Full Year 2021 EngageSmart Inc Earnings Call
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Good evening. Thank you for attending today's engaged Smart Q4, 2021 earnings call. My name is Selena and I will be your moderator all lines will be later in the presentation portion of the call with an opportunity for questions and answers.
If you'd like to ask a question. Please press star one on your telephone keypad I'll now turn the call over to Josh Smith from engage smart Raj.
Thank you and good evening with me on today's call are Bob Bennett, Chief Executive Officer, and Cassandra Hudson Chief Financial Officer.
Earnings press release supplemental presentation and associated form 8-K can be found at investors, Doug engaged smart dot com within the supplemental presentation. We are providing a more detailed breakout of our revenue by segment into the following categories subscription.
Actually in usage based fees and other during this call we will be discussing certain forward looking information.
Actual results could differ materially from those contemplated by these forward looking statements. Please refer to the risk factors section of our quarterly report on Form 10-Q , and other SEC filings for more information on the risks regarding these forward looking statements and risk factors associated with our business all metrics discussed during this call are non-GAAP unless otherwise noted a reconciliation of non.
GAAP metrics to the nearest GAAP metric can be found in our earnings press release and supplemental presentation, both of which are available on the Investor Relations section of our website.
This call is being webcast live and will be available for replay on our website at investors that engage smart dot com I would now like to turn the call over to our CEO Bob Bennett.
Thank you, Josh and welcome everyone and thank you for joining us.
We are excited to host our fourth quarter fiscal 2021 earnings call on the heels of a strong quarter and an outstanding year delivery.
Delivering on our mission of simplifying customer and client engagement can be directly attributed to our customers our partners and our employees and I remain humbled by their contributions and continued commitment to engage smart. Thanks Beth.
Before digging deeper into the details of our performance I'd like to share with you a few of the highlights that we are really proud of it.
We've seen tremendous customer growth of 39% year over year in our SMB segment, where we now serve over 79000.
Our strong organic customer growth is primarily driven by word of mouth and the strength of our end to end product suite.
For example, one of our Dietitian group customers was able to eliminate or separate vendor solutions in favor of a simple fact.
Improved efficiency enabled each diet piston in the practice.
These additional patient each day.
At the same time, we are driving continued innovation across our.
Our solution for example, we added mobile App features and introduce integrated diagnosis code with simplified management and documentation, while driving cost savings.
We are serving more vertical today than ever before and are focusing on several high growth areas.
Plan to further invest in these verticals and drive customization of features.
If that becomes unparalleled in the market and then our enterprise segment, we are experiencing great traction as they serve over 3100 customers across our fleet solutions.
We're seeing strong organic growth driven by product innovation partnerships and our focus on having a leading value proposition. This includes E payments on other options to help customers get a faster easier and without paper there.
Were invoiced cloud the largest revenue contributor in the enterprise segment, we provide multiple payment alternatives for our builders, including Paypal Venmo and others in our space, where the market is still largely running on checks. We're excited that our progress has been recognized with a short listing of invoiced by the Cloud Award.
The category of best cloud payment finance for billing solution.
Our donor drive solution, we are honored to support fantastic charities, such as extra light a one of a kind 24 hour gaming marathon benefiting children's Miracle network hospitals, we are helping them raise huge amounts of money through the advanced social features found in our technology, we helped extra life raised.
Over $3 million.
Our nation and a single weekend storage by these get us excited to be part of engaged smart.
As you recall, we founded engaged smart because activity by paying bills scheduling appointment onboarding, new patients and client communications shouldnt be that hard work.
Come a long way.
We are driving digital adoption and a $28 billion market.
Customers are increasingly adopting our offerings to drive digital adoption and self service as they simplify engagement with their clients why because engaged smart solutions help improve their businesses lower operating expenses Nbd's wasted time, turning to the financial headlines for the fourth quarter and full year.
Engaged smart delivered another quarter of record revenue performance total revenue in the quarter increased by 37% year over year to $61 6 million driven by strong revenue growth of 55% in our SMB segment, and 23% and our enterprise segment for the full year 2020.
One total revenue was $216 3 million, an increase of 48% from the prior year and the SMB segment, we delivered incredible annual year over year growth of 74% and in the enterprise segment annual revenue grew 28% to.
Cassandra will review our financials in more detail later, but first let me give you a high level update on our progress and execution in our SMB and enterprise segment.
Simple practice now serves and wellness vertical markets, including mental health. These language, the biology, occupational therapy nutrition, chiropractic and physical therapy among others.
While our roots are in mental health or newer markets are high growth engine for our SMB segment, and we intend to increase our investment in product and marketing to drive growth in these markets in 2022 and beyond.
Practitioners across these wellness market are in fact that the simple practice because it offers an integrated solution for business management simplifying task flight scheduling appointment documented cases, deploying telehealth billing and payment collections in insurance claims management. This is a high growth space.
<unk> accelerated its growth.
<unk> business continue to grow as the pandemic begins the way we believe the tremendous F&B customer growth, we experienced as a result of increased technology adoption that was catalyzed by the pandemic and has now become a secular shift in behavior.
Now turning to our enterprise segment.
Our enterprise business brings together vertical specific engagement capabilities with a modern digital commerce experience, we have more than 3100 customers across government utilities healthcare financial services, corporate and nonprofit giving all using our invoice cloud helps say 'twenty four and donor derived.
We saw excellent momentum in the fourth quarter and the full year driven by strength in customer wins go lives and the continued adoption of our digital solution.
During the fourth quarter, we saw strong new customer acquisition fueled by our growing network of Alliance partners in our core vertical. One example of the traction we're seeing with our alliance partners is Invoiced cloud partnership with Harris Utilities group.
Invoiced cloud as the largest payments partner for Harris utilities group and that partnership continues to expand with the launch of the Silverglade customer engagement portal solution by habit.
Under the mutual customers benefit from our pilot partnership, including the city of Arlington, Texas, who has been working on driving table that billing and online payment adoption the city of Ireland since working with us.
Already realized an estimated 60% decrease in payment related costs and $30000 in annual savings in printing costs alone.
Vantage is such as these underscore the great value that our enterprise product and leadership teams are bringing to the market.
Speaking of leadership, we're particularly excited about the New addition of Kevin O'brien, who will be leading this business as president of enterprise to build upon our clear steady success in this space.
Kevin comes to us from PTC and brings an excellent track record of leadership in product and go to market that will be valuable to our enterprise solution.
Looking forward the market for customer engagement online Bill payment software remains bath and organizations are becoming increasingly aware that driving digital self service and providing customers with multiple ways to pay has been proven to reduce late or loss payments and to increase customer satisfaction overall.
That I will turn the call over to our CFO Cassandra Hudson Cassandra.
Thank you Bob I appreciate everyone joining us today for our Q4 and full year 2021 earnings call. We delivered excellent Q4 results, which well exceeded the guidance. We provided on our last earnings call for revenue and adjusted EBITDA total revenue for Q4 was $61 6 million, representing an increase of 37%.
Year over year.
The two key metrics driving our strong revenue results, our total customer count and transactions processed as.
As of the end of Q4 2021, our total customer count increased by 23000 to 83000 total customers, which grew 37% and was mainly as a result of new customers acquired within our SMB segment.
Emily we saw 41% growth in transactions processed by our solutions year over year with $31 2 million transactions in Q4, 2021 compared to $22 1 million in Q4 2020.
We also saw continued strength in our net revenue retention rate, which was 119% for 2021, driven by our SMB customers continuing to add licenses for additional practitioners and increased utilization of our payment solutions. In addition, our net revenue retention rate is fueled by growth in digital payment adoption for <unk>.
Listing customers within the enterprise.
Our F&B segment continues to perform exceptionally well with fourth quarter revenue coming in at $31 1 million, representing 55% year over year growth.
Subscription revenue of $21 2 million grew 48% driven by continued growth in new customer adds and add on licenses for additional practitioners transat.
Transaction and usage based revenue of $9 5 million grew 68% as our customers continue to process more transactions on our platform.
Our enterprise segment also delivered strong results with reported revenue of $30 6 million, representing 23% year over year growth.
Our enterprise revenue growth was impacted by a onetime hardware sale of $700000 that occurred in Q4 2020 associated with the migration of customers from legacy on premise solutions to our health care 24 stack platform.
The vast majority of the revenue in our enterprise segment is derived from transaction and usage based fees, which grew 28% in Q4 of 2021.
To provide further color on the topline and address the market interest in Covid in our quarterly growth compares I want to share. The following is one of those outlined growth drivers that we see for 2022.
We're engaged smart COVID-19 accelerated our top line growth rate in 2020 across both segments of our business.
With respect to SMB, we were in a great position to serve the immediate increase in demand that we saw from mental health practitioners at the outset of the pandemic.
We had elevated levels of new customer adds in Q2, and Q3 of 2020 as practitioners quickly added digital capabilities and solutions in a mostly virtual world.
Quarters in addition.
We saw higher revenue from existing customers as they added practitioners to their practices and process more payments through us.
Segment will continue to benefit from.
Strong secular tailwind in Digitization and technology adoption.
Our enterprise the need for contactless payments drove an improvement in the rate of digital payment adoption across our invoiced cloud customer base for throughout 2020.
Now that things have normalized we expect more consistent topline growth rates in 2022, as we move on from Covid comparison.
In terms of secular growth drivers for our business the tailwind remain highly into the wellness market. We serve today are low.
Large and relatively untapped, we remain confident that simple practice tailwind will continue to benefit from high demand for digital transformation within our target market low competition.
<unk> strong reception for our simple practice offering and a high LTV to CAC ratio that can be dialed into investments to drive growth.
Covid silver lining is that we have a larger installed base for simple practice that has a pattern of adding license subscriptions and payment transaction volume as their businesses grow. It also means a larger base of customers, who provide word of mouth referrals, which is a major source to feed our top of funnel trials.
Another growth opportunity and our simple practice business is the continued build out and innovation of our product suite as we further tailor it to see benign new practice areas, we now address.
As Bob illustrated within Dietitian example, we are in a position to advance our offerings further innovate on new features to serve distinct vertical needs. This should positively impact top of funnel activity.
Finally, we are rolling out new pricing and packaging, including an entry level option that we believe should help attract more practitioners to our solution.
We have incorporated our telehealth offering into the higher tiered packages to better align with the needs of our customers for.
For enterprise New customer go lives will continue to be a core driver of our growth as we expect a meaningful portion of our 22 growth to come from biller going live within the year as well as the full year impact of customers that went live in 2021.
Transaction growth with our existing biller is driven by increased digital payment adoption will also continue to contribute to our growth in 2022 now moving on to margins. Our adjusted gross margin for Q4 2021 decreased to 78% from 79% in Q4 of 2020, driven by the migration to a new <unk>.
Through telehealth backend provider in early 2021, and additional licensing costs incurred in Q4 of 2021, both for our SMB segment sales and marketing and to 21 5 million.
Driven by our continued investments for growth in new customer acquisition with.
With increased investment in our SMB segment, as we target new channels and broaden our brand to reach customers within our 10 Walnut market R&D expenses increased $3 6 million to $9 3 million driven by our investment in engineering head count focused on new product development.
<unk> our existing solutions.
G&A cost increased $2 9 million.
To absorbing public company operating.
Operating in September adjusted EBITDA was $6 3 million for the quarter, representing 10, 2%.
Million or 17, 4%.
Margin in the fourth quarter of 2020 full improvement in profit.
Ability in 2020 driven by <unk>.
Our strong F&B revenue growth as well as a temporary easing in our spending levels due to COVID-19 .
We have since ramped up our investment spend and are investing heavily in product development and sales and marketing to drive revenue growth given the opportunities we see in the marketplace. We continue to remain highly profitable moving to the balance sheet as of just $254 $3 million in cash and cash equivalents during the fourth quarter. Our change in cash was mainly related to free.
Cash flow of $2 7 million offset by the payment of $2 4 million of costs associated with our initial public offering.
With that I'll move on to our 2022.
For Q1, we expect revenue in the range of <unk> 61 to $62 5 million, which implies.
At the midpoint of our range.
We expect adjusted EBITDA in the range of $5 4 million and $6 2 million, which represents an adjusted EBIT margin of nine 4% at the midpoint.
The full year, we expect revenue to be in the range of $280 million and $285 million or revenue growth of approximately 31% for adjusted EBITDA for the full year, we expect to be in the range of $29 million and $31 million, which represents an adjusted EBITDA margin of roughly 10 to drive growth and maintain product leadership as you adjust your mom.
Adults. Please keep the following in mind, we typically see a step down in revenue.
In our enterprise segment due to the timing of transactions in Q4 associated with tax billing with an invoice cloud and the concentration of large fundraising events for donor derived.
We expect that sales and marketing spend will increase meaningfully as a percentage.
Fee to drive top of funnel.
All the wellness markets, we serve and continue to add sales capacity, we expect R&D spend will increase.
As a percentage of revenue driven by our <unk>.
And innovation to maintain product, but to decrease as a percentage of revenue after fully absorbing public company operating costs in the second half of 2022, and we expect depreciation to increase approximately 20% year over year, driven by an increase in capitalized software costs given the opportunities we have in our current market.
And our track record of success, we continue to target top line growth rates at or above 30% for the next several years from a long term perspective, we are kind of higher comprised of growth.
Margin within the 80% to 82% range sales and marketing expenses of 25% to 30%.
And which will vary based on overall revenue growth R&D of 12% to 15% given our focus on maintaining overall product leadership and G&A in the 8% to 10% range as we realize back office efficiencies and economies of scale I'll now turn the call back over to Bob for closing comments.
Three we are excited about our record public company, including Us.
Strong finish in Q4, our solutions have high adoption.
As evidenced by <unk>.
Customer count file conversion transaction volume.
Net revenue retention.
Third Party awards.
<unk> success will continue to be driven by three simple factors first our proven customer focused playbook driven by a players companies are simply groups of people organized around a common purpose throughout the entire organization.
Product leadership as measured by adoption cut.
Customers don't want to regularly make system changes.
And maintained product leadership.
Smart third.
Yes.
We are still in very early innings and have captured less than 1% of market share and we have the best SaaS solution in our view.
Excited about the future we are.
Focused on delighting, our customers growing our business and create shareholder value, while we make a positive impact in the world.
We appreciate you all join us.
On this call. Thank you very much.
If you'd like to ask a question. Please press star followed by one on your telephone keypad.
<unk> like to remove that question. Please press star one again to ask a question for Star one.
As a reminder, if you are using a speaker phone. Please remember to pick up your handset before asking your question. We will pause briefly ask questions are registered.
The first question comes from Robyn Shah with Deutsche Bank. Please proceed.
Great. Thanks for taking my question and congrats on a strong into 2021.
First Rick standards standards in terms of your fiscal 'twenty guidance any thoughts on how we should think about the performance of SMB and enterprise going forward and in particular, how should we think about the recent price changes simple prices kind of flow through model environment. It could imply a minute to walk through but any additional.
Color will be appreciated.
Great. Thanks, Bob and then.
Good to connect with you again.
So in terms of the guide for 2022, we're not guiding at the segment level for both Q1 and buys 30% growth.
Or higher at the midpoint of our <unk>.
Soon stable growth continues.
Doing from both segments can you growth from SMB, well above the fleet average.
Of our total revenue growth and then kind of consistent growth rates from the enterprise segment with what we've been seeing in the back half of 2021.
And then in terms of contribution from simple practice on the pricing side. It's early days still are are rolled out pricing to new customers and are transitioning pricing for existing customers over the first half of this year.
Sure.
For us I think put us in a good position to.
Sure.
Better customer acquisition on the.
Entry level.
Entry level offering that we didn't have previously.
And then we've also incorporated telehealth into the offering on the higher price of revenue contribution for existing customers we see.
An impact of about 5% to 10% expansion overall that that's our current expectation, but more to come like I said early days.
Helpful and I appreciate the additional color.
Just a quick follow up maybe for Bob just as we think about the nine additional verticals in simple practice.
Where do you think are the low hanging fruit of whats vertical do you see it.
Next coming quarters to years, and how much will kind of having the starter package.
Okay.
Got it.
We're still seeing very.
And they will help of course, but the new professions.
Occupational therapy.
Terror recently listed us as a as a high.
The highest quarter for massage therapy as well.
Those are those are well under way and we're seeing conversion rates in the mid to high Thirty's there right now and very strong retention similar to our mental health. So I think that those three will continue to be high charger charges for asthma.
Continuing to push forward in and others.
Physical therapy.
Nutrition dietitians physical sorry chiropractic.
And.
We're going to get them all.
We're on our way.
Perfect helpful. Congrats again, thank you.
Thank you for taking my questions.
Thanks.
Thanks.
Please proceed.
Yes.
Maybe quickly Bob start.
Cash from our balance sheet valuation.
Cros.
Everyone.
So I wanted to ask two questions.
Kind of a bid ask spread normalize.
And then to Paul.
The other assets you could buy to accelerate the growth.
Just given kind of a relatively immaterial part.
There would be helpful.
Okay.
Hey, John Nice to hear from you.
It didn't ask I'm not sure that there's been.
Such a compression of normalization get between bids and asks but we're certainly in the market now with our Alan can drano.
As the EVP of Corp Dev.
Strategy. So we're.
Could be impactful in our emerging businesses like home paid $24.
Yes.
Too early to say, where we go there yet but but.
We're active in.
And the currency to be able to be active.
Okay.
Sandra just ugly.
Two things I want to touch all of them in regards to timing.
So the guide 120 to one the longer term guidance on 'twenty two if I just look at the <unk> guidance and kind of fill in the rest of the year anything expected with tears.
Growth sequentially.
Throughout the year to kind of get some good point of view.
All right.
The latter.
Bigger picture.
Yes.
82%.
Gross margin, 30% EBITDA margins not trying to pin margin implies there's something we can see.
50 to 100 basis points a year.
Some of the top line upside flow.
Moving down to the bottom line or EBITDA, if and when that will happen in places.
Sure. Thanks, Thanks, John .
To hear from you.
So I guess first on the seasonality question.
The SMB business is pretty smooth from a sequential perspective.
Where we do have a bit of seasonality is more on the enterprise side.
Point of your question on Q.
Q4 is a pretty big quarter for revenue there's concentration.
Accretion of tax billing with an invoice cloud that occurs in that period and also.
Concentration of events within donor drive.
So we do see a sequential step down actually between Q4 and Q1 as a result of that seasonality otherwise it is pretty pretty stable and.
And then on the long term.
Side first on gross margins.
I think it will be a couple of years.
Full of expansion expansion, we're pretty well optimized today on the margin I think where youll see.
It is.
Sure.
And then.
Further optimization on the customer support delivery side, those are kind of our two bank levers to drive the margin.
And EBITDA I would say.
In terms of achieving that 30%.
<unk> targeted.
It's a little bit longer.
To drive top line growth, that's where we're focused.
Yes.
To the extent.
If that changes, we'll will obviously think a little bit differently about how quickly we can.
Well if I can just quickly Paul if we were to see.
Outside of the top line.
That's what you would you would see some higher EBITDA.
Yes.
It will largely be reinvesting for growth this year in those two main areas.
Is that I mentioned on the call so.
Reinvesting predominantly on the SMB side.
And then kind of continuing to invest in our product roadmap.
Okay very helpful. Thanks.
Thank you.
Thank you Sterling.
The next question.
Comes from Bob Napoli with William Blair. Please proceed.
Doug It's Andrew a nice job.
Thanks, Bob.
So.
In the SMB segment.
What percentage today can you remind me what percentage of your remind us what percentages is mental health and then as you look out over the next.
Five to 10 years, if you would I guess sort of three to five maybe.
What do you think the other verticals.
The organic.
Wood.
What is the opportunity where would you expect that mix to look like.
Overtime.
Alright.
Sure. Thanks for the question.
So today.
<unk> business with simple practices predominantly mental.
Health.
So we think north of 90% mental health percentage for the additional specialties.
The additional specialties are nascent today, but that's where we're seeing pretty fast growth in.
And expect to continue to drive faster growth there over the next several years, we will see that mix shift up.
Couldn't tell you with any precision today on where that would get you, but certainly we will start to see additional specialties pick up more share I do think it will be concentrated in the verticals that we know we're getting strong traction today, so speech language pathology occupational therapists.
Massage therapy, and then also physical therapy.
Thank you and you are ramping up marketing and.
That part of the business can you give any.
Give us some color on kind of trends and LTV to CAC or the any any different trends in the conversion rates from free to use to paying customers.
It vary.
Ltvs.
And conversion rates very much bye.
Vertical.
Sure. So on an LTV to CAC basis, certainly we're highly efficient in mental health for SMB.
So.
We do see higher.
Capex for the additional verticals that we're looking to we will look to optimize those over the next several years for 2022.
I think where we are.
Deliberately investing for growth and expect to take down our LTV to CAC ratio is a little bit as a result, but still in a highly it's still a highly efficient model.
I think higher than 10 X LTV to CAC ratio is less than 12 months on paybacks, though it makes perfect sense to do.
And I think another thing that we're doing in the year is really the brand. So that were speaking more holistically beyond mental health to all of these different wellness verticals. So those are kind of the two two main areas of focus from a marketing perspective.
And then just lastly, any update.
The monetization of monarch is what is the strategy behind Martin.
Does that have.
A chance to become a material part of the business.
So we still see.
Still in early stages.
Becoming more and more evident that it's a really critical piece of the puzzle for us to drive.
Organic growth really of new trials.
Right now in mental health and ultimately across all of our specialties.
For clinicians no plans to.
Create material revenue from it in 2020.
Yes, we do have some interesting what's going on that are that are moving.
Moving out to be very.
Yes.
Appointment.
Good good solid traction.
Thanks, Bob.
Cassandra I appreciate it.
Thank you.
Okay.
Thank you Bob the next question comes from Scott.
Scott Berg with Needham <unk> Company. Please proceed.
Hi, everyone. Congrats on the great quarter and thanks for taking my questions I have two let's start with the simple practice business.
I saw the change in pricing.
What do you think about the acquisition or kind of cadence around pricing going forward do you see opportunity just to capture maybe some customers on the well on that previously didn't form or maybe some of your.
Customers that were likely to buy it.
At this point, but then there'll be more apt to kind of get up solar on the higher price points.
Sort of life with the company.
It goes forward.
Sure Hi, Scott. Thanks, Thanks for the question. So certainly still early days on the <unk>.
For simple practice.
Motivation there really was around.
Yes.
Adding the startup customers who are sorry.
Our lifecycle.
Yes.
Billy capturing us.
And one of the market that we're not really kind of realigning the value of.
Non fashion up until now.
To the needs of our customers. So we've woven telehealth into the higher priced offerings.
I don't know.
Youll see us, we're not going to be programmatic about pricing.
Really we'll be in line with.
Features and rollout of future features to our customers.
So not something that Youll expect from us every year or anything like that.
Got it helpful. And then my follow up is on the enterprise business.
It looks like general price transaction volume was up 41% year over year, but revenues were up roughly.
36%, if our math is.
Correct Sir.
How should we think about pricing around your payment services or are they pretty stable at this point or should we maybe exploration further changes, whether that's up or down over the course of the next 12 months. Thank you.
And it's been very stable.
I wouldn't expect anything.
Okay.
In the way of changes at least as it relates to 2022.
Alright, thank you.
Thank you.
Thank you Scott.
<unk> with Citigroup. Please.
Hi, Cassandra.
And I appreciate all the detail.
Okay. Thank you.
So I guess the first question I have is if you can.
It could provide some some idea of the baseline right venue than you have.
Practitioners.
On a pro and is now plus.
Okay.
Is that still the case that youre seeing and is it a revenue split.
You could provide.
Solo versus group.
And I.
I guess, let me start there and any sort of metrics or granularity that calculation is today and then we can talk about.
The pricing I guess.
Sure.
Yes.
It's early in the pricing rollouts a bit tough for us to say what the actual mix between.
Clean all of the product.
Fencing ultimately will be what I will tell you is we've seen really strong utilization of our higher priced offerings across.
As our existing customer base today. So we're talking 79000 customers. The overwhelming majority of them are using our higher priced offering before we rolled out.
These these new offerings, though our expectation is that based on the features in each one of those packages that will skew more heavily to the two higher priced offerings than that.
Our journey and don't necessarily need or arent planning on using the fully featured option right away, but that ultimately they'll they'll upgrade into that.
In terms of solo versus group.
Again pretty stable trends there we have one fixed clinicians on average per customer and we've seen that tick up over the past two years or so so.
So pretty stable trends overall, and we've seen strong uptake from groups.
Which has been great to see.
There's been a couple of management changes what should we expect went on sort of the pipeline.
Large accounts.
That's natural.
Considering distributions there are no particular before invoice club.
Yes, thanks for that question right Brian .
<unk> got a great background in go to market.
Good product and a lot.
I am led go to market strategies, both with PTC and with <unk>.
And a product line that he had.
So super excited about that as the new president of our enterprise.
Yes.
Solutions.
And I would say that we are doing really well with some decent sized accounts. We actually you may remember that we had a new alliance with Guidewire in the insurance segment.
I think we announced on the 2021, we have already.
The deal that we've ever had as a guidewire with a guidewire partner. So we're off to the races that gate is now open. So we're really excited about our migration of the enterprise chain and I think we've got great prospects here.
Thank you.
Thank you.
Thank you Ashwin. The next question comes from Terry Tillman with Truest. Please proceed.
Sure.
Yes, Hi, Bob Sandra I'll Echo the congratulations I am going to keep myself, Brian Dan I'm, just going out two questions actually one like a almost a two parts. So maybe it's two and a half questions I hope that's okay.
I think first I want to ask on the enterprise side.
I think youll talked about outbound campaigns.
I'm curious just kind of like a same store sales question.
How much of your customer base is starting to use outbound campaigns and what kind of lift does that creating in terms of getting more folks to do paperless billing.
Payments as opposed to maybe just kind of natural expansion or.
A citizen or somebody is going to add another online payment service or et cetera, I'm, just curious kind of like what you see from those different angles on health same store sales growth and then I had a follow up.
Great to hear your voice Terry Yeah. The outbound campaigns are really targeted at delinquency delinquent payables receivables.
So they typically and we use outbound campaigns or directly through our IV. Our interactive voice response system that makes a phone call in.
You may have forgotten, but your bill is really your payment is late quick wanted to hear your bounds click to to to make a payment. So I think that the lift is meaningful it is early stages for us because we rolled it out in the second half of last year, but.
I'd say it is incremental not hugely material Terry I don't know if that helps.
That definitely helps.
Just a follow up question I don't know to vendor was talking earlier about.
Kind of a conscious decision to probably bring down the LTV to CAC.
In 2022 is there some incremental spending maybe some branding one thing I'm curious about though you have this proven word of mouth, it's amazing in terms of how that drives the <unk>.
Customer growth and conversion to paid customers, but is there any kind of testing and learning of other kind of top of funnel go to market activities Youre thinking about in 'twenty two.
And congrats again.
Sure. Thanks, Terry for the question.
I think what Youll see us scale will remain very focused on targeted digital marketing efforts. We certainly spent a fair bit of time in Q4 testing new marketing programs and channels. We will continue to do some of that today, but I think by and large we've found a very efficient go to market motion.
For us on the F&B side.
We're more or less doubling down on that and really investing in the brand and.
And going after our additional specialty market a little bit more deliberately.
But beyond that nothing terribly new or different from the model we have today.
Thank you Terry.
Next question comes from Jason Kupferberg with Bank of America. Please proceed.
Great. Thanks, guys wanted to just start with NR really strong here in 2021, I think you said, 119% how should we think about that trending in 2022 do you think you can stay in this kind of triple triple digit zone.
Yes, thanks, Jason.
I think we will see pretty stable trends there.
We still see a lot of opportunity to expand our pool on the F&B side, so that naturally will.
Keep NR are elevated also with the pricing and packaging change, we're expecting that to have a positive impact on <unk>. So that will certainly plan to it.
A little bit and then continued pretty stable growth on the adoption side of things for enterprise, So pretty stable with what we are what we saw in 2021.
Right right Okay.
Just on the margins.
How much of a headwind are you expecting in 2022 from having a full year of public company cost and just kind of looking at year over year, and I know theres going to be some decline at least at the midpoint in 2022 versus 2021, but I'm assuming some of it is just a function of having a full year of absorbing those those costs.
That's exactly right. So we started incurring public company cost in Q4 largely of this past year.
So with a full year impact of that Youre looking at an incremental roughly $7 million to $8 million hitting the P&L.
$7 million to $8 million incremental year over year and 22.
Correct.
Okay, great. Thank you guys.
Thank you.
Thank you Jason next question comes from Josh Beck with Keybanc. Please proceed.
Hey, guys. This is matti on for Josh Thanks for taking my question.
The first question that I have for you is with.
Clinics opening back up in person, how youre seeing that affect your telehealth and where do you see that going in the future and then my second question is any sort of color around payback trends that youre seeing across the businesses.
So thanks.
Thanks, Matti I am going to say that we are really not seeing any material change or deviation in the mix of.
New clinicians taking on the product and telehealth and so forth, we haven't sort of be bundled a little bit and we include telehealth and our and our top bundle, which has a lot of other things as well. So we can't be completely sure that theyre, taking it for telehealth only but we think that we think that it <unk>.
<unk> is a new normal frankly going forward for mental health clinicians for sure.
They are all they are serving clients all across the country now based on their specialty so.
I think that we're pretty solid on telehealth for the future.
Sure.
And then I think the second part of your question was on payback periods.
In terms of sales and marketing efficiency, we certainly did increase the level of investment in Q4, so some paybacks depth slightly.
We're expecting them to dip slightly again in 2022, as we invest to drive.
Topline growth in particular on the SMB side of the business. So that's where we're putting our investment.
Still see payback periods less than 12 months in the SMB space by.
By far so that's kind of what were using as our guide today.
Awesome. Thank you guys.
Thank you.
Thank you Maggie we have a follow up from Sterling Auty. Please proceed.
Yes, thanks, guys its actually its not a follow up thanks for squeezing me up for my first question.
Just wanted to know on the enterprise side you talked about.
New customers ramping being a big part of 'twenty two growth can you talk about what you saw in terms of sales cycles and the enterprise business in the fourth quarter and what the pipeline looks like for 'twenty two.
Sure so from a sales cycle perspective for enterprise they vary between three and nine months generally and then we have an implementation cycle kind of somewhere in the six to nine months.
Pretty stable trends there.
Don't know Bob anything you'd add.
We had a good quarter for bookings and go lives.
But a really good second half frankly, so I think.
No real surprises as kind of a steady cadence.
Great and then one follow up on the enterprise side are you seeing your customers do anything further.
Further promote adoption and usage I would imagine the pandemic, obviously was a huge driver to that adoption, but are there any kind of communication E mail programs or other things that youre seeing that are helping drive further adoption maybe into the base that they just couldnt get during the pandemic.
Good question Sterling I think that we do provide a lot of guidance to our customers to help them understand opportunities for increasing digital adoption and online payment adoption.
As you know our hour and the invoice cloud side, our pillars perfect World is 100% online payment preferably through auto pay and 100% paperless.
So.
We provide a lot of tools that help them get there in.
Actually work with them to run marketing programs that <unk> been absolutely drive.
Higher adoption.
Got it thank you.
Yes, thanks Sterling.
Thank you Sterling.
Another follow up from Bob Napoli. Please proceed.
Thank you for the follow up just on enterprise as well I think.
Bob last quarter, you had explained.
Enterprises, just dipping their toe into the consumer finance and insurance segment, and we signed a major customer in Guidewire, how how large first of all is consumer finance and insurance and enterprise and how big is the opportunity and do you have a pipeline there.
So much stronger pipeline and an assurance to take them in reverse order, Bob but we had a we have a strong pipeline certainly have a strong pipeline in insurance driven by our alliances.
Our alliance partners in insurance.
And I would say that.
Tumor finance, we have a handful of consumer finance customers, but we have so much.
Much pipeline and activity going on in insurance that where they were.
Much more focused on that because it is happening right now we are delivering live.
<unk> got a very strong product market fit there out of the gate, which we also have in consumer finance in terms of the size of the market.
Consumer finance is probably the largest vertical that we have and so we're early days there we will get to it we're already in it but we will get bigger in it as we move forward. So that's also an opportunity for us to look around and see if there arent any inorganic opportunities as well.
Thank you and is there any end consumer finance is it targeted towards like auto loan repayments or mortgage repayments or any specific sector.
Primarily primarily auto loan I think you think auto loans in general lending there is some.
So in discussions with some mortgage finance and so forth, but on the consumer consumer finance side, it's been primarily.
Auto.
Great. Thank you I appreciate it.
Okay.
Thank you Mr. Nicola.
There are no additional questions registered at this time, so I'll pass the conference to Bob for closing remarks.
Thank you.
And thank you for all your questions great to hear your voices again has been quite a year engagement delivered outstanding results in our first year as a public company with 48% annual revenue growth.
Momentum across the business drove another quarter of record revenue performance.
Standouts are the strong customer growth numbers and exceptional customer retention.
Overall, our positioning continues to be compelling as we address a huge market opportunity is product leaders in the markets. We're focused on today. Thank you all for joining US we look forward to speaking with you again at the Bank of America Electronics.
