Q2 2023 ON24 Inc Earnings Call
Greetings and welcome.
The 24 second quarter 20 twenty-three earnings conference call.
At this time.
<unk> are in a listen only mode.
Brief question and answer session will followed the formal presentation.
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It is now my pleasure to introduce.
Lauren Sloan Investor Relations fall on 24. Thank you you may begin.
Thank you Hello, and good afternoon, everyone welcome to on 24th quarter 20, twenty-three earnings conference call on the call with me today are <unk> co founder and C. E O of on 24, and Steve <unk>, Chief Financial Officer of on 24.
Before we begin I would like to remind everyone that 10 minute information provided during this call will include forward looking statements regarding future events and financial performance, including the execution of our capital returned program and guidance for the third quarter in fiscal year 2023, as well as certain third quarter and full year non-GAAP projections.
These forward looking statements are subject had known and unknown risks and uncertainties that could adversely affect on 24 as future results and caused these forward looking statements to be inaccurate, including our ability to grow revenue attract new customers and expand sales to existing customers. The success of our new products and capabilities other stay.
<unk> regarding our ability to achieve our business strategies growth or other future events or conditions, such as the impact of adverse economic conditions and macroeconomic deterioration including increased inflation.
On 24 cautions that these statements are not guarantee of future performance.
I'll forward looking statements made today reflect our current expectations warmly and we undertake no obligation to update any statement to reflect the events that occur after this call.
Please refer to the company's periodic S. E C filings in today's financial press release for factors that could cause our actual results to differ materially from any forward looking statement with.
We'd also like to point out that on today's call. We will report with gap and non-GAAP results.
We use these non-GAAP financial measures to evaluate our ongoing operations and for internal planning and forecasting purposes.
non-GAAP financial measures are presented in addition to and not a substitute for financial measures calculated in accordance with that too.
To see the reconciliations of these non-GAAP financial measures. Please refer to today's financial press release I'll now turn the call <unk>. Please go ahead.
Thank you.
Welcome everyone be 140 fours second water 21.
Three financial results, calling from school.
We appreciate you joining us.
With me today.
<unk> Chief Financial Officer.
Before we get into the results quick reminder of who.
We are and what we do for our customers.
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Industry, leading me to be an enterprise companies engaged with your prospects and customers through a portfolio of experiences the driving days with a scale.
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We focused predominantly on the following <unk>.
And the technology <unk> information services Vertigo.
Global demand generation teams use up my iPhone boot drive pipeline and the Ivy regulated industries of life Sciences, we have farmer and medical device organizations engage educate health care providers and patients two digital channels.
Insurance, we enable our customers <unk> sandwich, while virtually enrolled in new members delivery.
Benefits and screaming agents and brokers and finally.
Professional services verticals.
<unk> solution support new business development.
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Also providing our customers with a digital first approach to running complied professional certification and credentialing programs at scale.
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Revenue for the second quarter was in line with our expectations and with the high end of guidance and we are pleased to report that'd be exceeded our goal to reach breakeven non gap G. P S and do too.
We also have cheese non-GAAP EBITDA breakeven.
We believe that achieving the non-GAAP E. P. S targets, which is a key profitability milestone is a testament to the actions you have taken two screen line are expensive Roger.
Profitability will remain a key priority to a longterm growth strategy whichever elaborate on shortly.
Revenue from our core platform, including services and <unk> 40, 23 was $45 million in total revenue, including virtual coffers was $42.1 million.
Of total revenue for the subscription.
Subscription and other platform revenue was 30th one 3 million and professional services revenue was $3.8 million.
We ended up <unk> with 140.6 million, an era related to our core platform, representing a sequential degrees from Q1 of $8.6 million.
While we had a forecaster decline and nephew era I'd like to spend a few minutes slamming 104 platform era of you tube was weaker than originally expected.
As we shared in Q1, our customers budgets for our solutions stemmed predominantly from the marketing departments, which have continued to enter your budget cuts me off as a result of heightened macroeconomics uncertainty.
We had expected more budget scrutiny from our customers, which is why we have forecast a decline in this new era and do too.
However, this pressure persisted and increase through the second quarter and was even more pronounced than we had originally expected.
Specifically in <unk>.
We saw pressure on <unk>, which we found became even harder to balance with expansions.
You are our growth.
Our customers are still looking to cut costs.
Their budgets remain under pressure and face greater scrutiny from the CFO office.
In fact in queue to refill the highest level of balance of come from our enterprise customers with this higher degree of budget scrutiny is considering to put pressure on large deal activity.
We also saw the highest levels of chair from our smallest customers.
In this uncertain market environment budget constraints are pushing these customers to resort to lower costs tools, even as they admit that those tools don't match our product capabilities.
As we have standard previously, we know how to surf and a tough recessionary environment.
How are the most challenging aspect of this recent war came from being in limbo with customers, who have taken a pause in this plan until they have more certainty on what to expect next.
Based on what we are hearing customer discussion it seems that those customers are expected the second half of the year. We look similar to the first and there are simply waiting to reinvest or spend more on demand generation in mind.
We believe this is not a permanent <unk>.
Is the economic direction becomes more sir.
Customers focused on growth and his marketing budgets will begin to normalize we believe that we will see our customers reinvest and grow with us.
In the meantime, we remain laser focused on controlling what we can control and we continue to focus our execution.
Vision against the priest strategic priorities, which we expect to further strengthen our business.
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Turning to deliver on our profitability targets.
Second continuing a relentless innovation with generated.
The next generation of our plan.
Third continuing to strengthen our enterprise go to market strategy, where we offer differentiated solutions.
First I'll talk about our focus on profitability.
Continuing to deliver on our profitability targets as a top priority and we expect that when the macro stabilizes, we will see additional operating leverage in the business.
Pleased to report.
Positive non-GAAP EPS in the floor.
We achieved this goal by continuing to streamline our organization with our cost reduction initiatives. We plan to continue to make improvements in our operational efficiency and expect to exit 2023 that breakeven non-GAAP EBIT.
As our shed in our queue one earnings call.
Committed to achieving long term profitable growth and I remain confident that this business is capable of generating double-digit top line growth with double digit EBITDA margins.
Moving to our second priority.
Developing the next generation of a platform to our new generative capabilities and innovation roadmap.
Let me start by explaining how our platforms first party data advantage uniquely positions us to develop a differentiated of generated.
Lucy.
Each year, our customers one hundreds of thousands of all 2004 experiences engaging millions of professionals for nearly an hour per excuse.
At the end of two good we saw engagement levels increase with the number of interactions for attendee at an all time high.
By capturing each of these individual interactions.
More than 20, plus unique data plans for attendee poor experience. We believe we have been able to develop an unmatched source of human generated first party data.
Which gives us a strong foundation to power generated capabilities.
This quarter, we launched a new generator powered optimization suite, which provides a number of innovations through our customers, including the ability to charge each of the live webinar experiences into generated written content like a transcript summary E book or block.
Over 200 of our customers are currently in free trial and based on the momentum and positive feedback. We are here and we are optimistic that we will be able to turn pre trial into expansion sales.
Because this solution enables rapid content creation, which is typically the most cost and resource intensive aspect of sales and marketing. We believe this offering to prove to be a high velocity sale is it provides our customers with a fully integrated offer.
To give you a sense of what's coming in a roadmap and shaping the next generation of a platform I'll highlight two more solutions built on our foundation of course 40 days.
The forces porcelain vision.
Across our platform, we are enabling our customers to create highly personalised experiences that they can deliver at scale unique audiences.
With more personalized experience.
We expect that attendees will engage with even more content generating more first party data and enabling greater personalization, creating a flywheel effect or our customers that helps them increased revenue results with less resources.
A second innovation I'll highlight is the ability to automatically turn long form content into short form content like videos based on proprietary setup analytics called T mobile.
That provides a heat map of content performance based on audience engagement.
This intelligence is foundational to developing future generated content and experiences, which we believe will give us additional levers to drive retention and expansion from our installed base, while enhancing our platform differentiation.
Lastly move into our third Pryor or enterprise go to market strategy, where we are focused on mission critical use cases.
Digital transformation initiatives.
Sheridan.
R Q1 call the majority of our business close to 80%.
Housing plus employee confidence.
Why are we did see macro pressure on marketing budgets result in more downstairs with the enterprise customers Daniel remains strong and in fact the percent of era multiyear agreements wasn't the mid forties and all sides.
We believe that in today's environment, especially as companies look to consolidate solutions and vendors, providing our enterprise customers with a single platform that support the broad spectrum of use cases gives us a differentiated advantage.
Let me give more color on each.
Beginning with our most predominant use case of demand generation, we help large organizations, primarily in the technology and manufacturing sectors scale engagement and pipeline.
As we have sure. These verticals are under the greatest amount of macro pressure, especially their demand generation budgets as companies paws on growth agenda.
With that backdrop. We are currently funding most success with a highly regulated industries, where an enterprise grade solution like our platform is essentially letting.
Let me explain our platforms differentiation and supporting these digital transformation use cases.
Poor farmer and lifestyle.
Specifically our platform is critical for helping them digitally innovate healthcare provider and patient engaged.
Seamlessly captured that data and integrate it with their business systems, all while supporting compliance.
And the healthcare and commercial insurance categories are platform helps customers established our digital first compliant approach to develop a new business.
<unk> member enroll.
Benefits and enabling and training agents and brokers all of which used to happen in person and most costly and time.
Tessa to escape.
Finally, our platform enables professional services organizations to digitize and ultimate.
Professional certification and Credentialing programs, thereby increasing the scale reach and cost efficiency of running these programs while supporting compliance.
Because of the direction, we are seeing with customers who have this transformation initiatives underway. We are continuing to make these use cases and vertical strategic focus upon enterprise go to market execution.
We believe this will help us to further expand our business and give I'll go to market greater agility.
<unk> and resilience.
To further enhance I'll go to market execution against these digital transformation use cases, we are making two key strategic changes.
First you are simplifying our pricing and packaging and providing solutions by use case, which will provide our customers with more value in Ottawa from our plan.
While reducing their costs and streamlining our internal efficient.
Second we have evolved our customer success model to incorporate a digital first motion.
For our smaller customers, enabling us to efficiently scale, our global support resources, while focusing on expanding our most strategic enterprise customers undergoing digital transformation initiatives.
Before I turn things over to see I'd like to share a few highlights from new an expansion deals and Q2.
Started with new business and higher.
A few words that further represent the direction we are still.
With digital transformation uses.
We landed a lifesciences global Interweb with.
With a worldwide leader and advanced medical devices with over a thousand employees focused on a unique segment of health care provider specialists.
We believe the rerun this deal because of a platform the ability to help those customer deliver personalised <unk>.
Experiences that are unique to different providers will also katherine insights on each physician and maintaining privacy and compliance.
And the vertical a professional services Ah 6000, plus employee multinational organization came to us to serve as a foundational there an additional transformation initiative that as a goal of turning the go to market execution, which is primarily happening and offline channels into a digital first model through our platform. They can.
Multiple use case and gain a comprehensive solution for generating demand and pipelines delivering professional certification programs at scale and training their partner network.
Finally, we landed a multinational biotech firms that has a portfolio of products or special diseases.
With the presence across different international markets. This company was challenged with maintaining compliance while building urban Omnichannel strategy.
To our platform, they're able to enable a standardized scalable approach to health care provider engagements that can be Taylor two unique regional needs.
Turning to expansion wins, we expanded our footprint with an existing 10000, plus employ multinational insurance firm out of the UK who's continuing to execute against its digital transformation initiative to our platform.
Using our platform developed a centralized content resource center for their customers agents and brokers, while unifying the insights from each audience.
We also continue to grow our business with another with with one of the largest biomedical companies in the country, which is over 50000 employees.
Having already proven our ability to streamline compliance approvals and meet the stringent security standards. He brought a new department is this customer onto a platform to help visually scale their training and enablement programs.
Lastly, 11000, plus employ multinational software company doubled down on their investments on 44.
Primary platform for the pipeline generation engine.
Offer an initial pilot result of 12 clients R. O Y for the company. The go to market teams, including demand generation and customer success decided to make on 24, the standard platform for digital engagement programs.
While marketing budgets continue to be under pressure and we are disappointed with the change in net are are in queue to you're focused on the things we can control.
Our pace of innovation.
Justin or go to the market and driving more profitability.
In these areas we are optimistic about the changes we have made and remain confident.
Return to long term profitable growth.
We are making strategic changes to increase our when rates with new logos, especially around use cases that resonate in the current environment.
We will also shifting resources to drive better growth within our installed base and we are making profound innovated changes.
Platform around generator.
We believe that these actions coupled with improved renewal cohort dynamic positions us to see better performance in the second half of the year.
I remain bullish about the long term fundamentals and market opportunity for the business.
We provide our customers with a single platform to support their demand generation and digital transformation initiatives and we are uniquely positioned provide an integrated solution or a set of use cases across on six T verticals.
We have a strong competitive and we are confident that with our focus on our priorities combined with a long term commitment to profitable growth, we will deliver long term shareholder value.
Would that I would like to turn the call over and see.
Thank you shot and good afternoon, everyone going to start with our second quarter of 2023 results.
Will then discuss our outlook for the third quarter of 2023 and full year 2023 before.
Before I get into the numbers I wanted to remind everyone that our focus will be on the core platform business as it wasn't the prior quarter's as we are emphasizing the virtual conference product.
View the metrics from our core platform such as revenue <unk> is the best Kpis to measure our performance.
Revenue from our core platform, including services and Q2 of 2023 was $40.5 million, representing a decrease of 90% year over year.
Total revenue for the second quarter, which includes revenue from our virtual conference product was $42.1 million, representing a decrease of 13% year over year.
Total subscription another platform revenue was $38.3 million.
Overages represented approximately 1% of total revenue in Q2.
Professional services revenue was $3.8 million, a decrease of 28% year over year, representing approximately 9% of total revenue compared to 11% a year ago period.
Moving onto a R R.
<unk> represents annualized value of all subscription contracts at the end of the period and excludes professional services on Overages.
Are related to our core platform was $140.6 million a decrease of $8.6 million from Q1 2023.
Although we had forecasted a decline in Q2, and we're not anticipating any improvement in the demand environment from the prior quarter, we saw some incremental softness from customers. During the month of June which is inconsistent with our historical linearity <unk>.
This week or environment resulted in fewer expansion opportunities from existing customers and continued pressure on down sells as our customers froze any additional span or even look to reduce her current speed.
These factors were the primary drivers of our performance in Q2.
We also saw a number of new business opportunities get delayed or scaled back to smaller initial deal sizes customers have more certainty around their budgets.
A R. R for our virtual conference product was $4.2 million at the end of Q2 2023 down from $6.3 million at the end of Q1 2023.
Total a R. R was $144.8 million at the end of Q2 2023 as compared to $155.6 million at the end of the Q1 2023.
Turning to customer matrix.
For our core platform a R. R. R average error per customer at the end of Q2 2023 was $77000 per customer consistent with your end 2022 levels.
Our contribution from the $100000 plus customer cohort continues to represent approximately two thirds of our total <unk>, which is consistent with the prior quarter and demonstrates the strength of our larger enterprise customers and our continued commitment to our platform.
The number of customers contributing more than $100000. In total are are totaled 323.
Down from 333 last quarter.
This decline primarily resulted from some customers reducing their spend under the $100000 threshold due to budgetary pressures.
We continue to see customers, making longer term commitments to our platform.
Multiyear contracts, which comprise 41 per cent of our <unk> at the end of 2022 increase sequentially as a percentage of our air are in queue to the highest ever and currently stands in the mid forties as a percentage of our total <unk>.
Total customer count was 1826 customers compared to 1916 in the prior quarter.
The largest contributor to customer churn in Q2 was our smallest customers the cohort of customers with less than 250 employees, but some of them moving to lower cost solutions with basic capabilities due to budgetary constraints.
Before turning to expense items and profitability I would like to point out that I will be discussing non-GAAP results going forward.
Or non-GAAP results exclude stock based compensation restructuring charges impairment charges for real estate amortization of acquired intangibles shareholder activism related cost as well certain other items are GAAP financial results along with a reconciliation between gap and non-GAAP results can be found within our earnings.
<unk> release.
We are pleased to report an improvement gross margin to 75%, which is an increase of 200 basis points from Q1, which had a gross margin of 73%.
And an increase from 74% in Q2 of last year.
The sequential increase in gross margin and Q2 reflects the cost reduction actions. We took in the first half of this year.
Now turning the operating expenses.
Sales and marketing expenses, and Q2 was $18.3 million compared to $25.2 million and Q2 last year.
This represents 43 per cent of total revenue compared to 52% in the same period last year and 47% in the prior quarter or.
Our sales and marketing expenses have decreased in absolute dollars and the prior quarter and year largely due to the cost savings measures we have implemented.
R&D expensive Q2, with $7.6 million compared to $8.9 million in Q2 last year.
This represents 18% of total revenue, which is consistent with the same period last year and down from 19% last quarter.
Even as we rationalize or spend we continue to make meaningful investments and product innovation with a focus on reallocating R&D spending to the most impactful projects, including our investments and generative AI capabilities for our products.
She didn't expense and Q2 was $6.7 million compared to $8.1 million in Q2 last year.
This represents 16% total revenue down from 17% in the same period last year and down from 17% last quarter.
We have taken actions as part of our broader cost containment measures to reduce our G&A costs as a result.
<unk> expenses in absolute dollars have decreased as compared to the prior year in prior quarter.
As I move on to our bottom line performance I am pleased to report that we beat our profitability targets, we provided in the prior earnings call <unk>.
<unk> non-GAAP etf's profitability in Q2 as.
As well as achieving non-GAAP EBITA breakeven.
Sure I mentioned, we continue to make improvements are operational efficiency and planned exit 2023 with breakeven bandgap EBITA in Q4.
We achieved our targets by executing on our cost reduction program, which I will cover in more detail shortly.
Operating loss for Q2 was point 9 million or a negative 2% operating margin compared to an operating loss of $6.2 million in a negative 13% operating margin for the same period last year.
Net income and Q2 was $2.1 million or four cents per share based on approximately $57 million diluted shares outstanding. This.
This compares to a net loss of $6.4 million or 14 cents per share and Q2 last year using approximately 47.2 million basic add diluted shares outstanding.
Turning to the balance sheet and cash flow.
I ended the quarter with $245 million in cash cash equivalents and marketable securities.
Are strong balance sheet has allowed us to return a total of $41 million under our prior share repurchase program through February 20, twenty-three. While also initiating an additional 125 million dollar capital return program, we announced in March.
We plan on completing the $125 billion capital return program No later than Q1 2024.
In total with these two programs, we will be returning $166 million to our shareholders by the end of Q1 2024 as.
As a reminder, the 125 million dollar capital returned program consists of two components. The first component is a special cash dividend of one dollar and 90 cents per share, which totaled approximately $50 million and was paid out in June the second component of the capital return program.
As a $75 million a share buyback program, which may be executed using an accelerated share repurchase program and or open market repurchases.
This program, we utilize $6 million at two one.
$23.5 million in queue to buy a share repurchase program using open market repurchases.
Thus far in Q3, we have utilized an additional $10.5 million under this program.
The total repurchases to date to $40 million under this program.
We are pleased to be able to undertake this meaningful capital return to our shareholders. While also maintaining a strong balance sheet with ample liquidity to invest it strategic priorities.
Turning to our use of cash in the quarter cash.
Cash used in operations at Q2 was $4.3 million compared to cash used in operations of $2.7 million Q2 last year.
Free cash flow was negative $4.9 million and Q2 compared to negative $3.4 million and Q2 last year.
As a reminder, or cash flow also includes costs related to our restructuring efforts and other costs incurred related to our shareholder activism expenses this year.
Before turning the guidance I want to provide to update our plan to return to profitability.
As I discussed earlier, we achieved non-GAAP EPS profitability and non-GAAP EBIDTA breakeven in Q2.
We were able to achieve these targets as a result of the cost reduction program. We initiated in Q1, which we continued into Q2 <unk>.
Streamlining our operations to improve our bottom line is an ongoing initiative.
Q3 are total expense structure, it will have been reduced by over $50 million annually compared to Q2 last year.
When we entered 2024, we will do so with a lower expense structure, creating operating leverage on our business model and we expect to see expanding profitability in 2024.
The measures, we are taking position as well to deliver long term profitable growth.
Moving to guidance.
Setting our fiscal year 2023 guidance, we are assuming that the weakness we saw on Q2 continues.
Sure I discussed earlier, many of our customers are seeing their marketing budgets reduced until there is more certainty about the overall economic outlook. This.
This constrained spending environment has impacted our ability to expand an already existing customers increase the pressure from down south at the time of renewal customers look to reduce spending and.
And resulted in fewer new business opportunities as purchasing decision, sorry, long dated or delayed until future periods.
Despite the uncertainty we're seeing in the market, we are expecting to see an improvement.
Performance of the second half of the year relative the queue to as a result of improved cohort dynamics with a greater share of our <unk> and multiyear agreements, which alleviate some of the pressure on large our customer down cells.
While our guidance as soon as a sequential improvement in performance. A Q3, we are still assuming that our core <unk> declines by 4% to 4.5% sequentially in Q3 as compared to Q too.
For a virtual conference product, which we have deemphasize, we expect <unk> decline by at least half a million dollars sequentially in Q3. This.
This would result in total are are declining sequentially in Q3 by approximately 4.5 to five per cent.
Q for our guidance does anticipate a further sequential decline in core a R. R. A relative to Q3, but we expect that declined to be smaller as we begin to see improved performance in Q4.
We believe marketing budgets and spending will stabilize and rebound over time and as a result, we are optimistic that we will return to positive growth in the future.
For Q3, we expect core platform revenue, including services and arrange a $36.5 million to $37.5 million in total revenue, which includes our virtual conference product in the range of 37.5 $38.5 million <unk>.
Professional services. This is expected to represent approximately seven per cent of total revenue.
We expect gross margins to be in the low to mid seventies in Q3.
We expect a non-GAAP operating loss in the range of $2.7 million to $1.7 million and non-GAAP earnings per share to be breakeven based on 49.2 million diluted shares outstanding.
We expect a restructuring charge of point 7 million to $1.4 billion in Q3 related to our ongoing cost reduction efforts.
Which is excluded from the non-GAAP amounts provided above.
Now, let me turn to our annual guidance for.
For the full year, we expect core platform revenue, including services to be in the range of 152, two $155 million.
A decline of 15% to 13% <unk>.
We expect total revenue to be in the range of 157, two what her $60 million.
Professional services is expected to represent approximately eight to 8.5 per cent of total revenue.
We expect a non-GAAP operating loss in the range of $9.5 million to $7.5 million in a non-GAAP net loss per share two cents to net income per share of two cents per share using 44.8 million basic and diluted shares outstanding and 49.6 million.
Diluted shares outstanding respectively.
Restructuring charges incurred in the first three quarters of this year or in future quarters are excluded from the full your non-GAAP amounts provided above.
Our annual guidance assumes we achieved non-GAAP EBITA breakeven in Q4 of this year and positive non-GAAP EPS in queue for as well despite the impact the current market uncertainty is having on our customers marketing budgets and spending decisions, which is resulting in a more conservative topline outlook for us.
And the latter part of 2023.
Our estimate of shares outstanding takes into account the impact of our capital return program.
In terms of margins, we expect gross margins in 2023 to be in the low to mid seventies consistent with the expectations, we laid out previously.
In summary, we are operating in a period of greater uncertainty, which is impacting purchasing decisions and stretching timelines that many of our customers. We are executing on our strategy driving product innovation around generative AI and delivering on our profitability targets, we have achieved profitability and driven improvement in our gross.
Margins in order to generate leverage our business model, which we believe will position us well to return to growth and marketing budget stabilized and the uncertainty in the markets subsides.
What's that try and I will open the call up for questions.
Thank you we will now be conducting a question and answer session. If you would like to ask a question. Please press star and one on your telephone keypad.
A confirmation tone will indicate your line is and the question queue.
You may fresh Dot N too if you would like to remove your question from the queue.
Four participants using speaker equipment, it may be necessary to pick up your handset before pressing the stocky.
One moment, please while we four four questions.
Thank you first question is from <unk>.
<unk> please.
Please proceed.
Hi, guys its faith Hunter Orange and I just wanted to touch on the profitability piece second so you head EPS breakeven you're talking about breakeven can you just talk about the.
Roadmap ahead of what additional leather is or at your.
Spell it all to continue driving margin expansion and continue focusing on that profitability longterm.
Hey, first in terms of what we've done this far compared to med Q2 of 2022, which was the high water Mark for our our head count we've reduced headcount by.
70% of our total annual cost structure will be over $50 million left in Q3, then it wasn't Q2 of 2022, a little over a year earlier.
[noise] allowed us to achieve positive EPS and Q2 and a positive EBITA in Q2 as well.
And the second half, we expect to exit Q4 with breakeven EBITA and positive EPS, Despite a more conservative topline allebach Alexander.
<unk> 2024, we're gonna do that with a streamlined organization and a lower cost structure, which will deliver significant operating leverage to Annapolis.
<unk> starts to ease and we aim to deliver improved bottom line performance in 2024 and beyond with our target of delivering double digit non-GAAP EBITA.
<unk> in the future.
Okay awesome. Thank you.
Thank you.
Next question is from an all Herman with J P. Morgan. Please proceed.
Hey, guys. Thanks for taking the question can you just unpack a little bit <unk>, you mentioned, how you sympathize with the pricing packaging to support.
The services you know based on a use case basis and they'll help.
Streamline.
Perhaps get can you just don't have that available for us.
Okay.
Yeah.
No no. Thanks, thanks for the further questions. What we are doing is S.
<unk> our customer you scheduled first of all we found the that'd be fine.
<unk>.
Regulated industries compliant mission critical use cases related to we talk about health care professional engagement and life Sciences, we talked about remember enrollment and insurance and certification of professional services and financial services. So as we unpack them and if if you aggregate all that the.
The error in these use cases is about a fifth of <unk>.
More than a festival.
So as we look at this.
The requirement for health care professional engagement for for pharmaceutical people require different products.
So we are packaging the product for that particular use case, you'll also basically looking at do we have a starter a bundle in a mid level bundle and and and others, especially is now we are we are developing more capabilities related to January I can may I. So we're taking a multiple products bundled them into <unk> and midlevel bundle for these things similarly.
The requirements for people on the insurance side, when they're focused on number and enrollment is is is different. So we are packaging. The right kind of offerings. We are focused on going to these these kind of use cases with the right kind of case studies and best practices in Ottawa, and then having to stop living packs and.
Now we are doing this recognizing the fact that these use cases are showing the best retention and growth.
And the current market environment, and but then the marketing budgets normalize and improve in addition to dwell time here will also be able to basically get quote from the demand generation use case, we just took the largest portion of our business.
Great. Thank you.
Okay.
Okay.
Thank you.
Ladies and gentlemen, if you would like to ask a question. Please press star N. One.
Next call.
It's from Scott <unk> with <unk> and company. Please proceed.
Hi, everyone. This is Michael Rackers on for Scott today. Thanks for taking my question I was just wondering what you think about normalized gross and what this might look like you know maybe longer term or in a better macro.
What would you expect the mix of new logos verses existing customer expansion to be and then maybe just talk about kind of your current thoughts on.
On that path. Thanks.
So.
Michael <unk>.
Talk about what do we expect Grove hair debate I mean, we are committed to.
Delivering double digit revenue growth in double digits digits EBITDA growth.
Look at this stage, we are going to a patch.
Four of articles are being impacted.
Marketing Department is mainly pay up on our solutions are getting reviews. So this is impacting our business in the near term, but we'll bounce back and and just to provide a perspective, we are not the only one getting impact that if you look at all the companies selling marketing and sales offering to be debate, we've seen double digit reduction and growth rate starting from from last.
Sure.
From my perspective, we are about five quarters into this macrocycle.
If you look at the <unk>. If you look at the lay off the secret of stabilized. So I believe we may be closer to the end than the beginning.
How long it takes I don't know, but I know with more certainty in the market environment companies will start investing in revenue growth and that is where our product shines.
Now what gives me confidence that you'll get there.
Because we are currently focused on things, we can control our go to market products and profit.
On go to market, we talked about our use cases, which we are focused on.
The macro gets better we don't see a rebound in the demand generation use cases, which will further accelerate our project.
Our enterprise customer base of customers over a thousand employees is very strong yes, we have seen some downstairs Bara era for customer is still close to the highest ever.
Customers continue to make multiyear commitment to us with percentage of a multiyear deals is in the mid forties the highest ever.
No product, we are doing some very interesting things with our strengths and first 40 data <unk>.
We expect generate an <unk> an entire suite of offerings and the next generation of our platform, we will be winters here, because we have our customers that are a lot of their first 40 data on our platform and finally, we've achieved our profitability dark so again coming back to it focuses to deliver double digit revenue growth and double.
EBITDA growth.
Now in terms of.
I have a question about new logos and customer expansion. Historically this is customer expansion episodes of pain.
Close to 60% of the cards of our business and you'll always have been the other we and we expect to get back to as we normalize one four.
No just <unk> when we.
Do a return to growth we'd expect to first see sequential era growth first when that happens and then revenue growth.
<unk> as revenue growth is more of a lagging indicator as well.
Awesome. Thanks.
[noise]. Thank you.
As there are no further questions at this time I am turning to call back to Mr. Shaw, That's Sharon C E O for closing comments.
Ladies and gentlemen, thank you. Thank you for your time.
We appreciate your feedback thank you.
Okay.
This concludes today's teleconference. Thank you for your participation you may now disconnect your lines.
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