Q3 2024 Brightcove Inc Earnings Call
Good afternoon, he wasn't even brightcove as third quarter 2024 earnings presentation.
They will discuss the results announced in our press release issued after the market closed during today's presentation. We will make statements related to our business that may be considered forward looking and are made pursuant to the safe Harbor provisions of the private Securities Litigation Reform Act 1995 as amended.
Including statements concerning our financial guidance for the fourth fiscal quarter of 2024, and the full year 2020 for expected revenue profitability and cash flow.
A potential 2025 business performance, our position to execute on our go to market and growth strategy, our ability to expand our leadership position ability to maintain and upsell existing customers as well as our ability to acquire new customers forward looking statements may often be identified with words, such as we expect we anticipate upcoming or similar indications of future.
These statements reflect management's belief as of today and should not be reflected upon as representing our views as of any subsequent date. These statements are subject to a variety of risks uncertainties and changes in circumstances that are difficult to predict and many of which are outside of our control for a discussion of material risks and other important factors that could affect our actual results. Please refer.
To those contained in our most recently filed annual report on Form 10-K, and it was up.
<unk> by our subsequent SEC filings also during the course of today's presentation, we will refer to certain non-GAAP financial measures. There is a reconciliation schedule showing the most directly comparable GAAP financial measures versus non-GAAP measures available in our press release issued after market close today, which can be found on our website at www Dot Brightcove dotcom.
Speaker Change: Thank you all for joining today I'm, Marc Debevoise CEO at Brightcove and with me today is John Wagner brake as CFO.
Speaker Change: As always we're pleased to be streaming is to you on our own video cloud platform and today, we will discuss our third quarter results as well provide an update on our strategic progress and view for the remainder of 2024 and beyond.
Speaker Change: I'll begin with a quick overview of the strong financial results. We delivered in Q3, which were meaningfully above the high end of our guidance range on both top and bottom line.
Total revenue for Q3 was $49 9 million well above the high end of our guidance range of $48 million to $49 million.
Speaker Change: It's better than expected performance showed growth over 1% sequentially.
Speaker Change: Similarly revenue, excluding Overages was $48 4 million also better than expected and showed 1% sequential growth.
Speaker Change: Adjusted EBITDA was $5 $1 million meaningfully above the high end of our guidance range of two five to $3 5 million and up significantly nearly 35% quarter over quarter.
Speaker Change: It also represents a 10% adjusted EBITDA margin.
Speaker Change: We generated $1 $6 million of free cash flow and have increased our cash balance every quarter. This year now to $27 million up $8 million since the beginning of the year.
Speaker Change: This was a good quarter I am pleased with the consistent performance of the business. This year as we have hit or exceeded the high end of our guidance on both revenue and adjusted EBITDA each quarter in 2024.
Speaker Change: And as Jon will hit on later based on our performance year to date and outlook for Q4, we are raising our full year guidance on both the top and bottom line today.
Speaker Change: The top end of our revenue range is now $700000 above the top of our initial range set earlier this year and the midpoint is now $1 $7 million higher.
Speaker Change: Our beat and raise here is even more pronounced on adjusted EBITDA, where the top end of our revised range is now $1 8 million above the top end of our initial range and the midpoint is over $2 million higher.
Speaker Change: Ensuring we consistently deliver on or beat our financial targets has been a key priority and I would like to thank our teams at Brightcove for making this a reality.
Speaker Change: I think it's important to note some of the key attributes of our anticipated performance this year.
Speaker Change: First we have committed to delivering meaningful profitability and to drive improved efficiency across the company in any revenue scenario.
Speaker Change: We've done a really good job on this regard.
Speaker Change: We now expect revenue to be only down fractionally, but we will have grown adjusted EBITDA, 40% to 50% even faster than we expected at the beginning of the year.
Speaker Change: We have done this by focusing on improving the efficiency of our delivery and systems, which has lowered the cost of goods sold as well as rigorously evaluating and managing our spending across the business.
Speaker Change: Second it's important that this adjusted EBITDA profitability improvement translate to free cash flow. We are pleased to be tracking well to our full year cash targets and noting the sizeable growth we have seen in our cash balance as a result.
Speaker Change: Third we've continued to progress in building the long term stability of our business.
Speaker Change: This has been mainly supported by our focus on longer term deals, leaving less up for renewal in any given quarter and our move upmarket where customers are more apt to do larger longer deals with us.
Speaker Change: Our record long term backlog and record <unk> this quarter both demonstrate how this is working.
Speaker Change: And lastly, we have continued to invest in innovation that we believe will return the business to top line growth over time.
Speaker Change: I'll talk more about this in a moment, but we continue to see a number of opportunities to create more value for customers and generate future revenue growth over time with new products and solutions.
Speaker Change: Let me provide you with some color on our business and sales performance in Q3 overall.
Speaker Change: Overall it was in line with our expectations and was up slightly compared to our trailing four quarters' average and similar to the second quarter.
Speaker Change: From a new business perspective, we had our best quarter of the year, so far and saw a meaningful improvement from Q2 and similar performance to a very strong Q3 last year.
Speaker Change: We had a good mix of wins across the business with some specific strength in our international media business and continued success against our goal of signing larger new business transactions.
Speaker Change: More specifically new business in Q3 was up over 50% quarter over quarter and up 20% for the versus the trailing four quarters average.
Speaker Change: Average annual contract values for new business were up nearly 50% year over year and over 90% quarter over quarter and versus our trailing four quarters average.
Speaker Change: As we talked about last quarter overall demand trends have remained solid and our team did a better job proactively working with customers to complete deals in a timely fashion.
Speaker Change: Driving consistent execution and new business is a key priority and I feel better about our execution in this area given our Q3 performance.
Speaker Change: Our add on sales performance was up modestly about 5% year over year, albeit down compared to the very strong performance we saw in Q2.
Speaker Change: We're seeing continued progress in building up our cross sell and upsell motion, especially with our expanding portfolio of enterprise solutions.
Speaker Change: <unk> Communications studio activity is increasing along with our dot TV thought leadership marketing solution and we're also pleased with the initial traction we have with our new sales use case offering set for a more formal launch later this quarter, which I'll discuss more in more detail shortly.
Speaker Change: These solutions used as upsell and cross sell is a critical part of our long term strategy to deliver more diversified consistent growth.
Speaker Change: In terms of entitlements, we saw a similar dynamic to last quarter with some customers starting to add to their entitlement levels, while others continuing to right size as contracts renew.
Speaker Change: Positively we now believe we are in a position to say that we expect the pressure from entitlement downgrades to subside in 2025.
Speaker Change: We have now worked through almost all of the largest entitlement customers and feel like the large majority of our media customers are at or near the right entitlement levels.
Speaker Change: While there's always risk of specific customer entitlement pressure or specific customer churn from M&A. In this market. We believe the pieces are in place for retention to improve in 2025.
Speaker Change: Generally we believe the add on business will likely be an area of strength for us in the fourth quarter as we move into next year.
Speaker Change: I'd like to mention some of the exciting new business add on a renewal deals we signed in Q3 across a wide range of industries and geographies with some incredible companies.
Speaker Change: On the enterprise side of the business select new business customers included pharma company PAREXEL J&J spinoff can view Japanese drugstore companies <unk> Holdings Korean HR solutions Company wanted lab, and German exhibition company MSA Frankfurt.
Speaker Change: So like the enterprise renewals and add ons included Abbott labs, aqueous Apollo Broadcom Chick Fil, a deloitte dentsu HP Palo Alto networks Purger systems Marriott No Maura rocker 10, S&P Global service now Unitedhealthcare and Wendy's just to name some of the deals we completed in the quarter.
Speaker Change: On the media side select new business customers included International Media company and tenant group with numerous properties across central and Eastern Europe in a deal to power their aunt Oneplus streaming service.
Speaker Change: Philippine Media and Entertainment company tap digital media to power their blast TV streaming service.
Speaker Change: A next set as we like to call them U S streaming service in now that's TV plus moving to our OTT platform.
Speaker Change: And powering streaming for the U S leading sports entity the Premier Lacrosse League.
Speaker Change: Additionally, now we're able to mention that the large U S broadcaster when we mentioned in Q2 was actually the CW network.
Speaker Change: This multi year seven figure dollar win was driven by superior technical feature set the superior speed of our platform and an attractive total cost of ownership relative to its previous solutions and other competitive offerings. This is a classic core media use case for Brightcove, where the CW CW will be utilizing our platform across their video value.
Speaker Change: Check.
Speaker Change: Renewals and add ons in the media sector also included leading Japanese telco KDD eye to power a new live streaming use case across the U S and Japan.
Speaker Change: Leading Hispanic audience Streamer, Canelo media, leading subscription service provider Gaia, along with other major brands, including BBC Studios. This old House Fremantle Carnegie Hall, and the Academy Academy of Motion Picture Arts and Sciences among others.
Speaker Change: From a product perspective, we had a major announcement this quarter with the release of Brightcove AI suite.
Speaker Change: Overall, we now believe AI will be a meaningful accelerant to our business in the coming years, especially our enterprise business, mainly from the volume of video that will be created via the advancement of AI tool sets.
Speaker Change: We also believe our customers want us to help them utilize AI to drive real results in their business, either by helping them drive engagement and revenue or to be more efficient in their operations.
Speaker Change: Building on our two decades of innovation in the video engagement technology market. The Brightcove AI suite, we announced is a multifaceted push into the future of video and engagement.
Speaker Change: Our new capabilities address our customers' growth driving and cost savings needs from creating content to optimizing it to growing its engagement and monetization to reducing the cost of creating managing and delivering it without sacrificing quality.
Speaker Change: We have positioned ourselves at the App layer of AI as the place where customers will come to truly use AI and execute real business operations and needs and we have partnered with many of the world's leading AI and L. O M engines to help power, our solutions, including Anthropic, Google and AWS.
Speaker Change: In mid September we launched five pilot products for a set of customers to start testing with us in this Q4 with the goal of commercializing the suite in early 2025.
Speaker Change: We also intend to add additional pilots and products to the mix overtime and have already announced a few expansions.
Speaker Change: As we deepen our AI offerings, we are focused on four specific areas of value creation for our customers.
Speaker Change: The first area is automatic content creation.
Speaker Change: With the Brightcove AI suite customers will be able to take existing content and quickly repurpose it to create more content by auto clipping auto summarization or creating highlight reels from long form videos or to create alternative formats like vertical video or fully dubbed translations.
Speaker Change: We launched our two major pilots in Q3, our AI content maximize our and our AI universal translator.
Speaker Change: Here in Q4, just last week, we also announced a new pilot in this focus area launching in January that will enable our customers to create almost any video with just a few key strokes via our AI text video capability.
Speaker Change: The second area of focus is automated content management and optimization.
Speaker Change: We are introducing capabilities to accelerate workflows and make our customers' jobs easier in managing content libraries, while turning those content libraries into a foundational layer of data.
Speaker Change: Our first pilot in this area, our AI metadata optimizer, which helps transform content into a searchable and optimize <unk> dataset is making it more discoverable and more monetize volt automatically while saving our customers time and generating this data.
Speaker Change: We also announced two additional capabilities in this area last week as well, including an AI aided auto mail thumbnail creation tool and an automated chapter feature which will both launch by year end as part of the AI metadata optimize our pilot.
Speaker Change: The third area of focus is content engagement and monetization.
Speaker Change: We want to help our customers find the best ways to maximize the engagement and revenue their content generates.
Speaker Change: Our first pilot here is our AI engagement maximize or using data from our analytics and insights products. In addition to our customers' data we were able to improve engagement through recommendations and enhanced search and discovery.
Speaker Change: The fourth and final area is about quality and efficiency, we want to help our customers drive down the cost of encoding storage and content delivery without sacrificing the viewer experience.
Speaker Change: Leveraging our Emmy award, winning context aware and coding technology with improved optimization via AI. We have developed an AI cost of quality optimizer that will allow our customers to choose the level of necessary delivery quality against the meaningful savings small changes can deliver.
Speaker Change: Initial reaction to our September announcement and launch has been incredible.
Speaker Change: We already have over 50 customers signed just in the first few weeks to the pilots to these initial products.
Speaker Change: As mentioned we plan to commercialize these in early 2025 and continue to invest and iterate to add more in the coming quarters.
Speaker Change: We believe AI will be central to every company's video and engagement strategies and that Brightcove is in a great position to be their trusted partner on this journey.
Speaker Change: We've also been making meaningful progress on rolling out other new capabilities for our customer base to enhance what they receive from our platform.
Speaker Change: Most recently, we deployed marketing insights or deepen measurement and actions platform for marketers to help them maximize video engagement.
Speaker Change: We've taken our powerful broader insights platform and pointed it directly towards our enterprise marketing customer base to deeply track and derive actionable insights on their engagement.
Speaker Change: Put simply you can think of it as a marketing funnel managers dashboard for success.
Speaker Change: Perhaps most impactful in the quarter, we signed our second major real estate brand to our newest use case, which is effectively repurposing marketing student our marketing studio solution for sales teams.
Speaker Change: This use case capitalize on our core platform capabilities, but further re imagined and purpose built a solution to serve thousands of sales professionals each coming into the brightcove platform to manage their own set of videos to reach their own specific potential customers.
Speaker Change: In this specific case, approximately 30000 real estate brokers each with the power of Brightcove at their fingertips fully enabled to create and distribute video to engage their potential buyers.
Speaker Change: It's a powerful new use case developed on our same platform to serve a new customer set with evolving needs.
Speaker Change: We intend to fully packaged solution for broader deployment in the fourth quarter and grow its opportunity throughout 2025.
Speaker Change: Let me wrap up by saying that I'm pleased by the progress we have made so far in 2024 to meaningfully improve our business, especially our profitability and cash generation.
Speaker Change: At the same time, we have also strengthened our product offerings and value proposition to customers, which we believe will enable us to return to revenue growth.
Speaker Change: It's too early to discuss the specifics about 2025 as we are focused on executing in Q4, which will be very influential on the 2025 outlook. We provided in February.
Speaker Change: Having said that in any reasonable revenue scenario, we expect to target at least 10% adjusted EBITDA and free cash flow growth going forward.
Speaker Change: We know there are additional productivity gains we can achieve across the business and that the steps we have taken to rightsize our cost structure will lead to continued profitability growth as the business returns to revenue growth.
Speaker Change: And now with more than 50 cents a share in cash on our balance sheet and growing adjusted EBITDA growth of 40% to 50% this year and on a path to continued adjusted EBITDA and free cash flow growth going forward. We continue to believe our stock trades at a significant discount to our intrinsic value and that it represents an incredibly attractive investment opportunity.
Speaker Change: Current levels.
Speaker Change: With that let me turn things over to Jon to walk through the financials and our guidance in more detail and I'll be back for Q&A.
Speaker Change: John.
John Wagner: Thank you Mark I'll begin with a detailed review of our third quarter results and then finish with our outlook for the fourth quarter and full year 2024.
Speaker Change: Total revenue in the third quarter was $49 $9 million down 2% year over year and up 1% sequentially over Q2 and above the high end of our guidance range.
Speaker Change: Breaking revenue down further if we exclude overages of $1.5 million in the quarter revenue was $48 4 million down 2% year over year and up 1% sequentially.
Speaker Change: Subscription and support revenue, which includes Overages was $48 million and professional services revenue was $2 million down, 1% and 18% year over year, respectively.
Speaker Change: 12 month backlog, which we define as the aggregate amount of committed subscription revenue related to future performance obligations. In the next 12 months was $122 4 million, an increase of 1% year over year.
Speaker Change: Total backlog was $183 $2 million up 5% year over year, including a record backlog of $68 million up 15% year over year related to the portion of committed revenue to be recognized greater than 12 months in the future.
Speaker Change: We continue to see customers, especially our larger customers confident in making multiyear commitments to our platform, providing us greater visibility into our long term recurring revenue.
Speaker Change: On a geographic basis, we generated 60% of our revenue in North America in the quarter and 40% internationally.
Speaker Change: Breaking down international revenue a bit more Europe generated 16% of our revenue and Japan and Asia Pacific generated 24% of our revenue in the quarter.
Speaker Change: Turning to the supplemental metrics, we share on a quarterly basis recurring dollar retention rate in the third quarter was 80%, which was down from 83% in the previous quarter.
Speaker Change: Retention in the quarter was impacted by reductions in entitlements at contract renewal.
Speaker Change: In particular this quarter, we had a sizable down sell from one of our largest international media customers, who transitioned a significant portion of its video infrastructure in house.
Speaker Change: As a reminder, this metric only captures renewals in the quarter and Upsells at the time of renewal and does not factor in the impact of add ons during the contract term or multiyear agreements both of which meaningfully improve our dollar retention.
Speaker Change: As Mark mentioned, we expect the pressure from entitlement downgrades to subside in 2025.
Speaker Change: Net revenue retention rate, which provides a more complete view of the year over year revenue retention was 94% in the quarter, which compares to 93% in the previous quarter and 93% in the third quarter of 2023.
Speaker Change: The stability of NR or captures our success growing customer relationships during the subscription term and effectively locking in successive annual renewals in the form of multiyear commitments.
Speaker Change: Our customer count at the end of the third quarter was 2392 of which 1923 were classified as premium customers.
Speaker Change: Looking at our <unk> within our premium customer base, our annualized revenue per premium customer was a record 101400 up 6% over Q3 2023.
Speaker Change: This excludes our entry level pricing for starter customers, which averaged $4200 in annualized revenue.
Speaker Change: But we don't expect <unk> to always increase in a linear manner as it has in recent quarters. We do think strong ARPA as a successful reflection of our strategy to focus on and Super serve larger customers with more sophisticated requirements, where we are able to win grow and retain customers.
Speaker Change: More effectively.
Speaker Change: Looking at our results on a GAAP basis, our gross profit was $31 $6 million for the quarter, giving us a gross margin of 63% an increase compared to 62% in the third quarter of 2023 and 61% in the prior quarter.
Speaker Change: Gross margin benefited from a combination of durable improvements in the cost architecture of our platform some onetime benefits in the quarter and positive professional services margin.
Speaker Change: Operating loss was $2 $8 million net loss was $3 million and net loss per share was seven cents based on 45 million weighted average shares outstanding.
Speaker Change: Turning to our non-GAAP results are.
Speaker Change: Our non-GAAP gross profit in the quarter was $32 3 million compared to $32 5 million in the third quarter of 2023 and represented a gross margin of 65% an increase compared to 64% in the year ago period.
Speaker Change: non-GAAP operating income was $860000 in the third quarter compared to non-GAAP operating income of $2 $3 million in the third quarter of 2023.
Speaker Change: Adjusted EBITDA was $5 $1 million down 9% year over year and up 34% sequentially, representing an adjusted EBITDA margin of 10% and above the high end of our guidance range.
Speaker Change: Ongoing strength in adjusted EBITDA reflects the continued benefit of prior cost savings actions efficiencies, we are generating in our cost of goods sold and our ongoing expense discipline.
Speaker Change: non-GAAP diluted net income per share was <unk> <unk> based on $46 2 million weighted average shares outstanding. This compares to diluted net income per share of <unk> <unk> based on $43 4 million weighted average shares outstanding in the year ago period.
Speaker Change: Turning to the balance sheet and cash flow, we ended the quarter with cash and cash equivalents of $27 million and remain debt free.
Speaker Change: Free cash flow for the quarter was $1 6 million after taking into account $1 8 million in capitalized expenditures and capitalized internal use software.
Speaker Change: The strong cash flow performance in the quarter and year to date reflects the profitability improvements we have made during the year and the expected decline in the pace of Capex and capitalized software investments.
Speaker Change: I'll finish by providing our guidance for the fourth quarter and the full year 2024.
Speaker Change: For the fourth quarter, we are targeting revenue of between 48 and $49 million, including approximately $1 million of Overages and approximately $2 million of professional services revenue.
Speaker Change: From a profitability perspective, we expect non-GAAP operating loss to be between one three and <unk> $3 million and positive adjusted EBITDA to be between three and $4 million.
Speaker Change: non-GAAP net loss per share is expected to be in the range of a loss of four.
Speaker Change: To one based on 45 3 million weighted average shares outstanding.
Speaker Change: For the full year, we are increasing our revenue guidance to $197 $7 million to $198 $7 million, which includes an estimate of approximately $5 million of overage revenue and approximately $8 3 million of professional services revenue.
Speaker Change: This reflects our better than expected performance in Q3, and the midpoint now above the high end of our prior guidance.
Speaker Change: We're also increasing our full year guidance from a profitability perspective, we expect non-GAAP operating income to be between one and $1 $1 million and adjusted EBITDA to be between $16, eight and $17 $8 million.
Speaker Change: This equates to adjusted EBITDA growth of nearly 40% to 50% for the year.
Speaker Change: non-GAAP net loss per share is expected to be in the range of <unk> to.
Speaker Change: <unk> zero cents based on $44 7 million weighted average shares outstanding.
Speaker Change: Lastly, we are maintaining our full year free cash flow guidance, which is expected to be between 5.6 and $8 million.
Speaker Change: We expect to end the year with at least $30 million of cash on the balance sheet, an increase of more than $11 million over prior years, ending cash with no debt.
Speaker Change: A few things to keep in mind as you think about our guidance there.
Speaker Change: We expected a sequential decline in revenue is being driven by two dynamics.
Speaker Change: $500000 decline in overage revenue and the impact of a large down sale I mentioned earlier, which occurred at the very end of the third quarter.
Speaker Change: This sequential decline in revenue will also impact adjusted EBITDA in the fourth quarter.
Speaker Change: To wrap up we're very pleased with the results in Q3 exceeding the high end of our guidance range on both the top and bottom line, while generating meaningful free cash flow.
Speaker Change: We are successfully executing on our key strategic priorities that we expect will return the business to consistent revenue growth in the future.
Speaker Change: We will continue to deliver on our commitment to disciplined expense management, which will deliver significant adjusted EBITDA growth in 2024 and into 2025 as well.
Speaker Change: Please give us a moment to transition to Q&A and we'll be back to discuss our results further.
Speaker Change: Our first question will come from Steve Frankel from Rosenblatt Securities.
Steve Frankel: Good afternoon, and congratulations on the progress we saw in the quarter Mark how much of that do you think is repeatable muscle memory doing things you've been working on for several quarters versus the business continues to be lumpy and you brought in some good business in Q.
Mark: Yeah look I mean at the Q3 performance comes from the stack of previous quarters of business. We've developed so I do think it is relatively durable you know.
Speaker Change: I mean do you feel like the cost structure changes, we made over the past 18 months have really started to now.
Speaker Change: Pay the benefit that we thought would be there.
Speaker Change: From a new business perspective, as I said earlier I do feel really better about how we performed in the quarter really brought deals and those are not always.
Speaker Change: Our 90 day cycles, right and so it's really nice to see those those land and have the team really performed well when that did and then the add on business, obviously, where you know it is how our customers businesses are going and we do you know from an entitlement perspective have to play in that regard, but I do feel better about the durability of our ability to upsell.
Speaker Change: Sell and cross sell now with multiple product sets and suites and then when we look to the real future. We think about our AI suite, we think about our new use cases and some of the other products. We've released over the last 12 to 18 months that can really help us build behind that so I feel I feel very good about the durability in the long run there may be some you know some choppiness in certain parts of our customer.
Speaker Change: Base, especially on the media side, but I think those are well known and.
Speaker Change: And we have a good plan on how to attack those and I feel very good about the durability of our both upsell and add on business as well as new business being able to close.
Speaker Change: And this new Salesforce products actually.
Speaker Change: Should we think about something like that <unk> to raise arc.
Speaker Change: Yeah, well I mean, I think the great part there is it's a new use case from effectively the same or very similar technologies right. We basically purpose built we sort of took marketing studio and purpose built it for our sales team a big broad sales team in this case of over 30000 real estate agents are being able to one to one or one to many communicate with their.
Speaker Change: Buyers as opposed to sort of our normal marketing case, which is very few employees handling tonnage of video and putting it on.
Speaker Change: To help develop marketing leads so I do feel like this is a very.
Speaker Change: I'm very optimistic about the future of this specific use case, we haven't even really fully rolled it out yet we rolled it out to effectively one or two customers had meaningful bookings from those customers in the first two quarters of its relative new existence, so you'll see us roll it out more formally this quarter on the next few weeks and officially name It and then we'll go to market.
Speaker Change: And do believe it can help add especially to the <unk> on the enterprise side of our business right. It's gonna be meaningfully helpful to that side of the business for sure.
Speaker Change: Okay.
Speaker Change: I know you don't want to talk about 2025, yet.
Speaker Change: Do you need any additional elements to get to consistent growth.
Speaker Change: Or is it more the external environment and things like making sure youre at the bottom end.
Speaker Change: The entitlement shrinkage, that's holding you back from growing.
Speaker Change: I think it goes to multiple factors, Steve, but I think we're optimistic about where the business is headed you know first we obviously need to see a retention improvement from this year. The next to have that growth be real and our belief is that we're on a path to that as we said on the call that the entitlement sort of upgrade and downgrade cycle has been a little bit more normalized we're getting.
Speaker Change: Through that sort of last few of the large media renewals through the end of this year and so we feel like next year is going to be the year, where we will stop effectively talking about that COVID-19 issue and sort of talk about it as this is what our customers businesses are and then obviously we need to go we need to book New business and we need to book more business with our existing customer base.
Speaker Change: But we certainly believe we are on a path to do that and our goal is going to be to grow the business going forward.
Speaker Change: Okay, great. Thank you I'll jump back in the queue. Thanks, Steve Thanks, Steve.
John Wagner: Our next question is from Max Mccandless with Lake Street capital.
Speaker Change: IMAX.
Speaker Change: We still have an exon.
Speaker Change: Okay.
Speaker Change: Hum.
Max Mccandless: Yeah, We got you now okay gotcha, Okay, sorry, Yeah, Hey, guys. Thanks for the detail you guys gave on 2025 in terms of adjusted.
Max Mccandless: Adjusted EBITDA and free cash flow.
Speaker Change: When we think about growth I know you guys don't want to talk about it I mean is there areas in the market you've seen maybe from an inorganic perspective known achieved cash rise throughout the year now kind of get a sense of where you're comfortable with to go out and spend in the market I think youre at $27 million of cash now.
Max Mccandless: Yeah. So I guess is there any areas out in the market right now from an inorganic perspective that you guys would be interested in maybe to jumpstart growth a little bit for 2025 and.
Speaker Change: And beyond I want to give our point of view on cash now.
Speaker Change: I'll start by just saying.
Speaker Change: Pretty happy with what we've done with cash this year, we are now at over $8 million more in cash on the balance sheet and we started the year. We expect like you say to finish the year at about $30 million or over $11 million more than we started the year.
Speaker Change: So we do think that cash is beginning to get to the point, where it is more than sufficient for working capital purposes. So we are starting to think about what is the best use of cash in terms of creating value for shareholders and value for the business certainly inorganic opportunities is something that we look at.
Speaker Change: I'd say nothing specific but.
Speaker Change: Something that we do keep our ear to the ground on both of them I think that we're going to talk about specific sectors or anything like that.
Speaker Change: Yep.
Speaker Change: I guess.
Speaker Change: Quarter from new Biz.
Speaker Change: I guess, how has that trended into Q4 can you give any details on that.
Speaker Change: You, obviously don't want to get ahead of ourselves there, but we feel good about the execution in Q3 really being able to close deals I think on Q2, we had mentioned that it was a little bit more challenging I think that got a little better for us that our team did a fantastic job. So congratulations to them doing that I think we're going to have some interesting opportunities here in Q4 Q4 is obviously very.
Speaker Change: Influential over how we talk about 25 minutes, where you were going to wait until.
Speaker Change: The appropriate time to talk about that in February but I think if you don't have a really important quarter on our hands here in Q4.
Speaker Change: Alright, guys. Thanks.
Speaker Change: Thanks.
Speaker Change: Well with that.
Speaker Change: I'll wrap it up I want to thank you all for joining today just to reiterate a little bit of what we discussed we're extremely pleased with the strong Q3 results delivering above the high end of our guidance range on revenue adjusted EBITDA cash also very pleased given the year to date performance be raising the full year top and bottom line guidance and setting us up and deliver adjusted EBITDA growth as John said, a 40% to 50%.
Speaker Change: Our backlog in RVO, hitting all time records this quarter net revenue retention continuing to improve quarter over quarter really demonstrate the resilience of the business. So that our move up market and our multi year deal focus has delivered and we continue to make some of those right innovation investments and of the meaningful future growth opportunity ahead of us I believe with new use cases and with our AI suite.
Speaker Change: As we just talked about our cash position expected to be about $30 million by the end of the year, adding $11 million or so over the course of the year and remaining debt free. So we really do continue to believe our share price at current levels does not give us appropriate credit and provides our investors a great opportunity so with that I want to thank you again for joining and we really do look forward to updating you on our progress.
Speaker Change: Yes, after the new year.
Speaker Change: Yeah.
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Speaker Change: Yeah.
Speaker Change: [laughter].
Speaker Change: [laughter].
Speaker Change: [laughter].
Speaker Change: Yeah.
Speaker Change: [laughter].
Speaker Change: [laughter].