Q2 2023 Consensus Cloud Solutions Inc Earnings Call
Thanks for holding we appreciate your time and patience. Please stay on the line and we'll be back in just a moment.
[music].
Good day, ladies and gentlemen, and welcome to consensus Q2 2023 earnings call. My name is Paul and I will be the operator assisting you today.
At this time all participants are in a listen only mode.
Western and answer session will follow the formal presentation.
If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.
Mmk that would cause actual results to differ materially from the anticipated that's all.
Some of those risks and uncertainties include but are not limited to the risk factors outlined one slide three that we have disclosed in our 10-K SEC filings.
Well as a summary of those risk factors that we have included as part of the slideshow for the webcast.
We refer you to discussions and those documents regarding safe Harbor language as well as forward looking statements now let me turn this call over to Scott.
Thank you Madam.
Well there are many important accomplishments in the quarter. Most of them are now you're producing meaningful revenue as a result, and coupled with continuing slow decision, making from our perspective corporate customers weak results from summit and some near term loss of efficiency due to our internal salesforce, we alignment our top line revenue was weaker than it.
Dissipated and his influence us to focus on the lower end of our revenue guidance for the year.
Our focus on cost of allowed us to maintain an EBITDA margin consistent with our guidance range between 50 and 55%.
By investing our excess cash improving our tax position and reducing our share count our bottom line non-GAAP EPS is ahead of our expectations and should be above the mid point of our guidance for the year.
I will now provide some additional commentary regarding various aspects of our business before handing the call over to John .
As noted in our press release, we've made significant progress in our go to market realignment.
Based on the customer buying motions that we will outline at a later slide the realignment is showing early success with the pipeline growing significantly from Q1 2023.
In addition, we continue to see strong fax volumes in the quarter slightly ahead of our Q1 record results. However.
However, this process of realignment and the continuation of slow decision, making in the health care sector for new business, which we have address for several quarters did impact our revenue for the quarter and our corporate channel, which grew 6% exclusive of stomach and 3.1% in the aggregate.
Turning to our clarity product, we have signed our first customer on clarity and also decided to produce additional variations of clarity to address specific needs in health care.
Our first customers using the service for prior authorizations, which is a 1.9 billion dollar a year business and expect you to go to 4.1 billion by 2028, According to global market estimates research.
As a result, the service to address prior off will be known as clarity P. A additionally.
Additionally, we will be announcing the release of clarity CD.
This service will allow unstructured clinical data from faxes and scanned documents to be routed into the correct patient record.
Look for our press release in the coming days to learn more about this service.
As we discussed last quarter of the VA began the roll out of the E C fax service.
As of the end of July the initial group of 10 sites encompassing 40 facilities has been successfully rolled out.
A plan is now being developed for the implementation of more facilities this year in.
In addition, there are approximately 30 additional agencies interested in EC fact solution <unk>.
Cognis Santa has begun more detailed conversations with several of these agencies are.
Our Soho customer base is now completed the price increase that began last year.
We are pleased with the cancel right for the Soho customers return to the near Historic monthly average of 3.5% per month during the quarter.
Before handing the call over to John I'd like to discuss our liquidity and capital allocation opportunities and.
The quarter, we generated positive free cash flow within approximately $8 million improvement from Q2 2022.
I would remind everyone that we generate most of our free cash flow in quarters, one and three due to the interest payments that we make in quarters, two and four we.
We ended the quarter with 112 million dollar of cash and investments a record for us after spending $10.1 million and capitalize expenses and $2 million in the repurchase of 65 7000 shares of our stock during the quarter.
In terms of our capital allocation strategy, we focus in the near term on investments in the business. Both capitalize an expense followed by opportunistic share repurchases. We have built cash balances because it is our goal to retire some of our debt prior to maturity.
It is our belief that the credit markets will not return in the near to intermediate term to the favorable rate environment that existed in the summer of 2021, when the bonds were issued.
Due to limitations imposed by the spin we have not been able to repurchase dead until the second anniversary of the spin which is this October we are now studying the options available for us to effectuate repurchases of our debt I'll now turn the call over to John .
Thank you Scott.
Today in the operation to update we will look at our sales results for the quarter give a high level update from the Soho revenue stream comment on our overall pipeline and bring you up to speed with key product and engineering progress.
Following that I'll turn it over to Johnny Haecker are executive Vice President of operations to take a few minutes to give you a greater insight into the go to market realignment that we announced on our last quarterly call.
Before starting in on the sales numbers and what does it bring you up to speed on progress with our rolled out of the E. C. Fax program at the V. A.
As you recall program was a little slower out of the gate then we would've liked however, there has been positive movement over the last quarter.
In Q2, we successfully completed implementation of 40 da facilities across 10 sites, which accounted for the planned initial evaluation portion of the program.
I'm pleased to say that the response from the <unk> and the end user community has been overwhelmingly positive.
We will be meeting with the VA and our partner can't Desanto to map rollout plans now that we finished finished the test phase.
We will have updates on those plans on our next call.
One more note regarding E. C facts, there are nearly 30 governmental opportunities in the pipeline and we're pleased with the overall progress.
Given our confidence here, we've added some additional experienced sales talent to help us in partnership, Wisconsin, something with getting these deals over the line.
I'd also like to announce that we have signed a full production agreement for clarity with our first customer a major provider of prior authorization services to the industry.
Specifically this customer will be using our clarity prior authorization or clarity P. A product trained to extract discrete data from unstructured prior authorization faxed documents and then through the application of discriminate against AI create a structured output files direct.
Re enter their processing system <unk>.
Eliminating delays and cost associated with manual processing of unstructured documents.
The technology here is particularly innovative the customer required the ability for clarity to extract both type font and hand written content a use case that we believed significantly expands clarity utility for our customers and further differentiates us in the marketplace.
Four Q2 bookings came in at just under $4 million and the breakdown between product families was 80 per cent tax and 20 per cent advanced products.
When you look back to Q2 2020 as a comparison the number is down by just over $1 million and this is a great example of a point that we've made several times in the past that bookings numbers are lumpy and subject to a disproportionate impact by one or two large deals.
To this point.
Q2 of 22, we were the beneficiaries of a large deal in that timeframe. If you exclude that one deal then we would actually had been up year over year.
Further you have pure timing issues for example, after the quarter close this year, we were able to sign two deals that we are projected in Q2 that missed by just weeks, which would have made a measurable difference in the quarter totaled.
Point is that as we report our bookings expect lumpiness in timing issues that impact our quarter to quarter booking numbers.
The initiative, we announced two quarters ago to become more aggressive in mining the Soho base to upsell those existing customers into corporate product delivered over a thousand accounts transitioned into higher value products.
This result is consistent with last quarter and in line with our expectations.
The overall pipeline remains strong and growing in fact in queue to the sales team accelerated the rate of pipeline growth over Q1.
We continue to be confident in the ability of our teams to move these deals for the sales process, an while slower than we would like the issue continues to be one of timing and not lost opportunities.
<unk> business the price changes that we enacted last year to have now completely run through the entire customer base.
We're pleased with the completion of a price increase rollout churn has slowed in the corner to 3.57%, which is 19 basis points better than Q1, and 30 basis points better than Q2 22 now.
Bear in mind that the churn rate also includes those a thousand counts that I talked about earlier that were moved out of Soho to corporate.
Churn rates have returned historic levels overall customer ads in the Soho space are down running about 20 per cent less than pre pandemic levels.
Based on a number of factors, including the new pricing some erosion of paid search keyword volume and our shift towards upmarket messaging. We believe that this is the new normal for web acquisition in the Soho market.
With that in mind, we are pleased to announce that we have brought onboard T. New leader for E. Commerce efforts and he will be guiding our efforts as we transition from a small office home office focus to a more integrated web marketing approach that are lined with our customers buying motion.
Buying motion as a concept that Johnny will talk about later.
The product front clarity has been a central focus.
In addition to the sign contract for clarity prior authorization or calling clarity P. A I mentioned earlier I'm excited to say the team has also completed an early stage release of clarity clinical documents or clarity C D with.
What they specifically tuned clarity instance, designed to extract data.
Clinical documents <unk>.
Likewise work has begun on clarity R F or clarity referrals, which is focused on data extraction for referrals.
And each of these cases, we have customer interest that's driving our development effort and look forward to bringing these clarity products to market over the next several quarters.
On the harmony front I'm pleased to report that we have completed a successful proof of concept with an interested E. H R. Prospect and are currently negotiating the potential for protection agreement.
As you recall harmony uses both the transformative capabilities of our product set as well as the broad strengths of our network to transform clinical documents in process between protocols and deliver information based on our receivers preference.
And when you look at the successful proof of concept as validation of our product direction and gauge or the potential for market demand.
Finally, we have continued to push forward our security program and they have completed the work for J sign Hi Trust joining our other products that have achieved that level of security.
Now as you recall, we announced a major realignment of our go to market organization under the leadership of Johnny Hacker, Our executive Vice President of operations.
Johnny has a long track record of success in both the digital facts arena as well as in large scale cloud based sales.
We thought it would be beneficial to have Johnny talk in more detail about the realignment.
Our reasoning for taking this action and how things are progressing.
So now let me hand, it over to Johnny Thank you.
Thank you John excited to be here today, and thank you for the opportunity to explain in a bit more detail what led to our go to market realignment earlier this year.
Started the process of evaluating the entire go to market posture of the company.
We took a view that focused on product or customer groups, but on the practices behaviors and processes that aren't prospects used to purchase consensus services <unk>.
Broadly I call this the buying motion.
And then thinking for our organizational improvement it was essential that'd be both understand that motion of our customers as much our process are selling motion to meet theirs.
By aligning to go to market team and this way, we create and natural rhythm that meets the customer where they are and helps to ensure our selling process fits their buying process.
We examined the customer behaviors, we saw four distinct buying motions emerge and violent they loosely confirm to customer size. There is a substantial overlap between E. Commerce S. M. B, what we call a large accounts and a list of names strategic accounts and partners. If you can see at the top <unk>.
<unk> <unk> customer continuum side.
More importantly, the characteristics of how the various customer groups prefer to buy whether self service inside sales Orfield sounds.
Is the guiding principle will be used to construct or go to market approach.
We analyzed where leads come from like marketing inbound calls outbound, calling channel account based marketing Tradeshows rfps referral and networking.
We live closely at how long the sales cycle takes from an immediate fail and e-commerce to sometimes multiple years with the largest companies <unk> a prospect.
This is largely driven by the complexity and link off the contracting process and then followed by the revenue ramp velocity.
[noise] varies from literally seconds, and a click and accept process charged on a credit card to negotiating custom contract over an extended period of time and rolling out our solutions and large complex organizations.
The revenue mix is on the low end very much description dominated with only little incremental variable usage based spent we see what is typical for a fast and cloud model.
<unk> customers grow and as consumption increases clines might commit to a certain <unk> Ah <unk>.
Prefer a usage based Ram and billing model.
The way customers integrate with us and deploy our solutions as well as the mix of solutions, we built for them changes from down to up market.
At the very bottom of the slide we outline the multiple layers of opportunities we have.
A one use your account is oftentimes a one opportunity account, but as we move up from their frausto opportunities arise to the level will be closely cooperate and co innovate with our most strategic partners and customers.
V. A is a prime example, an opportunity that first surfaced in 2019. It took multiple years to close and is now taking months.
<unk> <unk> <unk>.
But the government specific offering for developing the process and unlocking new promising opportunities.
All in all these are the key determinants of our sounds process and by extension, how we organize the T.
Another key is the continuum of how our marketing efforts dovetail into ourselves process.
It is an important consideration to ensure that coordination between marketing and sales as well choreographed and that the customer buying motion is matched to the marketing campaign.
Finally, the alignment of our <unk> implementation support and opportunity management is likewise constructed around the buying motion.
Actually consider sharp wallet expansion and upset potential.
Customers very in both opportunity to potential and and how they prefer it to be approached <unk>.
Many grow in graduate overtime, creating untapped rose potential for us and our existing customer base with this overall dynamic understood. We recognized that our traditional organization model had to be significantly re imagined we have to stop thinking in terms of Soho incorporate.
And understand that in order to maximize the revenue potential of the consensus solution set a full review of our organization and personnel what's necessary.
It was that review, which lettuce to the realignment.
That said, our internal operation I'll go to market model will for the time being not to change the way we report our numbers to our investors. We understand that many models has been built around the separation of Soho in corporate.
And just as today, we will continue to report a result in that way.
In addition to reshaping the organization, we recognize that it was essential to make personnel changes as well.
The skill set to be effective in our new go to market environment.
Both training and experienced leadership to drive the transformation.
While alignment in personnel are highly important.
You also have to think through the technical piece of the operating environment tools reporting metrics analytics, the essentials supporting mechanisms to institutionalize these improvements and built the habits that lead to success inside the new structure.
A good amount of this work started in late two one and the momentum go through to you too I think that the results from the corner bookings down a bit while pipeline Richmond asleep or ahead of expectations and this kind of major transition.
I want to thank all of our employees. The teams responds to the new operating approach, they're quick ability to learn and apply the required skills and the speed at which our leaders have learned the business and driven results is nothing short of exceptional now while we were all excited about the white or a pipeline.
<unk>, you're very aware that the real test here will be the points on the board.
Most deals ramp customers revenue growth.
These are the key targets, we still have to hit and run.
Q2 has shown us the potential of this new go to market approach full execution still needs to be achieved.
There are certainly work to do in order to finish the transition, but I am pleased with the start and our progress to date.
With that let me hand over to our C F O Jim Malone Jim.
Thank you Johnny and good afternoon, everyone first of all we are very pleased to announce the voices are new ordered is appointed in Q2, 2000 twenty-three, replacing B D O.
<unk> and R. A K U foiled on June 5th 2023.
Let's start with a corporate business results Q2, 2023, corporate revenue was 50.4 million.
An increase of $1.5 million.
Or 3.1% pulled the prior year of comparable period.
Excluding summit revenues, which was characterizes inorganic in the prior year.
Q2, 2023 over Q2 2022.
Corporate revenue crew.
Rose increased to approximately 6%.
<unk> from Q1 2023 by approximately 1%.
Corporate offer of $317 was down $38 or 11% from the prior year.
Somebody represented.
$9 or approximately 25% of this difference.
The remainder of the <unk> Oprah difference is John is noted as <unk> as the timing of laundry customer wins, which is lumpy or a quarter to quarter basis.
<unk> is certainly affected by this loneliness.
Furthermore, and Q2 2023, the year over year offer.
Decreased reflects a greater share of paid is telling me from S. M. S N b customers and the plan migration of Soho customers to corporate.
<unk> presents the opportunity to one increased offer a sofa customers migrated based upon our experience under this initiative.
And secondly, upset up so additional services, gaining greater customer wallet for Ya.
Corporate monthly churn improve 1.3% down from 1.9% for the part of your.
Hello return input.
Delivered a trailing 12 months revenue retention of approximately 101 per cent consistent with our expectations.
Moving to Soho results Q2, 2023 revenue of $42.4 million, an increase of point 2 million 4.5%.
Over the prior comparable period exceeded expectations.
<unk> $15.69 was an increase of $1.82 or 13% year over year substantially driven budgets over price increase program, we announced over a year ago. The completed this quarter.
Mostly temperature.
Calling to 3.6% compared to 3.9% exceeding expectations.
3.6 churn besides the 3.6% churn rate is approaching pre price.
Increase levels.
Moving to Q2 2023 consolidated results revenue was 92.8 million, an increase of 1.7 million or 1.8% over Q2 2022.
Have some stomach in both periods revenue growth would've been 3.2%.
Reported adjusted EBITDA for 47.7 billion was a decrease of $2.3 million or 4.7% delivering a 51.4% margin.
The adjusted EBITDA clothing was primarily driven boy planned employee related Cos and it's only me a bad did expense, which we expect to improve by year end.
<unk> P. P S a $1.36 Peter expectations, but was lowered by eight eight cents or four or 5.6% compared to the prior period.
E. P. S difference results from the adjusted EBITDA items mentioned above.
Plus increasing depreciation and amortization expense as we continue to invest in our technology and client plums.
An increase in foreign exchange impact related to into company balance revaluation, all set positively by interest income lower.
Lower taxes and <unk>.
We continue to build okay. His position as in the quarter with approximately 112, <unk> <unk> is sufficient to pull into operations in debt.
We all reaffirming full year 2023 gardens at the low end of.
The low and the revenue and adjusted <unk>.
<unk> for Joseph <unk> E P S.
As a reminder of guidance Arrangers orders falls.
Revenue 370 million, two 390 million <unk>.
With 380 million mid point <unk>.
Just a <unk>.
192 to 206 million.
With 199 million bitcoin.
Joseph <unk> V P S.
$4.93 to $5.20 with $5.08 at mid point.
R Q2, <unk> tax rate and share count was 18.5% in 19.7 billion <unk> <unk>.
We are planning to follow Q2, 2023 10-Q at Barca clothes on August 9th.
That concludes my formal comments I'd like to turn the podium.
Back to the operator for.
<unk>. Thank you.
Thank you we will now be conducting a question and answer session and the interest of time, we ask that you. Please limit yourself to one question if.
If you'd like to ask a question. Please press star one on your telephone keypad, a confirmation total will indicate your line isn't the question Q U.
You May press start to if you would like to remove yourself from the queue for.
For participants using speaker equipment, it may be necessary to pick up your handset before pressing Miss darkies.
One moment, please while we begin.
And once again, it's star one if you wish to ask a question and we did have a couple of questions come in first question is coming from N as a female Oppenheimer.
And your line of life.
Hey, good afternoon. This is isaacs off and on for you and thanks for taking my question. My first question is on the corporate channel and the deals that were delayed and out to the third quarter could you quantify or put into perspective, how large the deals where and then maybe for was the delay a function of sales realize.
That you guys talked about or just customers delay and the buying decision. Thanks.
Okay. So the the delay has nothing to do with a sales re alignment. This is more of a continuation of the large and strategic account. If you go back to Johnny's buying emotionally continuum sharp these would be at the upper end of that spectrum, the sort of the Harper.
<unk> will be.
These are situations some of what you like clarity we've been working on for in excess of a year. So there's different reasons why <unk>.
<unk> I would say generally they fall into you know a couple of different categories.
One we've noticed that upper quartile, a slowness indecision make any general irrespective of whether it's the core fax service or an enhanced service like clarity or the initial phase of the apartment. So that's just something we've generically see we've talked about before it started the uncertainty the economy and the tight labor market.
Particularly as it relates to the implementation of services like these is a constraint for some of those larger buyers. So that's one element.
Now if you think of clarity in particular.
And you go back to some of the previous earnings calls, where you know to use a football analogy. If I were on the five yard line multiple occasions.
And the next quarter at the ball then again at the end zone a lot of that has to do with unpacking. What we're disclosing now you an understanding about clarity when we first launch priority.
As a service.
Think about Willie more as a platform technology.
And the vision was we'd go out and we would be able to take all comers, what we learned through the proof of concept phase is that they're really needed to be <unk> <unk>.
The address very specific somewhat narrow.
The situations so the customer <unk> really we gain traction with was involved in this area prior authorizations.
<unk>.
Went through their own understanding of prior off they attack what.
What they thought were court Ah cases, it turned out to be very poor so how their own business functions. One example is a lot of those prior off come in via handwriting.
That was not the assumption when the process and the testing to get it was it was assumed by van.
Vast majority was all in some python well.
Well as you can probably imagine whether it's enhance OCR or an L. P. It's a lot easier to wait and to learn when they're a standard type boss that it comes with much more challenging when you start to introduce handwriting.
But we can understand in order for this service to really deliver the value to them it needed to be able to address the vast majority of the prior off request that they process. So that actually caused us to evolve the product really take it from where it was and go into almost a 2.0.
So that created a delay because the effects of that change and it was through that process. Then we then determine there are other use cases, where we can narrow the functionality.
That's resulted in now the recent launch of clarity C. D. And then there's John hinted at in his remarks, which will not come until next year clarity referral. So there'll be these different would call the apps.
Will run on a platform to address specific use cases, so there's different.
Reasons why each of these was delay, but certainly any of the clarity customers fallen too I would call. It the evolution of the product.
But almost all of them were affected because they're all health care related by a general I'd say slowness in that marketplace in making decisions and <unk>.
<unk>, we're seeing that start to Chiba late now.
You know we were talking amongst ourselves for the call will have a very nice pipeline to report issue <unk>.
But you should anticipate that these kind of customers that we talk about these are at RAF. These are hundreds of thousands of dollars a year or two in excess of a million dollars.
And the key there is rap I'll go back to Johnny Fly ran doesn't mean that just because we start to roll out in Q3, it you're gonna see that kind of revenue in Q3 and in fact R. O view and it may be somewhat conservative is to not assume that that's one of the reasons why we've not been more aggressive on the revenue for the corporate channel for the.
Balance of the year, we've assumed somebody that will come in this year, just like there'll be some V. A revenue we've assumed that all that revenue in the back half of the year still relative to our poor book a business rather bought us.
It'd be a little bit more than the minimum <unk>.
Okay understood. Thank you and then just as a quick follow up Uhm on D V. A roll out could you just more broadly talk about how the input implementations have gone and then the other opportunities that you mentioned any color that you can give on the timing of those would be great. Thanks.
Yeah. So the the V a and I think for you know for reasons was very cautious so they selected.
These 10 sites and each site can have multiple facilities associated with them. So on average there were four underlying entities, hence the 10 sites mapping the 14th Phillips.
And what they were interested in I think a lot of it was a learning process for them as well.
I know you know to the outside audits.
Probably sounds pretty simple Oh, you've got a facility.
<unk> and they have a fax machine or fax machines, or a server or a multi function device that can send and receive faxes well the answer actually is all of the above.
It's not generally one so one of the things they had to go through is when they would query aside.
What are all the use cases by which and devices by which you send and receive faxes today and so they would submit a question your back to <unk> and then we go down the list and say Okay. That's already covered that's already covered okay. You have a <unk> multifunction device, we do or don't have an API.
Can work with that particular manufacturer.
So the V. I wanted to you'll have the best customer experience for the underlying facilities and as a result, there was incremental work that we did to make sure we can address.
Not all but substantially all of the use cases that with cash or substantially all of the traffic.
So they were very diligent about that we only would roll out a couple of sites on a two to three week basis and as a result. This initial phase took probably about three months cause. It just ended in late July .
So now that access the tablets.
For how we start to roll out the rest of the facilities and just so I won't understand there are over 2000 additional facilities.
So the 40 only represents two per cent and they work for obvious reasons the largest two per cent probably closer to the smaller end of the spectrum of the two per cent. So.
So it is given the V. I think confidence of how this can be done and in fact later this month in a couple of weeks, we'll be having a a onsite meeting with the V. A <unk> ourselves too.
Work through now how we do the next batch because one of the things the V. A offer internally once it became known to the facilities and the site that the service was available they can put their hand up.
After the early adopters.
A number of sites and a larger number of facilities have raised their hand, if you will to Wanna be early adopters. So now we want to build a process that the V. A is comfortable with and that will meet those needs, but obviously on a more accelerated basis that it took the wrong. The first 40, but that plan is still very much under development.
And under negotiation amongst <unk> V. A in ourselves and we'll know a lot more end of this month.
Okay, great. Thank you very much.
You are.
Thank you once again, it's star one on your phone if you wish to ask a question Star one if you wish to ask a question and the next question is coming from John <unk> from CJ Securities. John Your line is nice.
Hi, it's trolleys drug for John Thanks for taking the questions. Just a quick one for me how have your expectations changed if at all and the website's versus corporate outlook in how is the conversation evolved over the last tour with potential enterprise clients.
I missed the last part of the conversation changed over the what I couldn't hear you.
Sorry about that.
How about the conversation evolved over the last quarter or so with the potential enterprise plan.
Okay.
So on the so and I'm glad you pointed out so as you mentioned that were mentioned had a very good quarter.
<unk> quoted to us and that you know, obviously well not tremendous grow it did take a little bit of <unk> over.
The same for the prior year, but as we noted.
This was due in large part to what we've seen over the last several quarters, which is a consecutive increasingly are for was the price change at various places rippled through the base. So as we look forward with the price change be complete we don't anticipate that Soho will necessarily be in the positive Tara.
Tori for the back half of the year in fact, if you look at the map.
The.
I endorse what John said.
Until our new head of e-commerce really gets C under him.
Save some more holistically about the various marketing opportunities I think it's safe to assume the 75000 <unk> U as per quarter, what we call a Soho chat I remember were stealing song from the Soho channel into the S. M. B that thousand roughly in order. So I think if you look at that and the fact that the price change.
His thoughts about 13%.
And it's a very tough Q3 to four cop because we pushed through so much of the price change the back half of 22, you should expect the Soho channel to be modestly negative and choose three and two four of this year.
And then as we look at the 24.
We will revisit a whole basket of opportunities which include how we market.
It may be looking at pricing there'll be a whole basket of things will look at in terms of how do we think of that piece of the business not dot E Commerce channel as a whole, but the Soho customer base is a portion of the E. Commerce, how do we look at that a going forward basis, but obviously stay tuned as we get into next year closer to next year in terms of our.
Thinking of guidance for the chance, but right now we wouldn't back away from the guidance that we've given you throughout the year in terms of the budget for corporate which is slightly negative issue.
And then Johnny what I'm talking about this the sales bushy the seeing on the on the large.
Strategics, yeah on the enterprise thigh I think we're <unk>, we're going to ask you about the pipeline that we were able to build a huge too I think that has accelerated substantially from Q1, maybe we're still.
Cleaning how's the little bit that after the realignment, obviously I knew it was coming in yeah have a closer look at the pipeline and look how much potential it's really in there. So we explained that out and that'll be it really build up on it.
Uhm.
You're very excited and some of the deals are closing.
<unk> three six months and.
Beyond the the closed a hippie anticipated and basically reporting on this for a couple of quarters now.
Decision, making is slow so that said, we don't see a lot of acceleration of we don't see the seals actually all out of the pipeline. So we're not losing them. It's just that decision, making eventually customers do this.
Side and and bring them in.
And we just need to <unk>.
It was more pipeline.
You'll get more transaction and.
Can these larger <unk>.
We're we're seeing things happening on the one side I think our strategic partnerships are starting to pay off. So we have a I think the report it last order on the AWS partnership that where I V X R. A partner of of AWS received <unk> materializing there in closing.
There.
We have strong partnerships <unk>.
Sent out a press release on the island Amish partnerships. So all of those and there's more partnerships to come that we're working on all those are generating larger leads and the and the enterprise squirrel. So so we're excited about what's happening, but as I mentioned in my in my opening remarks, obviously, we have to close out.
<unk> and ramping up to revenue and as you saw on the continuum site that revenue Ram.
First you have to the the sales cycle contracting cycle now that revenue Ram can be several months each so sometimes over a year 18 months uhm. So it so it takes time, but.
February exciting to see the customers normally.
We have a question by email Paul before we go to <unk> was there a follow up I'm sorry.
No no. That's that's helpful. Thank you.
So what type of question by email that came in which is question is to refresh refresh our investors memory on management incentives work and basically to stock component within our overall compensation program and that's it's a very broad question is everybody within consensus has equity although it.
Is a varying degree of their total compensation.
About 30, or so individuals where it would be much more significantly waited relative to the cash component, particularly you can see in the proxy the named executive officers like myself and.
John <unk>.
And.
Half of that stock for those 30 people is performance based on the performance criteria is stock price, it's actual stock price dollar amounts.
And it's been you know a lot of debate.
<unk>.
No discussion with cough consultants or what are the right metrics or using performance based and there's all kinds of theories and I I I have to admit I don't think.
Any of them actually hit the mark perfectly, but our philosophy is that we want our managers or senior managers in particular could be a line with.
Oh, and the stock price and then the stock price rose not only will that equity this issue at a certain price be worth more but in the case of the performance unit then it triggers the ability for those the best that we put a 10 per cent <unk> on the stock price based on the date of grant so.
That is not work as we would like so far.
But as I remind the management team and the employees. These things play out over several years I saw this at J to where you know in one year multiple tranches of equity best it because the stock one on a on a terror one year and as a result, there was not only of ketchup to what I call. The normal best thing, but there was actually.
N N and.
In excess if you will.
So while obviously at the current price levels, both P S use or not and the money for any of the employees.
There's still time, the best and as a result, you know we're looking out over.
In terms of that portion of our compensation the longterm for Jada myself, it actually represents 77% of.
Our equity grant.
Other employees at bright represents 50 per cent and they're granted on an annual basis coming up in November Ah John I took a one time grant that the hold just for about five years and if somebody's interested are protesting prices 60 to 87 is appropriate double Woodstock prices today.
We all have an incentive collectively as employees of the company as one does the company no matter, what our ownership position of equity certainly those at F. T issues to do things that will move the stock in the north north for direction and that <unk> <unk>.
Racial elements.
And also a capital allocation of opportunities, which I addressed briefly.
Briefly in the opening remarks, Uhm, we do put share buybacks in as part of that capital allocation, but we're not solely focused on buybacks and the reason for that is R.
Our own view of the capital markets environment higher rates of interest and the fact that we do have maturities in 26th 28, respectively.
And an order I, thanks to get good execution on those refinancing it will be in our interest to refinance less than 800 million of debt. So as a result in some form.
We look to repay or retire some death prior to maturity how exactly that will be done is being studied now as I mentioned there were so.
Handcuffs placed on us for the first two years <unk>.
That was just the nature of the spin, but as we come up to the second anniversary of a spin in October and those restrictions are loosen that gives us the flexibility been to start looking at but we'd be able to recapture some of the <unk> and depending on the price that could give us a better yield than we are currently.
Currently experiencing by just investing it in relatively short and save money.
Money market funds or getting you know 500 per cent.
Okay that was the questions from email any other questions that are reliable.
There were no other questions from the last the lines at this time Scott Alright. Thank you and I would just take all of you for participating in our queue. Two earnings call. A few housekeeping notes Q3, clearly will be reporting some time in November .
Three weeks before the <unk> of the exact date tomorrow, we will be presenting virtually at the Oppenheimer coverage. So some of you signed up for one on one there will be a fireside chat tomorrow is in our press release dated August 3rd and then on September the seventh what kind of host a webinar.
It'll feature John and <unk>, and Jeff Jeff is R. C T O to discuss artificial intelligence or AI.
Generally how it is used in health care today, and then more specifically.
We use it both of our clarity services.
As well as.
As we look forward, where we C N L T and a I playing a role.
We did a similar conference with one of our covering analysts maybe four to five weeks ago that was well received but it was it was a closed audience. So this one is open to anybody that is interested.
There will be a press release that will go out that will announce it since it's right. After labor day, and we'll give you all of the particulars of how to sign up and to participate.
And then as we have other conferences come up we will put out a press release allergic to them.
And I say if not then we'll talk again in November to discuss Q3 results. Thank you.
Thank you cause does conclude today's conference you may disconnect. Your lines at this time. Thank you for your participation.