Q2 2020 Earnings Call

Ladies and gentlemen, BCC operator, today's conference will be in Turkey fees continue to somebody in thank you for your patience.

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If anyone should require assistance during the conference. Please press Star then zero on your Touchtone telephone as a reminder, it's called especially be recorded I would now like turn the conference over to your host Mr., Marc Baumann, Chief Financial Officer for Beach line, because I'm sure. Please go ahead.

Thank you very good afternoon, everyone. My name is mortality and I'm, the Chief Financial Officer for bridge like digital.

I'm pleased to welcome you to our fiscal 2022nd quarter Conference call.

Before we begin I would like to remind listeners that during this crop school comments that we make regarding bridge like digital that are not historical facts or forward looking statements and are subject to risks and uncertainties that could cause such statements to differ materially from actual future events or results.

These statements are made this week.

To the Safe Harbor provisions of the private Securities Litigation Reform Act 1995.

The internal projections beliefs about which we base our expectations today may change over time, we undertake no obligation to inform you if they do.

Results that we report today should not be considered as an indication that future performance.

Changes in economic business competitive technological <unk> regulatory and other factors could cause bridge loans actual results to differ materially from those expressed or implied by the projections or forward looking statements made today.

For more detailed information about these factors and other risks that may impact our business. Please review the reports and documents filed from time to time Lightbridge like digital Securities and Exchange Commission.

Also please note that all the call today, we will discuss some non-GAAP financial measures when discussing the Companys financial performance.

Provided a reconciliation of these non-GAAP measures toward our GAAP financials in our earnings release.

You can obtain a copy of earnings release by visiting our website.

I would now like to turn the call over to every time, our president and CEO.

Eric.

Thank you Mark and good afternoon, everyone.

Continues to see growth in subscription license revenue as well as improvement to our bottom line.

Revenue increased 20% over this quarter last year and license and subscription recurring revenue is up 42%.

Customer renewals for licenses and subscriptions are the foundation for the future growth and remains strong today.

An important focus for the business is its bottom line, which has also improved.

Our strategic goal for this year remain on track and specifically our profitability expectations have not changed net income is strong include several non cash adjustments adjusted EBITDA as a better metric for profitability, which we expect to be positive in the second half of this year.

I heard goes out to all those hurt by the Cobot 19 pandemic, which is first you.

Foremost health issue, but also on economic ones.

Demick will create predictable and somewhat unpredictable challenges as well as opportunities one challenge and opportunity is that both commerce and community will become even more enabled through the online world.

This is bridge lines expertise and we're here to help our customers and other businesses get the most out of their online stores and employee portals, we can expect longer sales cycle delays and team coordination that impact implementation timelines businesses a job.

I expect rich lying to come out of this crisis, even stronger than we were when we entered it with a more healthy bottom line deep strategic value demonstrated to our customers and then efficient sales organization.

I'll take a few minutes to share the impact we have seen did cobot banking outbreak the actions we've taken how it relates to our longer term strategic plans.

Ridgelines operations have supported remote work for years, which is common for software companies our processes and culture continue to operate as efficiently today is our work enforced at home as they did prior to the outbreak.

We conduct daily Videoconferences regular internally as well as with our customers. In fact this afternoon, we have a companywide scheduled which helps maintain a strong team work and internal communications.

We did chancellor by annual customer conference now focus instead on one on one customer communications, including Videoconferences to maintain strong relationships.

Ridgeline supports these customers by empowering their online commerce, enabling unlike communication with their customer in employees and providing internal portals for their teams to collaborate.

These capabilities are increasingly critical to our customers during the cold that 19 outbreak, we've participated and strategic conversations with our customers to ensure we can support their needs in the makes suggestions on additional capabilities that we can provide to them. They may not be using already this has resulted in some new sales within our existing customer base.

Yes that may not have occurred had we not been as its outbreak.

Some of our customers are impacted more greatly than we are especially those with brick and mortar operations like restaurant chains franchises as Jim said salons.

And if you ask me to their customers have requested extended payment terms and the spirit of compassionate partnership we've worked with them in this regard, but this has been an exception.

Our DFL remains strong as our customers have been able to make payments on time, we don't expect that to become an issue.

The primary economic impact to bridge liner slowdowns and implementations enhancements to our customers online stores is they reorganized themselves for remote work within their operations.

Refines professional services team typically collaborate closely with our customers on these projects so when our customers not available for a certain parts of the price the project most gone home.

Since these project your build time material basis, the delays impact services revenue and we saw this in March.

We have not seen customer projects cancel and in fact, there is likely pent up demand, but we have seem to me delays and with the summer. Upon US we expect project delays to continue so we've made some team adjustments that allow us to remain on track and achieve our profitability goals.

Throughout the rest of this year, we are structured to maintain strong professional services gross margin and also are prepared to respond.

You an uptick.

In our customers are ready to focus on their implementations and customization together, we have not experience and do not expect the Colby 19 outbreak impact subscription renewals, which account for the majority of our gross profit Robin.

In general customers have expressed a bridge line powered portals web stores are expected to be an even more strategic part of their business is going forward. They continue to renewed their subscriptions to our software with several customers choosing multiyear renewal contracts to lock in pricing for 2021 and beyond first.

The more the upfront investment in collaboration required to re platform makes continued partnership with bridge loan with bridge line, even more attractive for our customers during uncertain times.

Our strongest demand is in our celebrations product line celebrants provide immediate measurable growth in mind revenue for our customers through its intelligent search capabilities. We recently published a study were celebral help the customer grow revenues by more than 30%.

New engagements with Celebral not require customization services and therefore celebre has a more rapid sales cycle without the requirement of in person meeting.

Our unbounded orchestra product lines have several features that are out of the box like celebrates its such as online recommendation engines marketing automation campaign management as well as coupons or promotion engine.

Historically those capabilities were bundled with our platform systems that require personalized services.

We are separating these capabilities into independent product modules or bundling them. What celebral is so that will be able to grow customer base through online than telephonics sales for these products as we do with celebrate.

This is intended to reduce our customer acquisition costs and further increase subscription revenue relative to services revenue for the business.

We announced the strategy prior to cope with 19 outbreak unstructured the business around these types of inside sales, but from a new customer acquisition perspective is very much in line with growth given the new constraints created by the pandemic.

We have rebuilt our sales team around telephonic sales in our conserving much of our marketing budget until later in the year as we expect buying decisions to be little bit slower. This spring is companies just to the crisis.

New customer acquisition and our second quarter included businesses, the U.S. Europe and in Asia. The breadth of this geography is based on our out of the box strategy and go to market strategy around telephonic sales.

One of our recent win was a retailer with over 2300 stores.

What's the decline in foot traffic, our online commerce solution becomes even more strategic to their business.

We recently launched and I'm mine site for a manufacturing business.

Offering office in safety products, including personal protection equipment, such as disposable state shields, and social distancing markers for retail stores ridgeline helped this manufacturer increase online traffic by 65%.

Bridgeline had 90 renewals for the quarter booking over $1.5 million since subscription.

Renewals include multinational biopharm bio pharma company on international change of key chain of convenient stores with more than 50000 location and the chain of pharmacies with nearly 10000 locations.

Overall ridgeline is structured to be successful business. During this downturn based on its existing customers and subscription contracts. We've been fortunate in that the strategic changes that we made to our R&D efforts prior to the outbreak and changes to our sales structure compatible with the different economic and social environment.

The rent today and the strategic value, we provide to our customers positions us well for success in the long term.

At this time I'd like to turn over the called our Chief Financial Officer, Mark down either because the specifics in Florida.

Thanks, Eric Today, I will review our financial results for the second quarter fiscal 2020 ended March 31st.

In March the World Health organization to clear the outbreak of the Nobel Cologne of ours God disease called 19 as a pandemic.

While we anticipated our operations and all locations to be affected we have a robust business continuity plan, even as the virus continues to proliferate.

We have adjusted certain aspects of our operations to protect employees and customers, while still meeting customers needs for mission critical technology.

We will continue to monitor the situation closely and it's possible that we may implement further measures.

Total revenue for the quarter ended March 31st 2020 increased 20% to 2.7 million as compared to 2.2 million for the same period last year.

The following all the various components of revenue.

Recurring revenue, which is comprised of SaaS licenses maintenance and holistic revenue increased 42% to 1.8 billion for the quarter ended March 31st 2020 from 1.3 million for the same period last year.

As mentioned in prior earnings calls deferred revenue exciting to us associated from our 2019 acquisitions.

Okay to that full contracts are not recognized upon acquisition, but only a portion of those revenues associated with auctions CMS can be reflected.

We are now we are now able as of March 1st the first annual license payment after the acquisition to recognize the full 100% value of these acquired contracts.

Subscriptions and license revenue, which is comprised of recurring revenue and perpetual license revenue increased 63% for the quarter ended March 31st 2020 to 1.5 million for 1 billion for the same period last year.

Services revenue was kisses consistent and 900000 <unk>.

For the quarters ended March 31st 20 22019 respect.

As a percentage of total revenue services revenue decreased 9% to 33% of total revenue for the quarter ended March 31st 2020, compared to 42% of total revenue for the same period last year.

Resigns focus is on increasing license revenue with some of our newer products such as the Celebrex product line, which require little or no service to implement this focus along with the company's new partnerships and customer's ability for self service are expected to further increase our license to service ratio overtime.

Total revenues from our two acquired businesses comprised approximately 38.5% other total revenues for the quarter ended March 31st 2020.

As I mentioned earlier this does not represent a school normalized quarter due to purchase accounting principles.

Were acquired deferred revenue contracts are not realized that there first full value on acquisition date.

Upon the first annual renewal lifesaving. That's acquisition, we are now able effective march 1st to recognize a full value of these acquired contracts.

Gross margin increased to 57% for the quarter ended March 31st 2020, compared to 27% for the same period last year.

Cost of revenue decreased 26% or 400000 to 1.2 million for the quarter ended March 31st 2020, compared to 1.6 billion for the same period 2019.

Operating expenses remained consistent at 2.6 million for the quarters ended March 31st 20 22019.

Alluded within the quarterly totals as of March 31st 2020, our restructuring charges of 365000 really to reduction in force of our U.S. in Canada operations aimed at improving efficiencies by eliminating redundancies and combining functions in certain responsibilities.

And for the quarter ended March 2019 acquisition charges of 304000 really to the acquisition of stance of respectfully.

As we have previously stated on prior earnings calls we concluded on March 12, 2019. The sale of 10227 0.5 units of series C preferred stock and associated warrants with at market value of 21.5 million less gross proceeds received the 10.2 million.

Which resulted in a noncash charge to warrant liability expense, although 11.3 million.

The net proceeds for this transaction, where allergy to each of the freestanding clinics instruments based on their fair values, which were comprised of the preferred stock and warrants.

Due to fair value derivative accounting rules the derivative warrants are independent we dialed on a quarterly basis.

The quarters ended March 31st 20, 22019, it's revaluation, resulting in a 1.8 million and 1.1 million noncash gain to change in fair value of warrant liabilities respectfully.

Also included within the March 30, Onest 2019 results well the write off of unamortized debt.

And cost to discharge loans in the amount of 221000.

[noise] net income album applicable to common shareholders for the fiscal quarter ended March 31st 2020, 795000 compared to a net loss of 12.6 million for the same period last year.

Adjusted EBITDA loss for the quarter ended March 31st 2020 is 331000 or a loss of eight cents per diluted share compared to 1.5 million or loss of 5009 cents per diluted share the same period in 2019.

Our non-GAAP adjusted net income for the quarter ended March 31st 2020 is 1.5 billion.

For a gain of 33 cents per diluted share compared to an adjusted net loss of 12.1 million or a loss of 39.94 per diluted share for the same period in 2019.

At March 30, Onest 2020, the company had cash of 234000 and accounts receivable net of 874000.

Total days sales outstanding for the quarter ended March 31st 2020 was 45.3 days an improvement from the beginning of the your high 48.8 dates.

The primary reason for these improvements for the three months ended March 31st 2020 can be attributed to our exceptional strong customer relationships and can system conversion of accounts receivable into cash.

In February 2016, the Fazhi issued a issue 842 leases, which outlines principles for the recognition measurement presentation and disclosure of leases out a little to both less ores and lessees.

This new standard inquiries lessees to recognize most leases on their balance sheet for the rights and obligations created by those leases.

As a result of adopting the new standard as of October 1st 2019. The company has recognized as at March 31st way 20, operating lease assets and liabilities of approximately 385000.

On December 34, 30, Onest 2019, the company filed the first amended and we see certificate designations for the series a convertible preferred stock, which amended and restated the series a preferred stock conversion price.

They indoor conversion.

I'm showing option and dividends.

The company has 264000 shares of series, a convertible preferred stock, which may be converted into the seem equivalent number of shares of common stuff.

As of March 31st 2020 series C preferred shareholders have converted 41% or 107416 shares of series a convertible preferred into 613806 equivalent shares of common stock.

On April 17th 2020, the company entered into the load would be bank as a lender in aggregate principal amount of a million all 47 500.

Pull PPP loan, which is persuading to the paycheck protection program onto the cares ex the Kuroda virus eight relief and economic Security Act.

The P.P.P. loan is evidenced by a promissory note.

Hubs to the terms of the note the P.P.P. loan bears interest at a fixed rate of one per cent per annum.

The first six months that interest differ.

Has an initial term with two years and is unsecured guaranteed by the small business administration.

The company me apply to the lender for forgiveness of the PPP loan with the amount, which may be forgiving equal to the sum of payroll costs.

Robert rent obligations and covered utility payments incurred by the company during the week period, beginning on April 21st 2020.

Lastly, in accordance with the terms of the cares.

I would total assets or 10.8 million total liabilities of 6.1 million.

There is no debt on the balance sheet as of March 31st one important.

So that's outlook I wanted to wrap up our presentation with some financial outlook.

We expect to generate positive adjusted EBITDA for the second half of fiscal 2020.

Thank you Walter listening and at this time.

We like to open up the call to QNX.

Ladies and gentlemen, if you have a question at this time. Please press Star then the number one on you touched on telephone. If your question asked me I'm curious are you wish to remove yourself on the Q nice breast accounting.

Once again, if you would like to ask a question can be press Star then the number one on your Touchtone telephone.

Once again, ladies and gentlemen, give me press Star then the number one on your touched on telephone you would like to ask.

A question.

Your first question comes from the line of eating House. Your line is open.

Hi, good afternoon, everybody hope everybody space and a healthy.

Yeah, we aren't good afternoon.

[laughter].

Private investor and.

Yes.

Got into your call a few minutes late but I see that the market has reacted very favorably.

News.

So I'm anticipating that.

The.

The positive earnings.

And as a shareholder a one of the thing.

About your company that I found very unique an interesting.

Is that there are 2 million.

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<unk> million plus shares outstanding.

Correct.

The total shares outstanding that sounds about right.

Yes 2.800 million.

Yes.

And I guess that was due to a reverse split that took place.

In the past.

So I'm wondering yeah, that's an extremely low amount of shares.

Yeah for the average company have.

I would.

Your company anticipate.

The possibility of.

Having a.

You know split at a certain price at the stock prices go up to a certain point.

Increase the number of shares.

Well I can see something like that happening or.

You know as we grow in the stock improved significantly in our market there are acquisition opportunities, where there could you know.

Good chance increase the share price in the context of an act the number of shares the context, the financing an acquisition, but neither of those are really something that we expect happening in the in the immediate future.

Okay alright, thank you.

Thank you.

Once again, if he would like to ask a question you Me Press Star one on your telephone keypad.

Once again to ask a question you Me press Star one on your telephone keypad.

I'm showing no further questions at this time I would like to turn the conference back to Mr. Ikang President and CEO. Please go ahead.

Thank you.

We appreciate the sport patients of our shareholders and that's our goal to continue building a scalable business model, which in turn will build shareholder value.

Thank you for joining us today, we look forward to speaking again, our Q3 fiscal 2020 conference call. This summer.

Thank you.

Ladies and gentlemen, this concludes today's conference call. Thank you all for joining you may now disconnect.

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