Q3 2022 Kaleyra Inc Earnings Call
Yes.
Good afternoon, welcome Chick hilarious third quarter 2022 earnings conference call.
After the market close Claire released and audited results for the third quarter ended on September 30th 2020 to the press release as well as a replay of today's call can be found on the company's Investor Relations website at investors Doc Calera Dotcom. Please view the release for additional information.
On what will be discussed today.
At this time all participants are in a listen only mode.
After the speaker's presentation, there will be a question and answer session Joy.
Joining us today are Clarus, founder and Chief Executive Officer, Dr. Youll colored Harel, Chief Financial Officer, Jack Moore, still Asheville, and VP of Investor Relations Colin Gillis. Following their remarks, we will open the call for questions I would now like to turn the call over to Claire as VP of Investor Relations Colin.
Please go ahead.
Thank you before we begin we would like to remind everyone that 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 the <unk>.
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.
Yeah.
Claire cautious investors not to place undue reliance on any forward looking statements. The company does not undertake and specifically disclaims any obligation to update or revise the statements to reflect new circumstances or unanticipated events that occur.
Except as required by law.
Today's press release and on the call we'll refer to adjusted gross profit adjusted gross margin adjusted EBITDA and adjusted earnings per share. These metrics are not determined in accordance with generally accepted accounting principles and therefore are susceptible to varying calculations.
Yes.
A definition calculation and reconciliation to the financial statements of these non-GAAP measures can be found in the tables included in our press release, but we believe these non-GAAP measures of Polaris financial results provide useful information regarding certain financial and business trends and the results of <unk>.
Operations.
Now I would like to turn the call over to our founder and CEO Daurio for an overview of Polaris third quarter.
No.
Thank you call them like them to everyone and thank you for joining us today.
For those of you who may be moved to our story I will begin with a brief overview of our business.
Ah is a communication platform as I said, we saw hospitalized.
The high level, we provided our global client base with an omnichannel suite of powerful might be I use unusual tunes to bridge the communication beside between brands and better costs in this company.
Company, especially those that require security and must prioritize reliability, such as financial institution and does care provider often face coverage, that's what I'm trying to communicate.
Communicate with their customers.
Well good luck and it gives our customers relationships.
Now spans across China and to do so while providing so at least the delek by asking.
So they used to eat our girl strategy relies on three main pillars. One we are focused on expanding our geographical footprint Hello here that somebody new comes from global Castillo. Indeed supply you always do for us to both expand to new geographies and maintain our value first of all does that have any folks would say.
Specifically tier one mobile network Goodbye this represent important partnerships for our business as they are often the key to new geographies and expand and so forth.
It is our view that the surplus market as a whole remains very fragmented and underpenetrated in many parts of the world and that's.
We are well positioned to meet the demand in order to understand where that is.
After last year's expansion into American markets through engage infrastructure, we continue to have around a third of our revenue from each of the Marriott just around 44% you were around 28% and Asia around 28%.
A favorable balance that makes Kelly I don't want to know if the most predominant and geographically diverse cheapest companies doing the work.
We will continue to judiciously invest in our omni channel suite of services. It's our goal to meet our NASA whichever channel. They are required to best connect with their customers. Neither in voice communication continues to expand globally, and we believe that using our platform.
Communications space.
Page unimportant that else investments for that work.
And lastly, we remain committed to secure reliable and trusted Saturday hour drives in industries that have the highest standards of security for their communications with the consumer bank.
Banks financial institutions as care, etc, all need to be able to trust the daily interactions with consumers.
They want more security and consistency.
I believe that it's the one that's in a way that no other industry players.
While all of this valuable for them at a.
We know that our expertise in testing see past influenza customers of attention.
And with that I leave.
We use the matter in which we can et cetera.
Oh, Wow, what a diverse geographical mix of tier one mobile providers constantly faced with investments in our Omnichannel platform and secure service. We believe we have a real opportunity to scale and the lives of our long term vision of being the fastest.
So that's what our partners, our Chief Financial Officer Jack.
We'll discuss our financial results for the quarter sharply, but before I hand over the call I'd like to recap a few recent highlights from our survey work.
Financially this quarter, we continued to manage our business with profitability in mind, including a strong increase in our cash position.
Overall, our third quarter.
Was $83 9 million in.
In line with our previously provided outlook, despite the adverse effects of foreign exchange rate.
Largely due to short term headwinds driven by heightened and connectivity costs. Our gross profit decreased slightly impacting our adjusted gross margin of 21, 5% for the third of course the hour.
Our net loss for the quarter was $11.7 million compared with 11.9 billion Boe.
Yeah.
Most importantly, our balance sheet remains strong with $87.6 million in cash and cash equivalents restricted cash and short term investments at the end of the quarter.
Or up 17% from the prior quarter, we believe as the industry environment continues to normalize in the coming quarters, Oh, well that's taught to prioritize profitability. We've said about what it would be at this well.
Even with these considerations our team's diligent so I'm going to say that ensign has allowed us to continue investing in our growth strategy.
As evidenced by our K P. I N partnership success in the third quarter.
Moving to some of our key operating metrics. This quarter, we delivered 11 6 billion.
Is this.
A reflection of our ability to leverage the benefits of scale, we're seeing our SMS segment.
Additionally, we connected two 4 billion voice calls in the third quarter showing in Spanish and in our voice segment and the sign of the opportunity available within this channel moving forward.
In Q3, our dollar based net expansion rate was 94% calculated.
Right from the same cast of let's say even the.
Comparable yes.
Also building on the first million dollar malls last quarter third the campaign registry continues to perform in our third quarter, showing sequential quarterly growth in revenue, which sustain as high profitability.
The container registry continues to be a part of our trusted C pass offering as well as a margin driver.
Yes.
Moving to our operational highlights in the third quarter, we announced them sell it up off the ships.
First is that Muslims pay India prefer a service provider, our ACI solution already integrated into the Amazon <unk> platform will take that message as far how do you make every single one time password and confirmed paid news these days for vendors and end users.
Easy integration I would expect that to enhance customer experience and increase customer satisfaction.
Also with us today and wish to call them and Needless to live you can call that a service provider to enhance our ability to provide so after them safe business communication services pull through Congress.
I thought he was verified business Golar Ied solution.
Partnerships like these on both our brand and our customers.
And we expect to continue of course to see that the opportunities in the future.
In addition.
We reached a key need nice normally with one of our existing five 9% water Google very cycles.
We crossed the 20 million Google verified cost manage through voice.
Voice API E 20 planes.
With 10 million of those schools manage inaugural Stallone.
Pottsville fell on our operational success over the last year has been exposed to the hard work of shifting business off you're sitting now at Ocado ban it would celebrate all celebrated its one year study.
So do you wish the company score.
Now what does that sort of especially for developing relationships with tier one providers, saying were slashed enterprise customers has been exceptional yes, we'll let you know what I'm ashamed to expand Telega, that's bleach impart medical.
I'll sell water meters. This we were able to achieve these results despite persistent headwinds faced during the quarter.
Global economic uncertainty driven by older lapping geopolitical and macroeconomic factors, including a slowing global economy.
Market volatility and then come on Lehigh and flashing.
How are the two main factors stand out to US first we continue to face significant exchange headwinds, we saw an increase in volatility within the phone and exchange rate market in the past few months.
We announced that when compared to last year Q3 exchange rates do you see that revenue was reduced by nearly four 7 billion.
Cool.
Secondly, golden of economic downturn continues to shift enterprise to change the behavior.
Due to our commitment to secure service our enterprise partner relationships to require significantly more awesome images than fall out of that as the foundry industry.
Why is that thanks to our sales cycle.
This would be a loser bottomless photo release process that was past maintaining a strong net retention in zero percent churn rates, we've seen our top 10 customers. Unfortunately in periods of more careful enterprise spending this creates an even more elongated sales cycle.
And next up our customer acquisition pipeline as it is out there.
The typical seasonality in collateralized business include positive catalyst in the fourth quarter, including the 2022 U S election cycle Diwali Black Friday, cyber Monday and the December holiday season, We don't expect these global external impact to last forever and we're concert.
Our sales pipeline reflects the diligent work, our safety and risk both in over the past few quarters.
However, given the macro environment, we are mindful and diligent of these headwinds and believe our fourth quarter and full year outlook should be reflective obvious calling wouldn't be discussing our outlook shortly.
Moving forward, our focus remains on maintaining consistent profitability metrics and driving healthy growth across our business. The fundamentals of our business that are top of mind, and we understand that high quality product and service development.
Inflation will continue to reap increased economy manifest in the long term.
We are proud of our team for seven months and there are weather and commitment to building a sustainable and valuable business moving forward.
And with that I'll now turn the call over to our Chief Financial Officer, Jack Lazar.
To discuss our financial results for the quarter in greater detail Giacomo. Thank you Darby I'm, turning now to our financial results for the third quarter ended September 32 anything to.
Is that is not our total revenue in the third quarter was $83 9 million a decrease all under $9000 from 84 million in the comparable year ago period. The decrease in the very beginning the third quarter was mainly driven by.
Broader economic uncertainty and temporary the enterprises will change sentiment, notably this quarter was our first full quarter. After one year anniversary Oh, the engage acquisition engage was it contributes significantly to our scale and global footprint over the past the ear and we look forward.
So continuing to organically grow the business moving forward.
Gross profit in the third quarter decreased.
So $16 7 million from $19 6 million in the comparable year ago theater, because margin for the third quarter of 2022 decreased to 19, 9% compared to 23, 3% in the third quarter of 2021.
Crazy in gross profit and gross margin were mainly driven by an increase of cost of revenue attributable to the effect of connectivity cost.
Net loss totaled $11 7 million or 26 cents per.
Share based on $44 7 million weighted average shares outstanding compared to a net loss of $11 9 million or 29 cents per share based on 41.6 million weighted average shares outstanding in the comparable year ago period.
Adjusted gross profit and non-GAAP measurement of operating performance decreased 14% to $18 1 million from $21 million in the comparable year ago period, adjusted gross margin for the third quarter of 2022 or 21, 5% compared to 25.
5% in the comparable year ago period.
Net income and non-GAAP measurement of our operating performance, the crazy $793000 or two cents and one cents per basic and diluted share based on $44 seven and 54 6 million weighted average shares outstanding respectively.
Mm, three 6 million or 9% and seven cents per basic and diluted share based on 41.6, and 52 4 million weighted average shares outstanding respectively in the comparable year ago period.
Adjusted EBITDA I don't get measurement also operating performance decreased two 4 million four 8% of total revenue compared to 8 million nine 5% of total revenue in the comparable year ago period.
At the end of the third quarter cash cash equivalent the restricted cash and short term investments were 87 6 million compared to $97 9 million as of December 31st 2021.
This completes my financial summary.
Now like to children called back over to Colin to provide our financial outlook for the reminder of the year Giacomo. Thank you.
I'll now take a few minutes to update you on our financial outlook for the fourth quarter, which ends on December 31st 2022 as.
As we close out the year, what lasting impact of industry wide headwinds still limit typical enterprise and consumer spending.
We foresee degrees of growth in our business driven by Black Friday, and cyber Monday shopping that the December holiday season.
Diwali and among other factors.
Therefore, we see that the investments we've made into expanding our sales team building, our partnership pipeline and developing our technology have put us in a position to take advantage of these catalysts.
We remain confident in our strong fundamentals and comfortable balance sheets as well as our path toward becoming the leading global trusted C pass.
Daria explained and due to many factors, including the uncertain macro environment impacting the broader technology industry cut.
Coupled with the elongated enterprise sales cycles married with the backlog within our pipeline. We have made the decision to update our full year expectations.
Based on our expectations for the fourth quarter.
Clara is no exception to this challenging environment and what the typical seasonality expected we are anticipating our revenue fourth quarter to range between $86 million and $90 million, resulting in full year over year growth at 24%.
For 2022.
This completes my financial summary, I'd now like to turn the call back over to Dario to wrap up our remarks for the call.
Sorry.
In summary, we are encouraged by our positive momentum in many strategic and has no power business as we look at Q4.
While we were confronted with a broader global economic landscape that impacted downward older. Overall, we believe that we took meaningful meaningful steps forward in the third quarter.
They are to take advantage of the future we continue to invest in our omni channel platform and partnerships, while still driving profitability of our product suite continues to grow in both depth and breadth.
And the quality of our service is.
So long in this area.
Our geographical footprint continues to expand into as he global balance that we will look to build on moving forward.
Basically with tier one mobile operators and enterprise customers and that was drive into new growth areas, including collateral medium.
And bodies, along with promising results from the campaign registry has continued to drive leverage into our operating model.
As we finish out 'twenty 'twenty cool, we do so with conviction.
Our long term growth strategy supported by a growing balance sheet and a healthy business fundamentals.
We are confident that we have the people and the processes in place to remain agile in the face of challenging environment and that our overall business remains very healthy.
Above all we look forward to driving sustainable value across our business as we advance along our journey to become the trusted partner in the massive and expanding market and with that we're ready to open the call for your questions. Operator. Please go by the opposite.
Sure.
Thank you 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 will hear a tone acknowledging your request.
If youre using a speakerphone please pick up your handset before pressing any teeth to withdraw your question. Please press Star then two we.
We will pause for a moment as callers join the queue.
Our first question comes from George Sutton of Craig Hallum. Please go ahead.
Thank you I Wonder if you could address the normal seasonality that we would see in the business.
And.
What we saw this Q3 and expect for Q4, so normally we would see revenues kind of ramping up because of the seasonality we would start to see volume discounts and campaign registry fees kick in and therefore influencing the margins. It doesn't look like we're seeing that so I just want to make sure I understood those dynamics.
Hello, George This is Daniel Thanks for the question well I was seasonality typically comes more from Europe , and India, because you asked.
Kris.
Then the valley holidays, so it's small.
Foreign thing rather than the U S domestic them.
Which is a in a way come back.
In fact, if you consider that in Q4, if we would have used the same effects of Q and Q3. If you would use the same effects of the previous year Q3 people have made $4 $7 million more.
So this is something that we have the carefully weighted in our.
Expectation about Q4.
Yes campaign registry contains continuous to contribute but it's not like skyrocketing it's in.
In line with Q3 and that typically relates to the seasonality of the campaign now the future is it's a future so.
We will see exactly what will happen.
In November and December when we will close.
Gotcha one.
One other thing as now that we've lapped M gauge I just wanted to understand I understand the current environment is challenged but when we look at long term say three to five year organic growth goals that you have can you just walkthrough what those look like.
Yeah.
Well I'm not sure I got your question, but in general we do not segment any longer why these are the legacy of collated I'm the legacy of engage because basically the company as one company now and we actively cross sell information on our reach to go out by customers coming from engaging multiple.
Patients that were legacy Conagra that'd be calling can add some color to this question.
Yeah, George that that's extremely difficult question to answer right now yeah. There, there's a range of outcomes as to what the growth potential is but I will tell you. This.
Desire for brands and customers right, who want to connect to their clients is not going to disappear right and that is what see passes right. You know communication platform as a service and it will change and evolve into different channels, but the intent.
To want to communicate with your clients is always going to be there.
I understand okay. Thanks, guys.
Our next question comes from Mike Latimore of Northland Capital. Please go ahead.
Hi, I'm, a Nick in for Mike Latimore of Northland capital.
So I have a couple of questions with me. The first one is how many employees do you have now and what are your hiring plans for the next six months.
At the moment, we are a little over 600 units.
And we don't believe that we will increase significantly our head count and actually it's months.
Because of the need to become more efficient.
Company is carefully wagging.
Its growth plan, but we will keep on investing in our R&D.
And then D technology.
Especially.
Our.
Hap.
In India.
And in the Dominican Republic.
And we will keep on boosting our business development teams.
Exactly to your question.
Okay.
Yes. Our next question is how much revenue did political traffic contribute.
All we do not segment or disclose that in the political drastic basically we had a volume coming through in the last weeks of October because of that.
September I'm, sorry, because because.
Basically we have to do some changes in our platform because the traffic is out there to be only 10 digit long code and we were mastering the shawcor escalator in the legacy Alpha engage which is not being used very much for political campaigns, it's more 10 digit long code.
Play.
Okay.
And then I have one last question with me a new law logo popped prospects taking longer to decide now.
I'm not sure I got the question.
Now if the new logo prospects are taking longer time from the site.
Yes in general, especially large enterprises.
And long waiting a little bit the decision taking processes, because get Indiana facility management.
I would say he's waiting better and longer the decision of investments, even though our 70 days is down operating costs for our customers basically part of the overall digital transformation and digital transformation requires investment so oh.
Results of these situations is also we are investing on business development.
Sales to an increasing consistency.
The consistency of our pipeline.
And but they cycle and not getting any shorter are getting a little bit longer.
That's it thanks, that's something that's it from my side.
Thank you so much.
Once again, if you have a question. Please press Star then one.
At this time. This concludes our question and answer session I would now like to turn the conference over to Mr. Calogero for any closing remarks.
Thank you operator, and thank you for joining us on today's call as always we would like to thank all of our extensive worldwide network of partners and investors as well as our employees for their continued support.
Operator.
I would like to remind everyone that a recording of today's call will be available for replay via a link available in the investors section of the company's website.
Thank you for joining us today for <unk> third quarter 2022 earnings Conference call you may now disconnect.
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