Q1 2021 Kaleyra Inc Earnings Call
Greetings and welcome to the call ever incorporated first quarter 2021 earnings conference call.
At this time all participants are in a listen only mode.
Question and after the session will follow the formal presentation, if anyone should require operator assistance. The when the conference. Please press star zero on your telephone keypad.
And as a reminder, this conference is being recorded.
I would now like to introduce your conference of host today, Marc Griffin Investor Relations. Please proceed sir.
Thank you good afternoon, and welcome to Polaris first quarter of fiscal 2021 conference call.
For at least unaudited financials for its first quarter ended March 31, 2021. After the market closed the press release as well as of today.
The replay can be found on the investors section of the company's website at investors day Calera Dot com.
Joining us for today's call from management is the founder and Chief Executive Officer, Darryl collateral and the company's Chief Financial Officer Giacomo the Lyle.
Management is doing this call from different locations today. So please bear with us as we transition between speakers and address your questions.
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 a 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 comes.
And he does not undertake and specifically disclaims any obligation to update or revise the statements to reflect new circumstances or unanticipated events as they occur except as required by law.
Throughout todays press release and all of the call today, we will refer to adjusted EBITDA. This metric is not determined in accordance with generally accepted accounting for pensions, and therefore and subject to a very and calculations.
A definition calculation and reconciliation to the financial statements of adjusted EBITDA can be found and the tables included in our press release.
We believe this non-GAAP measure of Claris financial results provide useful information regarding certain financial and business trends and results of our operations with that let me turn the call over to Daria. Please go ahead.
And thank you Mark and thank you to everyone joining us on the call today.
<unk>.
All of the where the effects of the glaucoma from there and it continued to pose challenges worldwide, but was sent and geographies. The expediency of the continuous temporarily negative aspects of golf and the Mems mandated lockdowns and.
Why would the positive momentum building and the United States of America is the number of boxing day, the citizens right. Meanwhile, our resilience and Europe has lowered the modest recovery.
See you need the leap and most of unfortunately, many days now and we still see the worst of.
Of the pandemic as cases rise.
Moving on some financial highlights.
And we reported quarterly of revenues in Q1 of the 39.7 million with an increase of 18% from the same theory of last year, demonstrating continued resiliency and the recovery.
We continue to experience growth in all of our measure of geographies with particular strength coming from regions and our rest of the war segment. The there's been less affected by from the pandemic. The main drivers in the quarter, while and uptick in our e-commerce customers and India broad based positive.
The activity, we're seeing out of U S based enterprise customers and new customers and rest of the work and the fees.
The challenging quarter, we're very pleased to see digital payments and construction team through which the old messages of 2% on a year over year basis on the boys side calls competing with the increase year over the year and were up 55% of that basis for the quarter we deliver.
The 7 billion billable messages and connect the 1.2.
Billion voice goes on behalf of our customers now.
Now I would like to touch on some of our key initiatives in the quarter.
Our Caleb initiative continues to gain momentum and during the quarter, we signed an agreement with the exact all of it and even Latin America and the Caribbean region. The Spa.
A lot of the young men Caleb and will be creating communication solutions for visa partners. So all the digital communication issues the range from streamlining and K Y C to timely reminder of self reward benefits and messaging to our boys transaction declines.
The visa agreement easy and addition to the agreement, we signed last quarter with Mastercard banking customers and Latin America and the Caribbean.
As a reminder, we launched K lab is the way to leverage our expertise and solutions development digital innovation and growth of America strategies for the financial sector to be more impactful mobile customer experience solutions for both new and existing clients. We continue to be excited.
The pipeline for these new initiatives and believe our bespoke solution for the financial service sector will quickly build sustainable momentum.
And now the newly announced at Kittila The agreement the East West trade lengths, the leading provider of data analytics business intelligence and professional services for trade Aculeus together, we'll be creating communication solutions for credit unions powered by backup from the threat of lunch and three seeks the platform.
Using Caleb services trade and a few news will now be able to bridge the gap between the that the sources and the member and messaging.
Remember and sung section that the from the thread of loss and 360, the abuse by Caleb to integrate with Vascepa last for more color here, which will result in a more contextually relevant way to communicate with members through multiple channels, including voice SMS application to person.
And Pete and more.
The most exciting news of the quarter was the our announcement of the blended closing off the air and gauge the acquisition, which pending approval by our so called the at the May 27, and stockholder meeting is set for June 1st we could not be more excited to work and engage with customers and the and tight.
Moving to the color of the family.
L. A and I'm engaged together are the American two world class Enterprise cloud communication companies to create the top five loved the cheapest platform with a diversified and balanced product portfolio and jiggled graphical representation and.
And the remainder and gauges of best of breed, Mumbai and messaging solution that focuses on the mobile engagement amount of kit and allows the enterprise clients to effectively engage we expect cash the list who old mobile channel for a variety of use cases, such as cash the Mccann 70 silent and multi.
Factor authentication.
Over the past few years and gauge has invested heavily to create two excellent solutions for their customers and the first is communicate for all the cloud our cloud based enterprise grade messaging platform that for next brands and their cash the glass true all major mobile messaging channels there.
And second solution connector is engage the enterprise grade API that allows guests to clients to seamlessly build on existing message and progress without the need for extensive development.
And the age as the diversified base of full of three out of the Blue chip customers some of which are associated with the world's most valuable brands and the engaged stopped and clients at an average tenure of more than 10 years for.
And for these customers and engage is processing approximately 20 billion messages. The older 150 countries more importantly, engage 90 and the U S.
As one of for mobile messaging provider with direct connection to all four major U S carriers.
I'm gauge the offering is very complementary to collateralize and this combination will accelerate and the spam collateralized opportunity to serve the steepest market, which is expected to reach 26 billion in 2020 side with the account compounded annual growth rate of <unk>.
The 5% and the consolidated application to person enterprise messaging market, which is expected to reach 78 billion in 2020 two.
In summary, we believe that <unk> is well positioned to execute on our initiatives with our broad product portfolio global reach and the unbelievable wore wide thing.
Let me now turn the call over to <unk>, Chief Financial Officer, Jack on the larger who will review our financials in more of the pace.
Jack Moore. Please go ahead.
Thanks, Darren and.
For the first quarter of it ended March sort of first 2010, and warm and we reported total revenue of $39 7 million and increase of 18% per year over the year and demonstrating the continued the momentum of the recovery.
The revenue and the quarter was likely below which the patient is the economic recovery was not the it's all most of Europe, and we anticipate the because of the spike in COVID-19 the cases and.
Additionally, we choked off some of the extremely low margin and messaging right that the lower revenue, but a bit of positive effect you know what are the gross margin.
The main driver in the core for the word and that peak in our ecommerce customers who need from.
The positive of activity within our U S b, the enterprise customer and new customer and the rest of of the war all of our revenue base continues to move away from Italy, India, which we grow sales.
The 2% here over the year, while U S grill, 19%.
And the rest of of the World segment and was off the 64% and the.
The quarter, we processed seven be unbeatable messages up 2% from the prior year.
And we connect the one 2 billion.
Volume and boy scores in the course of.
55% year over the year.
Gross profit the first quarter 'twenty, 'twenty, one and <unk>, 74% to $6 3 million from four 7 million and in the year.
Peter.
The gross margin was 16% of the vote in the first quarter of 2021 after approximately two one of their biggest points.
From the 14% and we report and the first quarter of 2020. The the main drivers of gross margin expansion, where the revised profit mix and he.
Increasing trend toward higher margin premium service and boy scores and the journey of low margin and route.
Operating expenses and you were at $16 3 million and Q1 'twenty to 'twenty, one compared with the $14 3 million of in Q1, the 'twenty 'twenty, mainly driven by the increase in human and Pakistan.
Loss from Operation was 10 million for the first quarter of 2021 and include a $5 5 million of stock based compensation $2 5 million of transaction and one off costs.
These compare with the loss from operations of $9 6 million and the first quarter of 2000 and trend.
Net loss was $10 4 million or 30 for expense.
The share of phone for the first quarter 2021 compared to the net loss of eight point, the 8 million or 44.
And sort of share for the first quarter of 2020.
Adjusted EBITDA loss was one point to one medium and the first quarter of 2021 compared to a lot of salt.
300000 from the first quarter of 'twenty 'twenty the claw.
And adjusted EBITDA, yet is the attribute to the increase of Red Dot com, but.
The dominantly in the engineering done and it has been harder to execute on our and managing growth opportunity.
We develop and deliver new products and services.
Cash and use it in operating activities was $8 2 million and Q1, 2020, one mainly due to working capital changes and transaction costs compared with the cash use of two point and my media.
In the same period the prior year.
We have a very strong balance sheet and with cash and cash equivalents in short term investments of $39 8 million as of March 31st 2020 one.
This cash position is after paying down the company's liability by 18 point the 8 million during the first quarter include the eliminated any remaining obligation under the full watershed of it which is the agreement.
Good evening and compare at a weighted 57.8 million and the cashier cash equivalent and short term of investments as of December 31st 20 training.
Before I discuss.
Our financial outlook I would like to highlight the strategic capital raise and we are executing and as part of the transaction we don't engage.
Calendar, we found the the consideration to engage the shareholders.
And related transaction costs, and with a combination of 200 million of U.
The senior unsecured convertible notes due in 2020 six and the issuance of 10 million shares of common stock issuance of their pride itself on the 25 million.
Both of them.
Of the convertible notes and the common stock issuance will close the immediately prior to the closing of the engage acquisition.
Now I'd like to expand out of workflow rig out of the our financial outlook and their outlook doesn't not taking into consideration the engagement acquisition.
We are repairing guy and one of the revenue guidance in the range of <unk> <unk>.
And there are 83, two arms of the 85 million off of approximately 25 per cent of the midpoint of the range for.
For Q2 total revenues are expected to be in the range of 40 to 41 million off of approximately 30% of the midpoint of the range.
Thank you for taking the time to join us on our call today and with that and would that be happy to take of your question now.
Thank you at this time, we will conduct a question and answer session.
Like to ask a question. Please press star one on your telephone keypad.
And confirmation tone will indicate your line is there any question queue.
You May press Star two if you would like to remove the question from the queue.
For participants using speaker equipment, and it may be necessary to pick up your handset before pressing to star Keith.
Once again Thats star one to ask a question at this time.
One moment, while we poll for our first question.
Our first question comes from Mike Latimore with Northland Capital markets. Please proceed.
Yeah, great. Thanks, a lot of I guess.
Yeah, just with regard to the guidance for the year.
And it implies some solid sequential growth and the second half of the year I guess can you just go through a few of your assumptions. There do you assume there is kind of the.
Rio more of a reopening of the third quarter, again, and India, Italy, and maybe what are you thinking about in terms of the campaign and registry.
Hi, Mike its value I, let the Jack and want to ask this question related to the variety of new I just one on the line the last year, we reported the in the second of all for people.
And the 6%.
Of the total of Arabian of the year and.
And thanks, all sorts of the reopening we think and we are in the track with the guidance.
Okay got it.
And then and it sounds like M gauge of the Doctor close here.
June for some of them yourself.
And any color on how and gauge is performing and I know they have the bigger U S presence and there and some other region. So any color you can give us on whether and gauge is tracking to those original expectations.
Well, Mike and I would like talk about dengue job for the closing not before closing.
So I will give more.
And inflammation and call or when we will do the financial reported for the second quarter and at this point in time.
And in general and I'll walk I liked the stresses that engage the like the perfect fit.
For the room.
Because the we ended up.
With post closing and post combination and a pro forma basis with the about one third of the revenues coming from the United States, which will definitely and who the financial performance profile of calendar.
And also we will have about neither for the coming from Europe.
And I engage them.
And very significant operations and the U K.
And the rest of the last for the would be at least 50 50 split between Asia Pacific and.
And Latin America, and the reason that.
And what I can tell you about this combination is the same gauge seems to be very very promising.
And the altogether, Atlanta, and engaged and is becoming a very relevant player in the space.
And then battery battery glad of.
And that way.
Like three weeks away from the closing.
Okay got it got it and then just last on the campaign registry I think you had said that you wanted to see how the second.
Second quarter played out before you gave a little more color there and Thats still the plan on the campaign Register.
Yes, that's exactly the plan because I said the before as I said before we need to add some data points before we can guess about the financial performances of the U N and the unit is doing well is doing great. The.
The team is working very closely with the content and service provider and with the operators and they all the ecosystem seems to be.
Let me say.
Supporting the approach of the campaign registry and.
And Uh huh.
The operator, starting to Monday and.
And the registration of the campaign and the campaign and service provider or the like.
And simply testing, but we stopped adding goes to some revenues income. So these are encouraging me in restating the affirmation that the after the second quarter.
The understanding.
The understanding of the volume and the revenues and we can make a guess for the second half.
Oh, okay.
Thanks very much.
Thank you Mike.
Our next question comes from George Sutton with Craig Hallum. Please proceed.
Thank you I Wonder if you could talk about the traction you're seeing so far with voice and the U S and what were some of the drivers behind the growth and voice volumes and the quarter.
Oh boy.
Voice and the U assets that the battery value beginning so it's not yet relevant in terms of volume the increase in volumes.
And I would say mainly in India out of the moment and we have also launched and the services and other geographies, but we are at the very beginning so I would say that basically E. Commerce is the one that is the.
Taking the lead of the increase in volume.
And also some COVID-19 related services like the one that we announced and India, which was cold step one the.
Let me say, a seatbelt supported and the three Rs system for coffee and suspects.
And this is going very well.
And but e-commerce is definitely the service, which is leading the increase in volume.
Gotcha.
So I wonder if you could quantify the impact from COVID-19 and the impact on the low margin routes, you exited and the quarter.
But the impact on called the there is.
As Scott and I think that way because it depends not from the pandemic itself rather on the reactions of the.
And iterations and governments.
The quarterly for let me say very strict lockdowns and so whatever the reason very strict lockdown in general of the society.
You know slowed down and the economic and the economy behind the societies and rolled out.
So the impact is got to that and then if the.
Depending on where.
And when the government of doing the shutdowns.
And what they can tell you is that type of you start seeing a significant improvement in the definitely in the United States.
But also in Europe, because there is a fairly significant ramp up in the in the supply of the boxes in the world in May we are about to have the.
Roughly a couple of billion of none of this the dividend.
Uh huh.
Oh and getting to the to the to the wrong.
In general kill any of that.
The policy, where it's not being of quality provider is the policy that is not willing to work.
And routes and markets, where the price competition becomes unsustainable.
The especially because of the granting of routes policy that some supply and apply.
And on some routes and some geographies and so for these reasons and we start becoming more and more peaky and deciding where we want to work and with whom we want and work and this is already operating.
Number of larger accounts, especially the big digital Giants, where we start seeing gross margin significantly improving per.
The customer for the Spanish.
One other question of if I could you referenced a industry study that suggested that this market would grow 35% compounded over the next handful of years I wondered if you could just the align that with what you anticipate your own organic growth opportunities should look like.
Over that period.
Yeah, well the markets overall.
Could be defined as the union of the strictly cold the shipper's market that for instance, and and it's like Juniper of reserves.
And that is going between the seven five and 1 billion in 2020.
To roughly 25 billion and 20 to 25, but this is not the whole market because of these excluding the application of the personal messaging, which is much larger and it's going from 60, plus $2 78 billion in 2020 for excited moving so let me say the two segments have different and.
The Ah graph right. The first one being the imaging, it's growing faster and it's the the one that is considered to be growing and you've got about 35 per cent. The other one is growing a little bit.
The less if you blend the two markets together I would say that the AR and.
The duplicate because there is there are some duplication and seen in the tool in the tool.
The segments, you can say that the market is growing roughly between 25 and 30% on any of the branches.
Gotcha, great. Thank you very much.
Thank you hi.
Hi, Joe and once again, ladies and gentlemen to ask a question. Please press star one on the telephone keypad and my next question comes from Allen Klee with Maxim Group. Please proceed.
Good afternoon for the rest of World segment, and what were the factors behind the.
The year over year increase.
Mainly it's the old customers, because we are on board and new customers and new geographies.
So the increases is the it's pretty much related to new customers or new routes for existing customers and new geographies.
Especially when you work with large digital Giants of the global players now you start to have been going on for.
And the basis.
Uh huh.
Selection of new routes and new geographies, what they need the service.
Okay, Great and then for India.
Your.
And you did did quite well I think the revenues were up like 32% and you mentioned ecommerce and voice.
But your guidance for the year what are what are you I mean, what we're seeing from the outside it seems to be the things are likely to get worse, there rather than stable and the at least.
Next quarter or so what are you assuming and your guidance or are you assuming sort of India is going to be under some pressure.
Oh gosh, yeah the flatness.
Right, Yeah, Yeah, Oh, we are conservative.
The guidance for Q2, because of the situation and India, starting from April and May and.
And he is going well.
The worse than expected the on the on the 10 day make sure.
For we wouldn't see of go of course because of what our guidance is 70% a bowl of Q2 last year.
The yeah, we are conservative and India.
Great and my land the the.
And gauge the transaction seems like.
It's going to be very transformative for your company and so I just wanted to confirm my understanding of that.
There's a shareholder vote, but.
The likelihood that this goes through it seems to me quite high.
And could you explain kind of the dynamics of that.
Well the thing that makes it seem to find interesting if you look at the yes, the AE called and recently.
But he's very simple there there would be especially and meeting on Monday, the 27, where the share holders will be called for both.
And in the in the merger agreement already the existing shareholder so on and on.
On the on the on the buy side on the collector side.
And the agreed to vote for.
And the pool. So we're really now all of this we have the X percent off the existing shareholder of soccer League and of Bolting and playbook and the game. This is and the filing so I'm not saying anything wishes not in the public domain and.
So we expect this especially making to go of mostly it's it's the should.
Should be very easy so it's kind of a it because basically we are issuing 10 million and your shots. So these day shrink it's exceeding the threshold of 20%. So we have to go through the special meeting under the Covenant.
The regulation and.
And the use of Jakafi and the closing is expected to be after the approval of the special meeting on June 1st.
Zach.
Okay, Great and my I mean the.
M gauge is roughly around the same size and sales as you not exactly but significantly.
Significantly more profitable even before.
Any potential synergies. So it seems like this has the potential to be of nicely.
The very accretive type of deal.
And that it is financially it's definitely very accretive strategically also instead of accretive.
The zero all of that lapping costumes, almost zero the lapping of geographies box of India, where we basically doubled the revenues, which is good because we became more relevant and this would potentially lead to significant savings in the sourcing of the termination with the mobile network operators.
And the lot of cross selling opportunities, because Kelly and I used the Gnome channel platform.
And gauge it pretty much focusing on messaging on the two core technologies, which is.
The original the time that I asked the Madison and disabled function in two of yes.
So we are looking very much for what was the working together with the team to engage to exploit the opportunities, but yes. This is the very accretive.
A combination and also the enjoy a better profitability because of the geography of the dates because they are of the U S and the U S based.
Basically the.
Our highest gross margin messaging and marketing the walk.
Fantastic Congratulations and thank you.
Thank you all and thank you for your question and your continued support.
Thank you at this time I would like to turn the call back over to management for closing comment.
Thank you very much. Thank you, ladies and gentlemen for staying with us during the school and are looking very much for to talking to you again next time. Thank you very much.
Thank you. This does conclude today's teleconference. You may disconnect. Your lines at this time and thank you for your participation and have a great day.
Bye bye.
Okay.