Q4 2020 Kaleyra Inc Earnings Call
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Greetings and welcome to the Calera, Inc, fourth quarter and full year 2020 earnings call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad.
As a reminder, this conference is being recorded I would now like to turn the conference over to your host Mr. Marc Griffin Investor Relations for Claire Inc. Thank you you may begin.
Thank you good morning, and welcome to Claris fourth quarter and full year 'twenty 'twenty conference call.
Collateral released unaudited.
<unk> for its fourth quarter and full year ended December 31, 2020 earlier this morning.
The press release as well as a replay of today's call can be found on the investors section of the company's website at investors day Choleric Dot com.
Joining us for today's call from management is the founder and Chief Executive Officer, Daddy-o College at all and the Companys Chief Financial Officer, Giacomo they'll audio.
Management is doing this call from different locations today. So please bear with us as we transition between speakers and address your question.
During today's call management will be making forward looking statements. Please refer to the company's SEC filings, including the company's annual report on form 10-K for summary of the forward looking statements and the risks uncertainties and other factors that could cause actual results to differ materially from those forward looking statements.
<unk> cautions investors not to place undue reliance on any forward looking statements.
The company does not undertake and specifically disclaim any obligation to update or revise such statements to reflect new circumstances or unanticipated events as they occur except as required by law.
Throughout today's press release on our call today, we will refer to adjusted EBITDA.
This metric is not determined in accordance with generally accepted accounting principles and therefore are susceptible to a variety of varian calculations.
A definition calculation and reconciliation to the financial statements of adjusted EBITDA can be found in the tables included at low pressures.
We believe this non-GAAP measure of Claris financial results provide useful information regarding certain financial and business trends and results of operations.
With that let me turn the call over to value. Please go ahead.
Thank you Mark and thank you to everyone joining us on the call today.
As you are all aware that the glue.
From there may continue to unfold and why we believe we are most likely through the wall stupid, but moving to Alaska on the global economy are still present.
We continue to see a modest recovery in Italy, while our other largest marketing media reported solid growth in the United States of America led the way with growth, which was over 100% from last year.
Digital transformation is driving change up organizations of all around the work and the pandemic has only accelerated those plans now on interactions with enterprise customers, They're Oh gosh.
Mom didn't announce a digital relationships.
Through a variety of new channels like E Mail shop book, and interactive voice response or ABR.
We are well equipped with one Lou distributional demand will not work from range of Super schools will allow us to capitalize on this opportunity and provide solutions to any communication platform challenges our cash unless my place during these times.
In addition, the scale and scope of our trusted platform and our reputation as a global provider of communication tools.
He goes on anything with large multinational corporations and we are starting to see traction outside of our core markets.
By leveraging our position he has the most trusted cheapest provider for banking and financial services in Europe, and India. We are now, making a significant legal in the United States, where we see strong demand for our industry, leading API per articles. This drop as she is now starting to pay.
Is that one of the United States business. So how long the decrease in 2020 and believe we have a number of greenfield opportunities with additional fortune five on good companies in the region.
Now moving on to some financial highlights we reported record quarterly revenues in Q4 with 44.3 million, beating the high end of our guide on or $42 5 million.
Most importantly, Q4 revenues was up 16% from Q free and 24% from the same period last year demonstrating continued momentum in in the recall that.
For the full year 'twenty 'twenty revenue increased 14% from full year 2019 to 147.4 million.
The main drivers in the quarter was our E commerce customers in India, and the continued ramping of the large U S day enterprise customers either enterprise customers.
Momentum with an increasing number of digital payments and transactions, which roll messages up 16% sequentially and 18% on a year.
<unk> already made this on.
On the voice side calls were up 27% from Q3.
And 100% year over year.
For the full year, we delivered nearly 26 billion billable SMS messages and 4 billion voice calls on behalf of colored glass customers.
Now I would like to touch on some of our key initiatives in the quarter.
Last year, we launched Caleb as a center of excellence dedicated to supporting to layer on in developing new solutions to enhance the customer experience for financial services companies in the U S market.
Our goal was to leverage our expertise and solution development digital innovation Engle tobacco stoppages for the financial sector build more impactful mobile customer experience solution for both new and existing clients.
We are very excited to see that this initiative beginning to bear fruit.
And we announced the signing of our first scale on the agreements in the fourth quarter.
First the agreement involves the bad debt deployed.
Deployment of our prepared food application to person solution from Mastercard banking customers in Latin America on the Ku band.
The second on agreement.
One of the top five U S banks, helping them with design digital onboarding processes and systems.
With the current pipeline for this new initiative and believe our bespoke solution from the financial services sector with quickly.
Payable momentum.
We also announced on the strategic partnership with the web page <unk>, leading marketing automation and customer data platform for business to consumer businesses.
<unk> engaged when used <unk> platform unique state of the art communication channel infrastructure to engage customers and provide an omni channel brand experience for consumers across the globe.
And now from customer engagement is becoming increasingly true show through the sanctions and collector's edition to the web engaged Serbia will empowered brand to foster a personal connection with their consumers.
In October of 2020, the breath of our platform now on blood, which was highlighted.
<unk> were listed as a representative battenberg in governmental.
In comparison not a good guide for communication platform as a service.
The estimation by 'twenty, two 'twenty, 390% of global enterprises with leverage API enabled on cheaper softening is a strategic value skus that book to.
To enhance their digital competitiveness.
Oh from only 20% in 'twenty 'twenty.
Our wide range of developer tools had customers get the most of our expansive platform, particularly our visual builder, which is crucial.
Or walk us without cobian skewed to access the true range of Vascepa to debt.
Finally on <unk> one.
<unk> gold in the <unk>.
<unk> one unit per reserve future Digital award for technical innovation in the category of best Rcs provider highlighting the strength of our platform.
<unk> has dedicated the vast amount of time index with PS two the advancement of cash and we couldnt be more on the lab can be recognized on a global level for our efforts.
In summary, we believe that caller your line is well positioned to execute on our initiatives with our broad portfolio of products global reach and unbelievable worldwide thing.
We continue to build traction globally with solid growth in India, and the United States, which we see as key markets going forward for right now.
Let me now through on the call over to <unk>, Chief Financial Officer Jakob on the line.
Who will review our financials in more detail lacrimal. Please go ahead.
Thanks, Danielle for the fourth quarter.
Fourth quarter ended December 31st 2020, we reported total revenue of $44 3 million, beating the guidance disclosed in the previous quarter.
Q4 revenue was up 60% from Q3, which demonstrate the continued strength of the recovery and was also up 24% year over year isolating alright, so not to break all of its growth levers for the free.
Full year on 2020 revenue increased 14% to on that of $47 4 million.
The main drivers in the quarter was.
Our E commerce customers in India, and they continue on into the ramping of allowed to use based on enterprise customers.
Our geographical mix shift continuous to move away from Italy, with India growing 39%.
Over to you on it.
27% of our revenue GAAP revenue and the U S growing at over 100% to 16% of revenues.
Okay.
On the quarter, we processed seven point to 1 billion messages.
But eight per cent from the per year over year.
And the officer teen percent answer with share basis.
Connected one 4 billion voice calls in the quarter offer on the percent that.
Year over year, and 37 per cent from Q3.
For the full year, we delivered nearly 26 b BB on billable messages.
And the four beyond voice calls on behalf of customers.
Gross margin was 18% in the fourth quarter of 2020 down approximately two points from Q3, 20% and down approximately five points from 23 per cent that we reported in the fourth quarter of 2019.
The decline in volume in the first half on half a day you gotta caused by Covid that created a negative residual effect on margin.
In the fourth quarter Q.
Q3 gross margin increased debt following the effect of debt negotiation of a good evening. Thank you new services.
Compare to the force at all.
Oh from 'twenty 'twenty. The main drivers of gross margin expansion were the reopening of economies, which led to an increase in higher margin premium service and voice calls.
Operating expenses were $12 5 million in Q in Q4, 2020, compared with $9 8 million in Q4 two.
2008.
These operating expense include 4 million in stock based compensation.
One 4 million of transaction on one of course on one 5 million per extending to the public company compliance, which.
Which we did not have in Q4 2015.
Excluding these costs operating expenses would have increased by two point for media on a comparable.
I just did the operating expenses of $3 1 million in the fourth quarter of 2019, mainly driven by significant increases in new home on capital.
Loss from operations was $4 7 million for the fourth quarter of 'twenty 'twenty and includes 4 million of stock based compensation $1 4 million of transactional on one off costs and $1 5 million of public company costs.
Just mention.
This compared with a loss from operating of one 8 million in the fourth quarter of 2018.
Net loss was $4 5 million or 15 cents per share for the fourth quarter of 'twenty Grant.
The percentage improvement.
N.
Compared to Q3 net loss of $5 3 million debt.
The quarterly net loss can be compared to the net loss of $3 6 million or.
25 cents per share for the fourth quarter of 2019.
Adjusted EBITDA comparable with the previous year was $3 1 million in the fourth quarter of 2020 and include approximately $1 5 million of costs incurred as a public company that were not recognized in the fourth quarter of 2019.
Without adjusting for those costs adjusted EBITDA would have been one 6 million and compare to $5 6 million on the fourth quarter of 2019.
Decline in adjusted EBITDA, adjusted EBITDA to the increase.
At the heart ground, mainly in the engineering talent.
It would be higher.
Executing on emerging growth opportunities to develop and deliver new products and services.
For the full year 2020 gross margin.
17% down approximately 375 points from 2019 net loss was $26 8 million or $1 90 per share compared to the net loss of $5 5 million or 48.
In 2019, adjusted EBITDA comparable with the previous year was seven 5 million compared to 11 1 million and includes approximately $4 3 million of cost incurred as a public company that were not recognized in 2019 without debt.
Adjusting for those costs adjusted EBITDA would have been $3 2 million and comparable to 11 1 million in 2019.
Cash used in operating activities was 11 5 million in the year 2020, mainly due to working capital changes compared with net cash provided of $6 4 million in the prior year.
Cash cash equivalents were 33 million as of December 31, 20 per se.
This cash position is after being mainly.
True.
Free cash of $20 9 million the remaining obligation on the forward share, which is the agreement and compare with 77 moving cash cash equivalent on a free cash flow.
Timber 31st 2018.
Now I'd like to expand our film regarding our financial outlook.
The issue on one revenue guidance in the range of 283 $285 million up approximately 25% the midpoint of the range for Q1.
Both out of revenues are expected to be in the range of <unk>.
45 to $41 5 million up approximately 22% at the midpoint of the range.
Thank you for taking the time to join us on our call today and with that debt, we would happy to receive your question now.
Thank you at this time, we'll be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question can you.
You May press star two if you'd like to remove your question from Mccann.
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Our first question comes from the line of Tim Horan with Oppenheimer and company. Please proceed with your question.
Thank you.
A few if I might can.
Could you talk a little bit about non SMS revenue voice.
Voice video chat that Bob I'm, sorry on Dr. These other products.
Roughly what percentage of revenue are they now.
Maybe what the growth rates and how do the margins kind of compare to.
More on legacy SMS services. Thanks.
Thank you Tim.
You're answering.
Well the exact percentage of the non SMS revenues, it's a figure that they go back from Jack on what can provide.
We haven't seen on expansion index product line it should be about 10% in 'twenty 'twenty on a full year basis.
With an increasing volume, especially in.
In India on where voice is taking getting momentum.
So whatsapp for business is going pretty well.
Literally still at the very very early stage. So let me say very promising going forward, but not really providing significant revenues in 2020.
And in General we force you'd be expansion of the new channels, because all of them Mcham with gross margin on voice. It's over 45 per cent for example.
And definitely we have the people on the overall non SMS revenues as we have that again.
Yeah. It is a little less than 10% of the Delaware on the.
<unk>.
Revenue for the full year day, yeah. It can be crazy to think what the back book.
And.
What's that growing.
Roughly that growth rate versus decimus on revenue.
So on.
The growing 7% on Q3 and 100% year over year.
<unk> is the most significant.
Pizza of visa cash.
On the fringe.
Great.
And in the quarter.
What percentage of revenue do you think the cyclical due to the holiday season, and an E Commerce channel.
I know your mix is very different I I'm not sure. If India has the same type of cyclicality is so is the United States for the fourth quarter, but do you have a rough idea of what percentage was more on a out of trend on the quarter.
I got the question right from the employees of the fourth quarter is the high seasonality quarter in general.
The U S in Italy on those seen in India.
For multiple reasons, but the most relevant one day is because it's a holiday season, where you add the value and in a in Italy and in the U S. You are crazy loans, which is the theory on where people he's making a lot of.
Get some presence and this is leading to more practical central platform in terms of seasonality in general Q4 EBITDA, yes.
Volume quarter in the year and Q1 is a little less in Q4 net the typical pattern that we observed over the last few years.
<unk> 'twenty 'twenty has been a little bit different.
From the other years because of the pandemic and because the very substantial increase of the.
Digital transaction E commerce on the Liberty.
Our electronic payments and.
Relatively lower volume off.
Cash present transaction, we need from you.
Day shops, because you.
You know people has been a more using the online channel to reduce the.
On your exposure to Covid pandemic.
And then lastly, any update on campaign registry.
Is it being kind of implemented at this point and when do you. When do you think it'll be fully implemented in.
Maybe a rough idea of what you know.
How large of a contract or how meaningful can this be thanks.
Well, we start seeing the volume of campaigns services provided registering these fuel one on check on that.
On your campaign registry Dot com, which is our website.
We publish the names of the caveat on the names of the campaign salaries rider, which is getting on board.
This is a moving target, but which is changing on a daily basis.
On the major operators that are expected to enter into the commercial phase.
Phase of the survey says as of March 1st 'twenty 'twenty, one next month.
And after adding on what's going on and be the volume off the registration in the campaign on the traffic a let me say second quarter, then we will be in a position to make a best guess about what doesn't work in terms of revenues on volume, but it sounds to me better.
Any problems and frankly speaking on most of these are naive girlfriend on eyeglass margin segment. So this will be very very let me say.
Yes.
We'll provide an expansion.
Due to the gross margin in North Carolina, well. Thank you.
Thank you.
Thank you. Our next question comes from the line of Mike Latimore with Northland Capital markets. Please proceed with your question.
Great Yeah, thanks, very much congratulations on the strong rebound to the year there.
I guess.
Jack of all on the your comments about gross margin our volumes in the first half of the year.
Fourth quarter gross margin just can you just elaborate on that a little bit and then how do you think about that dynamic playing out in 2021, and what kind of visibility do you have the gross margin in 2021 here yes.
So let.
Let me say there are some agreement there are.
On a cumulative basis.
On the year related to debt cost of messaging.
And that we.
We did some with target.
Because of the Q2.
The decline on revenues and volumes, we are not able to reach some targets. So these are.
Taken effect a receivable on effect as I said on Q4.
So Q4 is not so high as we expected in a normal situation.
Compared to that of course that bad debt starting from.
Jen we see Arctic comedy.
And we can project for the next year.
On a recovery in that gross margin.
But can you say.
As we were before the pandemic Ah in 2019 day gross margin was 20% and we can project something like that for this year.
Okay, Let me add on the let me add value.
The one on one comment on this most of the most of the contract with the mobile network operators have a kind of a volume discount scheme, which is progressive so due to the lower than expected volume in Q2.
Basically didn't reach the threshold in Q4 that we were expecting normally because we add that there's a slowdown in Q2. So that's the mechanism basically so the anomaly is still Q2.
Yeah, Okay got it great and then.
You talked about the pipeline for K lab looking pretty solid can you elaborate on that a little bit more what are the use cases and also is the does the pipeline involves sort of greenfield opportunities or are you looking at replacing.
Yes.
No I believe that it's more on a greenfield opportunity rather than on replacement in the U S. Domestic market. The banks have been using messaging on depot, okay right fees from cash from op indication and some are let me say marketing and engagement, we'd gone see very sophisticated use cases like we have seen answer.
During the war.
In Latin America, where we are working closely with back to come out with their insurers.
The use cases are very much from related to the prepaid.
Plastic because theyre lucky on the American market.
It's significantly either.
On the U S. So prepaid because often you on all the crazy, scoring golf debt it could go.
Latin American citizen is lower.
And on those specific plastic use cases.
Kelly.
The light transaction denial, because you run out of credit. So we notify we notify the cabo there to top up the car hire.
A typical monthly transaction on full subscription like Netflix or Amazon.
Amazon flying these kind of things.
Also dispute management seems to be very promising and the way. We handle this is cole creators, we think alongside with the cyclic than the issuers to analyze that data and to decide where they should progress on the design of new services to them.
To improve the overall performance is more cardholders.
More true.
Transactions per kind of older less transaction denied and less dispute debt debt.
All our idea.
And this is very interesting and very promising in the future. It's a process. It takes some time to get into volume, but once its a full pledge our full throttle.
<unk> value of element.
Right.
Yeah excellent. Thank you.
So much good luck to share.
Thank you Mike.
Thank you. Our next question comes from the line of Lance per tons at with Cowen and company. Please proceed with your question.
Hi, Thanks, guys. Thanks for taking my questions Congratulations on staff.