Bigtincan Holdings Ltd

ASX:BTH

Earnings Call Transcript 2022-Q2

[Jane Morgan]

So good morning. My name is Jane Morgan, and thank you for joining the Bigtincan Holdings Limited Q2 FY '22 Appendix 4C and Quarterly Report Briefing. Today, joined by Bigtincan Co-founder and CEO, David Keane; Global Financial Controller, Cyril Desouza; and Chief Marketing Officer, Rusty Bishop, who will discuss the Q2 FY 2022 quarterly results release and provide some business progress commentary with the Q&A session to follow. [Operator Instructions] David, I will hand over to you.

[David Keane, Co]

Thank you so much, Jane. And yes, good morning, and welcome to everybody for Bigtincan's Q2 FY '22 Appendix 4C and Quarterly Result Report Briefing. My name is David Keane, the CEO and Co-Founder of Bigtincan. As you heard, with us today is Cyril Desouza and Rusty Bishop. Now for today's call, we'll be using the Appendix 4C report that was released to ASX this morning, together with a brief supporting slide presentation also released on the ASX. Now before we begin, I want to start by sending my thank you to the entire global Bigtincan team who have -- and really, again, this quarter, shown the ability to execute, to delight our customers and deliver a strong result that we'll talk about today in delivering, I think, some really interesting things to talk about in today's presentation. Let's get on to the results. We're going to share some slides with you now. All right, let's go. So highlights for this quarter, first of all, from a cash flow perspective and this the 4Cs. So of course, total cash receipts increased 150% to $26.3 million for this quarter. Cash operating payments of $25.2 million. That payments line includes the operating payments for the first full quarter of the Brainshark acquisition that was completed in last year in September and associated Brainshark integration investments. And that resulted in a $1.1 million cash operating positive position for Q2 FY '22. And again, as I was saying before, those payments include approximately about $600,000 of payments for one-off Brainshark integration cost. So if you added those back in the operating cash positive, it should be something about $1.7 million to $1.8 million. At the end of December 2021, Bigtincan had approximately $50 million in cash and cash equivalents, with a strong accounts receivable balance and is well funded to continue its progression into the second half of FY '22. Let's have a look at some of the noncash-specific highlights though on the next slide. Thank you. So trading highlights and outlook. One of the things that we talk about in these 4Cs, this period is our ARR growth at the end of December, Bigtincan at $112 million in annualized recurring revenue. That's 133% increase over December 2020. Now what drove that were a bunch of new customer wins and expansion. And we'll talk a bit about that more in a minute. But we also released new versions of products across our 3 core hubs, our Content Hub, our Learning Hub and our Engagement hub. And these releases offer new features and capabilities that continue Bigtincan's market leadership position. And Bigtincan is on track to achieve or exceed $119 million in ARR and $109 million revenue for FY '22. Let's have a bit of a more look into some of those growth vectors on the next slide. Thank you. So let's look at the growth sources, well, of course, new customer wins and expansion in key existing customers. We'll talk about some of those in a minute. We also saw growing cross-sell and up-sell across our different hubs as we see customers seeing the benefits of taking advantage of multiple hubs as they grow their investment in Bigtincan. But we're also seeing our sectoral awareness increase. And those are new product offerings that we spoke about adding to our team's ability to build complete solutions and grow our revenue with each of our customers. Let's have a look at a little more detail on some of the new customer wins and expansion into this quarter on the next slide. So customer wins and expansion with organizations like Konecranes, based out of Finland, it's a nice global deal coming out of there. And for folks that have spent time in the United States, Clorox, it's a fast-moving consumer goods company, focused, of course, on cleaning products, amongst a bunch of others to house our name here in the U.S. Other customers, including Singer Equipment, Doma, Yokohama Tires. And good expansion in organizations like Genentech, the life sciences organization; Delta Airlines in transportation; Brookdale, GUESS Clothing in retail; and ThermoFisher in life sciences. As I mentioned, platform cross-sell continues to be a focus here at Bigtincan. As we empower our customers with the ability to be able to take advantage of the technology that we have in our different hubs. We had growing strength with the Q2 cross-sell deals, including RevRV, Convatech and in Australia, Lion, and that's really showing the benefits of the Bigtincan multi-hub product strategy that we'll talk a bit more about in a minute. Let's go to the next slide, thank you, and we'll have a bit look at the Brainshark up there. So we're really pleased to get to present to investors the strong and significant progress the company has made in work relating to the integration of people and systems on the Brainshark acquisition. This was a busy quarter for our team, and they executed really well in bringing together the people side, unifying the product offerings, unifying the system operations in areas like finance and human resources and settling our brand positioning, which we'll talk more about today, and providing an integration across those multiple work platforms so we can connect this into the core of Bigtincan. So team executed really well. I'm really pleased with the progression on the significant integration task following that acquisition in September of 2021. Now as we think about the future on the next slide, I want to talk a bit about why we think this is such an important market to be in. We believe that sales enablement technology is having an impact, really, on every buyer-seller interaction. To talk to us a little bit more about why this is happening and I think some of the importance of Bigtincan strategy, I'd like to hand over to Rusty Bishop, Bigtincan's Chief Marketing Officer, who will take you through a bit of the market update. Rusty, over to you.

[Rusty Bishop]

Thanks, David. For those who didn't catch it, my name is Rusty Bishop. I'm the Chief Marketing Officer here at Bigtincan. Next slide, please. Bigtincan is on a mission to help the world's best companies create the buying experience of the future. We know these large brands are ambitious. They know the economy is changing, and they want to be successful in these challenging times. However, with current solutions, these aspirations are unattainable, hampered by limited insights, training quality, misalignment, siloed sales assets, compliance and slow onboarding times. As a result, their sellers fail to take action and grasp opportunities for growth. Bigtincan empowers sellers to focus on their buyers' experiences; offering solutions that are smart, flexible and easily adapted to unique business processes, giving companies a better way to engage their customers, drive value and guide them to the best decisions. Next slide, please. The Bigtincan platform consists of 3 hubs. They come together to form a complete sales-enablement solution. Our Learning Hub is a system of action to receive onboarding, training and coaching that adapts to individuals' learning preferences with micro learning and chat-based certifications. Our Content Hub is a system of action to create, personalize and interact with digital assets for sellers to share with our customers, and we've recently expanded to include augmented reality and virtual reality in anticipation of Facebook's metaverse. Our Engagement hub is a system of action for sellers to interact with buyers remotely or in person and most importantly, to measure their responses in real time with conversational intelligence built in. Underlying the hubs is a unified data model that continuously adapt based on our clients' processes, compliance rules and data sets with real-time analytics to help predict and suggest the best actions for sellers to take next. This platform is extremely flexible. Clients can pick 1, 2 or 3 hubs, giving us the ability to expand our revenue base with current customers as well as close deals with large enterprises that want to consolidate from a single vendor, such as the Asurion deal we announced recently on the ASX in September 2021. Next slide, please. In support of this, I pulled together 3 recent analyst data points to share with you today. First, here in the United States, LinkedIn recently published that as many as 62% of Americans were looking to change jobs in 2022. The impact of that will be that companies will need tools like our Learning Hub to rapidly onboard their new hires and scale training and coaching in this remote first world. Second, the global analyst firm [indiscernible] released shared data that at least 75% of B2B sales organizations now have a dedicated sales-enablement function, suggesting our core sales Content Hub technology will continue to be in high demand. And finally, something that many of you I'm sure will agree with, McKinsey has shown that B2B buyers now prefer remote and digital interactions to meeting in person. This is a perfect fit for our Engagement Hub technology. It can get sellers a chance to understand customer behaviors and actions even in remote selling situations. Next slide. In closing, I'll leave you with a quote from Jim Lundy of Aragon Research from earlier this month. He said Bigtincan is positioned well as a leader in sales enablement. They continue to add capabilities and innovative features to help their customers anticipate buyers' needs. Thank you for your time today. I look forward to speaking with you all again at our Investor Tech Day in late February. And with that, I'll pass it over to Cyril Desouza, our Head of Finance.

[Cyril Desouza, Global Finance Manager]

Thanks, Rusty. So Bigtincan ended the quarter of Q2 in a very strong position. As you can see, we ended at $1.1 million net cash from operating activities, which was compared to a loss of $4.9 million in Q1 FY '22 and a loss of $1.1 million in Q1 FY '21. What you can see here is the business has actually improved 198% year-on-year, which demonstrates the strong cash management and operational efficiency throughout the business. Another key point is this was the first net cash quarter that we've had in 3 years. And it's -- it was perfect timing with the business ending the period of $49.9 million in cash and cash equivalents. Looking at the cash receipts on the next slide, Bigtincan ended at $26.3 million. Now our cash receipts come from 3 main hubs. The first is the Content, second is Engagement and the third is the Learning. Within the Learning was the most recent acquisition being the Brainshark, which contributed the readiness technology, which was acquired on the 8th of September 2021. In terms of the mix of the cash collections, just over 50% of it was related to the Bigtincan Learning Hub, and the other 50% related to the Content and Engagement Hubs. There was also a few cross-sell opportunities within Q2, and we see momentum of that heading into the second half of FY '22. Now moving to the right-hand side, you can see the operating cash payments of $25.2 million, and David called it out. Within that, it was $600,000 that related to the integration of the readiness platform into the Bigtincan Learning and the Bigtincan core platform. Most of the increase of the $5.9 million from the last quarter was related to the full run rate of Brainshark coming into the Bigtincan operations. I want to also call out down below, you can see $4.9 million was invested in data product-related products as well as our learning, coaching and content and future development projects, which we see as our competitive advantage in terms of future revenue opportunities in a market that we see in a long-term potential market. Other payments within the quarter was the last payment of [indiscernible] of $557,000 as well as there was $1.3 million worth of delayed and the final acquisition costs related to the Brainshark acquisition, which included legal, tax and accounting fees. Moving on to the next slide. As you can see here, our cash has had a tremendous trend going forward, and we ended the period, as I said before, $26.3 million. Now if you back that out, if you back away the multiyear deals of $1.6 million, which are payments related to more than 12 months, you end at $24.7 million. What's significant about that number is if you annualize that number and then you take that as a percentage of ARR, which was 1-1-2, meaning $112 million, it gives us a conversion rate of just under 90%, and that's in line with company forecast. The other significant thing is we've ended the year with very solid accounts receivable balance, which will be disclosed at the half year accounts at the end of February. That's all for me, back to you, David.

[David Keane, Co]

Thank you, Cyril. So again, I think, really, Bigtincan is in a good place as we start the second half of FY '22. And again, as we confirmed in the 4C today, Bigtincan is on track to achieve our guidance of $119 million of ARR and $109 million of revenue. And you can see that the opportunity for Bigtincan extends more than through FY '22 into future periods. And we're convinced that today's result demonstrates to investors that Bigtincan is able to grow its business, to do so efficiently and effectively. And it also shows opportunity for us as we grow our enterprise-focused Software as a Service business to be able to continue that trend of building efficiency and effectiveness into our growth as we go forward. Now I want to talk a bit about going forward and a couple of things that happened post the end of this quarter that I think are of interest to investors. That's some of the -- yes, thank you so much, all right. So one of the things that we announced to the market earlier in January was the release of our Bigtincan Salesforce tool. And this is a tool that was created in conjunction with Salesforce.com and is available on the Salesforce.com exchange. And it's a good example of the work that the data products group does. That's the group that Cyril talked about. We're investing in the long-term capability to use technology like artificial intelligence and other tools that Rusty spoke about as well to be able to build technology that really makes a difference for our customers. The Bigtincan and Salesforce shows we can start to create intelligent mapping between what our customers need and what their company has. You can see on the left-hand side [indiscernible]. We talk about how Bigtincan and Salesforce allowed our customers to describe their business almost in a logical way. And then the technology in the ontology engine built into Bigtincan for sales force will match the needs that those customers have against content and information that the company has, and we'll create that connection dynamically. And as the system learns, it scores content and training items based on the presence or absence of turns within fields inside the CRM platform. And this is really going to add more and more benefits as customers continue to these technologies. So I see Bigtincan and Salesforce is an indication of the market leadership position where Bigtincan has taken through the investments in the Data Products group and other parts of our business all around the world. There's one other thing I thought I might bring up for you as well on the next slide, thank you. This is something that we announced in a press release last week. And this is Bigtincan was a named a leader in Gold Medals in the 2022 SoftwareReviews Sales Enablement Data Quadrant Guide Report. It's a bit of a mouthful, but this is an important report published by SoftwareReviews, which is an independent organization that conducts reviews of customers of enterprise software. Now Bigtincan was ranked #1 amongst our competitors for our vendor capabilities and products features. We took first place in 18 different categories. Now this is the most ever category wins awarded to a single provider in SoftwareReviews' history. And the press release is available for you to read on Bigtincan website. The one other point we came out of that report, which I found quite pleasing for us was when asked about the propensity to renew the use of that SaaS software. Bigtincan has added 100% propensity to renew when our customers were asked about that for the future. I think that's a pleasing result. It really demonstrates the work that this amazing team here does at Bigtincan all around the world to build the technology, take care of our customers and build what I think is going to be a strong future for our company. Well, that's it for today's appendix 4C review. I would love to take any questions. Maybe if we can stop the screen share. We can go through some questions.

[David Keane, Co]

Okay. We've got a question here about the $4.9 million CapEx investment that Cyril spoke about. Cyril, do you want to comment on the trend of that? I'm happy to comment on the technology side but you can come around the trend for us.

[Cyril Desouza, Global Finance Manager]

Yes. The trend of the $4.9 million will be pretty much consistent, I'd say, over the next half. It's not going to increase dramatically. Now we do it prudently where we take it as a percentage of total product development, which historically has always been within the range of 20% to 30%. And we'll manage that going forward based on the projects or the technology, which I'm going to pass over to David now to discuss.

[David Keane, Co]

Yes. Look, we see data products and other technology investments really being the good investments that generate long-term value to shareholders and the company as we continue to grow. And I think it is showing you today's results how that focus on building technology drives the efficiency and effectiveness of our engines here at Bigtincan. And our growth engine has been successfully continuing to build on the momentum noted by the technology leadership. We think those are important investments. A question here from [Greg Ellis]. If ARR and cash receipts have improved so well, how come it hasn't translated into the share price, which has fallen? Of course, there are sectoral challenges that we're seeing maybe [indiscernible] to the market at the moment. Look, from a Bigtincan point of view, the company is performing as it should. And I think today's results will give investors' confidence that Bigtincan knows how to grow responsibly. And showing that we're operating cash positive, I think, will give investors increasing confidence in the building this company to execute and build long-term value. Okay. A question from Paul. He asked, when are you having to turn profit? Well, of course, we'll talk more about our EBITDA position at the half and or the full year results. Look, I think the important thing for investors to understand is we do believe it has been important to invest ahead of the revenue to show that we could create this technology and build the underlying value in the company that makes some of the world's leading brands chose to work with us, and we believe that the long-term value of the LTV we talk about a lot is demonstrating that there is hundreds and hundreds of millions of dollars of long-term value for us to gain from those investments may be in technology leadership. But at the end of the day, look, it's our job to be that efficiently and effectively, adjust the company to market conditions. But certainly, we believe that the result and other results you see really demonstrate the company's ability to be able to grow and grow effectively. So we'll talk more about that at the half year. All right. [Operator Instructions] All right. Well, again, just the 4C team, we'll have a lot more to talk about at the at the half year. But Jane, maybe back to you to sign us off.

[Jane Morgan]

Wonderful. Thank you all for joining the Bigtincan Holdings Limited Q2 Appendix 4C and Quarterly Report Briefing. If you have any questions, please feel free to reach out by the contact details on the bottom of our ASX releases. And a copy of today's presentation will be available on the Bigtincan website in the coming days. Thank you. We look forward to hosting you again soon.