked us if we could give them. Some relief on bookings that are channel have driven that have resulted in a cancellation. So we know.

For a fact that this is impacting some of our clients. What we haven't had a chance to do a study clients, where it's impacting to the upside you know we all here the anecdotes of what's happening in the you know like that at the Big box stores. The kaka the same clubs or the world. So far we have not seen that materialized in a in a noticeable way in our data, but we're going to keep watching it.

Our guess is it will probably come sort of the stay at home part of the spend but it is it is definitely something that we see in the data and we are seeing with our clients. So it is real the question as to what magnitude and how long will it happen that anyone's guess.

Yeah, that's right Yeah and was our second question that I forgot now.

No that that data that takes care of it okay.

Thanks, very much thanks, Tim.

[laughter] Kim.

Our next question comes from Chris Shutler of William Blair. Your line is open.

Hey, good afternoon, everyone.

For the the 2018 ARPU levels that you, saying that you expect to get there by the end 2021 should we think of that Oh full year 2021, ARPU should be at least $2.30 or is there a different way to interpret that.

It's a it's a fair question I I think to be safe I've always said you know as we exit 2021, you know we should be.

Back to those normalized levels from 2018, so not that not the annual average but in exiting 2021.

Okay.

Got it and then the only other one is the only other one is just a enter your conversation with the bank and what areas capabilities functionalities are they telling you that they would like sneaker licks invest <unk> yeah. It's a great question. So for sure if I had to answer it in two words, it's the user experience.

And making a user experience that is you know more robust it [laughter] than what we have today I mean, if we're honest with ourselves today. We show you know logos, so creating a user experience that is both more contextual in terms of being able to sort of find the right offers based on what you're looking for you know you can picture.

A tab for just travel offers a tab for you know retail offers a tab for dining out offers but then also within each of those sort of contextual experience is just an overall richer media experience and the fact that we can't show a picture of a hamburger.

As you know is a little disturbing so we need to work on that and then also you know offers that are more relevant for those particular categories. So today. Most of our offers are you know just save a certain percentage off.

You know you'd love to be able to offer a free hamburger with the purchase of a Coke for example, or you know to be able to.

Sell a particular product at a big box retailer versus just the big box retailer themselves. So you know in one word it's a richer user experience or I guess, that's a couple of words, but richer user experience is what they're looking for they all have different ideas and flavors of that and we're trying to build a very module by module realized.

You know components to the technology, so that they can sort of pick and choose the way they watches display the experience, but yet from an advertiser perspective, it's still one seamless network that they're buying a and so that you know does take time, but I would say that are advised are pretty excited about creating this richer experience.

And you know not well they all have different opinion, none of them have said no. Most of them. It's not all of them are actually pushing forward pretty aggressively and you know what's great about is the things that we're trying to do from the bank side around a richer user experience Richard media is exactly what our advertisers want us to do for them also so it's a good example of where we're kind of aligning.

But the interested banks in the advertisers together and Weightage, it's good for ecosystem.

And when do you think that some of those capabilities will be rig is ready for prime time, where they are rolled out across that part of the the base. Yeah. So this that's a tougher question to answer because we first have to build it and then the banks have to accept what is going to be a pretty significant technology really and we have to get cut into their queues. So we have what I would call.

And aggressive goal of having the first wave Uh huh.

Having it bill.

By you know Q4, 2020, and then trying to get at least our first bank or initial bank lives with that first user experience upgrade sometime in the first half of 2021, but that is highly reliant on banks and getting into their cues that we all know there is you know that is the more unpredictable part of.

This business model.

Got it thank you.

Thank you again, if you like that's a question. Please press Star then one on your Touchtone telephone.

Our next question comes from Jason Kreyer of Craig Hallum. Your line is open.

Hey, good afternoon, just wanted to unpack the commentary that you gave on 2020, you know you talked about a range of outcomes there and obviously wells remains somewhat of a wildcard just curious if you can give like any qualitative commentary around like a same store sales or you know what what kind of progression you would expect from the more.

Mature clients like Chase and.

Oh and be there.

So let me first about at Chase and be they are all three of these these banks are in very different states of maturity.

To be they as you know is a very very mature bank. They have pretty good user experience I think they have a program that is running well on with without a lot of you know marketing without a lot of continued consumer education I would say, it's a program that.

It's just sort of coming along reasonably nicely.

Okay on the other hand still a newer bank customers are still finding it still learning about it chase is still spending you know significant dollars marketing and enhancing the program and the offers.

So you still.

It's still very much maturing.

And I think there's you know there's upside quite frankly, that's quite a bit of upside not to say that there is an upside and some are more mature banks, but they're just at a more steady state.

Wells Fargo of course by definition is in our lease mature bank. So there's some material and significant upside and you know we've only rolled out to 35% of the population in terms of full user experience in full you I.

Oh, we're not even halfway done yet and even that 35% have really only had the program for a couple of months, So no real upside with Wells Fargo.

And so we do monitor each bank both individually and then we monitor the overall network up but you know individually each bank isn't a very very different state of of rollout and maturity and thus consumer adoption I mean, it but it wasn't say on the advertisers side you know couple of good sound bites on the prepared remarks, you know we.

Yeah, we saw 30, new logos and the new verticals that that we're going after almost about half of our billings now or are or annual commitments, which is which is an improvement from a year ago. So where I said I'm very encouraged about the remainder of 2020 and us being able to execute again.

You know what we what we told everybody all along.

To better with David just said and to remind everybody our constraint to growth is really not tied to it may you growth at all we use very small amount of our total inventory today be constraint is the number of advertisers that we sign and the mouth are spending with its very few are spending even close to what they could spend in the channel. So that's really our focus is how do we.

Good to see C.L. King to place and go after just.

More significant budgets across a broader range of major advertisers well, we know for a fact is every new material logo that we add creates a reasonably a noticeable and measurable change to the good side and engagement.

So you know and that that's consistent across all the banks, regardless of where they are in their maturity date. So that is absolutely the focus.

Yeah on the engagement side, just wondering if you could comment at all on I guess, maybe on a more mature bank perspective on what kind of acceptance or utilization rates and how those have progressed within consumers and like any I guess at a scale at the efforts with the financial institution.

It's to ramp that up so like if we talk about a wells Fargo, which is only a third of the way into the roll out you know at what point do you work with them to start improving consumer adoption in consumer awareness.

I'll I'll comment and then I'll, let Scotland add on I mean, certainly problem and engagement perspective. It's it's a question we get often <unk>. We are still very much in the same place. We were you know three three months ago, which is there's a lot of noise right. Now you know for wells you know we're at were fully rolled out to 35% a week.

Back that number to continue to ramp up as that happens we're going to continue to see a lot of movement as it relates to engagement not only at wells, but across the network certain banks are performing better than others at the end of the day, but but we also hear people out unclear. I mean this is something that we are going to coalesce around onto provide additional transparency into.

To the performance of the network with regards to a two engagement it's important to keep in mind. However that it's a high correlation to you know engagement as it relates to how we make money, which you know we make money on on the on the post spin. So you'll hear you loud and clear we're still in a pickup in a position where we're seeing a lot of noise and if I could just add.

I mean, if we were if we feel comfortable giving you engagement levels. Her bank. This would not be a problem and you guys would be able to understand full color of how different banks mature and also have different user experiences and even different marketing efforts of the banks impact. The program. We have you can't do that so trying to create averages occur.

Ross's very complicated network with all of these massive organizations in different states. The maturity is it's not as easy as it might sound, but we are committed to trying to create engagements that that we can talk about you know sometime in the course of 2020.

Okay, great. Thank you.

Thank you. Our next question comes from Nat Schindler with Bank of America Merrill Lynch. Your line is open.

Yeah, Hi, guys. This question to make fall victim to what you just said I'm glad I wanted to drill down more on that engagement issue.

Specifically, whether or not if there's any I know, there's a difference in maturity and not that Mike you something you with how the user interface works with war protocol cellphone, but he was there any real differences between.

The major your major customer bank, yeah in how they their online probably their mobile presence at all.

Yeah. There your dramatic difference is directly correlated day I'm on the customers have the offering to be able to them, but also the quality of user experience and and the quality of the marketing that goes on the overall program and the consumer education. There are dramatic differences yesterday and that one of things. If we do do these we we look at those differences and then we.

Yes, we benchmark I'm sure, but the other banks to you know to help immobilize to go and drive engagement, but I'm going to keep going back to the basic back.

Very very few of our advertiser spend even close to what they could given the levels of consumer engagement. We have so it is not a constraint to revenue growth.

So then going a little deeper into that question.

What is Oh retisert at this point, yes, you could say that getting back to the use of the pre chose Cree wells.

ARPU Superfast might take a little time with B of a was ahead in how the IP interfaces and how people engage with it.

But.

Getting back closer because our show getting these ads out to massively more people what is stopping them.

Just turned on more budget would it what's what's when you tell them I've got triple as many people now.

How did they respond.

That's great question, what ARX <unk> couple of things Yeah first of all the significant increase in annual budgets.

Contracts is is we think a great signed it does show that people are like Oh, I need to sounds a constant part of my marketing mix, but our experience has been that you can only kind of.

Road budgets so much during the fiscal year, because every time someone doubles our budget they almost for sure taking it out of another budget and so we do think theories a.

Kind of a or just a certain rate or certain friction of trying to grow grow, but it's too fast or the second thing that we continue to think is really important.

We are Nio driven model.

And every 45 days were going to get new eyes, I was in turning back channel versus being an always on model. That's one reason we are best in so.

Much to get to that always an automated state because that we think that takes out a lot of the friction of how quickly <unk> robots with advertisers.

Okay. Thank you.

Sure.

Thank you.

Showing no further questions at this time I like to turn the conference back over to CEO, Scott grounds for any closing remarks.

Yeah, Yeah, we are super proud of power team delivered and 29 team and but you know I'd say, we're really even more excited is how well the company's positions growing 2020 and 2021. We think these leadership changes, we're making you think but what we're really doing we're expanding the bench of leaders that we can have that can really drive growth and the.

Company, we have a super exciting new leaders in the company and a yard just really excited about what we're going to go bring to investors in 2020 and 2021. So we think everybody for joining the call today and we look forward to earnings call me.

Ladies and gentlemen, this does conclude today's conference. Thank you for anticipating you may all disconnect.

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