Q2 2024 FiscalNote Holdings Inc Earnings Call
Good afternoon, ladies and gentlemen and welcome to the fiscal note second quarter 2024 financial results conference call.
Operator: 2Q2024 Financial Results Conference Call. At this time, I would like to inform all participants that their lines will be in listen-only mode. After the speaker's remarks, there will be a question-and-answer session on the call. If you would like to ask a question during this time, please press star 1 on your telephone keypad. I would now like to introduce your host for today's conference, Bob Burrows. Mr. Burrows, you may begin.
Speaker Change: At this time, I would like to inform all participants that their lines will be in listen only mode.
After the speaker's remarks, there will be a question and answer session of the call. If you would like to ask a question during this time, please press star 1 on your telephone keypad. I would now like to introduce your host for today's conference, Bob Burrows. Mr. Burrows, you may begin.
Bob Burrows: Good evening. My name is Bob Burrows.
Bob Burrows: I'm with Western Avenue Advisors LLC, which was hired in April as an investor relations consultant to the company following Sara Buda's departure. I continue to act in that capacity and look forward to speaking to the company's investor stakeholders in the coming weeks and months. Thank you for joining the call today as we discuss fiscal notes and second quarter 2024 financial results. With me on today's call with prepared comments are Tim Hwang, Chairman, CEO, and co-founder, and John Slabaugh, CFO and Chief Investment Officer.
Bob Burrows: Good evening. My name is Bob Burrows. I'm with Western Avenue Advisors, LLC, which was hired in April as an investor relations consultant to the company following Sara Buda's departure.
I continue to act in that capacity and look forward to speaking to the company's investor stakeholders in the coming weeks and months ahead.
Speaker Change: Thank you for joining the call today as we discuss Fiscal Note's second quarter 2024 financial results. With me on today's call with prepared comments are Tim Hwang, Chairman, CEO, and Co-Founder, and Jon Slabaugh, CFO and Chief Investment Officer.
Speaker Change: Other members of the senior management team will be available during the Q&A session that will follow these prepared comments.
Speaker Change: Please note, copies of today's press release, the current report on Form 10-Q for the quarter, as well as an updated version of the corporate overview presentation, are all available on the company website.
Speaker Change: In terms of important housekeeping, it is important to mention the following. During this call, we may make certain statements related to our business that are forward-looking statements under federal securities laws. These statements are not guarantees of future performance, but rather are subject to a variety of risks and uncertainties.
Bob Burrows: During this call, we may make certain statements related to our business that are forward-looking statements under federal securities laws. These statements are not guarantees of future performance but rather are subject to a variety of risks and uncertainties. Our actual results could differ materially from expectations reflected in any forward-looking statements.
Speaker Change: Our actual results could differ materially from expectations reflected in any forward-looking statements.
Bob Burrows: For a discussion of the material risks and important factors that could affect our actual results, as well as the risks and other important factors discussed in today's earnings release, please refer to our SEC filings, which are available either on our company website or the Securities and Exchange Commission's EDGAR system. Additionally, non-GAAP financial measures will be discussed on this conference call. Please refer to the tables in our earnings release or the updated version of the Corporate Overview presentation, both of which are available on the Investor Relations portion of our website, for reconciliation of these measures to their most directly comparable GAAP financial measure.
Speaker Change: For discussion of the material risks and important factors that could affect our actual results as well as the risks and other important factors discussed in today's earnings release. Please refer to our SEC filings which are available either on our company website or the Securities and Exchange Commission's Edgar system.
Speaker Change: Additionally, non-GAAP financial measures will be discussed on this conference call. Please refer to the tables in our earnings release or the updated version of the corporate overview presentation, both of which are available on the investor relations portion of our website, for reconciliation of these measures to their most directly comparable GAAP financial measure.
Bob Burrows: Finally, we use key performance indicators or KPIs in evaluating the performance of our business. These include One Right Revenue, or RR, annual recurring revenue, or ARR, and net retention revenue. Again, please refer to the Unings Release or the updated corporate deck for definitions of these important metrics. And with that, I'd like to turn the call over to Fiscal Notes Chairman, CEO, and Co-Founder, Tim Hwang.
Speaker Change: Finally, we use key performance indicators, or KPIs, in evaluating the performance of our business.
Speaker Change: These include one-right revenue or RRR, annual recurring revenue or ARR, and net retention revenue. Again, please refer to the UNIX release or the updated corporate deck for definitions of these important metrics.
Speaker Change: And with that, I'd like to turn the call over to Fiscal Notes Chairman, CEO , and Co-Founder, Tim Hwang.
Tim Hwang: Thank you, Boxer, for that introduction, and thank you all for joining us this afternoon. It's good to be with you today to discuss our second quarter 2024 results and provide an update on the state of our overall business. I always look forward to these opportunities to connect with our shareholders and share with you the exciting developments here at Fiscalnote. But first, let me take a few moments to remind you of some of the core fundamentals of fiscal notes.
Tim Hwang: Thank you, Bob, for that introduction and thank you all for joining us this afternoon. It's good to be with you today to discuss our second quarter 2024 results and provide an update on the state of our overall business.
Tim Hwang: I always look for these opportunities to connect with our shareholders and share with you the exciting developments here at Fiscal Note.
Tim Hwang: First, let me take a few moments to remind you of some of the core fundamentals of Fiscalnote.
Tim Hwang: As you've heard from me many times before, we're on a mission to help our customers make sense of the complicated and constantly changing world we live in by delivering a proprietary AI-enabled platform that aggregates and organizes regulatory, political, and macroeconomic information and analyzes its impacts on organizations overall. We are the market-leading AI platform for the regulatory, legislative, policy, and geopolitical intelligence sectors, essentially the Bloomberg Terminal for regulatory, legislative, and strategic risk drawing upon a deep reservoir of technical expertise, proprietary data, and analytical tools.
Tim Hwang: As you've heard from me many times before,
Tim Hwang: We're on a mission to help our customers make sense of the complicated and constantly changing world we live in.
Tim Hwang: like delivering a proprietary AI-made platform that aggregates and organizes regulatory, political, and that for economic information, and analyze the impacts on the organizations overall.
Tim Hwang: We are the market-leading AI platform for the regulatory legislative policy and geopolitical intelligence sectors, essentially the Bloomberg terminal for regulatory legislative and strategic risk, drawing upon a deep reservoir of technical expertise for planetary data and analytical tools.
Tim Hwang: Our proprietary, high-quality, and authoritative data on a range of aspects, including international, federal, state, and local legislation across 80,000 cities, all 50 states, and every major federal regulatory agency, as well as deep profiles of tens of thousands of policymakers, millions of legislative and regulatory bodies, and purpose-built analytical tools monitoring governments around the world that have enabled Fiscalnote to build a market-leading position across thousands of customers. Many of our assets, including CQ, serve essentially as the Dow Jones of the legislative and policy worlds, providing deep demand expertise with proprietary data.
Tim Hwang: Art proprietary high quality and authoritative data on a range of aspects include international, federal, state and local legislation across 80,000 cities, all 50 states, and every major federal regulatory agency.
Tim Hwang: As well as deep profiles of tens of thousands of policymakers, millions of legislative regulatory bodies, and purpose-built analytical tools, monitoring governments around the world that have enabled fiscal and field and market-leading positions across thousands of customers.
Tim Hwang: Many of our assets, including CQ, serve essentially at the Dow Jones of legislative and policy worlds, providing deep demand expertise with proprietary data. CQ, as an example, has been providing Washington with information about congressional votes, budgets, and congressional information since 1945.
Tim Hwang: CQ, as an example, has been providing Washington with information about congressional votes, budgets, and congressional information since 1945. We operate in a large and growing $40 billion industrial market, driven by increasing global uncertainty, as well as operational and regulatory complexity that impacts almost every organization, from governments and non-profit organizations through large enterprises who operate in a highly regulated global environment.
Speaker Change: We operate in a large and growing $40 billion dollar investment market, driven by increasing global uncertainty, as well as operational and regulatory complexity that impacts almost every organization, from governments and non-profit organizations, through large enterprises who operate in a highly regulated global environment.
Tim Hwang: We have a strong and enduring competitive moat underpinned by our decade-long investment in data, AI, and human intelligence. Our broad AI leadership in both generative AI and domain-specific AI is supported by a deep patent portfolio and is recognized by the world's preeminent AI platforms, from OpenAI to Microsoft and Google. We are passionate about our customer success. Thousands of organizations, ranging from government agencies and public sector organizations to major corporate customers in the Fortune 500, rely on Fiscalnote every day to help interpret the impact of policies, legislation, elections, global conflicts, macroeconomic shifts on their institutions and, more importantly, to take actions to achieve their business objectives and minimize political, operational, and economic risks. This forms the basis of our durable and long-term business. We enjoy recurring Our net dollar retention has stayed in the high 90s on a consistent basis, and our revenue stream is approximately 90% recurring in nature, which provides for a high degree of visibility.
Tim Hwang: We have a strong and enduring competitive moat underpinned by our decade-long investment in data, AI, and human intelligence.
Tim Hwang: Our broad AI leadership in both generative AI and domain-specific AI is supported by DeepPatent Portfolio and is recognized by the world's preeminent AI platforms, from OpenAI to Microsoft and Google.
Speaker Change: We are passionate about our customer success.
Speaker Change: Thousands of organizations ranging from government agencies and public sector organizations to major corporate customers in the Fortune 500 rely on fiscal and everyday to help interpret that the impact of policies, legislation, elections, global conflicts, and macroeconomic shifts on their institutions.
Speaker Change: And more importantly, to take actions to achieve their business objectives and minimize political, operational, and economic risk.
Tim Hwang: This forms the basis of our durable and long-term growth.
Speaker Change: We enjoy recurring, compounding revenue streams of customers on the basis of annual subscription renewals, coupled with ongoing opportunities to upsell and cross-sell those same customers by offering incremental data sets, products, and capabilities that enhance and expand their overall experience and therefore value.
Tim Hwang: Our Net Dollar retention has stayed in the high 90s in the consistent basis, and our revenue stream is approximately 90% recurring in nature, which arise for a high degree of visibility.
Tim Hwang: Driving our success is a management team with a strong record of innovation and product success, which in turn has enabled us to push the boundaries of the market and be innovative on behalf of our customers. We have relentlessly focused on capital allocation strategies that support our goal to build a durable, profitable, compounding growth company that provides unique value to the world's most important decisions. As we scale the business, we expect to deliver long-term free cash-from-margins in line with other information services leaders at scale.
Tim Hwang: Driving our success is a management team with a strong record of innovation and product success, which in turn has enabled us to push the balance of the market and be innovative on behalf of our customers.
Tim Hwang: We have remotely focused on capital allocation strategies that support our goal to build a durable, profitable, compounding growth company that provides unique sites, the world's most important decision makers.
Tim Hwang: As you feel the business, we expect it to deliver long-term free cash from margins, in line with other information service leaders at scale.
Tim Hwang: Just as S&P Global, IHS Market, FaxSet, Morningstar, CoStar, and Avalara have innovated in their respective information fields, Fiscalnote is forging a new path for global, political, legislative, and regulatory policy and market intelligence by delivering mission-critical information that has a direct impact on our customers' operations.
Tim Hwang: Just as S&P Global, IHS Market, FACTSET, Morningstar, CoStar, and Avalara have innovated in their respective information fields, FISMA is forging a new path for global political, legislative, and regulatory policy and market intelligence by delivering mission-critical information that has direct impact on our customers' operations.
Tim Hwang: With our established AI pedigree and our vast array of validated trusted data, we are in a unique position to lead what is an entirely new category within the information services industry. We have a clear competitive advantage to deliver on this outcome. With that as a backdrop, let me turn to our current state of the company. We continue to see positive signs throughout the business despite macroeconomic headwinds. We have an increased focus on higher-returning segments of our business, where we have reallocated resources towards improving retention rates, margins, and profitability. Although we have revised full-year revenues, our adjusted EBITDA is still tracking to meet expectations for the year, which highlights our improved profitability and margin profile.
Tim Hwang: With our established AI pedigree and our vast array of validated trusted data, we are in a unique position to lead what is an entirely new category within the information services industry.
Speaker Change: We have a clear competitive advantage to the world around the Southcome.
Tim Hwang: With that as a backdrop, let me turn to our current state of the company.
Tim Hwang: We continue to see positive signs through the business despite macroeconomic headwinds.
Tim Hwang: We have an increased focus towards higher-returning segments of our business, where we have reallocated resources towards improving retention rates, margins, and profitability.
Tim Hwang: Although we have revised full-year revenues, our adjusted EBITDA is still tracking to meet expectations for the year, which highlights our improved profitability and margin profile.
Tim Hwang: This is a testament to our operational discipline, our streamlined product portfolio, and our focus on ensuring that we continue to maintain and increase profitability regardless of circumstances. Ultimately, as we progress to 2025, we expect revenue growth to accelerate, and more revenue to drop right to the bottom line as we improve operating leverage. In regards to Ravini, we also have Sophie Modus Corp. in our European market, an incremental growth from our dragon flag position, focused on operational risk and security, which will continue to build the foundation for higher growth in the future.
Tim Hwang: This is a testament to our operational discipline, our streamlined product portfolio, and our focus on ensuring that we continue to maintain and increase profitability regardless of circumstance.
Tim Hwang: Ultimately, as we progress through 2025, we expect revenue growth to accelerate and more revenue to drop right to the bottom line as we improve operating leverage further.
Tim Hwang: In regards to revenue, we also still see modest growth in our European market and incremental growth from our Dragonfly acquisition focused on operational risk and security.
Tim Hwang: We continue to build the foundation for higher growth in the future.
Tim Hwang: We had many exciting product launches in the second quarter, including Stress Lens, which equips users with pioneering, innovative new AI agents to help decode the human element of mission-critical calls, speeches, testimony, and remarks given by policymakers, CEOs, regulators, and other key decision-makers; Copilot for Global Intelligence, which transforms policy, regulatory, and legislative workflows; and Copilot for Policy, our second copilot, designed to enable increased efficiency We highlighted these new products at our AI Day in June, which was received positively by analysts and customers and drove a significant volume of new signups for co-pilot for Colibri in particular.
Speaker Change: We had many exciting product launches in the second quarter, including Stress Lens, which equips users with pioneering, innovative new AI agents to help decode the human element in mission-critical calls, speeches, testimony, and remarks given by policymakers, CEOs, regulators, and other key decision makers.
Speaker Change: Co-Pilot for Global Intelligence, which transforms policy, regulatory, and legislative workflows. And Co-Pilot for Policy, our second co-pilot, designed to enable increased efficiency and impact on policy and legislative workflows for government affairs professionals.
Speaker Change: We highlighted these new products that are AID and June, which was received positive by analysts and customers, and drove a significant volume new sign-up for co-path for quality in particular.
Tim Hwang: As we've noted on prior calls, this year we are increasing the velocity of our product launches and enhancements as the foundation for enduring and sustainable growth. We have made strong progress to date with the launches that I've already noted, and we'll have more to announce later this year regarding our core offer. We know that this is important to increasing client engagement and retention overall.
Speaker Change: As we've noted on prior calls, this year we are increasing the velocity of our product launches and enhancements as the foundation for an enduring and sustainable growth.
Speaker Change: We have made strong progress to date with the launches that I've already noted and we'll have more to announce later this year regarding our core offerings.
Speaker Change: We know that this is important to increasing client engagement and retention overall. The enhancements we are bringing to market, which will take advantage of our industry lead in AI and data science, will have a positive impact on retention and growth in the future as well.
Tim Hwang: The enhancements we are bringing to market, which will take advantage of our industry lead in AI and data science, will have a positive impact on retention and growth in the future as well. As I mentioned earlier, the changes to our forecast for calendar 2024 reflect the ongoing focus on higher return in business segments, where we have reallocated resources toward improving client retention rates, margins, and profitability. We are focused on increasing efficiency and productivity in our business in light of the challenging macroeconomic environment.
Speaker Change: As I mentioned earlier, the changes to our forecast for calendar 2024 reflect the ongoing focus on higher returning business segments. We have reallocated resources towards improving climate tension rates, margins and profitability.
Speaker Change: We are focusing on increasing efficiencies in productivity in our business and letting the challenging macroeconomic impact in. In addition, we are focusing on accelerating growth in future quarters through the product development efforts that I discussed, which will further differentiate our product set and try to increase customer engagement.
Tim Hwang: In addition, we are focused on accelerating growth in future quarters through the product development efforts that I've discussed, which will further differentiate our product set and drive increased customer engagement. We're already seeing early indicators of this potential in our co-pilot for global intelligence, which is driving new cross-validates. We have additional product developments and enhancements on our roadmap for later this year, which will impact other areas of our portfolio. We expect these efforts to provide a tailwind to our revenue growth in 2025.
Speaker Change: We are already seeing early indicators of this potential in our co-pilot for global intelligence, which is driving new cross-validates. We have additional product developments and enhancements on our roadmap for later this year, which will impact other areas of our portfolio.
Speaker Change: We expect these efforts to provide a tailwind to our revenue growth in 2025. It's wrap up. Any conclude by saying we remain excited about the current state of our business, and looked at continued to execute cross second app 2024, and bridging into 2025.
Tim Hwang: To wrap up, let me conclude by saying we remain excited about the current state of our business and look to continue to execute across the second half of 2024 and bridge into 2025. Our investment in AI, our focus on operational excellence, and our commitment to customer success, a position that's ready to capitalize on the vast opportunities ahead. I believe that the new AI-driven future will mean that the old ways of analyzing legislative, regulatory, and geopolitical risk will become obsolete and will drive enormous opportunities for Fiscalnote.
Speaker Change: Our investments in AI, our focus on operational excellence, and our commitment to customer success have positioned us to capitalize on the vast opportunities ahead.
Speaker Change: I believe that the new age of the future will mean that the old ways of analyzing legislative, regulatory, and geopolitical risk will become obsolete, and will attract enormous opportunities to fiscal note.
Tim Hwang: As I said on our first quarter call in May, and I'll say it again, as we move through 2024, we viewed it as the first step in a multi-year journey to earning our place in the history books and becoming the dominant player in our industry. Our strategy is simple, deep, and wide penetration across our core customer base with our core offerings, translating to higher revenues and accelerating adjustability without margins as we realize incremental operating leverage.
Speaker Change: As I said on our first quarter call in May, and I'll say it again. As we move to 2024, we viewed as the first step in a multi-year journey to earning our place in history books and become a dominant player in our industry.
Speaker Change: Our strategy is simple, deep in wide penetration across our core customer base, with our core offerings, translating into higher revenues and accelerating it just to leave it down margins as we realize incremental operating leverage.
Tim Hwang: It's a powerful formula and one that I believe will create significant value for all of our stakeholders in the years to come. With that, I'll turn it over to Jon Slabaugh, our CFO, for a detailed review of our numbers. Jon. Thank you, Tim. My comments this afternoon will be brief, so let me.
Jon Slabaugh: It's a powerful formula, and one that I believe will create significant value for all of our stakeholders in the years ahead. With that, I'll turn it over to Jon Slabaugh, CFO , for a detailed review of our numbers. Jon?
Jon Slabaugh: Thank you, Tim. My comments this afternoon will be brief, so let me jump right in and walk through the numbers for Q2 2024, starting with the income statement. Total revenue for Q2 2024 was $29.2 million, lower than the prior year period due primarily to the divestiture of Board.org. While down from period to period, subscription revenue remains the cornerstone of our business, accounting for 93% of total revenue this quarter, in line with the company's historical trend.
Jon Slabaugh: Thank you, Tim. My comments this afternoon will be brief, so let me jump right in and walk through the numbers for Q2 2024, starting with the income statement.
Jon Slabaugh: Total revenue for Q2 2024 was $29.2 million.
Jon Slabaugh: Lower than the prior year period due primarily to the divestiture of Board.org. While down period to period, subscription revenue remains the cornerstone of our business, accounting for 93% of total revenue this quarter, in line with the company's historical trends.
Jon Slabaugh: Digging deeper into revenue, let's look at our key performance metrics. As of Q2, 2024, run rate revenue was $121 million, and annual Korean revenue was $109 million, on a pro forma basis, adjusting for the impact of the board.org divestiture. Current year run rate revenue was level with the prior year second quarter, and ARR was slightly higher than the prior year quarter. And as of Q2 2024, net revenue retention was 98% level with the prior year.
Jon Slabaugh: Degging deeper into revenue. Let's look at our key performance metrics.
Jon Slabaugh: As of Q2 2024, run rate revenue was $121 million, and annual recurring revenue was $109 million.
Jon Slabaugh: On a pro forma basis, adjusting for the impact of the Board.org divestiture, current year run rate revenue was level with the prior year's second quarter, and ARR was slightly higher than the prior year quarter.
Jon Slabaugh: and as of Q22024, net revenue retention was 98% level to the prior year.
Jon Slabaugh: Overall, on a true apples-to-apples basis, revenue performance for the current period was on par with last year, in line with our revised forecast and indicative of our existing operational capacity. Turning to expenses, principal operating expenses in Q2 2024 continue the trend of year-over-year decreases, reflecting the impact of cost savings initiatives instituted in 2023, as well as the impact of the sale of Board.org and Sunset Products. Specifically, the cost of revenues decreased by over $2.5 million, or 28%, and R&D decreased by $1.3 million, or 29%. Sales and marketing decreased by approximately $2.6 million, or 23%.
Jon Slabaugh: Overall, on a true apples-to-apples basis, revenue performance for the current period with on par with last year, in line with our revised forecast and indicative of our existing operational capacity.
Jon Slabaugh: And G&A decreased by nearly $5 million, or 30%. In aggregate, total operating expenses in Q2-24 fell over $11 million versus the prior year, or 25%. On a pro-forma basis, excluding amortization expense, stock-based compensation, and the impact of the sale of Board.org, OPEX decreased approximately $6 million, or 16%. Looking at our profitability during the quarter, let's start above the line. Gross margins remain strong in the quarter, with Q2 2024 coming in at 77% on a gap basis and 85% on an adjusted basis, both increases over the prior year period.
Jon Slabaugh: Turning to expenses, principal operating expenses in Q2 2024 continue the trend of year-over-year decreases.
Jon Slabaugh: Reflecting the impact of cost savings initiatives instituted in 2023, as well as the impact of the sale of Board.org and Sunset Products.
Jon Slabaugh: Specifically, the cost of revenues decreased by over $2.5 million, or 28%.
Jon Slabaugh: R&D decreased by $1.3 million, or 29%, sales and marketing decreased by approximately $2.6 million, or 23%, and G&A decreased by nearly $5 million, or 30%.
Jon Slabaugh: In aggregate, total operating expenses in Q224 fell over $11 million versus the prior year, or 25%.
Jon Slabaugh: On a pro-forma basis, excluding amortization expense, stock-based compensation, and the impact of the sale of Board.org, OPEX decreased approximately $6 million, or 16%.
Jon Slabaugh: Looking at our profitability during the quarter, let's start above the line. Gross margins remain strong in the quarter with Q2 2024 coming in at 77% on a gap basis and 85% on an adjusted basis.
Jon Slabaugh: Both increases over the prior year period. These improvements primarily reflect our focus on consistent, adjusted EBITDA growth and the impact of the sale of Board.org, Sunset products, and improved efficiencies.
Jon Slabaugh: These improvements primarily reflect our focus on consistent, adjusted EBITDA growth and the impact of the sale of Board.org, Sunset products, and improved efficiency. As we said in past calls, we continue to pursue further incremental operating efficiency, transitioning to below the line.
Jon Slabaugh: As we said in past calls, we continue to pursue further incremental operating efficiencies.
Jon Slabaugh: Gap net loss for Q2 2024 was approximately $13 million, an improvement over the prior year period. EBITDA for Q2 2024 was negative $2 million, also an improvement versus the prior year, and Adjusted EBITDA was a positive $2 million versus a negative $4 million for the prior year. With a positive adjusted EBITDA for the quarter, that brings Fiscalnote to four consecutive quarters of positive performance for this key profitability metric, a total of approximately $7 million on a trailing four-quarter basis.
Jon Slabaugh: Transitioning to below the line.
Jon Slabaugh: Gap Netlons for Q22024 was approximately $13 million, and improvement over the prior year period. Even down for Q22024 was negative $2 million, also an improvement versus the prior year.
Jon Slabaugh: and Adjusted EBITDA was a positive $2 million versus a negative $4 million for the prior year.
Jon Slabaugh: But the positive adjusted EBITDA for the quarter, that brings fiscal note to four consecutive quarters of positive performance for this key profitability metric. The total of approximately $7 million on a trailing four quarter basis.
Jon Slabaugh: Turning to the balance sheet, at quarter end, we had cash and cash equivalents of $38 million, which was bolstered by the sale of Bordow to Oregon March. Period end cash also reflects the ongoing initiatives to improve efficiencies across the company and our continuing attention to prudently allocate capital to investments in the business with the highest potential for growth and positive return. Additionally, the quarter-end or total debt outstanding, including Principal McCrewd, was $172,000,000, sequentially lower than the end of the first quarter.
Jon Slabaugh: Turning to the balance sheet, at quarter-ed, we had cash and cash equivalent of $38 million, which was bolstered by the sale of Burd Out of Oregon March.
Jon Slabaugh: Period End Cash also reflects the ongoing initiatives to improve efficiencies across the company and our continuing attention to prudently allocate capital to investments in the business with the highest potential for growth and positive return.
Jon Slabaugh: Additionally, at quarter end, our total debt outstanding, including principal and accrued interest, stood at $172 million, sequentially lower than the end of the first quarter.
Jon Slabaugh: Turning to guidance, today we raised and tightened our full-year profitability forecast for adjusted EBITDA to approximately $8 million, reflecting continued operational efficiencies. At the same time, we lowered our full-year revenue forecast for total revenues to approximately $121 million, reflecting the impact of the recently experienced higher rates of customer churn driven by a number of factors, including macroeconomic headwinds and delays in the launch of certain product enhancements. The weaker client retention experience in recent quarters has led to slower ARR growth.
Jon Slabaugh: Turning to guidance, today we raise and tighten our fully-your-profitability forecast for adjusted even dot to approximately $8 million, reflecting continued operational efficiencies.
Jon Slabaugh: At the same time, we lowered our full-year revenue forecast for total revenues to approximately $121 million.
Jon Slabaugh: Reflecting the impact of the recently experienced higher rates of customer churn driven by a number of factors including macroeconomic headwinds and delays in the launch of certain product enhancements.
Jon Slabaugh: The weaker client retention experience in recent quarters has led to slower ARR growth. However, as we progress through the second half of 2024 and into 2025, our continued investments in product innovation and enhanced and focused on improved customer experience.
Jon Slabaugh: However, as we progress through the second half of 2024 and into 2025, our continued investments in product innovation and enhancements focused on improved customer experience, including those featured in our June AI product day, should drive higher customer engagement, retention rates, and, as a result, revenue growth and improved operating leverage. We also today provided our initial guidance for Q3 2024 total revenues of approximately $29 million and adjusted EBITDA of approximately $2 million, both reflecting trends we've experienced thus far this year.
Jon Slabaugh: Including those featured in our June AI product day should drive higher customer engagement, retention rates, and as a result, revenue growth and improved operating leverage. We also today provided our initial guidance for Q3 2020 for total revenue use of approximately $29 million.
Speaker Change: and adjusted Eva Dahl of approximately $2 million, both reflecting trends we've experienced thus far this year. Finally, I wanted to note that the board continues to review all strategic alternatives available to the company to maximize value for shareholders.
Jon Slabaugh: Finally, I wanted to note that the board continues to review all strategic alternatives available to the company to maximize value for shareholders. As we stated before, we do not intend to provide updates on the outcome of this review until further disclosure is appropriate and required. Through the midpoint of the year, our business remains well-positioned to drive further impact and success. We continue to implement our product strategy while executing on the operational efficiency initiatives as we further solidify our position as a critical partner to a diverse global customer base. That concludes my prepared remarks. I'll turn it over to the operator to begin the question and answer session.
Jon Slabaugh: As we stated before, we do not intend to provide updates on the outcome of this review until further disclosure is appropriate and required.
Jon Slabaugh: Our business through the midpoint of the year remains well positioned to drive further impact and success. We continue to implement our product strategy while executing on the operational efficiency initiatives as we further solidify our position as a critical partner to a diverse global customer base.
Speaker Change: That concludes my prepared remarks.
Speaker Change: I'll turn it over to the operator to begin the question and answer session operator.
Speaker Change: [inaudible]
Operator: Thank you. At this time, I would like to remind everyone, in order to ask a question, press star then the number 1 on your telephone keypad. And your first question comes from the line of Zach Cummins with B. Riley Securities. Please go ahead. Hi there.
Speaker Change: Thank you. At this time, I would like to remind everyone, in order to ask a question, press star then the number 1 in your telephone keypad. And your first question comes from the line of Zach Cummins with B. Riley Securities. Please go ahead.
Ethan Wiedel: Hi there, this is Ethan Wiedel calling in for Zach Cummins. Thanks for taking my question, just one from my end. So, can you maybe elaborate a little bit on the factors behind the REVS guidance? Is it mostly just churn based on the macros you were talking about, or is there anything else in play there?
Speaker Change: Hi there, this is Ethan White, I'll call you in for that comment. Thanks for taking my question. Just one for my end, so up.
Speaker Change: Can you maybe elaborate a little bit on the factors behind the REVS guidance? Is it mostly just churn, based on macros you were talking about, or is there anything else in play there? Thank you.
Josh: Hey there. Yeah, this is Josh.
Speaker Change: A.S.A.
Speaker Change: Hey there. Yeah, this is Josh. I can address that. So, in terms of what we're seeing there, there's certainly the macro in play. We're seeing some slower decision-making, some softness on renewals.
Josh: I can address that. So in terms of what we're seeing there, there's certainly macro in play. We're seeing some slower decision making and some softness on renewals as a result of the macro. However, we are very focused on driving improvements through what we can do in terms of the product improvements that Tim spoke about. And we are very confident in our ability to have a positive impact on customer engagement and retention, but macro is definitely playing a factor.
Speaker Change: You know, as a result of the macro, we are very focused on
Speaker Change: Driving improvements through what we can do in terms of the product improvements that Tim spoke about, and we are very confident in our ability to have a positive impact on customer engagement and retention, but Macro's definitely playing a factor, and we're doing other things to around operational improvements as well as we have continued to do over time, look at things like customer scoring models and life that we think will drive great in there as well.
Josh: And we're doing other things, too, around operational improvements, as we have continued to do over time. We look at things like customer scoring models and the like that we think will drive improvement there as well.
Speaker Change: Got it. Appreciate that.
Josh: [inaudible]
Operator: Your next question comes from the line of Mike Latimore with Northland Capital Markets. Please go ahead. Hey, hi, this is Vijay Dever.
Speaker Change: Your next question comes from the line of Mike Latimor with Northland Capital Markets. Please go ahead.
Vijay Deva: Hi, this is Vijay Deva on behalf of Mike Latimore. Thanks for taking my question. The first one is on board.org, and they got 7x revenue for that into the valuation. So I'm wondering, are there any other groups that could logically be independent? And if the investment strategist looked at them for such groups, what valuations would be logical for them?
Vijay Deva: Hi, this is Vijay Deva for Michael Latimore. Thanks for taking my question. The first one is on the Board.org and they got 7X revenue for that in terms of valuation. So I'm wondering are there any other groups that could logically be independent?
Jon Slabaugh: I'll take that. It's Jon Slabaugh, and I would say that we're not presently planning to make a divestiture that we were prepared to speak to at this time, and I think it's I think we have a view of valuation in the underlying products that we own, and we think they're disconnected from where our overall market value is, and we'll continue to explore ways to maximize shareholder value, but presently, None, nothing, eminent.
Jon Slabaugh: I'll take that. It's Jon Slabaugh and I would say that we're not presently planning to make a divestiture that we were prepared to speak to at this time and I think it's
Jon Slabaugh: I think we have a view of valuation in the underlying products that we own, and we think they're disconnected from where our overall market value is, and we'll continue to explore ways to maximize shareholder value, but presently...
Vijay Deva: And secondly, the majority of bookings tend to happen around the September-December timeframe. How are the leading indicators of bookings for that period? We talked about macro headwinds, but any commentary on the leading indicators for bookings that would be helpful?
Speaker Change: No, no, no, no, no, no, no, no.
Garret: of Garret.
Speaker Change: and secondly, the majority of bookings tend to happen around September, December, time frame. So, how are the leading indicators of bookings for that period, great and talk about the general macro headwinds, but any commentary on the leading indicators for bookings are very helpful to us.
Josh: Sure. Yeah, this is Josh.
Josh: Sure. Yeah, this is Josh. So...
Josh: So, I mean, you know, our forecast reflects what we expect to see from Booking's perspective for the second half. As I mentioned, we have seen some slowness from the macro, but we're taking steps that we need to do to address what we can control internally. We do have a healthy new logo pipeline, so we're feeling better about the second half.
Josh: So, I mean, you know, our forecast reflects what we expect to see from Booking's perspective.
Josh: For the second half, as I mentioned, we have seen some slowness from the macro, but we're taking steps that we need to do to address what we can control internally. We do have a healthy new logo pipeline, so we're feeling better about the second half.
Josh: Thank you.
Speaker Change: Thank you.
Operator: Again, if you would like to ask a question, please press star then the number 1 on your telephone keypad. There are no further questions. I will now turn the call back over to Bob Burrows for any closing remarks. Please go ahead.
Speaker Change: Again, if you would like to ask a question, please press Thor, then the number one and your telephone keypad.
Operator: [inaudible]
Operator: There are no further questions. I will now turn the call back over to Bob Burrows for any closing remarks. Please go ahead.
Bob Burrows: Thank you, Angela. That concludes our call today. We appreciate everyone's participation on the call, and if there are any additional questions, obviously feel free to reach out to any of us. Again, we really appreciate the time, and thank you very much. We'll speak to you all soon.
Bob Burrows: Thank you, Angela. That concludes our call today. We appreciate everyone's participation on the call. And if there are any additional questions, obviously feel free to reach out to any of us. Again, we really appreciate the time and thank you very much. We'll speak to you all soon.
Operator: That concludes today's call. Thank you all for joining us. You may now disconnect.
Operator: That concludes today's call. Thank you all for joining. You may now disconnect.
Operator: Good night. Good night. Good night.
Bob Burrows: Other members of the senior management team will be available during the Q&A session that will follow these prepared comments. Please note that copies of today's press release, the current report on Form 10-Q for the quarter, as well as an updated version of the corporate overview presentation are all available on the company website. In terms of important housekeeping, it is important to mention the following.