Q3 2023 Veritone Inc Earnings Call
[music].
Good morning, and welcome to the Verra tone, Inc. Third quarter 2023 financial results Conference call. All participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing the star key followed by <unk>.
Uh huh.
After todays presentation, there will be an opportunity to ask a question.
To ask a question you May press Star then one on your telephone keypad.
To withdraw your question. Please press Star then two.
Please note that this event is being recorded I would now like to turn the conference over to Stefan in the ARPA of Investor Relations. Please go ahead.
Thank you and good morning.
Before the market open stag baritone issued a press release announcing results for the third quarter ended September 32023.
Press release and other information.
Information are available on the investors section of <unk> website, joining us for today's call are Barrington, <unk>, CEO and President Ryan <unk> and CFO, Mike Smith will provide prepared remarks, then open the call up for a live question answer session. Please note that certain information discussed on the call today, including certain answers to your questions forward looking statements.
This included without limitation statements about our business strategy and future financial operating performance. These forward looking statements are subject to risks uncertainties and assumptions that may cause actual results to differ materially from those statements certain of these risks and assumptions are discussed in <unk> SEC filings, including its annual report.
Take care.
Forward looking statements are based on assumptions as of today.
Number eight 2023 and bear children undertakes no obligation to revise or update them. During this call the actual and forecasted financial measures, we will be discussing non-GAAP measures reconciliations of these measures to the corresponding GAAP measures are included in the press release, we issued today.
When we referenced pro forma measures such measures are presented on a combined pro forma basis, taking brought being as a blackberry chapter in fiscal year 2022.
Finally, I would like to remind everyone that the call today is being recorded and will be made available for replay via a link on the investors section of Biogen's website.
The Ww dot baritone dot com.
Now I would like to turn the call over to our CEO and President Bryan Stuart.
Thank you Devin and thank you everyone for joining us today before turning to third quarter earnings business highlights and results I want to provide an update on our strategic initiatives and discuss baritones positioning in the current operational landscape.
Exactly a year ago baritone announce my appointment as CEO and I introduced several strategic initiatives, including focused execution operational excellence and fiscal responsibility to accelerate our path to profitable growth and drive long term shareholder value.
I continue to be impressed with our team's progress against this framework.
Fight lingering uncertainty across financial and consumer markets Paragon has made significant strides in streamlining operations and we looked at the start of 2024 at an inflection point in our growth trajectory.
Aratana has intensified its focus on the verticals, we serve allocating our resources to established markets, where we have demonstrated differentiation and strong product market fit we took swift action to reshape our organization the pursuit of operational excellence aligning baritones go to market strategy and purpose built applications to solve critical problems.
For our customers, enabling them to cut costs streamline operations and boost revenue streams, even amidst the difficulties posed by the challenging macroeconomic environment. Our customers are affirming the value of our services by choosing to extend their contracts Baritones recent award by Deloitte as a member of its 2023 technology fast five.
100 class underscores our position as a top innovator in high growth company in North America across various sectors.
In addition to operational changes baritones dedication to fiscal responsibility resulted in $24 million in annualized savings year to date, and we expect to realize more as we progressed through the end of the year.
As signaled last quarter baritone is taking decisive action to improve our liquidity position restructuring our debt and adding $40 million in net new cash to our balance sheet. While also extending a major portion of our debt to 2027 maturity Mike's the metro will provide further information and details on the debt restructuring later as we approached.
The conclusion of 2023 I remain confident in our path forward and the strategic value of our products and services as well as the enduring growth potential of our business.
According to Goldman Sachs Research companies involved in the AI ecosystem can be classified into two distinct groups enablers, who make cognitive and generative AI possible or empowered entities that harnessed the power of cognitive and generative AI to grow stronger as.
As enterprises increasingly seek to deploy AI solutions faster than ever before they face unique challenges in integrating and productively managing the growing C of disparate data as well as the AI models. They utilized by leveraging burtone proprietary AI, where platform our integration capabilities and our established partnerships we support.
I empowered companies implementing cognitive and generative AI into their key business lines and work productivity tools.
Baritone as an enabler and we are committed to advancing human potential by blending human expertise with AI technology, helping organizations solve problems and achieve more than ever before.
Next I'll highlight our progress in each of our core go to market verticals tell acquisition media entertainment and public sector industries.
First baritones hiring platform.
Last quarter, our strategic acquisition of <unk> further solidified our positioning in a talent acquisition industry. These solutions offer substantial customer improvements tiring performance, resulting in higher Rois and accountability, while also enabling faster and more efficient hiring process.
In Q3, we made substantial progress integrating broadband with bare town and expect to complete this integration in early 'twenty 'twenty four and subsequently start realizing anticipated synergies in the first half of 'twenty 'twenty four two.
To that point I'm excited to report that we have successfully integrated the sales and marketing organizations and have begun upselling baritone programmatic solutions to the legacy broadband customer base.
We remain committed to diversifying our customer and revenue base and a notable increase in subscription based customers. This year has contributed to greater stability in revenues and earnings reducing vulnerability to the actions of a single customer or market segment.
Turning to media and entertainment.
Baritone remains at the forefront of driving AI innovation in the media and entertainment sector. Our comprehensive range of services spans content and advertising analytics asset management licensing and bespoke cognitive and generative AI solutions.
By equipping content organizations and their team with these powerful tools, we facilitate the swift and efficient management creation monetization and innovation surrounding their proprietary datasets, enabling our customers to meet the ever growing demand for personalized content and boost their organizations revenue streams.
Despite the turbulent environment impacting consumer behavior, and the active Sag Aftra and recently settled W. G a strikes or customer retention and engagement metrics in meeting entertainment remain resilient during the third quarter, we signed and renewed contracts with leading talent agency C. A a United States Tennis Association.
N B C Universal A&E networks, H, B O and Augusta National <unk>.
Recently on the heels of the women's World Cup, we renewed and extended our longstanding AI and monetization partnership with the U S Soccer Federation.
Together, we will continue our efforts to oversee licensing rights and optimized content management and monetization with U S Women's and men's national team youth National team and extended national teams.
Lastly, I am proud to state that we renewed our flagship partnership with I Heart media, providing the largest audio media company with baritones market, leading AI based applications and solutions to enable them to continue to drive consumer engagement and ROI for their advertisers.
Our media and entertainment platform is well positioned to capture market share as blue chip customers turned to berritown to unlock the unrealized value from unstructured datasets and supercharge human outputs.
Finally, I would like to comment on Burtone public sector business, our Q3 wins with a baritone public sector suite of solutions across state and local agencies education U S fed civilian and U S. Fed D O D. Intel showcase our value focus and passion for providing AI powered solutions to address the unique challenges.
Faced by government agencies and legal organizations.
As of the end of Q3 baritone is actively supporting over 300 and twenty-five law enforcement agencies. We are engaged in a new project with a law enforcement organization of a major D. O D Agency and we have started a new project with a fed did agency with significant potential and utilizes the baritone public sector product suite.
We are thrilled that former Anaheim police Chief Jorge Cisneros will act as a law enforcement adviser to Burtone public sector working alongside our team to empower law enforcement agencies with our latest AI driven tools to accelerate investigations protect personally identifiable information and improve public safety.
In addition, this past quarter, we were selected by the U S Department of Justice for a 15 million dollar sole contractor blanket purchase agreement that can be used by all organizations within the Doj, which will facilitate access to baritone software and services.
Specifically bear town will enable Doj personnel to greatly improve their productivity and proficiency as they investigate review and redact unstructured data, including digital documents audio and video files.
During the third quarter, we also launched a new product burtone evidence to manage protect and share digital evidence amongst and across government agencies.
As of last year more than half of the 100, plus state and local law enforcement agencies are using cloud based digital evidence management system or plan to implement these solutions within the next three years.
We look forward to growing our public sector customer base as government agencies seek out solutions that rapidly extract actionable intelligence from their diverse data sources.
Our pipeline continues to grow significantly and we expect baritone public sector to deliver nearly 75% to 100% year over year growth in 2023 and continue to contribute a greater share of revenue through 2024.
As baritone execute this long term strategy and embarks on its next phase of growth I am thrilled to announce the addition of Michael village as an independent director to our board.
Michael who is currently serving as EVP and CFO of Ingram Micro is an accomplished company executive and dynamic leader, who shares baritones mission of delivering highly targeted solutions to help companies through technology to unlock operational efficiencies and productivity gains.
His financial and international operations expertise will bring a valuable perspective to bear tons pursuit of operational excellence to prioritize the artificial needs of our customers, while driving value for our shareholders. We welcome Michael to the baritone team.
Overall customer growth bookings strength and an increasingly diverse revenue base demonstrate that baritone is resilient and poised to accelerate its growth.
We anticipate the company wide financial advantages will become increasingly evident in 2024, with one time integration and transaction costs behind us.
Baritone is on a clear path to profitability and we look forward to updating you on the progress we are making to unlock long term value for our shareholders in the quarters to come.
Now I would like to hand, the call off to Mike Symmetra, our CFO to go through the financial results in more detail.
Over to you Mike.
Ryan I am pleased to report Burtone made material progress in the third quarter headlined by the announced new debt structure, improving our balance sheet heading into 2024 increased annualized cost savings through Q3 of over $24 million and the integration of broad being all while closing the quarter with solid customer and operating metrics.
I would like to highlight a few items before I begin with the June 2023 acquisition of broad beam are key software customer metrics are presented on a pro forma basis, which assumes that we owned broad beans at the beginning of fiscal year 2022.
During my prepared remarks, I will discuss our third quarter financial and operating performance on a GAAP and pro forma basis progress on 2023 cost initiatives Q3 cash flow and liquidity sources, including our new $77 5 million debt facility, and our Q4 and fiscal 2023 outlook and projected improvements in our call.
Structure heading into fiscal 2024.
Starting with Q3 2023 points.
GAAP revenue was 35 1 million down, 6% or $2 1 million year over year, driven primarily by a 1.6 million decline in managed services and 0.5 million decline in software products in.
Q3, 2023 decline in managed services was driven in large part by advertising, which declined $1 million or 9% year over year, primarily driven by the lower AD net revenue contribution due in part to the challenging macro environment, coupled with customer deferral of budgeted AD spending to future periods.
Q3, 2023 average billings per customer drove 15, 7% to 630000 as compared to Q3 2022 of 747000.
As previously discussed advertising softness began to reverse itself to the second half of 2023, due largely to our customer mix, new customer activation seasonality on spend and slightly improved economic outlook.
We expect Q4 to continue to be down versus Q4, 2022, but improved versus the first half of 2023.
In addition, licensing declined by 0.6 million or 11% to $4 8 million principally due to the deferral of certain planned deals from Q3 to Q4 2023 as a result of the pending writers and actors strikes.
The software products and services decline was largely attributed to a lower consumption across our verathon higher solutions customer base, including Amazon offset by the addition of broad beam in Q3, 2023, which contributed $8 7 million of revenue in Q3 2023, an increase in both Gi and legacy.
Media and entertainment revenue.
During Q3 2023, Amazon represented less than 10% of our consolidated revenue down sequentially from 14% in Q2 2023 and from 31% during Q3 2022.
Each quarter Baritones revenue base is becoming increasingly diverse.
On a pro forma basis Q3 revenue of $35 1 million declined $9 9 million or 22% largely due to lower consumption of our legacy higher solutions, which was really driven by the decline Amazon spending year over year, coupled with the decline in managed services as previously discussed in addition to the year over year increase in G. R. I, a legacy media and.
<unk> broad beam increased 12, 2% as compared to Q3 2022.
As a reminder, during 2022 and the first half of 2023 broadening focused a lot of its efforts on moving existing customers off its legacy careerbuilder platform in preparation to be sold this efforts shifted sales focus on maintaining existing customers versus acquiring new customers, particularly in North America.
Despite this challenge broadening revenue did grow slightly year over year, which highlights the stability of our subscription based business.
During Q3 2023, a little over 100 customers associated with this effort will remove from the broadening platform the revenue impact of which was immaterial to both <unk> and the financial results looking forward.
In Q3, we delivered strong key performance metrics on a pro forma basis.
<unk> of $98 6 million, including over $47 million from subscription versus consumption based customers are subscription based air grew eight 7% year over year, our overall air our decline given the trailing 12 months pullback and consumption spending principally from Amazon. We expect this trend of consumption based air.
Our declining in Q4 2023 versus 2022, given Amazon pullback on spending over the trailing 12 months.
Total new bookings were $15 5 million up 85% sequentially from Q2 2023 are down year over year, largely due to Amazon's reduced spend the sequential improvement in bookings was largely driven by our higher solutions and jarrod.
Gross revenue retention continued to be in the high 90 percentile.
And total software products and services customers of 3536, which were down slightly year over year, principally due to the previously discussed runoff of legacy careerbuilder customers transitioning off of problems platform, which had a minimal impact is overall air are at broadband standalone basis improved 7% year over year.
We remain encouraged by the growing number of opportunities that come from companies seeking to boost operational efficiencies given the challenged market.
You need to see meaningful traction from new and existing commercial enterprise and <unk> customers that want to benefit from baritones industry, leading applications, our solutions and newer offerings, such as cloud based baritone D M age, which accelerates unstructured data and workflows.
During the quarter, we closed several large deals, including a deal with the U S Senate and a blanket purchase agreement with the department of Justice.
Our future pipeline continues to grow and ample cross selling opportunities, particularly in <unk>, where we expect significant growth in the near and long term.
As previously discussed Q3 managed services gross billings per active client of 630000 declined 15, 7% from Q3 2022.
While the macro environment remains challenging gross billings per active client did improved nine 4% sequentially from Q2 2023.
Given our performance in bookings through today, we expect advertising revenue to be relatively consistent in Q4 versus Q3, but down year over year as customers continued to delay spend to future periods.
And as of today, our advertising operations had the highest gross planned spend in 2024, since our inception coming from existing and newer customers, including the mobile.
Q3, 2023, GAAP loss from operations was $23 1 million as compared to $3 6 million in Q3, 2022, largely driven by the decline in non-GAAP gross profit coupled with nonrecurring cash benefit of $14 3 million in Q3 2022 associated with the change in estimated value of contingent.
Purchase price consideration.
Q3, 2023, non-GAAP gross profit reached $27 9 million down $2 2 million or 7%.
The decline was largely driven by the reduction in higher margin consumption based revenue in Q3 2023 versus Q3 2022 offset by the addition of broad theme in Q3 2023.
Q3, non-GAAP gross profit margin of 80% was relatively flat when compared to Q3 2022.
During Q3, 2023, probably being contributed approximately $8 2 million of non-GAAP gross profit as compared to $7 5 million in Q3 2022.
We expect consolidated non-GAAP gross margins to remain near 80% in Q4 2023.
Q3, non-GAAP net loss was $7 9 million as compared to $5 7 million in Q3, 2022, driven largely by the decline in revenue and corresponding non-GAAP gross margins, which negatively impacted our core operations coupled with the addition of broad beam operational expenses in Q3, 2023 offset by the various cost reduction.
Actions enacted through Q3 2023.
On a pro forma basis Q3, 2022, non-GAAP net loss was approximately $2 8 billion.
Turning to our balance sheet at September 30th 2023, we held cash and restricted cash of $72 9 million compared to $185 3 million at December 31, 2022.
The $112 4 million decrease reflects net cash outflows from operations of approximately $48 1 million driven principally by the timing of payments and managed services and by our non-GAAP net loss.
In addition, we had net cash outflows from financing and investing activities of $64 2 million driven by the net $50 2 million acquisition of <unk> in June 2023, and deferred purchase price consideration of $10 5 million attributable to <unk> 2022 earn out and certain 2022 acquisitions.
Of the total $72 9 million in cash approximately $60 million of our reported cash is essentially held for payment to third parties from our managed services down from $93 1 million at December 31 2022.
The decline in cash held for third parties is partially reflective of the seasonality of our advertising services, coupled with certain catch up payments made in Q1 2023 from delayed payments as we migrated onto new Oracle ERP system in the second half of 2022.
Turning to liquidity.
Turning to first half of 2023, we were approached by a highly regarded P firm to sell one of our non software based assets for total consideration in excess of $100 million in cash.
In late Q3, 2023, we terminated discussions with the Pea firm due in large part from the uncertainty around the timing to close coupled with macroeconomic challenges.
That said, we may elect to run a formal banking process for this asset in mid 2024.
I am happy to report that in Q4, we committed to a four year $77 $5 million senior secured debt facility, which will replace our previously announced a our credit facility in terms of the debt facility include a rate of sofa, plus 850 basis points amortization of payments at two 5% per quarter beginning on the six month anniversary of alone.
10% warrant coverage, a minimum liquidity covenant and the ability to pay down the debt with equity at certain price points prospectively.
37 $5 million of the proceeds from the debt facility will be used to repurchase existing convertible debt at 75% of par and the remaining $40 million to be used for general corporate purposes.
We expect the deal to close in the fourth quarter of this year.
On a pro forma basis, we project to have approximately $37 million of unencumbered cash post deal, which includes direct fees associated with the deal.
Post deal our consolidated pro forma debt will be $168 5 million, including our legacy November 2026 convertible notes of $91 million down from 141 million at September 30 of 2023 additional information regarding the term loan facility was included in our earnings release today and more information will be included in.
Our 10-Q filing.
We ended September 30th 2023, with 37.0 million shares outstanding and convertible debt of $141 million principle, 175% interest due November 2026.
Turning to cost savings in February of this year, we announced $12 million to $15 million of annualized cost saving initiatives, which including optimizing our cost structure along with the Q2 2023 divestiture of our energy group.
In August we announced that we are targeting an additional $10 million in annual cost savings to date, we have executed over $24 million of annualized savings well above our initial range.
As these cost reductions flow through the P&L, we expect they will have a much larger impact in 2024, which will be when baritone pivots back towards vertical growth from existing software and services with a clear path towards profitability.
Put this in perspective, assuming no revenue growth in 2024 on a pro forma basis, and we were able to hold our exiting 2023 operating structure relatively flat, our non-GAAP net loss or a projected cash burn would improve greater than 50% of our projected 2023.
And if we grew pro forma 2022 revenue by approximately 20% year over year, we'd be close to breakeven. This is a substantial improvement over our baseline 2023 operating structure.
Turning to our financial guidance for Q4 and fiscal 2023.
Fiscal 2023 continues to be a difficult year with increased uncertainty amplified by fed rate increases.
<unk> writers and actors strikes wartime events in Israel and customer impacting decisions, including Amazon's recent Q2 2023 decision to reduce spending.
While we remain more efficient operationally and continue to progress on longer term initiatives the consumption side of our business, including our advertising and legacy HR solutions products continues to be challenged.
With that backdrop, we are guiding Q4 revenue to be between 33, and $34 5 million down year over year at the midpoint.
Included in this is broad theme, which is expected to contribute eight to $8 5 million in revenue in Q4.
Excluding bra beam organic revenue is expected to decline overall, largely driven by our conservative outlook on Amazon spend in Q4 2023, coupled with a projected decline in advertising offset by continued improvement in <unk> and other services.
Q4 revenue guidance include the execution of new enterprise deliverables, namely across G. R I, which can be unpredictable advertising concurrent with the current economic environment and the variability of usage across our hiring platform.
And we expect Q4 quarterly non-GAAP net loss to be between $5 5 million and $6 5 million as compared to a $2 2 million non-GAAP gross profit in Q4 2022.
In summary, our efforts in 2020 through had been focused on streamlining operations to build a strong foundation for <unk> next phase of disruptive growth <unk>.
Despite external challenges in the current environment. We are excited by the improvements we've made year to date.
That concludes my prepared remarks, operator, we would like to now open the call for questions.
Great.
We will now begin the question and answer session to ask a question you May Press Star then one on your telephone keypad. If you are using a speaker phone. Please pick up your handset before pressing the keys to withdraw your question. Please press Star then two.
At this time, we will pause momentarily to assemble our roster.
The first question comes from Darren <unk>.
The heat with Roth. Please go ahead.
Hey, guys. Good morning, Thanks for taking my questions. Just two if I may on the Doj contract can you kind of talk about the scope of work there and kind of the impact on P&L or just any.
Any clarity is the $50 million in aggregate is that a number that spans over the over the five years or is that an annual kind of ceiling in terms of the contract value.
I think thank.
Thank you Darren can talk to you.
The blank purchase agreement.
Finally have a financial vehicle instrument in place.
That a.
A couple of key.
Tenants here number one its sole contractor. So these are appropriated and approved fun, yes for the Doj and the breadth of their agency.
Spanning from the Bureau of prisons now to get B I D would you be able to buy starting with product and services.
We've already had.
Very large pent up demand for these services.
Correct that the 50 million blanket purchase agreement does provide.
The allocation of those funds over a multi year period of time. However, we're optimistic that working interest based upon the demand that we have.
The acne trials and other projects, we're working with with these respective agencies, you'll hopefully be able to service.
I'd say more yeah, a lot of our material amount of that $15 million prior to the end of extended it through your true year. Four so again, we look at this as the beginning of a very active and dynamic opportunity with the department of Justice. The services include both our I'll call industry specific.
Applications from as it relates to recap for programmatic Redactions illuminate which is let's say dynamic AI based.
Data analytics.
And discovery, but also it's kind of a blanket coverage for net new initiatives built natively on AI.
Again, we think that this is a bellwether turning point for our relationship with them.
Third ship highlighted by the Doj that hopefully, we'll be able to service them and worked through the $15 million on a much faster clip.
That's helpful. Thanks, Ryan and then just maybe one.
So Amazon looks.
It looks like Theyre going to higher core a million people in the call.
That theoretically should be good for your panned out business the guidance sort of.
Does it really assume that.
That benefit I'm, just trying to understand.
The relationship of your company or panned out with Amazon.
How we can connect tests has that relationship changed meaningfully or is there an opportunity for that.
Business to maybe have a resurgence to come out in the future.
We're taking a pretty conservative view on it we're still actively working with Amazon as Rebecca mentioned, they still are a material customer thankfully, we brought down that that concentration risk down significantly.
But we're going to keep it.
Pretty conservative view working with that with that entity, it's taken us as you're well aware full year to kind of flush through that reduction through our business actually we kind of do your own math and you look at the locked contribution of net revenues and contribute to EBITDA.
Tom that the picture would look radically different for us overall, just with that one customer, but it'd be very clear I mean, Amazon is a great partner and we work with them.
On many different areas that the baritone business lines.
We're co selling with them, they're one of our most active co selling partners in media Entertainment and now growing quickly in the public sector.
So we need to do you continue to do work to right size.
Our cost structure and get it truly at a base level on a baseline for growth next year, but to be clear there we are.
We're going to take a conservative view on the hiring side of the relationship with Amazon going into obviously in Q4, but even into 2024.
Great. Thank you.
Thank you.
Our next question comes from Chad Bennett with Craig Hallum. Please go ahead.
Great. Thanks for taking my question. So can we just dig into a line item on the balance sheet. The accrued media payment line item I think it was 84 million box and how that.
And that reconciles with your your 60 million dollar held for payment customer commentary on the call is that I assume that 60 millions in that 84 million and and if so what's what's the remainder.
Yeah, I'll take that one so you do have receivables associated with that business.
Which would plug the difference.
Okay, you have receivables in in that 84 million.
As a liability.
No you have receivables plus the cash will get you back to the liability.
Okay.
And so the delta between your cash and that line item has grown.
It's actually went negative last quarter, but growing this quarter.
Is that.
I mean, just from a future payment term standpoint that 84 million is cash going out over the next 12 months.
Yeah, that's right.
Okay.
And then what.
What what are the terms on the new debt facility from you know whats the current interest costs today, and then are there any covenants associated with that.
Yeah. So the current in interest cost today is $1 75 per cent.
This one is going to go up just on the new debt facility.
<unk>.
It'll be a sofa so call at prime.
Plus 850 basis points.
It'll be a four year loan so 2027.
And then in the covenants, while the minimum liquidity covenant that'll.
That'll be pegged at $15 million of consolidated cash.
Okay and then.
Those are the big ones.
Are there is there any.
Net leverage or anything else on the covenant side.
No.
Okay.
And and then you know just from a cost savings standpoint that the 24 million you talked about and I think you alluded to additional cost savings and <unk>.
Just wanted to get a sense from the current Opex run rate.
Kind of how to think about that run rate.
No.
Maybe two quarters out into the first half of next year.
Yeah. So what we said in our prepared remarks, if you take the pro forma business.
Exiting this year and assuming no growth.
Our bottom line would be improved by over 50%.
From a non-GAAP net loss perspective.
I mean, 20% growth on that pro forma revenue, we'd be near breakeven.
Got it okay. Thanks, so much.
Yeah.
Again, if you have a question. Please press Star then one.
Our next question comes from that no not a car with UBS. Please go ahead.
Hi, Thanks, a lot. This is Jason on for canal from UBS, a couple of questions as well.
First question is on your unencumbered cash so you'd finished requeue with $14 million or so.
Not all unencumbered cash and I think in the prepared remarks, you said.
After the debt scale.
Scale close you're going to be at $37 million unencumbered cash.
And so I'm just trying to get a sense of how you guys manage the unencumbered cash what is the minimum amount that you guys expect to have on balance sheet and do you guys think about it in connection to <unk>.
Other key metrics such as cost of revenue any helpful. Any color would be helpful. Thank you.
Yeah, the the 37 million.
The net benefit of the cab the debt facility.
After you take in.
All the fees.
We continue to manage cash pretty tightly through this window.
So I don't know if that gives you.
Any more perspective.
Got it.
Thanks, a lot and in the prepared remarks, you also said 2024 will be an inflection point for growth trajectory. So can we break that down a little bit by different verticals can you talk about some of the trends that you see as we go into 'twenty four for software expertise, saying hiring trends anything you can share would be helpful. Thank you.
Yeah.
Yeah, well, what we'll give more guidance on 2024 and our annual call in March.
Yeah.
Okay. Okay.
Okay.
But I think Mike you know to reiterate with you.
Just disclose based upon what our projected exit pro forma is going to look like from revenue and a cost structure perspective.
Restate. It again, if we proceed next year with near zero growth.
Realized around 50% improvement year over year, and our non-GAAP net loss.
Correct me, if I'm wrong like and then if.
If we are.
Able to grow in Q2 to be clear we've kept nearly 100%.
Our customer base and less them I'll call reconciliation from a few customers as named entities for the divestiture.
Hum.
The acquisition of broadband from Careerbuilder, but we break pain, our customer base and so in the event.
Which we're working very hard to see a growth of 20% or more next year that would get us close to breakeven.
Over the course of 2024, so that will kind of give you some perspective of the.
The magnitude of the right sizing of our cost structure against where we're expecting and from an exit velocity perspective on.
On both our top and bottom line.
Got it thank you.
Thank you.
Okay.
This concludes our question and answer session.
I would like to turn the conference back over to Ryan Steelwork for any closing remarks.
I want to thank you everybody for joining today.
We've done a tremendous amount of work.
In some unforeseen major pullbacks from spending from a few customers. We've done a I think a brilliant job of maintaining those customers and the relationships.
While having to rightsize, our cost structure not easy for any organization, but I think we've done it.
Almost a masterful job.
Very very clear that we are fully committed to making sure that we're ready for sustained profitable growth in 2024.
Really want to thank our baritone team for their hard work.
And also their commitment to our customers many of which we highlighted today on the call.
Most of our flagship customers have renewed so when when almost every company out there is looking to.
Kaufman find more efficient you can gain that.
We really want to telegraph.
How impactful and critical our solutions and applications are to our customers and considering these are tightening of budgets. So very thankful for the renewables there.
Lastly, I would really want us to recognize the empower our employees and team members and partners who are in Israel and other conflict zone.
Who continues to amaze me that they continue to produce and execute at a high level.
Despite these extremely challenging and tragic time, so heartfelt. Thank you to to again not just our employees.
But also to partners and customers, who are being impacted as well.
So again.
We're very very thankful, though what we're excited about pushout pushed through the end of the year complete kind of the initial work we laid out.
And really prepare ourselves for an exciting 2024, thank you very much.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.