Upland Software Inc (UPLD) 2024 Q2 法說會逐字稿

Thank you for standing by, and welcome to the Upland Software second-quarter 2021 earnings call. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session and instructions for that will be given at that time. The conference call will be recorded and simultaneously webcast at investor.uplandsoftware.com, and a replay will be available there for 12 months.

感謝您的支持，歡迎參加 Upland Software 2021 年第二季財報電話會議。此時，所有參與者都處於只聽模式。稍後，我們將進行問答環節，屆時將給予相關說明。電話會議將進行錄音，並在 Investor.uplandsoftware.com 上同步進行網路直播，並可在該網站重播 12 個月。

By now, everyone should have access to the second quarter 2024 earnings release, which was distributed today at 4:00 PM Eastern Time. If you have not received the release, it’s available on Upland’s website. I'd now like to turn the call over to John McDonald, Chairman and CEO of Upland Software. Please go ahead, sir.

到目前為止，每個人都應該可以查看東部時間今天下午 4 點發布的 2024 年第二季財報。如果您尚未收到該新聞稿，可以在 Upland 網站上取得。我現在想將電話轉給 Upland Software 董事長兼執行長約翰麥克唐納 (John McDonald)。請繼續，先生。

All right. Thank you, and welcome to our Q2 2024 earnings call. I'm joined today by Michael Hill, our CFO. I'm going to start with our Q2 review. And following that, Mike will provide some detail on the numbers and our guidance.

好的。謝謝，歡迎參加我們的 2024 年第二季財報電話會議。今天我們的財務長邁克爾希爾 (Michael Hill) 也加入了我的行列。我將從我們的第二季回顧開始。接下來，麥克將提供有關數字和我們的指導的一些詳細資訊。

After that, we'll open the call up for Q&A. But before we get started, Mike will read the safe harbor statement.

之後，我們將開啟問答環節。但在我們開始之前，麥克將閱讀安全港聲明。

All right. Thank you, Jack. During today's call, we will include statements that are considered forward-looking within the meanings of the securities laws. A detailed discussion of the risks and uncertainties associated with such statements is contained in our periodic reports filed with the SEC. The forward-looking statements made today are based on views and assumptions and on information currently available to Upland management as of today.

好的。謝謝你，傑克。在今天的電話會議中，我們將納入證券法意義內被視為前瞻性的聲明。與此類聲明相關的風險和不確定性的詳細討論包含在我們向 SEC 提交的定期報告中。今天所做的前瞻性陳述是基於觀點和假設以及截至目前 Upland 管理層可獲得的資訊。

We do not intend or undertake any duty to release publicly any updates or revisions to any forward-looking statements. On this call, Upland will refer to non-GAAP financial measures that, when used in combination with GAAP results, provide Upland management with additional analytical tools to understand its operations. Upland has provided reconciliations of non-GAAP measures to the most comparable GAAP measures in our press release announcing our financial results, which are available on the Investor Relations section of our website.

我們不打算也不承擔任何義務公開發布任何前瞻性陳述的任何更新或修訂。在這次電話會議上，Upland 將參考非 GAAP 財務指標，這些指標與 GAAP 業績結合使用時，將為 Upland 管理層提供額外的分析工具來了解其營運情況。Upland 在我們宣布財務績效的新聞稿中提供了非公認會計準則衡量標準與最具可比性的公認會計準則衡量標準的調節表，這些新聞稿可在我們網站的投資者關係部分找到。

Please note that we're unable to reconcile any forward-looking non-GAAP financial measures to their directly comparable GAAP financial measures because the information which is needed to complete a reconciliation is unavailable at this time without unreasonable effort. And with that, I'll turn the call back over to Jack.

請注意，我們無法將任何前瞻性非 GAAP 財務指標與其直接可比較的 GAAP 財務指標進行核對，因為如果不付出不合理的努力，目前無法獲得完成核對所需的資訊。然後，我會將電話轉回給傑克。

All right. Thanks, Mike. Here are the headlines on the quarter. We beat our Q2 revenue and adjusted EBITDA guidance midpoint. So beat those midpoints. We posted core bookings in excess of core churn, just like we did in Q1.

好的。謝謝，麥克。以下是本季的頭條新聞。我們超過了第二季的收入，並調整了 EBITDA 指引中位數。所以擊敗那些中點。我們發布的核心預訂量超過了核心流失量，就像我們在第一季所做的那樣。

So that's two quarters in a row, and that's the key point for this year, posting quarter after quarter of core bookings in excess of core churn. That's what's going to set us up for our target 3% core organic growth rate in 2025. I'd note that in this year, the core organic growth rate will bounce around a bit based on year-over-year compares it's positive this quarter. But again, the meaningful part of this is putting up core bookings in excess of core churn quarter-by-quarter.

這是連續兩季的情況，也是今年的關鍵點，核心預訂量逐季超過核心流失量。這將有助於我們實現 2025 年 3% 的核心有機成長率目標。我要指出的是，今年，與本季的正值相比，核心有機成長率將略有反彈。但同樣，其中有意義的部分是每季的核心預訂量都超過核心流失量。

Good news also on the adjusted EBITDA front. Q2 adjusted EBITDA, $13.6 million in the second quarter. That is up sequentially from $13.1 million in the first quarter. And as you can see by the midpoint of our guidance, we expect adjusted EBITDA to continue to grow each quarter this year. So again, $13.1 million in Q1, $13.6 million in Q2, $14 million in Q3, $14.9 million in Q4.

調整後的 EBITDA 方面也有好消息。第二季調整後 EBITDA 為 1,360 萬美元。這一數字比第一季的 1,310 萬美元有所增加。正如您在我們指導的中點所看到的，我們預計調整後的 EBITDA 將在今年每季繼續成長。同樣，第一季為 1,310 萬美元，第二季為 1,360 萬美元，第三季為 1,400 萬美元，第四季為 1,490 萬美元。

So the plan is to exit the year at nearly a $60 million adjusted EBITDA run rate, so we're setting up for 2025 with positive core organic growth. We're going to be targeting that 3% number core organic growth next year and continued expansion of adjusted EBITDA to the mid-$60 million next year. So we believe, made the turn, both in terms of starting to show steps towards positive core organic growth and getting past the low point on EBITDA. And now with this quarter and the quarters going forward, bringing EBITDA up each quarter.

因此，我們的計劃是以近 6000 萬美元的調整後 EBITDA 運行率結束今年，因此我們正在為 2025 年實現積極的核心有機增長做好準備。我們明年的目標是實現 3% 的核心有機成長，並將調整後的 EBITDA 繼續擴大至 6,000 萬美元左右。因此，我們相信，無論是在開始展現積極的核心有機成長的步驟，還是在突破 EBITDA 的低點方面，我們都取得了轉變。現在，隨著本季和未來幾季的開展，每季的 EBITDA 都會增加。

So again, still in the early stages, but we are starting to see the ship turn here. So we welcomed 155 new customers to Upland in Q2, and that includes 17 new major customers. We also expanded relationships with 275 existing customers, including 41 major expansions. And I will say based on the growth investment that we've made in pipeline generation, SDR capacity, sales capacity, we are starting to see chunkier deals, larger ARR deals for our lead products, and that's a critical kind of green shoot.

再說一遍，雖然仍處於早期階段，但我們已經開始看到船在這裡轉向。因此，我們在第二季度迎來了 155 位新客戶來到 Upland，其中包括 17 位新主要客戶。我們也擴大了與 275 家現有客戶的關係，其中包括 41 家重大擴張。我想說的是，基於我們在管道發電、特別提款權產能、銷售能力方面所做的成長投資，我們開始看到我們的主導產品有更大規模的交易、更大的ARR 交易，這是一種關鍵的綠芽。

And so good news that we are starting to see those larger deals where, and it's their marketing-sourced pipeline, right? So the work that we've done on organic search, the work that we've done in terms of accessing intent data, having an SDR capacity to qualify these leads, the product marketing work that we've done, the investment in the sales team that we've done, it's starting to bear some fruit here. Again, I'll caution that it's early, but we're seeing those green shoots including chunkier deals. A few other points: we earned 56 badges in G2's Summer 2024 market reports that was across our portfolio of products.

好消息是我們開始看到那些更大的交易在哪裡，這是他們的行銷管道，對吧？因此，我們在有機搜尋方面所做的工作，我們在訪問意圖數據方面所做的工作，擁有 SDR 能力來限定這些潛在客戶，我們所做的產品營銷工作，對銷售的投資我們所做的團隊，已經開始在這裡結出一些果實。我再次提醒大家，現在還為時過早，但我們已經看到了一些萌芽，包括更大規模的交易。其他幾點：在 G2 的 2024 年夏季市場報告中，我們在我們的產品組合中獲得了 56 個徽章。

That's up from 44 badges in the spring 2024 reports. Our AI knowledge management solutions, up and right answers in Upland Panveva, continue to garner numerous badges, while Upland Covidien, our AI power proposal management and software, increased earned recognitions another quarter in a row. Additional products to receive badges included Uplanded Genius, which is a computer telephony integration solution, which powers personalized customer service with AI, and Upland Interfax, which is a secure cloud-based fact service and, of course, other products also on the badge list. And again, beginning to see more reviews and more engagement with G2 as a platform, and we expect more goodness to come from there.

這比 2024 年春季報告中的 44 個徽章有所增加。我們的 AI 知識管理解決方案（Upland Panveva 中的正確答案）繼續獲得眾多徽章，而我們的 AI 電源提案管理和軟體 Upland Covidien 則連續一個季度獲得更多認可。其他獲得徽章的產品包括 Uplanded Genius（一種電腦電話整合解決方案，透過 AI 提供個人化客戶服務）和 Upland Interfax（一種基於雲端的安全事實服務），當然，徽章清單中還有其他產品。再次，開始看到更多的評論和更多的 G2 作為平台的參與，我們期望從那裡產生更多的好處。

I would note, Upland Covidien continues to enhance the response and sales proposal process with new regenerative AI model called Covidien AI assist. Covidien is a leader in the RFP and proposal automation industry is dedicated to helping teams easily uncover the right processes and quickly for RFP response generation and quickly create standout proposals and RFP responses. And this beta release of Qvidian AI assist adds these powerful new AI features. And of course, we've also got the partnership with IBM that we've talked about before integrating Watson X AI capabilities in a Qvidian.

我要指出的是，Upland Covidien 繼續透過名為 Covidien AI Assist 的新再生人工智慧模式來增強回應和銷售提案流程。Covidien 是 RFP 和提案自動化行業的領導者，致力於幫助團隊輕鬆發現正確的流程並快速產生 RFP 回應，並快速創建出色的提案和 RFP 回應。此次發布的 Qvidian AI 輔助測試版增加了這些強大的新 AI 功能。當然，我們也與 IBM 建立了合作夥伴關係，我們在將 Watson X AI 功能整合到 Qvidian 之前就已經討論過。

So these are both examples: when you look at right answers and Panveva, you look at Covidien of where we are doing deep work to integrate AI capabilities into our products. And of course, these were product initiatives that began well over a year ago that are now beginning to come to market, in some cases, in beta, in some cases, generally available. And also note a partner announcement Upland and Ramot is a global leader in cloud-based RIS, PACS radiology solutions for imaging centers and teleradiology providers, announced the milestone transmission of the 40th, 40 million fax through the integration of Ramot PowerServer and Upland Interfax. So it's Interfaces robust security features, including HIPAA compliance and PIA compliance, complement power service, secure HIPAA-compliant architecture.

所以這些都是例子：當你查看正確答案和 Panveva 時，你會看到 Covidien 正在做深入的工作，將人工智慧功能整合到我們的產品中。當然，這些產品計劃早在一年前就開始了，現在已經開始進入市場，在某些情況下是測試版，在某些情況下是普遍可用的。另請注意合作夥伴公告Upland 和Ramot 是影像中心和遠端放射學供應商的基於雲端的RIS、PACS 放射學解決方案的全球領導者，宣布透過Ramot PowerServer 和Upland Interfax 的整合實現第40 份傳真傳輸，即4000 萬份傳真，具有里程碑意義。因此，它的介面具有強大的安全功能，包括 HIPAA 合規性和 PIA 合規性，並補充了電力服務、安全的 HIPAA 合規架構。

And so we're seeing with our secure file transfer solutions, some great growth characteristics as are also high-margin products and really seeing some success there as we have for some time in health care and financial services, but seeing an acceleration of that, which is great to see. I also a note on Upland Altify. During the quarter, we announced the release 9.12 release, which contained major enhancements to transform the customer experience with Altipy's sales force native products and of course, Altify is a product that really enables B2B enterprise sales forces to coordinate activities, deploy methodology, and a super-efficient way and do the kind of account planning and white space analysis that can really move the needle in terms of sales generation and of course, adding our AI capabilities to that platform.

因此，我們看到我們的安全文件傳輸解決方案具有一些巨大的成長特徵，同時也是高利潤產品，並且確實看到了一些成功，就像我們在醫療保健和金融服務領域一段時間以來所取得的成功一樣，但看到了這種趨勢的加速，很高興看到這一點。我還對 Upland Altify 進行了註釋。在本季度，我們發布了 9.12 版本，其中包含透過 Altipy 的銷售人員本機產品改變客戶體驗的重大增強功能，當然，Altify 是一款真正使 B2B 企業銷售人員能夠協調活動、部署方法和超級有效的方式，並進行那種可以真正推動銷售成長的客戶規劃和空白分析，當然，還可以將我們的人工智慧功能添加到該平台。

And Altify is sales force native, so the Salesforce partnership has been great for us and at 9.12, again, just the next step in Altify evolution. So a great quarter, another step along the way towards driving growth and driving margin expansion. And with that, I'm going to turn the call over to Mike to review the numbers and guidance. Mike?

Altify 是天生的銷售人員，因此 Salesforce 合作關係對我們來說非常有利，而 9.12 版本則是 Altify 發展的下一步。這是一個偉大的季度，是推動成長和利潤率擴張的又一步。接下來，我將把電話轉給麥克，以查看數字和指導。麥克風？

All right. Thank you, Jack. I'll cover the financial results for the second quarter of 2014 and our outlook for the third quarter and full year 2024. These results and our outlook for 2024 reflect our continued incremental sales, marketing, and product investments pursuant to our growth plan as well as the previously announced runoff of the Sunset assets. So on the income statement, total revenue for the second quarter was $69.3 million, representing a decrease of 7% year-over-year. Recurring revenue from subscription and support declined 7% year-over-year to $65.5 million.

好的。謝謝你，傑克。我將介紹 2014 年第二季的財務表現以及我們對第三季和 2024 年全年的展望。這些結果和我們對 2024 年的展望反映了我們根據成長計畫以及先前宣布的日落資產徑流不斷增加的銷售、行銷和產品投資。那麼在損益表上，第二季的總收入為6,930萬美元，較去年同期下降7%。來自訂閱和支援的經常性收入年減 7% 至 6,550 萬美元。

Provincial license revenue increased to $1.7 million for the second quarter, up from $1.3 million in the second quarter of 2023. Professional services revenue was $2.1 million for the quarter, a 23% year-over-year decline. These revenue declines are consistent with the planned runoff of our Sunset assets. Overall gross margin was 70% during the second quarter, and our product gross margin was 31%, and that's 75% when adding back depreciation and amortization, which we refer to as cash gross margin.

第二季省級授權收入增至 170 萬美元，高於 2023 年第二季的 130 萬美元。該季度專業服務收入為 210 萬美元，年減 23%。這些收入下降與我們日落資產的計劃徑流一致。第二季整體毛利率是70%，我們的產品毛利率是31%，加上折舊和攤銷，也就是我們所說的現金毛利率，就是75%。

Operating expenses for the second quarter of '20, excluding depreciation, amortization, and stock-based compensation, were $37.9 million for the quarter, or 55% of total revenue. This is in line with our expectations and reflects the sales, marketing, and product investments we have been making as part of our growth plan. Our second quarter 2024 adjusted EBITDA was $13.6 million or 20% of total revenue, down from $16.6 million or 22% of total revenue for the second quarter of 2023. This adjusted EBITDA year-over-year decline is generally as expected, considering our growth investments and our decision regarding Sense assets.

20 世紀 20 年代第二季的營運支出（不包括折舊、攤提和股票薪酬）為 3,790 萬美元，佔總收入的 55%。這符合我們的預期，並反映了我們作為成長計劃的一部分所做的銷售、行銷和產品投資。2024 年第二季調整後 EBITDA 為 1,360 萬美元，佔總營收的 20%，低於 2023 年第二季的 1,660 萬美元，佔總營收的 22%。考慮到我們的成長投資和我們對 Sense 資產的決定，調整後的 EBITDA 同比下降總體符合預期。

However, and as Jack said, you can see our adjusted EBITDA growing sequentially each quarter this year from $13.1 million in Q1 to $13.6 million this quarter in Q2 to $14 million in Q3 and $14.9 million in Q4 based on the midpoint of our guidance. So this has us, as Jack said, exiting 2024 and almost $60 million of annual run rate adjusted EBITDA, setting us up for the mid-$60 million next year. For cash flow, for the second quarter of 2024, GAAP operating cash flow was $5.5 million, and free cash flow was $5.2 million, which is in line with our expectations. Our ongoing free cash flow generation is in addition to our approximately $232 million of cash on our balance sheet as of June 30, 24.

然而，正如傑克所說，根據我們指導的中點，你可以看到我們今年每個季度調整後的EBITDA 都在連續增長，從第一季度的1310 萬美元增長到第二季度的1360 萬美元，再到第三季的1400 萬美元和第四季的1490 萬美元。因此，正如傑克所說，我們將在 2024 年結束時獲得近 6000 萬美元的年度運行率調整後 EBITDA，為明年的 6000 萬美元左右做好準備。現金流方面，2024年第二季度，GAAP營運現金流為550萬美元，自由現金流為520萬美元，符合我們的預期。截至 24 日 6 月 30 日，我們的資產負債表上約有 2.32 億美元的現金，此外我們也持續產生自由現金流。

At the end of June, we had outstanding net debt of approximately $247 million after factoring in the cash on our balance sheet. At the end of Q2, our gross debt was approximately $479 million, of which $257 million is still fully hedged effectively locking our interest rate at 5.4% on that portion of our debt through the full maturity of our term debt, which is in August of 2026. The remaining approximately $222 million of term debt now flows at an interest rate of SOFR plus 385 basis points, which was 9.2% at June 30, 24. I will also note that we used $3 million of cash to buy back approximately 1 million shares of common stock during the second quarter under our limited stock repurchase program that began in early September of 2023.

截至 6 月底，扣除資產負債表上的現金後，我們的未償淨債務約為 2.47 億美元。截至第二季末，我們的總債務約為4.79 億美元，其中2.57 億美元仍處於完全對沖狀態，在我們的定期債務（即2018 年8 月）完全到期之前，這部分債務的利率有效地鎖定在5.4%。剩餘約 2.22 億美元的定期債務目前以 SOFR 加 385 個基點的利率流動，截至 24 年 6 月 30 日的利率為 9.2%。我還要指出的是，根據 2023 年 9 月初開始的有限股票回購計劃，我們在第二季度使用了 300 萬美元現金回購了約 100 萬股普通股。

This concluded our $25 million stock buyback plan with a cumulative total of approximately 6.5 million shares of repurchase. Now, on the guidance, as described on past calls, the following guidance continues to reflect a significant incremental sales, marketing, and product investments that we are making as part of our comprehensive growth plan as well as the effects of decreasing revenue and expenses related to the Sunset assets. Also, I will note that we have raised our full-year 2020 guidance midpoint for total revenue and adjusted EBITDA by the amount of the Q2 guidance midpoint beats. So for the quarter ending September 30, 2024, we expect reported total revenue to be between $63.2 million and $69.2 million, including subscription and support revenue between $60.1 million and $65.1 million for a decline in total revenue of 11% at the midpoint from the quarter ended September 30, 2023.

我們 2,500 萬美元的股票回購計畫就此結束，累計回購股份總數約 650 萬股。現在，根據過去電話中所述的指導意見，以下指導意見繼續反映了我們作為全面增長計劃的一部分所做的銷售、營銷和產品投資的顯著增量，以及相關收入和費用減少的影響到日落資產。另外，我要指出的是，我們已經提高了 2020 年全年總收入指導中點，並根據第二季度指導中點的幅度調整了 EBITDA。因此，對於截至2024 年9 月30 日的季度，我們預計報告的總收入將在6,320 萬美元至6,920 萬美元之間，其中訂閱和支持收入將在6,010 萬美元至6,510 萬美元之間，總收入較本季中點下降11%截至 2023 年 9 月 30 日。

Third quarter 2020 adjusted EBITDA is expected to be between $12.5 million and $15.5 million for an adjusted EBITDA margin of 21% at the midpoint. This adjusted EBITDA guidance at the midpoint is a decrease of 13% from the quarter ended September 30, 2023. For the full year ending December 31, 2024, we expect reported total revenue to be between $269.6 million, and $281.6 million, including subscription and support revenue between $254.1 million, and $264.1 million for a decline in total for a decline in total revenue of 7% at the midpoint from the year ended December 31, 2023. Full-year 2024 adjusted EBITDA is expected to be between $52.6 million, and $58.6 million for an adjusted EBITDA margin of 20% at the midpoint.

2020 年第三季調整後 EBITDA 預計在 1,250 萬美元至 1,550 萬美元之間，調整後 EBITDA 利潤率為 21%。調整後的 EBITDA 指引中位數較截至 2023 年 9 月 30 日的季度下降 13%。截至2024 年12 月31 日的全年，我們預計報告的總收入將在2.696 億美元至2.816 億美元之間，其中訂閱和支持收入將在2.541 億美元至2.641 億美元之間，總收入下降7 % % 為截至 2023 年 12 月 31 日止年度的中點。2024 年全年調整後 EBITDA 預計在 5,260 萬美元至 5,860 萬美元之間，調整後 EBITDA 利潤率為 20% 的中位數。

This adjusted EBITDA guide at the midpoint is a decrease of 14% from the year ended December 31, 2023, and again, I'll point out, as both Jack and I have mentioned that these guidance points represent sequentially growing quarterly adjusted EBITDA for every quarter this year, exiting the year in Q4 at $14.9 million at the implied guidance midpoint, which is almost $60 million of annualized run rate. So, with that, I'll pass the call back to Jack.

調整後的EBITDA 中位數指導值較截至2023 年12 月31 日的年度下降了14%，我要再次指出，正如傑克和我都提到的那樣，這些指導值代表了每個季度的季度調整後EBITDA 的連續成長。那麼，我會把電話轉給傑克。

All right. Thanks, Mike. Let's open the call-up and take any questions there might be.

好的。謝謝，麥克。讓我們開始徵集並回答可能存在的任何問題。

(Operator Instructions) Ian Black from Needham.

（操作員說明）來自 Needham 的 Ian Black。

This is Ian Black on for Scott Berg. Core bookings have exceeded core churn, again, as you note, but how far through the go-to-market changes is the Company now?

我是斯科特·伯格的伊恩·布萊克。正如您所指出的，核心預訂量再次超過了核心客戶流失率，但公司現在的上市變化進行到什麼程度了？

I would say that we're about halfway through that process in the sense that we've put in place the lead generation and lead qualification we've put in place the demand gen teams we put in place the inside sellers. We have upgraded our field sales force. We have brought in place put in new sales leadership. And we are seeing the results of that in terms of significant increases in pipeline generation and now beginning to see some chunkier sales hitting, which is great to see across a few of the products.

我想說，我們已經完成了這個過程的一半，因為我們已經建立了潛在客戶生成和潛在客戶資格，我們已經建立了需求產生團隊，我們已經建立了內部銷售人員。我們升級了我們的現場銷售團隊。我們任命了新的銷售領導層。我們看到了這樣做的結果，管道發電量顯著增加，現在開始看到一些更大的銷售業績，這在一些產品中看到是很高興的。

And so the work has been done, and now we're starting to see the fruits of those labors begin to ripen here. So we feel good about where we are and execution now quarter-by-quarter. At the same time, part of that growth investment was on product and cloud ops, and we're seeing the benefits of that as well in our renewals numbers. And you put those two together, and we're seeing, again, two quarters in a row of positive core net ARR.

工作已經完成，現在我們開始看到這些勞動的成果在這裡開始成熟。因此，我們對現在每個季度的現狀和執行情況都感到滿意。同時，成長投資的一部分是在產品和雲端營運上，我們也從我們的續約數量中看到了這樣做的好處。將這兩者放在一起，我們再次看到連續兩個季度核心淨 ARR 為正值。

Now I realize that's only the beginning, but we're feeling good about Q3 in the second half of the year. And that should set us up to attack our 3% core organic growth target next year. And again, exiting the year at $60 million adjusted EBITDA run rate with a goal to get to the mid-$60 million next year. So if this business troughed at sort of a core organic growth rate of negative 1% or negative $2 million, and $55 million of EBITDA, we see now we've made that turn and we're going to get this thing back to at least low single digits next year with mid-$60 million, having made the turn. And then, of course, we want to take it higher from there.

現在我意識到這只是開始，但我們對下半年的第三季感覺良好。這將使我們能夠在明年實現 3% 的核心有機成長目標。再次強調，今年調整後 EBITDA 運作率為 6,000 萬美元，目標是明年達到 6,000 萬美元左右。因此，如果這項業務的核心有機成長率為負 1% 或負 200 萬美元，EBITDA 為 5,500 萬美元，那麼我們現在看到我們已經實現了這一轉變，我們將使這件事至少恢復到明年的銷售額將達到6000 萬美元左右，達到低個位數。當然，我們希望在此基礎上取得更高的成績。

Jeffrey Van Rhee, Craig Hallum.

傑弗裡·範·瑞，克雷格·哈勒姆。

This is Dan on for Jeff. Just starting off just on the Sunset assets. You guys do a great job of getting the 10-Q out promptly looks like there's about $8.5 million still of sunset assets. Just thoughts on the pace of roll off of that and how we should expect that to unfold.

這是丹為傑夫代言。剛從日落資產開始。你們做得很好，很快就把 10-Q 拿出來了，看起來還有大約 850 萬美元的日落資產。只是想一下它的進展速度以及我們應該如何期待它的展開。

It looks like year-over-year, that's down maybe about $5 million. Should we expect sort of on an absolute value basis, roughly a similar pace of roll-off? Or just how should we be modeling that?

看起來比去年同期下降了約 500 萬美元。我們是否應該在絕對價值的基礎上預期大致相似的下滑速度？或者我們應該如何建模？

Yes, Daniel, this is Mike. So just from a modeling standpoint, I think it's going to be very consistent with what we've said in the past. We've got about $30 million of Sunset asset revenue here in calendar 2024. Next year, 2025, that's going to decline to about half, call it, $17 million or so next year. And then in 2026, it will have again down to somewhere around $8 million, $8 million, $9 million, so that's sort of the pace of the runoff.

是的，丹尼爾，這是麥克。因此，僅從建模的角度來看，我認為這將與我們過去所說的非常一致。2024 年，我們的 Sunset 資產收入約為 3,000 萬美元。明年，也就是 2025 年，這一數字將下降到一半左右，約 1700 萬美元。然後到 2026 年，它將再次降至 800 萬美元、800 萬美元、900 萬美元左右，這就是決選的速度。

And then any thoughts on, especially as a point of being considering M&A, just what the strategy is for tackling the debt balance and as we get incrementally closer to 25%, just how you envision the path toward refinancing?

然後有什麼想法，特別是在考慮併購時，解決債務平衡的策略是什麼，隨著我們逐漸接近 25%，您如何設想再融資的道路？

Yes. This is Jack. So we anticipate doing a refinancing in the first half of 2025. So that's the plan, and we'll execute against it then.

是的。這是傑克。因此，我們預計在 2025 年上半年進行再融資。這就是計劃，然後我們將根據它執行。

Okay. And then just last for me. Digging down sort of to the product level, as you look to the product portfolio and for weakness.

好的。然後就對我來說最後一次。當您查看產品組合併尋找弱點時，可以深入到產品層級。

Well, a number of products where we saw some highlights in Q2. One is Altify, which is the B2B sales enablement solutions. I mentioned earlier, saw some good chunky deals there. BAI, which is our AI-powered enterprise search solution, where we've got a growing partnership with Microsoft, where our connectors are used as a part of enterprise cognitive AI for Azure implementations. We're seeing some nice momentum there.

嗯，我們在第二季度看到了許多產品的一些亮點。其中之一是 Altify，它是 B2B 銷售支援解決方案。我之前提到過，在那裡看到了一些不錯的大筆交易。BAI，這是我們的人工智慧驅動的企業搜尋解決方案，我們與 Microsoft 的合作夥伴關係不斷發展，我們的連接器被用作 Azure 實施的企業認知人工智慧的一部分。我們在那裡看到了一些良好的動力。

We remain positive on our right answers and Paiva knowledge solutions, which have applications in contact centers and both in a variety of industries, including a lot of highly regulated industries. So continuing to see positive results there. We're seeing a nice turnaround in Mobile Commons, which, again, still early, but that is our mobile text messaging solution. So when we look at our key growing products, the work that we've put in over the last 1.5 years in terms of the product investment, cloud investment, positioning these products appropriately, getting them into the stream of commerce by upgrading our organic search efforts.

我們對正確答案和 Paiva 知識解決方案保持積極態度，這些解決方案在聯絡中心和各個行業（包括許多高度監管的行業）都有應用。因此，我們將繼續看到正面的成果。我們看到 Mobile Commons 出現了良好的轉變，雖然這還為時過早，但那是我們的行動簡訊解決方案。因此，當我們審視我們的主要成長產品時，我們在過去 1.5 年裡在產品投資、雲端投資、適當定位這些產品、透過升級我們的自然搜尋將它們納入商業流方面所做的工作努力。

For a lot of these products, 1.5 years ago, our search rankings were not first page. And now we've got pretty much all first-page rankings. We've got 18 number one rankings and double that number top five ranking. So I mentioned where we are with G2, still a ton of work to be done, but those badges are a part of the recognition, also increasing the number of reviews out there, these are good products.

對於許多此類產品，1.5 年前，我們的搜尋排名還不是首頁。現在我們已經獲得了幾乎所有的首頁排名。我們有 18 個排名第一的項目，並且是排名前五的項目的兩倍。所以我提到我們 G2 的處境，還有大量工作要做，但這些徽章是認可的一部分，也增加了評論的數量，這些都是好產品。

We have not done a good enough job marketing and selling them. That's one of the reasons we brought in the HGGC investment a couple of years ago focus the product portfolio and committed to this $20 million, $19 million a year growth investment. So we've been hard at it, and we're starting to see the results of it. Obviously, we're learning month by month, quarter by quarter, making tweaks, or are things we can be doing better.

我們在行銷和銷售方面做得還不夠好。這就是我們幾年前引進 HGGC 投資、專注於產品組合併致力於這項 2,000 萬美元、每年 1,900 萬美元成長投資的原因之一。所以我們一直在努力，並且開始看到結果。顯然，我們正在逐月、逐季學習、進行調整，或者我們可以做得更好。

We're also seeing opportunities to toggle up investment in some areas, toggle down investment in others. But that's the basic take on the products where we're seeing success. And again, we feel good about where we're positioned, but we just need to execute quarter-by-quarter.

我們也看到了在某些領域增加投資、在其他領域減少投資的機會。但這是我們所看到的成功產品的基本看法。再說一次，我們對自己的定位感覺良好，但我們只需要按季度執行。

And then just one last for me for Mike. Just on gross margins, can you help us sort of cut through as the business is sort of transitioning out of the content assets, hard to tell the trajectory on gross margins was, let's say, 72% Q4 '23, up to 75%, down to 73%. It's hard to read the trajectory there. How should we be modeling there?

最後我要為麥克做一次。就毛利率而言，您能否幫助我們擺脫困境，因為業務正在從內容資產轉型，很難說毛利率的軌跡是，比方說，23 年第 4 季為 72%，最高可達 75%，降至73%。很難讀取那裡的軌跡。我們應該如何在那裡建模？

Yes. I think over time, Daniel, the margins will gradually improve a little bit as those sunset assets decline. Those are generally lower-margin products, even gross margins. So now I'm not talking about a lot, but sort of tens of basis points kind of improvement over time gradually.

是的。我認為隨著時間的推移，丹尼爾，隨著那些日落資產的下降，利潤率將逐漸提高一點。這些通常是利潤率較低、甚至毛利率較低的產品。所以現在我不是說很多，而是隨著時間的推移逐漸改善數十個基點。

Okay. That's helpful. That's it for me.

好的。這很有幫助。對我來說就是這樣。

Alex Sklar, Raymond James.

亞歷克斯·斯克拉，雷蒙德·詹姆斯。

This is John on for Alex. Jack, I was curious maybe if you could comment on sales cycles you're seeing in the market. Some companies like we have been calling out elongated sales cycles. Just curious if you could speak to what you're seeing and maybe how that trends over the last 90 days. And I have a few follow-ups.

這是約翰替亞歷克斯發言。傑克，我很好奇您能否對您在市場上看到的銷售週期發表評論。像我們這樣的一些公司一直在呼籲延長銷售週期。只是好奇您能否談談您所看到的情況以及過去 90 天內的趨勢。我還有一些後續行動。

No. We have not seen a lengthening of sales cycles. Now maybe we're aosyncratic in that regard because we've really started ramping up our marketing efforts over the last 18 months. But gosh, if anything, we saw a couple of $250,000 ARR deals marketing source that were sourced and closed in quarter. So for the right AI-powered solutions in the marketplace, we're seeing demand not seeing lengthening now you ask me next quarter, maybe we'll have a different result, but we didn't see that in Q2.

不。我們沒有看到銷售週期延長。現在也許我們在這方面是不合時宜的，因為我們在過去 18 個月確實開始加強行銷。但天哪，如果有的話，我們看到了幾筆 25 萬美元的 ARR 交易行銷來源，這些交易是在季度內採購和完成的。因此，對於市場上正確的人工智慧驅動的解決方案，我們看到需求沒有延長，現在你問我下個季度，也許我們會得到不同的結果，但我們在第二季度沒有看到這一點。

That's helpful there. And that leads into my next question on the major account expansions, which were up nicely sequentially and year-over-year. I know you mentioned some rig the prepared remarks, but just any commentary on what's driving the success there? commonality, maybe geographically? And how we should think about the trajectory of that metric? Do you expect to kind of hit a near-term trough here?

這很有幫助。這就引出了我關於主要帳戶擴張的下一個問題，這些擴張連續且同比增長良好。我知道你提到了一些準備好的言論，但只是對推動成功的因素有任何評論嗎？共性，也許是地理上的？我們應該如何考慮該指標的軌跡？您預計會在此觸及近期低谷嗎？

You're talking about I just want to make sure I understand the question, the major account expansion that you guys called out there. Yes. Part of this effort, our growth effort was bringing in new CS leadership. So we brought in a team from Infor, our Chief Revenue Officer or Chief Sales Officer, and Chief Customer Success Officer. We've deployed a new tech stack in CS. We've been investing in enablement of our customer success teams and really moving from being reactive to being proactive partners with our customers, driving value.

你說的我只是想確保我理解這個問題，即你們所說的主要帳戶擴張。是的。作為這項努力的一部分，我們的成長努力是引入新的 CS 領導層。因此，我們從 Infor 引進了一個團隊，包括我們的首席營收長或首席銷售長以及首席客戶成功長。我們在 CS 中部署了新的技術堆疊。我們一直在投資客戶成功團隊的支持，並真正從被動轉變為主動與客戶合作，推動價值。

Again, we are early in that process, but the level of rigor and discipline in that function is a step change up from where it was a year ago. And so I'm optimistic that we're going to see both improved GDRR as well as improved NDRR. NDRR over the last year is up might keep me in check here. I think about 100 basis points? Yes and so I think we're running now at 96% or at least that was the pick mark that was disclosed year-end at 23 million.

同樣，我們處於這一過程的早期，但該職能的嚴格性和紀律水平比一年前有了很大的變化。因此，我樂觀地認為，我們將看到 GDRR 和 NDRR 均得到改善。去年的 NDRR 上升可能會讓我在這裡受到控制。我想大約100個基點？是的，所以我認為我們現在的選票率是 96%，或至少是年底披露的 2300 萬的選票分數。

So the goal is to improve that another couple 300 basis points over the next couple of three years. And I think we're on our way to doing that. Again, we are early in that process, a lot of work yet to be done. Expansions have been a disproportionate share of bookings for us over the past couple of years.

因此，我們的目標是在未來三年內再提高 300 個基點。我認為我們正在努力做到這一點。同樣，我們還處於這一過程的早期階段，還有很多工作要做。在過去的幾年裡，擴張在我們的預訂中所佔的比例不成比例。

I expect the share of bookings comprised by expansions to decline as new logo activity increases, right? Because all of this investment that we've been making in pipeline generation has been new logo opportunities. And there's also work we're doing around customer marketing. And frankly, directing more of our sales capability at the existing customer base to supplement the efforts of our customer success teams and to drive larger expansion opportunities because there's value we can be bringing to our customer base, I think we're leaving on the table today. So it's a core part of our growth plan. And thus far, the signs look good. But again, still lots of work to do.

我預計隨著新標誌活動的增加，由擴張組成的預訂份額會下降，對嗎？因為我們在管道生成方面所做的所有投資都是新標誌的機會。我們也圍繞著客戶行銷開展工作。坦白說，將我們更多的銷售能力用於現有客戶群，以補充我們客戶成功團隊的努力，並推動更大的擴張機會，因為我們可以為我們的客戶群帶來價值，我認為我們正在考慮這一點今天。所以這是我們成長計畫的核心部分。到目前為止，跡像看起來不錯。但同樣，還有很多工作要做。

Okay. That's helpful. And then just last one for me. I realize there's moving pieces internally that you've been talking about here. But just any commentary you can share on the acquisition pipeline going forward. I think last quarter, you mentioned you're always looking. Just curious what you're seeing from private multiples and how we should think about M&A as we move forward in the model?

好的。這很有幫助。然後是我的最後一個。我意識到你一直在談論的內部正在發生一些變化。但您可以分享任何有關未來收購管道的評論。我想上個季度，您提到您一直在尋找。只是好奇您從私人倍數中看到了什麼，以及當我們在模型中前進時我們應該如何考慮併購？

Private multiples remain high. I see our focus, and we will stay in the market and continue to monitor opportunities and to be opportunistic. But we are focused on driving organic growth. That's how we're going to create value over the next couple of years here.

私人倍數仍然很高。我看到了我們的重點，我們將留在市場上，繼續監控機會並抓住機會。但我們專注於推動有機成長。這就是我們在未來幾年創造價值的方式。

We're also focused on margin expansion and then, of course, generating cash flow and continuing to pay down debt. So that's, as we look out over the next 12 months, that's really the core 12 to 24 months. That's really the core focus. But of course, we always keep our eyes open. And I have not I just have not seen any kind of screaming opportunities out there.

我們也專注於利潤率擴張，當然還有產生現金流並繼續償還債務。因此，當我們展望未來 12 個月時，這確實是核心的 12 至 24 個月。這確實是核心焦點。但當然，我們始終保持警戒。我沒有，我只是沒有看到任何令人尖叫的機會。

I just think the private market multiples have been remained too high, at least for us based on where our stock is trading today. Just hard to make a case for it.

我只是認為私人市場的本益比仍然太高，至少對我們來說是基於我們股票今天的交易情況。只是很難證明這一點。

That's helpful color there.

那是有用的顏色。

David Hynes from Canaccord Genuity.

Canaccord Genuity 的 David Hynes。

This is Dan Reagan on for DJ. Maybe one for Jack to start. So you guys are seeing some nice returns from your sales and marketing investments across areas like search intent, SDR capacity. So clearly, you guys are positioned to have that nice EBITDA guide path from here. But I'm wondering how you're thinking about the pace of sales and marketing investments from here? And then also just any thoughts around the productivity of these investments as they continue to ramp.

我是 DJ 丹‧雷根 (Dan Reagan)。也許是傑克的開始。因此，你們在搜尋意圖、SDR 容量等領域的銷售和行銷投資中看到了一些不錯的回報。很明顯，你們已經準備好從這裡開始獲得良好的 EBITDA 指導路徑。但我想知道您如何看待這裡的銷售和行銷投資步伐？隨著這些投資的生產力不斷提高，還有關於這些投資生產力的任何想法。

So I think we are fully invested in terms of execution of the plan we originally laid out. So you'll recall, it was a $19 million annual investment, $5 million of that was on the product side, and a lot of that had to do with a chunk of that has to do with standing up our Indian center of excellence where we've gone from zero to 150 developers and opportunity to grow that further super-efficient development pods that we're able to put in place there. Then you had a $14 million spend on sales and marketing, and that has been fully deployed. There, as we move forward there, we don't see a need to increase that investment.

因此，我認為我們在執行最初制定的計劃方面投入了充分的精力。所以你會記得，這是一項 1900 萬美元的年度投資，其中 500 萬美元用於產品方面，其中很大一部分與建立我們的印度卓越中心有關。有機會進一步發展我們能夠在那裡部署的超高效開發小組。然後，您在銷售和行銷方面投入了 1400 萬美元，並且已經全部部署完畢。當我們在那裡前進時，我們認為沒有必要增加投資。

In fact, we are seeing opportunities to better target the money we're spending. We've got all the systems in place. We've got the processes in place. Now it's about tuning it. Many of these motions, you think about organic search, for example, it cost more to get those rankings in place than it does to maintain them, so the intent data that we are accessing now the forward roll you start to get on positive reviews, getting your content out in the market.

事實上，我們看到了更好地確定支出目標的機會。我們已經準備好所有系統。我們已經制定了流程。現在是關於調整它的。許多這些動議，你會想到有機搜索，例如，獲得這些排名的成本比維持它們的成本更高，因此我們現在訪問的意圖數據是你開始獲得積極評價的前滾，將您的內容推向市場。

So a lot of those things have been done. And I think those motions, frankly, will get more efficient through time. And that's one of the reasons why we're starting already to see some margin enhancement. And I think you'll continue to see that in the next year, again, where we're targeting mid-60s. And then we'll be targeting something with a seven handle on it for 2026. Again, all organic.

所以很多這樣的事情已經完成了。坦白說，我認為隨著時間的推移，這些動議將會變得更加有效。這就是我們已經開始看到利潤率提高的原因之一。我想你會在明年繼續看到這一點，我們的目標是 60 歲左右。然後我們的目標是在 2026 年推出 7 個手柄的產品。再說一遍，都是有機的。

Got you. Awesome. And then you highlighted chunkier deals in larger ARR lands for core products. Can you talk a little bit about what the average deal size increase is looking like? And where you're seeing the most traction?

明白你了。驚人的。然後您強調了核心產品在更大的 ARR 土地上的更大規模的交易。能談談平均交易規模的成長嗎？您認為哪裡最受關注？

Yes. So if you look at our business, 1,800 enterprise customers drive more than 90% of our revenue and the average ARR across those customers is 150,000. Now sometimes you go right in with a chunky opportunity that's in that size range or bigger. Sometimes you're starting with $25,000 or $50,000 kind of land and expand opportunity. Over the last couple of years, not to put too fine a point on it, but we're just seeing more of the small stuff.

是的。因此，如果你看看我們的業務，你會發現 1,800 家企業客戶推動了我們 90% 以上的收入，這些客戶的平均 ARR 為 150,000。現在，有時你會直接抓住一個規模範圍或更大的大機會。有時您會從 25,000 美元或 50,000 美元的土地開始，並擴大機會。在過去的幾年裡，並不是要過度強調這一點，但我們只是看到了更多的小事。

And what we're seeing now and again, I want to emphasize it's early, but the investment in product marketing, the investment in demand gen, the new sales leadership that we've got, getting tools in the hands of some of the great salespeople we've always had on board and then adding new sales talent, kind of getting our mojo back a little bit on going after bigger opportunities.And the investment we've done on the product side, Dan Doman's team has done a tremendous job over the past couple, three years, getting us set up for this. So addressing any stability issues, addressing product feature issues, getting us to where we needed to be, seeing the opportunity around AI, and starting these efforts well over a year ago so that for products like RightAnswers, we were able to really be the first contact center platform out there, one of the first to bring to market a chat GPT integration. So that's what we're starting to see some of those chunkier deals. And again, it's going to be quarter-by-quarter, but we're optimistic.

我想強調的是，我們時不時看到的情況還為時過早，但是對產品營銷的投資，對需求生成的投資，我們擁有的新的銷售領導力，以及將工具交到一些偉大的人手中我們一直擁有的銷售人員，然後添加新的銷售人才，這讓我們在追求更大的機會時恢復了一些魔力。在的三年裡，我們為此做好了準備。因此，解決任何穩定性問題，解決產品功能問題，讓我們到達我們需要的地方，看到人工智慧的機會，並在一年前開始這些努力，以便對於像RightAnswers 這樣的產品，我們能夠真正成為第一個聯絡中心平台是第一個將聊天 GPT 整合推向市場的平台之一。這就是我們開始看到的一些更大規模的交易。再說一次，這將是一個季度一個季度，但我們很樂觀。

Awesome. And then just as a final one, circling back to the customer expansion discussion and kind of building off of comments that you just made here. What does the current growth mix look like between expansion revenue and net new revenue today? And then with the progress that you're making with all of those sales and marketing investments, where do you expect that this mix will go over the next few years?

驚人的。然後，作為最後一個，回到客戶擴展討論，並以您剛剛在這裡發表的評論為基礎。目前的擴張收入和淨新收入之間的成長組合是什麼樣子？然後，隨著您在所有這些銷售和行銷投資方面取得的進展，您預計這種組合在未來幾年將走向何方？

Yes. I would say at the trough for us a couple of years ago, you were looking at 70% expansion, 30% new. The kind of more historical average for this business has been 50-50, which is where it should be running and we're sort of getting back to now. But with the investment we're making, I would see it going to more 60-40. 50 new 40 expansion. I don't know that, that will be this year's statement, it's probably more of a next year statement. But that's roughly where I see it some pit.

是的。我想說，幾年前，在我們的低潮時期，我們看到了 70% 的擴張，30% 的新增。該業務的歷史平均水平是 50-50，這是它應該運行的位置，我們現在又回到了這一點。但隨著我們正在進行的投資，我預計它會增加到 60-40。 50 個新的 40 個擴充。我不知道，這將是今年的聲明，可能更多的是明年的聲明。但這大概就是我看到的一些坑洞的地方。

At this time, there are no more questions in the queue. I'll turn it back over to Jack McDonald for closing remarks.

此時，隊列中已經沒有更多問題了。我將把它轉回給傑克麥克唐納 (Jack McDonald) 作結束語。

Okay. I just want to thank everyone for their time today, and we will see you on our next quarterly earnings call. Thank you so much.

好的。我只想感謝大家今天抽出寶貴的時間，我們將在下一個季度的財報電話會議上見到您。太感謝了。

And that does conclude today's presentation. Have a pleasant day.

今天的演講到此結束。祝你有愉快的一天。