Q1 2022 LiveVox Holdings Inc Earnings Call

Yeah.

[music].

[music].

Okay.

Yeah.

[music].

Okay.

Okay.

Okay.

Okay.

Hum.

[music].

Yeah.

Hum.

[music].

Okay.

[music].

We expect contract revenue to be between $26, three and $26 8 million, 18% to 20% growth over the second quarter of last year, and we expect excess usage revenue to be between six 9% and seven $4 million, 5% to 13% higher than the second quarter of last year.

We expect our adjusted gross margin in the second quarter to be around 61, 5% for the quarter about 110 basis points higher than the first quarter and we continue to expect that this will trend towards the mid sixty's by the fourth quarter of this year as we continued to optimize our AWS costs and scale in the public cloud infrastructure.

Structure.

We expect our adjusted EBITDA to be between negative $6 7 million of negative $5 $7 million in the second quarter of $2 $1 million sequential improvement over last quarter based upon the midpoint of this range and we continue to expect to trend towards adjusted EBITDA breakeven by the beginning of 2024 as we laid out on the call last quarter.

In terms of full year guidance for 2022, we are now reaffirming all aspects of our previous guidance, except adjusted EBITDA, which we are improving by $2 million. So to recap. We continue to expect our total revenue for the year to be between 140 at $142 million or 17 to 19.

10% growth over 2021, we continue to expect contract revenue for the year to be between 109 at $111 million and our excess usage revenue to be between 29% at $34 million.

We continue to expect our adjusted gross margin to be in the mid 60% by the fourth quarter of this year and with the $2 million increase in our adjusted EBITDA guidance. We now expect to be between negative <unk> 22, and negative $24 million for the full year and to trend towards adjusted EBITDA breakeven by the beginning of 2024.

With that operator can you. Please open the line for Q&A.

Yes, we will now begin the question and answer session to join the question queue. You May Press Star then one on your telephone keypad, you'll hear at Cowen acknowledging your request.

Youre using a speakerphone please pick up your handset before pressing any keys to withdraw your question. Please press Star then two.

We will pause for a moment as callers join the queue.

Okay.

The first question is from James Fish from Piper Sandler. Please go ahead.

Hey, guys great quarter, thanks for the questions here.

I did want to go back to something you said Louie on those three significant upsells into ppos.

To get a sense too you know what share you have of that swap.

50000 agents of those versus.

What you had before just to try to understand kind of what upsell youre getting with some of these large.

Contact centers are essentially as you move towards getting a greater penetration over the next couple of years.

Yes, Thanks, Jim.

I would say that are you know.

Our market share with these with these larger bps is still it's still relatively small and our expansion with them is incremental but but consistent and these are large organizations. So it.

It's a nice additional source of growth for us.

Understood.

We've seen some other contact center vendors report, including Avaya. This morning.

We're seeing larger contact center opportunities refreshing to the cloud over the next few years, especially in the financial services vertical and its something Louis you were alluding to in your <unk>.

Mark's yes, how is lightbox looking to go after these larger opportunities when historically it was more of a departmental sale and kind of expand from there or are we now kind of decoupled from that and moving into a full let's go get the entire piece of the pie at this point and specifically what are you also seeing with large contacts.

Inter pipeline's four lightbox specifically in <unk>.

<unk> got up 40% pipeline Youre discussing thanks guys.

Yeah Yeah.

So I think that we're happy to get a departmental sale, we obviously would rather have a full enterprise sale, but we often start the conversation on a departmental level and then in the course of the demo.

More people get involved more people see what's there and it starts to spread across the organization so as the market.

<unk> to look more and more as a cloud first market.

And as <unk> suite of products become broader and more robust than the situations where people pivot from a departmental sale to a more of a full enterprise sale increases.

And so when you look at our pipeline, which I mentioned was up 40% over over last year. There are a number of large companies inside of that a substantially more.

Number than there were last year at this time, so I think that the maturity of the market and the maturity of the product are driving that.

Okay.

The next question is from Parker Lane from Stifel.

Go ahead.

Yes, hi, thanks for taking the questions here I wanted to look at the exit usage revenue guidance for the year. Obviously, there is a little bit larger range there than the contract revenue side.

Two part question here one when you look at the full enterprise deals.

Is there any larger or smaller share of usage revenue that's associated with those customers and then two when you look at that guidance for the year, how have some of the dynamics that drive excess usage for these customers been playing out here and how much confidence do you have at that ending up at the higher end lower end of that range.

Yes.

There's not really a meaningful distinction between the departmental.

Departmental level sale and the full enterprise sale in terms of the split between contracted and usage that could emerge in the future, but that's not something that we've really seen as a distinct trend.

Hi.

As of yet.

As far as what our projection is or what our forward view is around around usage revenue.

I mean, I think you can see in our numbers that we haven't really received a strong usage recovery and I think that people that have followed us know that our usage is connected tightly to the credit cycle and as we look at information and data points from the federal reserve and from.

Moody's just to name a couple on how credit originations are going up and how service activities are flowing.

Into the credit cycle, we definitely see that there's a lot of activity picking up in the early stages of the credit cycle, but we have not yet seen that flow into the middle or back part of the servicing activity. Yet. So we think thats still in the future and possibly.

That we would experience in the back half of 'twenty two.

Yes, and just to just to add to that you can you can see that the.

The multiplier in the first quarter $1, two seven and that's what we've guided to basically at the mid point of the range for the second quarter. So we don't we're not we're not assuming that we're going to have a recovery here in the near term, but like Louis said we.

All of the things that we monitor will tell us that we do expect a recovery more in the back half of the year. We're hearing it from from from customers that we talked to as well and how they are preparing for their for their business.

And so that's what's reflected in the full year.

The full year number as well.

In terms of our guide.

Makes sense and looking at the enterprise business.

Pipeline seems to be very strong right now obviously the macro is very uncertain.

Is there anything from your conversations with your sales teams and customers to suggest that sales cycles could potentially elongate or are you seeing a lot of consistency from where we were let's call. It 90 days ago.

I would say that.

Yeah.

A year ago or a couple of quarters ago.

There was more talk about the pandemic and more talk about how.

The pandemic interrupted and changed operations, obviously, that's less of a conversation now and people are getting back to more of a new normal however, with that said the new normal definitely is a cloud first market.

And people that are looking at their contact center infrastructure, they're not thinking about if they're going to move to the cloud theyre thinking about when they make their change day.

They will move to the cloud and so because thats kind of the dynamic the pipeline has remained strong.

<unk> is up again for over 40% year over year.

Great. Thanks again.

The next question is from Jacob Stifel from Goldman Sachs. Please go ahead.

Hey, guys. This is Jacob staff, one part of cash with his team over at Goldman. Thanks for taking my question.

Sure.

I wanted to ask a couple of questions here first one being I believe one of the goals mentioned was to double direct sales head count.

By the end of this year from 35 to 70.

So one kind of where are we at.

With that hiring in to any color on.

How.

Doubling that head count is going to relate to operating margins.

How it might affect operating margins come into the year.

Yes, we still expect to be as we have said.

Doubling our go to market.

Quota carrying heads by the end of the year.

It's still in the plans.

That is factored into the guidance that we've given.

And and so.

That all remains consistent with what we have guided to previously in terms of how we're going to how we're going to ramp the go to market.

Awesome and then one more.

<unk>.

Okay.

Excuse me sorry any.

Any color on.

I think you all mentioned that you expect customer engagement to account for 73% of revenues.

By 2022 so.

Any color on where we're at there.

Consistent or is has that been adjusted or.

Whatnot.

We have not adjusted that.

We while we talked about in the last call was was collections which had been.

<unk>, 36% to 37%.

Our revenue in 2000.

In 2020, being 33% last year and Thats a trend that is continuing its a trend thats been going for a very long time and that.

The proportion of our of our new bookings that is driving that evolution is continuing so so collections is just a much smaller proportion of our new bookings and so we expect that that trend is going to continue the way that it has been.

Awesome. Thank you so much that's all from me.

The next question is from Brett <unk> from Cantor Fitzgerald. Please go ahead.

Hi, guys. Thanks for taking my question.

First any update as to what you guys referred to as headwinds last quarter with regards to the new regulations that went in place for your debt like some customers on how frequently they can contact.

I guess.

Their users has that been a headwind in Q1 as well have you had to renegotiate additional customer contracts any update on that.

I wouldn't say, it's been a headwind it's been it's been a consistent kind of.

Recovery since it happened in <unk>.

I don't recall us having any contract negotiations that took place since our last call.

And we are seeing volumes picking up for most of those customers and I'd also a diversification.

Away from voice and a greater utilization of digital as a channel to reach out and contact.

Yes.

Creditors so Joe.

It is.

Evolving and basically the way that we alluded to a couple of months ago on our last call. There was it was kind of a fast and furious impact in.

And it is largely back to normal now.

Okay.

Perfect and then just on the head count I see a decline and kind of go to market head count and total head count.

Was that just kind of employee attrition or is that a more focused kind of streamlining of cost rationalization of cost in the quarter.

It's a little bit of both I would say I mean attrition.

Attrition has picked up like it has for everyone across the board.

We still are well below what industry averages are especially for tech, but it is running higher than and we are being.

Very very diligent about how we.

Backfill and how we add new positions, where we're very actively involved louie ni across the whole executive team and their teams around.

Ensuring that when we do backfill what do we do add positions that it's justified across the entire business.

And so I would just say, we're just being a lot more hands on about about head count.

Then then.

Perhaps who are in.

The high growth phase that we've been at in the past past year or so.

Understood. Thank you.

Hey, guys.

Yes.

The next question is from Mike Latimore from Northland Capital markets. Please go ahead.

Thanks, and nice to see the strong bookings and gross margin outlook there.

In terms of the I think you said there were four deals in the quarter with with <unk>.

How was that an anomaly or is there a general trend here and how does the pipeline look for Ibs.

Yes, the pipeline looks strong I would say that that's the progression or that's the trajectory.

It's kind of.

Become a.

A standard part of pretty much every conversation now now by the way just because people are using it to some degree it doesn't mean they've used data in.

Broadway across their operations, so I think the conversation with the <unk>.

AI virtual agent in terms of getting started with them in testing them as mature.

A lot of people want to do that as far as really tapping it in terms of its full potential and spreading it across the operations I think we're still in the early stages there.

Okay got it thanks and then.

Hi.

Okay.

Revenue expansion rate it was up nicely.

Should that should that continue to sort of inch up throughout the year here the <unk> expense rate.

The net revenue.

Yeah, I would I would think so.

We've been saying for a while that the pandemic.

What's happened, particularly on the collections has been is what really took us from where we had been in the high teens before the pandemic and now we're at the point where those those early.

These data points are kind of rolling off the pre pandemic quarters and so we're comparing against.

As every quarter goes by.

Pandemic impacted set of numbers and so.

Yes, we do expect that that's going to continue to trend up.

Alright.

And then I guess, just lastly on the sales higher hires it sounds like you are confident of hitting your goals.

Okay.

Yes.

How is the pipeline of talent, where are you getting it from.

I Havent payable tomorrow to get them on board just kind of some color there.

Okay.

I mean actually we're doing we're doing pretty well there we continue to recruit people that are experienced selling into this space.

And where I would say refining our profile a little bit I mean, I think that as we've made a lot of go to market investments, we're able to focus the aes kind of more on the specific account development models and competency so I think that.

Yes, it's absolutely competitive, but our go to market investments are frankly, giving us an opportunity to refine our profile where were.

Where we can be more successful so I think we feel pretty good about that.

Alright, thank you.

Thank you. Thank you.

This concludes the question and answer session I would like to turn the conference back over to Luis <unk> for any closing remarks.

Great well, thanks, everybody for joining I really appreciate it and again, thanks to our employees and thanks to our board and thanks of course to our customers for all of their support.

And pulling together our quarter and I look forward to future communications with all of you. Thank you.

This concludes today's conference call you may disconnect. Your lines. Thank you for participating and have a pleasant day.

Yes.

Yes.

[music].

Sure.

Okay.

[music].

Okay.

Hum.

[music].

Yes.

Yes.

Yeah.