Bigtincan Holdings Ltd

ASX:BTH

Earnings Call Transcript 2020-Q4

[Jane Morgan;Jane Morgan Management]

Hello, and thank you for joining the Bigtincan Holdings June 2020 Appendix 4C Investor Briefing. My name is Jane Morgan. And today, I'm joined by Bigtincan's CEO and Co-Founder, David Keane, who will be providing you with an overview of today's report. David, I'll pass on to you now.

[David Keane, Co]

Thank you, Jane, and yes, welcome to everybody to the Bigtincan's Holdings June 2020 4C investor briefing. My name is David Keane, the CEO and Co-Founder of Bigtincan. And with me today is Cyril Desouza, our Global Financial Controller; and Vivian Stewart, our Chief Operating Officer. For today's call, we'll be reviewing the June 2020 4C that was released to the ASX this morning. The 4C is available on asx.com.au and also on our Bigtincan investor site at investor.bigtincan.com. Let's begin with some remarks, and then we'll review the quarterly report and Appendix 4C in detail. I'd like to start by discussing what is influencing our customers during these unusual times. During the quarter, we saw the beginning of the impact of the pandemic on 2 trends that have been growing in our economy for the past few years: that's digitization and mobility. Businesses need to empower their customer-facing teams now more than ever to work digitally and remotely. And our customers told us during the quarter they know this move to a more digital and remote working well. It's something that will affect the way their customer-facing teams work for the foreseeable future. Humans in business need new ways to learn, develop, engage and even share in ways that are more flexible than ever before. And all this is driving the move towards software as a service, or SaaS, offerings as the platform of choice for enterprise across the globe. And we saw the impact of that change during the quarter. As users moved to remote working practices, their use of Bigtincan's sales content management system increased. For example, T-Mobile's business-focused sales team used more content in the Bigtincan platform this quarter than in any previous quarter. And our mobile-focused learning and training system was used by customers to deliver information to their remote teams about the virus and to deliver remote working skills as part of the special program we launched to assist this transition to remote. And importantly, as we see the reopening of the economy, we will experience a growing need for digital onboarding for employees that have been furloughed or laid off as they need to be prepared to get back to work. And our mobile-focused digital onboarding platform is well suited to help companies and their teams do that faster and better than is possible with the legacy technology. So whilst we still do not know exactly how fast that opening up will come or how much of a lasting impact COVID will have on the overall economy, we hope that today's briefing will give you a view of how Bigtincan is performing in this environment and the important role Bigtincan can play in supporting our customers and their teams to perform at their best. And we really believe that Bigtincan's focus on mobility and digital selling, together with our growing set of household name customers, puts the company in a strong position to take advantage of this generational change. Now let's review some of the results in details. Highlights from the operating activities for the quarter. Of course, customer cash receipts increased 89% to $10.4 million from the June 2019 quarter of $5.5 million. Cash operating payments did increase 74% to $12.3 million against $7.1 million for the previous corresponding quarter. And our annualized recurring revenue growth of 53% to $35.8 million, with organic ARR growth of 40% to $32.7 million. At the end of the quarter, cash and cash equivalents of $71.9 million. Now as many of you know, we conducted a successful capital raising program in the quarter, comprising a $35 million institutional placement and a $7.5 million share purchase plan for retail shareholders, both significantly oversubscribed. So let's talk a little bit more about those results. The year-on-year ARR growth of 53% and organic ARR growth of 40% demonstrate the ongoing success of our organic growth engine, together with the benefits of strategic M&A that occurred in both FY '19 and in FY '20. Our ARR compound annual growth rate over the past 5 years is 50%, demonstrating a market with long-term opportunity for Bigtincan and importantly sustained interest for enterprise customers yet very much still at its early stages. And with that 40% organic year-on-year ARR growth for FY '20, which is up from the 35% the previous financial year, shows that this strategic program and approach to product development and market fit behind the business operations is working in today's market. During the quarter, the company focused on, of course, ensuring the health, safety and productivity of the global team. With today, 96% of staff working completely remotely, demonstrating the strength of our globally diverse organization. And during the quarter, we continue to compete for and win important new deals and new customers in key verticals. And we gained important external validation for our technology through industry awards, which I will discuss a bit more later. But importantly, we continue to develop the key technology and innovations, including new data science-based recommenders the guide users as to the next best action they can take to improve the way they work. Now we call this our [ Genie ] recommender suite, and that's making a big difference to how people get guided down the path of operating in this new world. And improvements to our Pitch Builder technology that we called Pitch Build Alive that enables user data to update automatically when a source content piece is changed. It's technology like this that will deliver long-term value for shareholders and continue our growth path. And with software releases on Apple's iOS, windows, Android and the web, we continue to make our product development investments for the future. And I really want to take this opportunity to thank the entire Bigtincan global team for the fantastic job of executing on our strategy and what were certainly challenging global times for all humans this quarter. It was just amazing to work with such a group of talented people. Talked about it just now. But during the quarter, we undertook the institutional placement of SPP for retail shareholders to enable the company to really take advantage of what we see as a growing pipeline of opportunities for inorganic growth. But also to support the additional work the team does to deliver for our large and growing customer base. That investment in humans and technology to support the product creation and customer care that we do is an important investment for the future. And we see that as fundamental to provide that foundation we need to get to the next level of growth. During the quarter, a number of new customers were added to the Bigtincan family, including Axogen in life sciences. Axogen is a leading medical devices company that produces technology to restore feeling and functionality to damage nerves, which we won in a competitive bid. Axogen is deploying for remote sellers in the U.S.A. and expects to grow to European and Canadian sellers and distributors during FY '21. We also saw expansions in financial services with multiple global customers and new deployments in the technology sector, including one of the 10 largest tech companies in the world, according to the Forbes Global 2000 for 2019. And during the period, Bigtincan won the coveted Software & Information Industry Association, or SIIA, CODiE Award for the best sales enablement platform. And for those who don't know the CODiE Awards, they recognize companies that produce the most innovative business technology products around the world. And in my view, these awards are the industry's only truly peer-reviewed awards program, with the first round review of all nominees conducted by software and business technology experts with considerable industry expertise, including analysts, media, bloggers, bankers and investors. And the score from the expert judges is then used to determine the finals. And then the SIIA members vote on the finals products, with the scores from both rounds tabulated to select the winners. Now this year's awards ceremony was held remotely, but you can see a link to a video of that award ceremony on our website. So in summary, Q4 FY '20 was an important quarter for the business, as we saw growing validation of both our technology and our market view. Enterprise customers are now facing a new world where digital and mobile will be the driving forces behind their investments to remain competitive and to deliver innovation in their businesses. And Bigtincan is well positioned to assist with that, with the leading products, strong teams, I mentioned those existing lighthouse customers and importantly the established go-to-market programs that put us at the forefront of one of the fastest-growing markets in enterprise software. Now I'm going to ask Cyril Desouza, our Global Financial Controller, for some remarks about the details in the 4C. Cyril, over to you.

[Cyril Desouza, Global Finance Manager]

Thank you, Dave, and a good morning to everyone. Let's start with cash collections. Customer cash receipts for the quarter were $10.4 million, an increase of 89% over Q4 FY '19 and a traditionally strong fourth quarter. Cash growth for the quarter was driven by large customer deals signed at the end of 2019 calendar year and in the first 6 months of calendar 2020. In addition, during the quarter, the company received $1.5 million in government grants. Total operating cash payments for the quarter were $12.3 million, a 74% increase over the previous corresponding period. For the full year of FY '20, total net cash from operating activities was $1.3 million, driven by healthy billing and collections from our enterprise customers with overall cash usage, including investments in property, plant and equipment and software development of negative $2.4 million for the 12 months. We continue to fund longer-term development projects in the quarter with $1.1 million of costs allocated to capitalized software development. These projects are important to the future of the business and our long-term strategic program providing ongoing investments in data science and AI technologies. Capitalization treatment of these projects was consistent with our ongoing program with 25% of total development capitalized in the second half of FY '20, the same percentage as the first half of FY '20. During the quarter, the company did not experience any material changes in accounts receivable in the form of extended payment term requests from our customers, reflecting the enterprise nature of the business. Accounts receivable and accounts payable at the end of the quarter are in line with seasonality of previous years. As at June 30, 2020, Bigtincan had $71.9 million in cash and cash equivalents and is well funded to execute on our growth plans.Well, that's all for me. Thank you, and back to David.

[David Keane, Co]

Thanks, Cyril. As discussed today and in our capital raising materials from the raise in Q4, we see the changing market, I think, offering potential for new inorganic growth opportunities. To talk about that, I'd like Vivian Stewart, our COO, to provide a few remarks about that and also about our upcoming Investor Relations programs that are really part of our strategy to expose the company to more investors in Australia and around the world. Viv, over to you.

[Vivian Stewart, Chief Operating Officer]

Thank you, David. Look, as discussed during our recent capital raising, we continue to see the value and opportunity in maintaining a strong M&A program at Bigtincan, in particular, in this environment where access to capital may be harder for under stale private companies. We can have productive discussions with target companies and have found that our arena of opportunities has, in fact, widened. M&A remains a strategic lever that we used to bring forward Bigtincan's product and technology road map to grow our teams of experts and to expand into new markets, both geographically and through industry verticals, opening new beachheads or deepening our presence in a historically strong customer market segment. Whilst we have nothing specific today, we continue to make good progress on a range of valuable and accretive M&A opportunities. Moving now to our investor engagement program. I thought it might interest you to note that we now have over 10,000 shareholders. As such, we are uplifting our Investor Relations efforts again this year with a series of additional activities planned to continue to educate investors on the Bigtincan story. These will include additional webinar technology demonstrations, customer use case sessions and investor conference participation. You can expect to see new information on investor.bigtincan.com about the company and the market during the quarter. And that's all for me. Thanks David.

[David Keane, Co]

Thank you, Viv. Now there is one more thing that I'd like to talk to you about in today's call that's really important to me. Those who have followed Bigtincan know that as a company we are committed to diversity and fairness in our business. And recent events have made me consider how I personally and the team of Bigtincan can make changes to ensure diversity and inclusion, not only internally for us, but for our customers, too. And I want to acknowledge the work the team at Bigtincan did this quarter to contribute to the ongoing social justice discussion that's happening around the world. Bigtincan team members work together to create educational resources for our teams and contributed to ensuring that we are doing all we can to address this moment. Our teams are working to review our internal systems, including in our products, development systems and customer-facing materials, to ensure that we are leading in recognizing the importance of the language that we use. We are holding town hall meetings and addressing our social justice programs in FYI sessions around the world for all our teams. We continue to see this as one of the things we can do to share together our commitment to deliver for our customers and the market. That completes the management briefing for today.