- Total Revenue: $63.7 million, up 5% year over year.
- Adjusted EBITDA: $20.9 million, up 21% year over year.
- Adjusted EBITDA Margin: 33%, up 450 basis points year over year.
- Adjusted Gross Profit Margin: 83.4%, down approximately 260 basis points from Q2 2023.
- Sales and Marketing Expense: $19.8 million, down 9% from Q2 2023.
- Product Development Expense: $6.9 million, down 1% from Q2 2023.
- G&A Expense: $6.5 million, down 11% from Q2 2023.
- Adjusted Operating Income: $19.3 million, up 21% from Q2 2023.
- Adjusted Net Income: $14.2 million or $0.09 per diluted share.
- Unlevered Free Cash Flow: $21.5 million in Q2; $78.6 million on a trailing 12-month basis, up 50% year over year.
- Enterprise Customers: 537, up 6% year over year.
- Total Customer Count: Approximately 2,600, down about 200 from Q2 2023.
- Stock Repurchase: Approximately 1.3 million shares repurchased at an average price of $5.54 per share, totaling $7 million.
- Cash and Short-term Investments: Over $296 million.
- Debt: $251 million.
- Q3 Revenue Guidance: $61 million to $62.5 million, a decline of 4% to 7% year over year.
- Full Year 2024 Revenue Guidance: $247 million to $251 million, ranging from a 2% decline to flat year over year.
- Full Year 2024 Adjusted EBITDA Guidance: $74 million to $77 million, with a margin of 30% to 31%.
- Full Year 2024 Adjusted Net Income Guidance: $50 million to $53 million, with earnings per share of $0.32 to $0.36.
Release Date: August 05, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Total revenue for Q2 2024 was $63.7 million, up 5% year over year and exceeding guidance.
- Adjusted EBITDA was $20.9 million, up 21% year over year, with a margin of 33%, exceeding guidance.
- Improved renewal rates compared to the prior year.
- Launched new products, including Carevoyance for the medtech industry and a new mobile app for the View platform.
- Selected as the 2024 Databricks Healthcare and Life Sciences Partner of the Year.
Negative Points
- Underperformed on internal logo and upsell expectations due to macro headwinds and sales execution challenges.
- Revised guidance for the remainder of the year, indicating lower expectations.
- Elongated sales cycles and heightened scrutiny on spending, particularly in the life sciences market.
- Total customer count decreased by approximately 200 from Q2 2023 and by 100 from the previous quarter.
- Gross profit margin decreased by approximately 260 basis points year over year due to the impact of the Populi acquisition.
Q & A Highlights
Q: Kevin, could you elaborate on how you envision shifting to more of a platform sale and what that looks like to a Definitive customer?
A: Kevin Coop, CEO: The shift involves moving from selling individual point solutions to a more unified platform approach. This means simplifying our go-to-market strategy and integrating our products to offer a more cohesive solution. This approach will make it easier for customers to use our products and should improve renewal rates and overall customer satisfaction.
Q: Could you talk about how net revenue retention might trend through the rest of this year?
A: Richard Booth, CFO: We are not reiterating our NDR guidance today due to the slow start to first-half bookings and the late Q2 shortfall. Our current guidance does not depend on NDR improving year over year, but it's too soon to put a finer point on it.
Q: What are some of the proof points you hope to share with the investment community in terms of progress on the turnaround?
A: Kevin Coop, CEO: We are focusing on root cause analysis and addressing areas where we can quickly improve. This includes simplifying our go-to-market strategy, improving customer intimacy, and making our sales motions more efficient. We hope to show significant progress in these areas in the next quarter.
Q: Are you doing anything around the edges in terms of costs given the lower run rate for the back half of the year?
A: Richard Booth, CFO: We are pleased with our revised lower run rate cost structure and have expanded the EBITDA margin by 450 basis points year over year. We continue to manage costs prudently but are not planning any new incremental actions.
Q: How do you view the shift from point solution to platform in terms of its impact on sales cycles and customer ROI?
A: Kevin Coop, CEO: While an improving macro environment will help, we need to grow regardless of macro conditions. Moving to a platform approach should make it easier to sell more products to the same personas, improving renewal rates and overall customer value.
Q: Could you expand on the incremental deal scrutiny you're seeing and any changes to pricing strategies?
A: Kevin Coop, CEO: We are constantly evaluating market dynamics, including pricing strategies, to understand the impact of longer sales cycles and increased scrutiny. This is part of our ongoing product strategy to ensure we meet market demands effectively.
Q: What is the status of Populi in your product roadmap, and are you still planning to roll it out to other end markets?
A: Kevin Coop, CEO: Populi is integrated into our product roadmap and is a major component of our data visualization efforts. We are pushing it through to all our end users and see it as a critical part of our strategy.
Q: What are you seeing in terms of the M&A environment, and do you expect any changes in your M&A priorities?
A: Kevin Coop, CEO: We are constantly evaluating build, buy, or partner strategies. We believe there are significant opportunities for partnerships and acquisitions that align with our growth strategy, and we are well-positioned to take advantage of these opportunities.
Q: Could you provide more color on the longer sales cycles and any specific segments or geographies affected?
A: Kevin Coop, CEO: It appears to be broad-based, indicating a general macro issue rather than a segment-specific one. We will continue to analyze this to provide more detailed insights in the future.
Q: How do you plan to maintain corporate culture and morale amid these changes?
A: Kevin Coop, CEO: We have a strong team with deep domain expertise and a family-like culture. My focus is on retaining this culture while driving performance and growth. Simplifying our approach and focusing on fewer, high-impact initiatives will help maintain alignment and morale.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
