Q4 2022 Thryv Holdings Inc Earnings Call
Ladies and gentlemen, good morning, My name is Abby and that will be your conference operator today.
At this time I would like to welcome everyone to the thrive holdings incorporated fourth quarter and full year 2022 earnings conference call.
Today's conference is being recorded and all lines have been placed on mute to prevent any background noise.
After the speaker's remarks, there will be a question and answer session. If you would like to ask a question. During this time simply prestige Starkey followed by the number one on your telephone keypad.
If you would like to withdraw your question that you must hit star one once again.
Thank you and I will now turn the conference over two camera on <unk> head of Investor Relations you may begin.
Thank you operator, Hello, and good day to everyone. Welcome to thrive fourth quarter 2022 earnings conference call on the call today are Joe Walsh, Chairman and Chief Executive Officer.
<unk>, Chief Financial Officer, <unk>, Chief product up Sir.
A copy of her earnings press release, an investor presentation can be found on our website or thrive dot com and the investors section some.
Some of the comments made on today's call and some of the responses to your questions may contain forward looking statements about the operations in future results with the company.
These statements are subject to the risks and uncertainties described in the company's earnings release and other filings with the SEC drive has no obligation to update the information presented on the call.
Also on today's call our speakers will reference certain non-GAAP financial measures, which we believe will provide useful information for investors.
Conciliation of those measures to gab will be posted on our website.
With that introduction I would like to turn the call over to Joe Walsh.
Good morning, Cameron and thank you all for joining us on our call today to discuss our fourth quarter results.
2022 was a year a tremendous accomplishment of drive we finish the year with strong financial results improve efficiency and continued products in a nation with the release of marketing Center.
Fourth quarter staffs revenue grew twenty-five percent year over year and 26% for the full year.
<unk> subscribers ended the year at just over 52000, an increase of 13% year over year.
Dash monthly <unk> grew 10% and the quarter <unk>.
Our average customer now spend.
Around $4400 a year.
Compared to $4000, one year ago, and $3000 and 2020th so we're making really good progress on our pool with customers using the product more and buying more than buying higher end versions of the product.
One year ago on our earnings call I highlighted our goal of targeting more balanced growth and fast subscribers <unk> going forward, which we've achieved for three consecutive quarters.
Engagement has increased 37% year over year, which we feel is a very strong indicator for durable growth.
Our clients are using the <unk> platform to run and grow their businesses to find customers to stay organized communicate and get paid.
Seasons monthly churn has remained flat in the mid one per cent range, which we consider to be world class.
On the bottom line once again, SAS EBITDA came in better than our expectations.
This is significant as we cut our stash EBITDA loss by almost half since we issued guidance a year ago.
We've been focused on driving cost efficient growth not growth at all costs.
The U S has been profitable for three quarters in a row as.
As we continue to scale and moved past our investment stage.
<unk> EBITDA loss as a result of our expansion internationally.
Australia, and Canada I'm pleased to report that Australia is on a path to turning a profit after selling staff for only six quarters, it's been one of our top producing regions.
So we feel our playbook really works and these are not big losses, only single digit millions once we stand up a new country takes a couple of years to cash flow and then it goes from there so that'll be our model as we move forward.
On marketing services, we continue to see very predictable performance in billings, which allows us to generate solid cash flow and pay down debt.
Next up I'd like to introduce Ryan Cantor, our Chief product Officer, Brian . Thank.
Thank you Joe as we previously covered in both 2021 and 20 twenty-two thrive continued to responsibly expand our engineering and product capabilities.
We've invested in a robust you are <unk> to ensure the five platform remains both powerful and easy to use we've invested in inapt experience to fuel our product led growth initiatives, we've invested in product and engineering to conduct better client research and to accelerate a roadmap to deliver better value to our current.
At our future clients.
Small businesses run better on Fries, we know this in here every day from our clients thrive as a growing all in one small business platform. The needs of these small businesses continue to grow at an accelerated pace and thrive as in pole position to deliver increased functionality to meet this growing demand and early 20th 22.
We unveiled an exciting new product strategy to move to a multiple center platform. This would allow us to solve these additional problems for our existing clients and attract a wider array of new clients into our platform and the coming periods. After a year of development and numerous rounds of live client testing, we were excited to launch <unk>.
Getting center in queue for this exciting new central presents a bridge between our past and our future marketing Center was built from the ground up and focused on the mother needs small businesses have withdrawing their business, while leveraging our decades of experience offering marketing services and tool to the market to date marketing.
Send a result have been strong and client reception has been incredibly positive we plan to show additional matrix and insights about our newest center throughout the year.
Sitting right underneath our centers are a growing number of modular apps that enable our users to customize the thrive platform to meet the specific needs and pains. They have but I was looking for a more cost efficient payment option built specifically for service based businesses, we built <unk> pay to be a modular app and then recently improved try <unk>.
Get by logging mobile card readers throughout the U S.
Additionally for small business owners, who have modern I O S or Android devices do I pay also just recently released tap to pay using near field communication technology to turn a small business owners mobile device into hardware to accept lower fee card present payments.
Logged in October 2020th thrive pay now enables businesses to accept credit card or bank drafts. They can accept in person payments via mobile devices or device list with tap to pay they can accept online payments via QR code S. M. S text messaging or email and it makes it easy to pay with Apple pay or Google wallet hidden.
<unk> small business owners to offer consumer financing to their clients for larger ticket items lastly, thrive pay enables customizable automated surcharges or convenience fees to help offset the cost of payment processing.
While lower average ticket sales put some pressure on overall payment volumes in queue for overall thrive pay volume nearly doubled year over year in 2022, the second full year. After I pay overall payment volume grew to over $140 million, a 114% year over year improvement another.
<unk>. We've recently launched is our new signatures app signatures enables our users to upload a document to send to their contacts for an e-signature fully built into the five platform. This eliminates the need for users to take multiple manual steps to get their contract agreements for proposals side, and then upload it to their centralized ciara.
With signatures. It is now a fully automated process and N.
The signatures App enables all users to try it for free with up to five three signatures per month people.
People, who need more and have been able to try it before they buy it.
Can upgrade in App to $49 a month for up to 100 signatures with a small overage fee for additional this really is on the heels of our teen chat app that we lodged in early Q for 10 per cent of our active users are already adopting team <unk>, which is extraordinary quite frankly, especially given the holiday season backdrop.
T chat enables all of the internal collaboration and coordination within a small business to take place in an organized and secure way.
These releases are in addition to a multitude of enhancements, we released to improve our core thrive product. We recently lost both native to a real time, Google calendar and native outlook integrations to better meet S. M B's, where they are before they adopt drive and to easily see their thrive appointments and events inside both Google and outlook.
And vice versa Wheeler.
We launched a robust and configurable and and deposit work flow that enable service based businesses to be paid a portion of their estimate at the time of approval, while capturing a digital signature all in just a few clicks for the end consumer.
In addition to the deposit improvements we have also released all new customizable templates for both estimates and invoices, enabling S N needs to pick a style and a color that of lines to their brand. Additionally, this month, we lost the ability to better configure, both estimates and invoices with customizable sections and headers with easy to use drag and drop capabilities.
Both of these improvements have been top five requests from our users and we were delighted to deliver it for them and 2022, a combined 1 million estimates and invoices were created and fed inside the platform that represents a 20% improvement year over year, we launched an improved rich text editor for our heavily.
You centralize inbox, enabling better control and customization for longer form conversations and this release has been a hit inbox conversations in 2022 increased nicely with thrive now powering 7 million conversations between small businesses and their prospects and customers.
Every month small business frustration from over adoption of independent quite solutions continues to grow with more and more business of seeking out a true all in one platform that can grow with them.
That's what thrive is it's simple it's powerful and it's tailored to the needs of these growing small businesses and with that I will now turn it over to our CFO , Paul Ross to discuss fourth quarter financial results Paul.
Thank you <unk> <unk>.
Good morning to everyone on the call.
As a reminder to listeners we're going to focus on our two sediments sauce and marketing services, which includes results from both domestic and international operations.
<unk>. This is more helpful and modeling and understanding the business.
Additional break out between domestic and international for each segment can be found in the appendix section of the investor presentation on our website, okay, let's get into the numbers beginning with our assess second <unk> revenue grew $259.3 million <unk>.
Fourth quarter, another shrunk quarter, and a 25% year over year increase boot.
<unk> revenue grew 26% year over year.
At the end of the fourth quarter SAS subscribers totaled approximately 52000 compared to 46000 in the prior year.
This represents a 30 per cent increases subscribers euro per year.
The third consecutive quarter of double digit growth.
<unk> increased to $387 in the fourth quarter compared to $351 and the prior year and represents 10% growth year over year <unk>.
<unk> to the bottom line fourth quarter SAS adjusted EBITDA.
Was negative 2.2 million and the head of guidance.
For your assess adjusted EBITDA was negative 13.4 million, which is an improvement of 36% year over year, and almost 10 million better when compared to the bitcoin of our original guidance.
Indicated at the beginning of 2022 Arab goal was to show more operating leverage and our <unk> business as the year progressed.
Throughout the year, we emphasize the value creation potential from improved marketing efficiency due to our enhanced to selling smile. We are pleased with our results and have confidence four hour positioning in 2023.
Susan <unk> retention was 91% in the fourth quarter as a reminder, Susan net dollar retention represents clients that have been with us for over one year.
Moving over to marketing services Fourthquarter marketing services revenue was 220.1 million and a head of guidance.
Are notable performance was due to strength in our digital offerings.
Oh, you're marketing services revenue was $986 million, which includes 89 million and contribution from <unk> holdings on and reported basis Fourthquarter marketing services. Adjusted EBITDA was 70.4 million, resulting in an adjusted EBITDA margin of 32 per cent.
Who are your marketing services adjusted EBITDA was 346.7 million, resulting in an adjusted EBITDA margin of 35.2% in line with our projections throughout the year.
Fourth quarter marketing services billings was $192.8 million, representing a decline of 70% year over year.
Two year marketing services billings was $829.9 million, representing a decline of a 2%.
Both of these measures exclude the impact of Vivian.
Fourth quarter consolidated adjusted gross margin was 68% two year consolidated adjusted gross margin was also 68 per cent and unchanged when compared to the prior year.
Fourth quarter to solve David adjusted EBITDA was 68.2 million, representing adjusted EBITDA margin of 24% full year consolidated adjusted EBITDA was $333.3 million, representing an adjusted EBITDA margin of 28 per cent.
I would also like to point out that we have an impairment to goodwill a one time non-cash charge in the fourth quarter and the amount of 102 million for $2.98 per diluted share related to the structural decline of our marketing services business.
<unk> loss was 50.4 million ordering boss $1.47 cents per diluted share for the fourth quarter 2022, and compared to net income of 5.1 million for 13 cents per diluted share for the fourth quarter of 2021.
Finally, our net debt position was $468 million in the fourth quarter hour leverage ratio for the fourth quarter in accordance with our credit facility was 1.4 times net debt to EBITDA and well below our covenant of three times the company generated an additional 34.
Point 5 million, a free cash flow in the fourth quarter and paid 31 million towards our term loan.
From and year to date perspective, we generated 119.3 million and free cash flow and paid 112.5 million towards our tournament.
Since the refinancing associated with the census acquisition in 2021, we repaid nearly 40 per cent of our terminal and just under two years <unk>.
<unk> to the progress we have made on a long term that we have made significant headway and reducing our pension my ability over the course of 2022, a reduction of 68 million a nearly 50 per cent reduction when compared to the prior year.
Now, let's discuss guidance for the first quarter and so year 2023.
For the first quarter, we expect SAS revenue in the range of $59.5 million to $60 million for the full year 2023, we expect fast revenue in the range of 257, two 259 million, which implies <unk> revenue growth of 19.
20 per cent.
For the first quarter, we expect <unk> adjusted EBITDA in the range of negative $2 million to $3 million for the full year 2023, we expect fast to be adjusted EBITDA positive. This fiscal year guidance currently reflects a more profitable U S <unk> business.
<unk> International investments for the full year 2023, we expect marketing services revenue in the range of $635 million to $649 million and adjusted EBITDA in the range of $185 billion to $187 billion, you can find quarterly ranges for marketing services revenue.
In our press release and Investor presentation available online has indicated on the third quarter 2022 earnings conference call. We expect to ship fewer print publications in the third quarter of 2023 and due to the accounting treatment it will impact our third quarter results.
However, this does not impact free cash flow and our ability to retire that we expect a very high cash flow conversion in the third quarter.
This reason, we want to point investors to our marketing services billing performance and operational metrics in our Investor presentation, which show steady performance for many historical periods, we realize the nonlinearity footprint is a bit complicated and we try to provide as much.
Information as possible to be transparent and finally due to the visibility we have in the business. We feel confident we can retire approximately 100 million of debt in 2023.
I will now turn the call back over to Joe. Thank you Paul Weir focus this year on efficient growth, we're fully scaled in the U S. The business has been profitable now for awhile and the losses are fairly small for the new country starts enough. So that the U S can cover those and carry then we've got in.
Overall, now profitable business and twenty-three and.
We've reached that scale or beyond the investment phase. So as we launched new countries going forward there'll be a small investment as we set up a new country, but we now have a fully scale U S business that we think can can carry that.
One interesting highly and this transformational journey in our company and this is actually I think a really big deal is that for 2023 and our financial plan in our model SAS revenues actually clips Trent revenues for the first time.
Yeah, that's right I am being clear about that <unk> <unk>.
Part of our business will have recognized revenue larger than the print part of our business.
Now to be honest, a little bit of that is the revenue recognition issue, where some books move out of the year, but by the time, they get to 24 and that sort of correction reverses. This ask business with him at the rate that it's growing will just pulled away from the friend business. So this was the inflection point, where staff is larger than print and from here on out.
It'll just pull away. So that's a gigantic milestone when you're trying to transform a legacy company into something new and you know for those that we're sort of waiting for that moment. You know this is that moment for work for that crossover is occurring.
The way we are investing our money is into engineering and into product, we're pretty focused on making sure. We've got the best in class product that we've got an all in one solution at the moment when small businesses are beginning to move to the cloud and beginning to experiment with point solutions. There's a.
Sort of a crisis of disconnected this where people really desire a more simple think about you know you get an iPhone because it just works the Android phone might be slightly better with a better camera and a few other odds and ends but it's more of a do it yourself project when you get that iPhone. It just works and that's what right does it says premium brand.
Super High quality everything works well together, it's integrated into its own App store and marketplace. You can run your business under one log in with one dashboard with an all in one product and that's super desirable for people at this point, there's a sort of a vendor consolidation thorn processing out there that's going on even with the people would be.
Done to experiment with with with that so.
Our investment is in product, we haven't had to throw lots of money at marketing and sales because we have this unfair advantage we have 400000.
Existing accounts and our zoo in our customer base that are steadily buying more and more software as this trend is picking up speed small business is moving to the cloud.
The largest area now customers for US is actually referrals were those those existing 52002 are thrilled with what drive is doing for them are telling their friends and that's driving referrals to know to be more and more of our of our revenue base. When you think about investing don't think about throwing money at plas.
<unk> sales and marketing efforts think about a robust product investment.
Well, we think about our customer base, we often talk about the S. M. B. When we started we were kind of in the lowercase S. We were selling very tiny solo printers to employ three employee businesses, but as our platform has gotten stronger gotten more robust as we've gotten better at figuring out who are ideal client is.
We've begun to move up market. So we're we're moving up more to the you know 10 or 15 or 20 employee business is a little bit more and we're finding that they are able to consume a lot more of the software and obviously they have lower chairman they are great payment capabilities and they tend to be less volatile. So that's that's part of the journey that were on his move.
<unk> from lowercase Ness to kind of uppercase S and even tipping into the M. Just a little bit as as we moving moving forward.
Our marketing services business I realize it's a little tough to understand the way. The revenue recognition is bouncing around I would just direct everybody to look at cash flow. We can show you cash slow going back for years and it's like a metronome. The the the rate of decline is very steady and that cash is coming through.
We pay down a lot of that last year, and we will pay down a lot of that again. This year. So we're cash flow guys keep that in mind. We are very focused on delivering cash that's what we've been doing our whole career and <unk> you feel comfortable that we will be able to continue to do that.
When we first got the <unk>. The very first thing we did was rip out a couple of hundred million dollars of course, just restructure the business then we bought Y T and in no time flat, we improved margins by 20 points for anybody who was watching so we're pretty focused on efficient growth and delivering cash that really is always our way and we are.
Always looking ahead planning had looking to variabilize the cost looking at cost levers that we can use <unk>.
Keep in mind in 2024.
The the the publications scheduled normalizes a lot so the the marketing services revenues ragging recognition at least kind of roars back in uhm, but but stash as I mentioned, while I've pulled away and N b b bigger at that point. So that's a quick trot through our business and and an overview of where we are uhm operator, why don't we open it up for <unk>.
Some questions.
Thank you.
At this time I would like to remind everyone in order to ask a question Press Star and then the number one on your telephone keypad.
We do ask that you. Please limit yourself to one question and one follow up question, we will pass for just a moment to compile the Q&A roster.
We will take our first question from Scott Berg quick Needham and company. Your line is open.
[noise] hi, everyone. Congrats on the next corner and thanks for taking my question.
I I I guess I got a couple of here Joe I know, it's real early you've only had marketing sent her out for a couple of months, but any bits of anecdotal information you can share maybe is this being purchased by new customers as part of the business Center Sweet or is this maybe selling better do existing customers of that crustal emotion.
Well thanks for the question.
Martin et cetera adopted withdrawal start as you mentioned, we we really just started selling it at the very end of the year.
So we don't have a super long run at it so far we did.
Limited and this initial leg in this initial phase two you can only buy it if you're already a visit us at our customer. So that's the universe that were marketing it to at the moment.
So we're really not bringing in new new with it at the moment now that will be that way forever. It was <unk> way of watching it.
To make sure that that week, we had really good success out issue, but.
But sales have been good interested it has been very high as Ryan mentioned in his prepared remarks, it does kind of bridge back to our legacy or.
Are are like.
They can see reputation is liking buyers and sellers together through marketing services that a lot of our employees date back to that period of time and have a lot of credibility allowed to scale. There. So it was a really logical move.
In that regard so.
Ryan cancer I don't know if if you would like to you know expound or offer or anything about what you're seeing in terms of customer.
Anecdote.
Customer uptake alright.
Thanks, Joe early early signs of people, who have adopted a marketing center as as Joe alluded to our adding it on top of their already powerful drive experience and they're taking advantage of better insights as customers are visiting their website or their lagging pages, they know where they're coming from which is.
Really starting to know inform their decision. So we're just starting to see people starting to run some paid advertising through the platform in the early parts of the year and we're starting to see some really really strong results there as well so all things are very optimistic.
Thank you that's Super helpful and then from a follow up question.
Paul we know what's going on with the marketing services business. This year you guys certainly detailed that over the last 90 days, but I think the number one question I get with the revenue in the year is how should we start thinking about ballgames or billings for that that segment here I know, we've kind of use the.
20% annual contraction as a rule of thumb. The last couple of years should we think about the the billings b and kind of in line with that you know 20, maybe a little bit below wood, which is where it's been or is there may be a different trajectory going through it for this year.
No no no I think that's the correct way to to think about it <unk> by.
My car was 18 per cent for the ear 17 per cent negative for the quarter, Yeah, I'd like Joe mentioned, it's a metronome it and that's the correct way to think about that links going into 23 [noise].
Great. That's all I have congrats on the next corner again, thank you.
Thanks Scott.
And we will take our next question from Arkan patio with William Blair. Your line is open.
I guess <unk>. Thanks, thanks for taking questions and congrats on the on the quarter.
Maybe to start off with the product and drama of this for you and Brian , possibly if you want to drop it but it seems like you're adding a lot more capability to.
To the solution right, you're adding a signature you've had the chat functionality are obviously out of marketing center. How do you think about you know with new capabilities that are coming in and how do you think about partnering with existing solutions that are out there versus building something yourself and you know what considerations do taken in terms of.
Product experience you know you are you access cetera, because it seems like your you know your M. A new growth kind of jumped off the took a step function increase rather this quarter.
And I'm I'm sure product enhancement has something to do with it but.
How do you think about just the roadmap and adding new capability is going forward into the platform.
Thanks for the question origin.
We're listening to our customers.
We're spending time talking with a meeting with them, we do zooms with them we call them, we have a Facebook chat session with the Ryan just spent a couple of days with a <unk> with one of our biggest customer groups.
You know big franchise group <unk> two days, they're just sitting and talking with people about the details the little stuff like screams like health sessions like really end of the week. So we're lifting.
Listening to our customers and I would say that if if I were to put a banner over the whole thing we're trying to make it as easy as possible for our customers.
<unk>, we're trying to make when you're kind of pluck things together that just works and so <unk>. The way, we do that as we sort of think of ourself at Switzerland, and then we've got our.
Our marketplace.
We've got you know plans to even significantly improve that in the year ahead, but we've got our marketplace, which if there's some standing stuff for the existing stuff that you're already using you could often just go into the marketplace and connected and the data flows let's start populating your CRM and it makes life easy.
In terms of the add on features and products that we have chosen to build and develop those were indirectly spot.
To.
Requests in conversations with our customers and we ask them to force rank you know they can't just ask for everything it's like Okay. You got the Forest Ranch, that's put an order and and things like you know having signature right within the tools. So they don't have to go get cigarettes or somewhere else and I'd put it in their C. R M.
So labour saving in such a kind of a home run.
Yeah, we decided to do it that way so it's really all about just just allowing.
Allowing our small business customer to do that easily without having to sit down and take courses have become certified or something just keeping it really simple.
And make <unk> cases, we allow them to do something multiple ways, if they'd like to do email marketing.
Drive has email marketing inside of it but it also integrates with belts yep. That's what they wanted to you know I mean, if they like constant contact no sweat just connect it works. So we're trying to make it as simple as possible and put as few barriers in front of them as possible and where our answers yeah. Yeah sure that that works good how're you.
Do it.
Uhm as often as possible.
Right I wanted to give you an opportunity if you want to expound any on my answer.
Thanks, Joe Uhm are getting a great question and I would say that speed. The market is what we're focusing all that we're focusing on the E Y experience for our users that it is a homogeneous experience as you move from one part of the platform to the other and we think that delivers really kind of compounding value to the user cause they're not having to.
<unk> new functionality as as we launch it because it relates and it looks like a pattern they've become familiar with where we can partner in bed and include partnerships with other companies to accelerate our roadmap faster. We obviously continued to choose to do that as we think that is ultimately a key to success.
In the small business space, but most of all businesses don't care, how the technology works. They just care that it does it it does what they wanted to do and so we continue to work smarter not harder and ultimately just deliver focusing on delivering value our users as fast as possible.
Awesome, that's that's very helpful and <unk>, maybe circle back on on marketing Center.
When you think about the go to market motion, maybe not you know what what you've seen in the last month too much but as you go forward and you think about where the adoption comes from and you look within your installed base do you see this as some somewhat of a targeted strike right. There's a group of customers that fit the bill that would adopt.
Marketing center or is this something that you plan to take to all your sauce customers because there's a broader opportunity you know for for adoption. There what are the thoughts on on that strategy for the next year or so.
Right right I'll start that answer and then if you want to emphasize a cat.
I would remind you <unk> if you look back at 2022, we have a billion dollar marketing services.
So it's a pretty big base of people that are trying to advertise and promote and get more customers. So we've got a really big you Earth people that we can go and talk to them about marketing center. It. It really is right down Broadway for us.
<unk>, if I'm really honest with you.
It's a little easier to sell help you grow your business than it is a full business process change where you've got it one install a CRM at the heart of it and begin to live in our inbox and that's kind of a <unk>.
Higher order sale, it's harder so we're actually moving down into an easier area and as I mentioned, what the heck in baby steps by Additionally, just marketing to exist things to ask customers, but that won't be forever. We do plan to go into the broader zoo. Eventually we're just making sure you know everything is perfect and we have all the momentum.
First so Bryan I'll, let you amplify if you want to add anything there.
Oh, no I think the early stages, we focus on the existing business at our user we're really seeing two cohorts were saying the you know already active user who is naturally willing to add an additional functionality and get more value out of the platform. Our teams operate very well when we give them a focusing area to go after that.
That's working out pretty well, but users inside the platform could also activate a 14 day trial inside the platform, which were excited about and we are starting to see some use issue maybe we're a little on the lower end of engagement, but really being able to track and measure the effectiveness of of their marketing is now a catalyst for using the platform.
More sometimes you know small businesses need a little bit of a push on well why should I use it online <unk> why should I track my online payments and if one of those reasons or it can deliver you an understanding of which marketing works in which marketing doesn't that can be a catalyst to drive future engagement in our in our CRM products. So we're seeing.
A little bit of both happening at the same time.
Great Uhm, that's helpful and <unk>, one last just housekeeping item for Paul the goodwill impairment that you mentioned Paul is that related to like a legacy acquisition Y P or is there something more recent that that's that that impairment is related to.
Yeah, that's what I want to relate to it <unk>. It came on the box in 2016 with the restructuring and plus N Y P acquisition in 2017.
You know.
Actually it's not too bad we restrict it during that time 1.6 billion in cash from the business. So given where we are I think we're doing pretty well and you know what <unk> declining business from time to time. This this could happen in the future.
But you don't see that it was interesting is accounting rules I'm Gonna, let you write write down assets not right up and the valuation on the <unk> International was actually a lot higher than the carrington value. So.
That's that's the deal.
Alright makes perfect sense. Thank you guys and congrats again.
Accurate reminder, press star one if you would like to ask a question and.
And we will take our next question from Rob Oliver with Bird Your line is open.
Great. Good morning, everyone. Thanks for taking my questions first one's for Joe Joe Just just curious there hasn't been a question yet on the macro it seems the economy at least in the U S has been fairly resilient and certainly your SAS numbers you know for Q4 metrics are quite strong.
<unk> bit of a bit of a D cell here in the guidance reflects that so I just wanted to get your sense of Wisconsin bladed in the guidance and how you view the macro having been through you know a bunch of cycles here before and then I had a quick follow up for Ryan.
Okay. Yeah. Our company has been in business for 137 years [laughter] and so there have been a lot of cycles set that the business has been through it and the customer base has been through and the macro what's really good for US right now I mean R. R. S M b customer.
It has weathered a pandemic.
Ah supply chain crunch, where they couldn't get any supply they've whether to staffing issue, where they couldn't find anybody to hire.
And all of that is better now <unk>.
Pandemics better now that supply chain is east east are using and they can hire again. So these are the best of times compared to what they've been going through for the last three years or so so I'm out of it and.
Remember our customers.
On average if it with us about 15 years. So these are very mature.
Kind of icons in their community more successful businesses, we really don't trade in the new startups R. I C. P. R are more established businesses and so that group has done really well and you know the consumer is I think you mentioned in your in your question is is good and it's continuing to do that.
Little concrete job out back you know or re roof their house or whatever they need to do so are mostly service based businesses.
Kitchen doing to be really busy.
And continuing to do well and that's part of why now you see our growth and resolve very very strong and.
We're actually a couple of months into the year already.
<unk> the software is higher than ever right now and you know a sales of momentum continue very strong right now.
In terms of your mention of our guide.
You know implying a detail we got it the same last year you know with the same Guy guidance. We gave you last year you know we tend to be underpromise.
Overdeliver kind of Guy, where we've been around a long time.
We're very conservative or proud of the fact that we'd beaten right.
Every quarter since we came out we're not going to get over our ski that's not who you're dealing with.
You know, we're we're being told that there is a great gathering storm out there you know.
So <unk>, yeah, we put a little bit of a conservative guide and then just as we did last year and we continue to have very strong momentum.
And you know we we've now got more than one center clicking as we go through this year and you know I mentioned and knocked my prepared remarks at Australia, now hitting full stride and candidates coming up really nicely.
We hired an international President So you can imagine what plan to add more countries, it's not hard to figure out so I I feel very comfortable with guidance that we gave it it's probably conservative about it but you know we we tend to be guy that wants a fully deliver over the liver and we're just not gonna get a out over our ski so.
No issues in the macro at all our guys are doing great and we don't see any signs.
Of trouble, which is not to say that you couldn't Tom I mean I.
I read the same stuff you guys do but I honestly I just wanted to say one more thing here you know I I have heard some of the enterprise.
<unk> companies talking about.
Decisions being delayed D sweet getting involved in this and that and the other you will understand our customers don't have a T. Sweet [laughter] you know, we're dealing with a decision maker and they're chugging, along just fine and and really nothing has changed for them and it would have to get a whole lot worse for it to begin to really affect the way.
They think about Modernising their visit this is a trend that you can't put back in the bottle.
Small businesses are moving to the cloud and they're moving at an ever faster right to the cloud is the big trend.
That were riding and I think it's stronger than a little economic crosswinds.
Really appreciate all the colors, Joe that's really helpful. Thank you and then Ryan there's been a bunch of product questions already but you know what I look at the platform today versus when you know some years back when it first started doing work on you guys. I mean, it's been a tremendous evolution functionality.
And you guys mentioned chatty sign obviously marketing center first of its and voices calendar integrations, what when you look at you know kind of what's on your agenda.
Over the next 12 to 24 months I know you don't probably want to give away all the good in terms of new features but what what what are the priorities for you. I know you mentioned kind of you you guys also done a lot of work and vertical is the kind of what what constitutes success in terms of.
Continued platform expansion for you over the next year or two thank you.
Thanks, Robert I think I'd feel a boat without giving away all the goodies.
We've obviously announced a multi center approach. We now are excited that we have to and obviously, we're we're continuing and focusing on that effort as well to solve additional pain points and problems that users have right, creating easier Onboarding I mean, Joe alluded to you know a CRM is business process change.
And so we're always really really focusing on how can we how can we meet small businesses, a little closer to where they are before they come to drive today.
And what do you think we can lessen that gap, we're reducing the friction to really be able to adopt the platform and then grow with us inside so that's a really really big focus I think as we add centers as we add these apps are focus on you is to ensure that again it remains simple easy effortless Joe's.
Analogy to an iPhone is simply perfect. It just works. It's homogeneous you don't have to learn new things with late when when when the iPhone is improve it just is intuitive and it's natural and so we're putting a lot of effort in there because that's always the risk as you add additional functionality that it can bogged down the platform and so we're being very very <unk>.
Careful and methodical about how we do that and then to your last question about about vertical you're really seeing now a transformation of of the platform into this combination of centers and apps right do I pay. The is is an app signatures is now an app and then you have these centers and we think that you know.
<unk>.
The the the appropriate way that we're thinking about Verticalization is really on the CRM side. The Sierra is verticalize, but there are of course are functionality and features that certain vertical would like to see being able to do those in a more modular app like way would allow the the vertical to wanted to adopt it without turning away or turning.
Off verticals, who don't you know we don't want to give them any reason to think that the platform isn't built for them and so that's really our direction is really to kind of complete that transformation. This year into the center kind of App strategy and really focused on usability.
Great.
Thanks for that I appreciate it.
Yeah, We will take our next question from Daniel more with C. J S Securities. Your line is open.
Hi, guys. Thanks, so much for taking the time. This is rock kesselman standing in <unk> would you mind talking a little bit about how your S. M. B customers, if <unk> economic environment, where customers who are pulling back a little bit on discretionary purpose.
Purchases I know that you just kind of touch I need help you know you guys are directly in touch with the decision makers, but could you say maybe about how you're approaching your customers decision making process in.
If there's you know how you're approaching needs you know difficult.
Economic headwinds and if you think there could be any kind of negative impact on your chest. Despite you guys are protecting stronger.
Thanks for the question.
Yeah I.
<unk> I appreciate what are you going with that you know just try to park with a little bit more I think and your question is answered you you use the word discretionary.
And there's very little discretionary.
And and the clients that we serve a thrive. It's the dentists were you <unk> you cracked or two and you Gotta go in and and had a cat or have a root canal or whatever have something done. It's the air conditioning doesn't work in your house and it's hot as Hell.
And you Gotta get it fixed it's a deer ran out <unk> side of your car when you drive down the back row and you.
Get the gigantic at the side of your carpet I mean that that's our customer base. It's the service based businesses.
Care for your home your body your car your family. Your life, we really are not selling high end dining or fancy travel or you know it's it's.
<unk> dot, there's not a lot discretionary and what our guys do they're really they're really working with making make it light keep going.
Sometimes say, it's the nasty things in life.
You know that our guys do they do the nasty things in life, and Uhm and accordingly, those things and you know if you're ruefully can you get it fixed you know you don't just sit there with a bucket under it and.
Having said all that I just want to underscore we're finding that the consumer is part of our customers have job that backlog the job they have a lot going on in this environment.
Is incredibly good.
The pandemic is quieter.
They are able to get supplies now you can get a two by four you can you can order supplies and get that much better than you could a coupla years ago, it's not all better, but it's much better than it was.
They'll take 11 months to get a sub zero refrigerator, but you know you can still get things better now and people got kind of accustomed to <unk>.
And they can hire again the ability to hire their staff has improved quite a bit from where it was last spring or last summer.
So that environment is pretty good in terms of your question peering ahead, and saying well, what if things get bad.
You know I haven't started refer you back to the same question archive.
Are are the are the most established visits and their markets.
So you know if there is.
12 carpet cleaners and your county.
You know we have the top six or seven the most successful the guy that had been there for awhile. We don't typically have a new start they are they didn't go by yellow pages. They didn't jump into our customer base, usually we don't have a lot of efforts to try to get the new start business.
We're pretty much focused on the more mature ones and you might say well why is that it's terror churn is a nightmare I mean, you have all the same cost to sell a new star that you do to sell a mature business.
Less likelihood that he's gonna be around so we really have focused on.
Established business as our base in in that in that.
Born out when you look at our Super low chair.
We have that because of this really established space. So yeah, we we don't see a big calamity coming but we read all the same headlines you do about monetary supply being tightened at some point, it's gonna kick in and all that so you know <unk>.
<unk> <unk> <unk> <unk>.
Cautiously and guardedly watching all that.
Sales right up through yesterday yesterday was Ah.
Kick <expletive> deck or drive sales marketing center sales everything was really strong right through yesterday I I can't tell you about today and it's just getting started.
Alright that sounds great and a quick follow up could you talk about a little bit about the progress, we're making with the marketing center when should we expect to see a more meaningful inflection growth as a result.
I I think you'll see it build steadily and I I think you'll start to feel really meaningfully see it reflected in the numbers and the second half. This year do you remember when we sell them you know it it it takes a couple of minutes to get it set up and get it go on and.
And you know the the numbers that were selling right now are so big to move the needle, but I would say in the second half of the year. This year, you'll start to see marketing set a rabbit is really starting to contribute.
And I think maybe one of the places you'll start to see it lifting as our net dollar attention.
That you know we were very very strong in terms of renewal loco renewal and holding on to people, but as Ryan detailed in it and is prepared remarks.
We're beginning to offer.
Life venue of additional things that customers can buy whether it's you know signature of his or her team chat or.
The big one being marketing center and these additional purchases by existing customers. He also mentioned, there's actually an app upgrade capability.
Which you know is another you know express past.
I think in the second half you'll start to see.
Let me, let me just back up one sentence I mentioned at our longterm guidance that you should expect us to get to 100 per cent.
Dollar attention.
And these new products that we've been you know building for awhile now that are now released coming into the market are part of why I felt that way a part of why I believe that we would be able to do that so I I would expect in the second half of this year you will see then start to come through and and <unk> <unk>.
Ask you to kind of keep an eye on that dollar attention and the progress I think will make toward our goal of 100.
Thank you for that.
Oh.
I apologize go ahead.
Oh, you say, thank you for the to show color.
Thank you for the question.
And we will take our last question from that come in to like be Riley Securitas. Your line is open.
Yeah, Hi, good morning, Thanks for taking my questions.
Just diving in a little bit more on that Joe as we're thinking about the rollout of marketing center this year.
Are you still thinking of the fast growth drivers is kind of a balance contribution between new customer adds an arco expansion or it could we see that fluctuate a little bit this year.
No I think we're still striving for that balance.
And I think I expect a good good solid subscriber growth I mean, we are you know.
Entering new countries, we are entering new segments.
A lot going on here that should be able to drive that.
But if you if you go back and you think about the Investor day, how long range Sky.
We told you that we thought that we would be able to grow <unk>.
Up into the $7000 range over the next few years and part of why we believe that as we felt that we could <unk>.
More needs and slightly bigger businesses as time goes by and that's exactly what we see happening.
And so you know it it might be that <unk>, you know starts to outright.
Some subscribers works out perfectly balanced, but I'm not guiding you that subscriber growth is gonna stop or slow down or that we don't see any more of it. It's just that you know we've got a lot Juicy barfoot drivers here now so it might it might pull ahead again, a little bit on it but we we are striving for balance.
And it would be a high class problem, if we have a big job <unk>, but but we are striving for balance.
Understood. That's that's helpful and final question for me and enjoyed <unk> you've made a couple of references to it in your in your comments, but.
Can you just talk about some of the progress you've made on on the international side seemed to like Australia is really coming right now, Canada, starting to ramp up pretty quickly uhm, just any insight into existing countries and how you were thinking about expansion over time.
Oh. Thank you that's a great question, so you'll remember last spring.
We hired an international leader Marie Corona, She's come in and done a wonderful job of integrating yourself into the business learning getting to know the company and the team and the people we have a lot of confidence in Murray.
<unk> <unk> <unk>.
Resting on our laurels she's.
Oops.
She she's working away with plans for us to enter still more countries. So just quickly answering your question specifically you know we we the entry model that we used for Australia was we bought a big established mature marketing services business, which allowed us to evolve quickly.
Into kind of pole position into a first mover advantage type situation in Australia, and Uhm you can see it when you look at our monthly stay out of the U S is broken into regions.
Australia is obviously a much smaller companies in the country and the U S, but Australia as a region often is beating the U S. Regents, it's like it's really coming along nicely.
We have a terrific later, they're terrific sales organization that are bought in an excited about what we're doing and we started really carefully in the beginning and made sure that we had carefully selected ideal client.
That we got them stood up correctly and that things were working and we've had very low churn at Super high engagement.
We're getting a lot of referrals already from the the the still relatively small install day. So the zoo is cranking and now the referrals are cranking uhm.
We're not doing a lot of inbound marketing there were just pretty much working within the zoo, but it's going really really well.
And so I you know I expect that.
<unk> revenue to grow quite quickly out of Australia and out of that out of the international staying but more generally Canada. We did not make any acquisition. We we went in and established a partnership with another reseller. We went in online and then we have established our own direct sales team there and.
They're they're trained up in the market selling and.
Experiencing very good reception the Canadian market is not quite as advanced as the U S market in terms of software options. So there's a lot of excitement interest about what we're sharing and so.
Leaning into it and as we as Paul mentioned earlier, you know about being efficient and all that we we we don't want a throat too much money it grow in Canada too fast because we didn't make any kind of acquisition.
Acquisition or initial investment. So we're you know we're growing it in an efficient way.
And there are plans to enter more countries and I'm not prepared to announce anything today, but if one were to think about.
Our plan to get to a billion or plan to get the 4 billion of overtime. We don't plan to do all that and just the U S. In Australia, we plan to continue to enter new markets and.
And we plan to continue to roll out new centers that gives us a lot more surface area over which to grow a lot more growth kind of growth vectors to to get there.
Understood well, thanks for the additional color and best of luck with the rest of the quarter.
Thank you very much for your question.
And maybe some gentlemen, this concludes today's conference call and we thank you for your participation you may now disconnect.
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