Release Date: August 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Revenue increased by 5.9% year-over-year to $43.5 million, driven by 6.1% year-over-year cloud subscriber growth.
- Adjusted gross margins improved to 77.5% from 73.2% in the prior year period.
- Net income was $78,000, a significant improvement from a loss of $11 million in the prior year period.
- Adjusted EBITDA increased by 115% year-over-year to $13 million, representing a 29.9% EBITDA margin.
- Successful repurchase of all outstanding preferred stock and some senior notes at a discounted price, improving capital structure and reducing costs.
Negative Points
- Prepaid subscriber base represents less than 5% of the overall subscriber base, indicating limited growth in this segment.
- Net loss from discontinued operations was $0.7 million.
- Adjusted free cash flow declined to $8.1 million from $9.6 million in the prior year.
- The company incurred regular expenses for legal costs related to former employees, although these costs are now concluded.
- The company paid income taxes this quarter, which is unusual and indicates a new expense going forward.
Q & A Highlights
Q: Can you elaborate on the cost savings from the legal end of the legal issues with the former management?
A: We have been incurring regular expenses to cover legal costs for our former Controller and CFO, reported on a quarter-by-quarter basis. These costs will now go away, which is great. The disclosure of the investment in these legal costs is in the queue. We are pleased to close this chapter, and it will no longer impact our operating results or financial obligations going forward. - Louis Ferraro, CFO
Q: You paid income taxes this quarter, which is unusual. Can you elaborate on that?
A: We recorded an accrual for the provision for income taxes. As a positive net income-producing company, we are now providing for income taxes. The amount in Q2 brings us up to date for expected cash tax payments of between $1.5 million and $2 million in 2024. - Louis Ferraro, CFO
Q: Do you expect double-digit revenue growth in the future, like long-term future or next year future?
A: Yes, we expect double-digit revenue growth over the next two to three years. With 6% year-over-year revenue growth this quarter, we see acceleration and expect continued growth throughout the year, aiming for double-digit growth over the two to three-year horizon. - Louis Ferraro, CFO
Q: Could you give some color on what percentage of subscribers are on a prepaid plan basis? And how is that category growing?
A: The prepaid subscriber base represents less than 5% of our overall subscriber base. The business is primarily driven by a postpaid model. We have been successful with brands within the Verizon family and AT&T prepaid area. Despite a net loss of prepaid subscribers for Verizon due to regulatory changes, we see long-term growth opportunities in this segment. - Ryan Gardella, Investor Relations
Q: Could you give some color on the revenue growth that we can expect in Q3? Do you expect sequential revenue growth?
A: You should expect growth similar to what we delivered this quarter. We remain on track for the 5% to 8% annualized revenue growth guidance for the full year, indicating a healthy trajectory. - Ryan Gardella, Investor Relations
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
