Q2 2020 Cardlytics Inc Earnings Call
[music].
Ladies and gentlemen, thank you for standing by.
Welcome to court, let Inc.'s second quarter 2020 financial results call.
At this time, all participants Arnie listen only mode.
After the speaker presentation, there will be a question and answer session.
So I ask the question during the session you will need to press star one in your telephone.
Please be advised that today's conference maybe recorded.
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I'd now like to hand, the conference over to your host.
She's legal and privacy officer Kirk summers Sir Please go ahead.
Good evening and walking a card Ltchs second quarter 2020 financial results call before we begin let me remind everyone that today's discussion will contain forward looking statements space Turner, Curt assumptions expectations and beliefs, including expectations about future financial performance or results the anticipated impact there.
Q parties on driving growth the launch of U.S. bank growth, an F.I.N., they use or monthly active users future ARPU or average revenue per user the evolution of our platform to provide self service and the potential related benefits to Austin, our clients the impact of cobot 19 on our business and the economy as a whole.
The impact of our rise retain and return strategy and the sufficiency of our capital structure.
For 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-Q for the quarter ended June Thirtyth 2020, we filed earlier today and in subsequent periodic reports, we file with the Securities and Exchange Commission.
Also during the 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 has been filed with the FCC.
Today's call is available via webcast and a replay will be available for one week you can find all the information I've just described on the Investor Relations section of card looks web site. Please.
Please note that a supplemental presentation to our second quarter results has also been posted to our Investor Relations website.
Joining us on the call today is karlix leadership team, including CEO and co founder led lobby and CFO Andy Christiansen.
Following their prepared remarks, well open the culture questions with that let me turn the call over to Lynn.
Lynn.
Thanks, Kirk and thanks, everyone for joining us on our second quarter 2020 earnings Conference call.
First we want to provide an update on the effects of Koby 19 on our business card Linux is doing its part to help ensure the health and safety of our employees in our community.
Our employees are working from home and we are evaluating opening our offices to them in a voluntary bases. Later this year that said, we're monitoring current events and we'll adapt depending on the severity of the virus going forward.
This is still a difficult time as an advertising business, while we saw signs of increased spend in the U.S. throughout the quarter consumer spending in the UK and some of our key verticals, especially traveling dining is still dramatically reduced year over year.
Billings in these areas are down in a similar way.
We're also continuously monitoring spend data to make sure we're prepared as a company for a potential second.
Considering the impact of Cobot 19, we delivered second quarter results that were in line with internal forecast. We also saw a month over month increases in absolute dollars throughout the quarter in all three metrics.
There are some of the numbers.
Total billings for the second quarter were $39.5 million down 46% year over year.
Total revenue, which is equal to billings net of consumer incentive was $28.2 million a decline of 42%.
An adjusted contribution was $12.4 million down 43% year over year.
Despite the unprecedented environment and the short term impact to our results we remain optimistic for the future. We continue to believe that our key long term priorities in increasing the number of marketers working with us, bringing our solutions to new industries evolving the card, but its platform and demonstrating operating leverage in our business our wholly achievable.
Our clients you still facing severe swings in spend both up and down and our three punk strategy rise retain and return discussed on the Q1's, earning call it's continuing to produce positive results.
Interestingly, we've seen some clients new from rise to retain over the past few months.
One example is with an online grocer, who we helped in Q1 as their sales rose by sharing custom link weekly reports in Q2 card, let it helped them quantify the competitive share of wallet last thing we're experiencing with those same new customers, particularly among the heaviest customer segment.
Our date uncovered that they're most frequent customers, we're making approximately 50% of their online grocery transactions and other online competitors. These insights motivated our clients who invest more aggressively on our platform for the second half of 2020.
We also had a new rise client so impressed with our results that they signed a long list advertising contract in card Linux history.
This quarter, we want to provide several new metrics to help investors understand engagement and the advertising spend potential on the platform. This includes quarterly data on monthly average log in days.
Offer activation rates across verticals and campaign spend ratios across verticals.
We believe this information shows that users are engaged with the platform and that we have significant headroom for revenue growth as we gain access to larger advertising budgets you can find these metrics in the supplemental presentation located in our Investor Relations website.
[noise], we continue to rapidly evolving innovate our platform today, we're really excited to announce that were externally testing our news self service platform with several advertisers and agency partners. This self service AD platform allows campaigns to be created in less than two minutes and is the first step in democratizing the card ltchs advertising.
Opportunity for all marketers and agencies big and small.
Together with our first partner Horizon Media, we launched Lynn chocolate as the first advertiser and campaign through the new platform.
Horizon is the largest independent agency in the World and this partnership paves the way for many more of their clients to now have access to card, but ex and our premium channels.
Additionally, it together with their media another large in fast growing agency partner, we've launched a quiet under their management.
Their agency representative noted that the tool had quote snap like simplicity <unk> Google level quality.
Finally direct clients like Forever 21 are also testing the self service platform to execute campaigns across our channel and scale their business. We're excited about the strides we've made and we see great opportunity for mutual benefit for our clients direct or agencies.
In addition to product advances, we're continuing to make investments in the right people to meet our organization into the future Jessica Jensen CMO of open table and an experienced executive whose work at several leading digital platforms has recently joined our board of directors and we've hired feral had Vic and P. babies to meet our bank team and sales strategy and operations.
Teens, respectively.
We look forward to the impact each of these talented leaders will have in our platform.
Moving to the bank side of our business in Q2, we completed our wells Fargo lunch and surpassed 150 million F.I. I mean.
We believe this scale places us on equal footing with other major U.S. advertising platform and provides a highly differentiated solution for marketers. We're extremely proud of our team for its work on Wells Fargo.
Further our launch preparations with U.S. banker going as planned and we expect to launch them with our version one of the new user experience in the first half of 2021.
On a fine on it I want to address the events that have caused massive local and national protest over the past few months.
Card, but it does the company stands in unison with all people of color. We have a number of new company go to support employees in the community, including an initiative to run campaigns to support minority owned businesses.
We will continue engaging with our employees and our communities or color to learn how we can best support them.
With that I will turn it over to Andy.
Thanks, Lynn Q2 was a difficult quarter for employees, our partners and our communities. We remain focused on our longer term initiatives and we're very optimistic about our future prospects just like last quarter I'll give a quick update on liquidity for covering Q2 results and guidance.
We're confident that our current capitalization liquidity will provide us the financial flexibility to weather the economic downturn triggered by cobot 19.
And continue with prudent strategic investments.
We ended the quarter with 98.4 million in cash compared to 102.2 million cash at the end of Q1.
We also continue to have access to our Undrawn loan facility, which had total availability base are eligible accounts receivable of 26.4 million as of June to yes.
[noise], we've seen improvement and the economy. So there so a lot of near term uncertainty. So we're making prudent <unk> strategy, while still focusing on achieving our long term operational and financial goals.
For the full quarter billings decreased 46% year over year to 39.5 million and revenue decreased 42% year over year to 28.2 million.
The U.S. revenue declined 38% year over year in Q2, and our UK revenue declined 74% as businesses there had been hit particularly hard by independent.
So most of last quarter I wanted to give everyone on the call clear picture, how the quarter unfolded.
Year over year revenue declined 46% in April 44% in May and 38% in June as we saw consumer spending improves throughout the quarter.
It's worth noting that May have 2019 was a particularly strong month.
So while revenue in May of 2020 was down 44% year over year. He was up nearly 40% sequentially from April.
Well, we've seen a pause in your your spending like the last couple of weeks, we're optimistic that the recovery, what perhaps uneven will continue over the coming quarters. This will materialize in our results with marketers, especially those in some of our larger verticals like travel grow more confident and deploying their advertising budgets overtime.
Adjusted contribution was 12.4 million in the second quarter down 43% from Q2 was 29 10.
Adjusted EBITDA was a loss of 7.7 million in the quarter compared to losses 600000 in Q2 2019, reflecting the revenue softness from the effects of coal the 19.
As we noted last quarter, we're continuing to invest in our business. During this time, which alongside the effects of the pandemic may cause fluctuations in our EBITDA over the coming quarters.
And they use grew 31% year over year from 120.1 million in the second quarter of 2019 257.2 million in Q2 of 2020, reflecting an increase and then they use stemming from goes at Chase the Wells Fargo launch.
Arthur during the second quarter was 18 cents down 55% year over year as we mentioned last quarter ARPU will experience. Some pressure this year due to our significant I mean, you gross and revenue softness caused by the pandemic and as a reminder, we think of EMEA growth is typically proceeding associated topline growth.
To Echo live we're pleased to have grown our and they you base over 150 million, which is exactly where we expected to be after the launch of Wells Fargo.
27.3 million shares outstanding at the end of Q2 weighted average shares outstanding during the quarter was 27.1 million compared to 22.7 million. During Q2 was 29 team.
Now on the guidance.
We're not providing guidance due to the unpredictable effects of the current global health crisis, what we see as far as if the economy isn't a more stable position that it wasn't early Q2, there are concerns around we sit in the veteran trends and the pause in the recovery.
However, we expect to see sequential improvement, both Q3 and Q4.
The best Directionally can provided that we exited the quarter with revenue down 38% year over year in June.
And barnyard deterioration in consumer spending we expect these acquired to continue narrowing as we execute our lives roofing and return strategy.
Despite the unpredictable environment, we continue to focus on achieving our long term goals.
And our liquidity provides us the flexibility to thing and act with a long term mindset.
This is what fees our optimism at our confidence in our future success.
With that I'll hand, it back to Lin for closing remarks, before we open one for questions Lynn.
Thanks, Andy Q2 was a solid quarter in many ways, but ultimately it was also difficult quarter, Judy if acts as a global pandemic as we said in the past we remain excited about our opportunities for growth and feel like our momentum is increasing we're cautiously optimistic that Q1 in Q2 will be the worst parts of the crisis, but we have plans in place to address any scenario.
Yeah.
You mean proud of our teams response in the workplace and the community and we continue to refocus on their health and wellbeing with that I'll open the call up for your questions.
Thank you as a reminder to ask a question you will need to press Star then one on your touched on telephone to withdraw your question from the Q. Please press the pound key.
Please standby will be compiled the Q and a roster.
Our first question comes from Doug I met with JP Morgan. Your line is now open.
Great. Thanks for taking the questions as to first just based on a the data and everything that you can see just curious when how you're thinking about some of the changes in.
Humor behavior that you're seeing over these last few months and you know what could be more permanent versus transient and how that impacts your sales strategy going forward and then second I'm, hoping you could give us some more details on the new user experience that you mentioned coming in the first half of next year or at least with one.
Thanks.
Ah, Yes, I do think we're going to see some permanent changes in consumer spending I think most notably.
Online ordering with in store or.
Curbside pickup is I think it a trend that here to say for the long term I think also online purchases in some categories, particularly some of the DTC categories is a trend that probably here to stay for the long term, but we do believe that consumer spending will come back into brick and mortar stores, probably not at the same they said it was before that.
But it will come back into brick and mortar stores.
As a reminder, all of the advertising content that though is good however, the consumer wants to make the purchase the whether they want to purchase online or they want to purchase in store the advertising content works or where that consumer desire on predicts the vast majority of redemptions that we saw were in store death.
We've seen a pretty dramatic shifts do I'm really and our rise retain return strategy is a part of going after some of the you know more surging categories in online only that weren't necessarily as heavy into focus for us.
Prior to tick open, but I do think we're going to see some permanent shift and how people are spending in our platform is able to accommodate the shift very easily and already has.
In terms of the U.S. bank, new user experience I do want emphasize this is version one so there will be many many upgrades to calm over many banks over time, but it's going to happen very basic things that we can't do today that are gonna sound very simple that are important.
Sure you know so the ability to show a picture of a product or a picture of the menu or just even whatever it is at the consumer sighing, it's going to have a lot more ability for the user to categorize filter organized search and find the content that they're looking for.
And it's going to enable a few different kinds of notifications of the kinds of offers that are available. So that we're able to do something a little bit more differentiated than just a simple percentage offer on that but can start to sort of work our way into what product level operating.
Kind of day offerings, you know things like that it will be fairly basic on that dimension, but the underlying foundation will you dare to enable more and more of that take a different offering and content variety.
Okay, great. Thank you.
Thank you. Our next question comes when you stopped calling with trust. Your line is now.
Great. Thank you very much you guys two questions for me first books by the way where the the clarity around the area throughout the quarter was wondering if you could actually a the one more month to that and help us maybe trends you're seeing in July.
And then maybe on the just the mix of advertisers we noticed that.
The percentage of digital advertisers on the platform I'm the true.
Just a versus physical ones, which kind of make sense can you help quantify the mix between digital dishes physical <unk>. The majority of digital but more importantly, how did they compare in terms of.
Stand on the platform well relative to each other thank you.
Yeah I know it's a great question you said this is Lynn.
I think you cannot see it many of you have relationships with our banks and to see the content, there's definitely a pretty dramatic increase up some of the online only content. That's out there it is hard for them to overcome or or to make up for the law, so very very big brick and mortar.
Particularly restaurants and also travel clients that we have but we see a nice rise in just the increase of these online only brand direct to consumer black brands using our platform. So I think it sets us up well or when this is over we're going to have those brand and we're gonna have to brick and mortar they travel the restaurant.
Definitely yes, I think are well in the long run, but they're not going to make up in the short term for some of the line up.
Somebody that's huge.
In terms of spend that we're seeing enjoy you want to touch on that when Andy well.
We have about it that's usually lag data so you're talking about or I think we did this about another week out a little bit more visibility and but we we are seeing better data in July that we certainly believe that our results is why won't you better more engine.
I mean.
But you certainly parsing.
Yes.
If I can just follow up on that.
As you look at the progression of the business.
How realistic is it too maybe expect.
You guys will get back to flat to maybe even year on year growth by like year that realistic and this month.
I had a lot really depends on some of the areas that doesn't touched all right. So some of the areas like like travel.
Hey, I'm brick and mortar you know, we're gonna have to see a lot more consumer confidence quite frankly, but a lot of it it's tied to teach and infections in fashion strike fear drive change in behavior change that so I think it's very difficult for us.
Hi.
Guidance at this time, but certainly we would need to see you know some some significant improvements it together.
What I will say uses and I hope, we don't sound like we're talking out of both sides of our mouth. It's possible as we've discussed many many times over our platform is capable of consuming a lot more budget than we have today and obviously that you know compounded with the current situation, but it's been came roaring back tomorrow.
That is absolutely possible I think the chances of spend coming roaring back tomorrow, or pretty though but I do want to.
Hi, like that it is entirely dependent on the economy coming back and then the advertisers we know for affect the advertisers come back on it.
Yeah.
Hi, Thank you Bill.
Thank you. Our next question comes with Chris Shutler with William Blair. Your line is now open.
[noise] hi, everyone. Good afternoon have you seen many side I know, it's early days, but you talked about being hopeful that some marketers will come back to.
To your channel before a lot of others are you seeing example that anything particularly around areas like.
Like hotels are nonstandard lodging.
Yeah.
We absolutely have seen in many cases, obviously one of the first off on certainly both in the restaurant or a industry well woven travel we've actually launch I want to probably about a half dozen twice what we do we actually no you're one of the first channels they come back on and it's something.
The only one then.
Right.
[noise], Okay, and then I also wanted to ask about the you made a number hires recently stick yesterday, you when you announced a any VP of bank partnerships and.
Some interesting comments in that that press release about.
Evolving and differentiating the current Ltchs platform for banks and further integrating it within banks beyond their offers programs. So if you could just dive into that a little bit more.
Yeah. This is lance, but when you start three of the largest banks in the country and actually more than that we serve I think seven out of the top 10 banks in the country. They all have a different spend that they want to put onto the program and a big part of the new user experience that we're building enable them to do that it enables them to.
Half of their own sort of optimization for how offers or display their ability to enhance the offered their ability to partner with some of the advertisers where maybe they have.
In relationship to those types of things so from an advertiser perspective, we're still selling and network, but from the bank perspective, they have the ability to customize the program much more so than they do today to meet kind of their look and feel and Specialisation requirement is really what what we were talking about there.
In terms of expanding the use of the platform like what do you think about it what we've built is a platform that can enjoy.
Bank data make it usable and then do something and there are multiple use cases for that platform sitting inside of that now I'm not going to suggest to you that we're going to have those use cases rolled out next year and I'm certainly not going to suggest to me that they are in our numbers are a part of any guidance he didn't meet providing.
The foreseeable future, but we have a number of.
Ways that we can serve banks with the existing platform that is installed inside their environments and many of their other types it well beyond just [noise].
Okay. Thank you.
Thank you. Our next question comes from Jason Kreyer with Craig Hallum.
Your line is now going up.
Thanks for taking my questions I can you give anymore color on on just the pause you talked a couple times about a pause that you've seen in recent weeks wondering if you give more color on that if that come back online now or if there's any specific verticals or any drivers to that pause.
Well, yes, the positive we're referring to no certainly is over the last couple of weeks again, there were a bit like in the data. So of course you'd have to go back to kind of the first half.
It will have July license to be able to go back then see the we also have a difficult year over year Commons, why which is kind of interesting way. So some of the weakness. We see is that I think that the normal have spikes and you see differently right a holiday what were a bit dampened as well right. So really our year to year.
Basis, you're starting to see a little bit of softness there, but we've seen that in several several verticals, which we're very happy.
But you know it actually has not been old, though it is certainly going a bit choppy oh.
But but not dramatic.
Okay, and then you know I know retail brick and mortar in kind of your fast casual dining had been larger categories for you on you know before the virus hit just wondering if you can give any you know any perspective on how you're offsetting that I mean.
And I know like E. Commerce is obviously, a growing category you pivoted to delivery solutions, but you can give us any progress updates and you know how what the trajectory is or how long it takes to kind of offset some of those spend in their category and how well you're doing in these new areas.
Here's what I'd say, we're doing a great job, attracting new logos that fit into those sort of rice categories, whether its delivery or direct to consumer E com only.
Great job tracking the new verticals.
But as I said before it is hard they're still in test mode. So you know the Io might need to 45 days and it might be for a couple hundred thousand dollars. It takes an awful lot of those to make up for some of our very large clients you had either huge brick and mortar footprint all very big.
In travel takes an awful lot of to make up for that in the short term.
We're obviously not making up for that in the short term.
When I put on my several quarters out hat and this thing is behind us.
Now we've got the they you know the big sort of traditional users of the platform backend and need new verticals that quite frankly weren't even a huge focus of ours before cove. It have now.
Then well through the testing cycle and they have the potential to spend quite a bit of money on the platform, particularly because as I said earlier, we are seeing what we think you're going to be some permanent changes just some consumer spending habits.
I think positions us incredibly well, but it will take multiple quarters cities test budget should grow to decide the budget some of the bigger clients.
Does that help.
Yeah. That's that's great feedback just I'm going to squeeze one more in you're you're obviously know testing with some agencies and some brands on the automated platform. Just wondering if you can give any feedback on what you're hearing there and potential for an update to the timeline on when this would be more generally available.
Yeah. So thank you for asking that because I'm really surprised that the first question. You know we are thrilled with where we are with rolling out for self service platform well ahead of schedule that we communicated to the street. We have two very very progressive agencies testing it and this should be you know something that that that you should.
Pay attention to in following quarters today the agencies, it's still very much in beta mode, they're using it to learn and understand the capabilities of our platform. So I wouldn't expect material revenue should be going through these these beta agencies. It this year and potentially even through the first half of next year.
Here, but we have repeatedly said this self service platform is what opens us up to go after the medium and small businesses that we do not call on today and if you look at every other platform out there starting with let's just pick on Facebook.
90% of their revenues come from these businesses that we're not even calling on today and this platform enables that and it's actually launched in mind and the hands a few agent. So we're super excited about it but I do want to be cautious it'd still be.
And you won't see material money going through the platform for several more quarters, but just to have it in the hands of agencies is a huge.
All right good update thank you.
Thank you. Our next question comes a match and live with Bank of America airline is now open.
Yes, Hi, guys are you mentioned several times about the change and you know.
What's your retail restaurants, and and travel obviously coming off in the pandemic.
Switching to more direct to consumer E Commerce brands.
Is there any where you can give us some more direct color on the percentages from categories and how they changed from pre cobot to post.
Yeah, we haven't shared those kind of exact numbers, that's a wait and everyone. I think at this point enough in appreciated the weighting the historical verticals have been quite important to us we actually have a significant amount of rose in the he.
But at this point right that is definitely being obscured by some of the point, we've seen from from our larger but more than comparable so there is a very nice rolling out there that olin's board will become meaningful in the future that that I think this in some ways. The silver lining is that there's some healthy diversification apple.
So were actually pretty excited about where that may leave in the future, but it's just going to take some time until that really shows itself.
And now what we [laughter].
You need vertical you know if you go look at the on me metric that we put in the supplemental they are they showing you the verticals and some of the performance rates by vertical and the upside potential there, which I think we'll give you some of what you're looking for to take a look at those and you get a chance.
Sounds good it then on in a separate note.
Well actually I'll, let you go sorry.
Good luck.
Thanks.
Thank you. Our next question comes a Josh Beck with Keybanc capital markets. Your line is now open.
Hi, this matti on for Josh I was wondering if we could talk a little bit more about your U.S. engagement metrics and I was wondering if you could compare specifically your monthly log in days to pre covert levels. I'm wondering if you maybe saw an increase in banking activity during calls anything that me because I mean use above expectations.
Then my second question is could you maybe talk about the cost savings that you think that you could achieve from the self service platform leader in like 2021 thing, but can you repeat that second question can we talk about the white from this all sort of flat for.
The cost savings that you think you pretty cheap.
[music].
So.
Let me hit on the lock in because that's a really easy one well we did see every spike in loggins when the stimulus check route for the most part that metric pretty consistent pretty stable. It has been for many many quarters, we're not showing historical data because the other metrics actually because banks are launching.
We'll go continue to grow from there about Lagon. There is there's no unusual spike in that and and you'll see that number grow overtime as more people adopt the only thing so that that's the answer to that one in terms of cost savings or the self service tool. There are cost savings as I mentioned, we can build a campaign into.
And then it and that is something that traditionally could take you know.
Words of an hour or more depending on how complicated campaign wasn't Uh huh.
But really the purpose of this self service tool is to go after agencies and small business bandits to go after new logo I think many of our existing advertisers will be a long time, it's ever before they're using the self service tool, they're going to want it you know happened really rich sophisticated capabilities that we.
We have today in the platform self service is intended to go after he logos that don't have the same sophisticated requirements as you know some of the larger retailers and restaurants in the country.
So there will be hockey.
It's not something you shouldn't.
Okay, great. Thank you so much.
Thank you and as a reminder to ask a question you'll need to press Star then one on your touched on telephone to withdraw your question from the Q. Please press the pound key our next question comes from Tim Willi with Wells Fargo. Your line is now open.
Hi, Thanks, and good afternoon, everybody two questions.
First one is about I guess sort of the pause that you referenced for remember correctly.
The first quarter call. You know there was definitely discussion of certain states that were reopening and beginning to see positive activity. I think you could really pinpoint geographically some of those states opened and obviously, we've seen states start to roll things back maybe so you know rolling back open again at some point in time.
Obviously, but I'm curious if the slow downs you referenced would really correlate geographically.
States that weren't pulling back or putting restrictions back in or is there no correlation that you could 0.2 geographically based upon how states. We're managing you know kings counts in social interaction and things like that.
Yes, so I absolutely I think many of the correlations that we saw early in the pandemic or consistent now we have seen that some of the states that have I'm thinking a bit more of a pause and others are certainly those as I look here in front of the some of our own indicators.
Arkansas, Georgia, Tennessee, Alabama, you get you get the drafted that it it's the southern states, who were actually starting to use a bit about a spike here in recent weeks. So we absolutely do you think is correlated to sections of consumer behaviors.
Okay.
Second question is on expenses and again I know that it can be a bit sporadic depending upon what investments you're making in the timing of campaigns and bringing customers on.
It looked like sort of all the expense categories relative to adjusted contribution margin in revenue.
I'm more show than probably like their last four to five quarters, maybe not every single one but a fair amount of them, we're really sort of probably higher than they've ever been relative to revenue. So I'm just sort of curious if that's a function of anything sort of again, maybe finishing up some investments and platform or just sort of holding steady on expenses while.
Revenue, obviously struggled with it this quarter or if there's something we should be thinking about index and the upcoming quarters about the sort of core run rate for expenses.
Yep.
So actually the increases in Opex that you're seeing is largely driven by stock compensation. Once you kind of Peel out the stock comp, which which we do have that detail never broken out some of the later material, but once you do that you'll actually see a nice decline.
But and that can be in several different areas. Obviously, so marketing a whole lot of sense like given our lower performance revenue and then you. We've got you know G. DNA is down quite a bit as well wasn't really large bad debt reserve in Q1.
When depend on it for started so a lot of that was really driven by thoughtful suck up is looking for a variety of reasons.
We're we got our annual refresher in April equity grants that we've been selling obviously, some some executive positions.
Those are likely to.
In the future, we've got something as compensation for both for all of our employees as we look to try and take care of almost five laugh, but yeah. We're thinking of ways. We can really try and tried to carefully what I think on study one of the ways in which we do that so we do expect all that stock levels to remain.
Is some level over the next couple of quarters.
Okay. Yeah, I was actually referencing I should clarify this is X stock comp with expenses as a percentage of revenue.
I know, there's some play but the revenue coming down relative to how quickly you could drop expenses down and maybe that's just what it is that there's just a level of expense you're going to maintain relative to revenue. So that ratio went up back stock comp I just wanted to make sure. There wasn't like some final push on product development or something that that moved up in R&D or sales and marketing line ex calm.
That would then back off in the back half of the year.
Yeah. So do you really got look sequentially do when looking at the Opex I'm, just because a lot obviously happens quarter to quarter. So you should see go from about 24.8 down to 20.5 that cycle.
Okay.
Right, that's all I haven't [noise].
[laughter] spending or anything going on that unusual or outside his.
Previous quarters at all it's more a function of revenues now.
Yep.
Perfect. Thanks very much.
Thank you and at this time I'm showing no further questions in the queue at this time I'd like to turn the call back to Lin lobby for any closing.
So you don't like it obviously was not a quarter. We we're all hoping for but we are still very optimistic about the long term success of this company is positioned to haven't I know koby will be over eventually it when it is we're going to be even stronger more it. So thank you all for attending and for listening and.
Well I felt it.
Ladies and gentlemen, thank you for your participation on today's conference. This does conclude your program and you may now disconnect.
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