Release Date: August 27, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Boardwalktech Software Corp (BWLKF, Financial) has strengthened its sales and distribution strategy.
- The company secured a credit facility to enhance liquidity.
- Boardwalktech hired a new Chief Marketing Officer to bolster its marketing efforts.
- The pipeline of new business has expanded through recently announced teaming agreements.
- The company is executing delivery of its Velocity solution across a top five bank in the United States.
Negative Points
- Total revenue for the first quarter of fiscal 2025 decreased by 20% compared to the same quarter last year.
- There was a 48% decline in revenue from professional services.
- Software and subscription service revenue declined by 15%.
- Gross margin for the first quarter of fiscal 2025 was 87.9%, down from 90% in the same quarter last year.
- The net loss for the first quarter of fiscal 2025 was $800,000, although this was a 14% improvement from the previous year.
Q & A Highlights
Boardwalktech Software Corp (BWLKF) Q1 2025 Earnings Call Highlights
Q: At the time of the last earnings release, you stated you expected to achieve cash flow or adjusted EBITDA break-even in the next few quarters. Given the current quarter's drop in revenue, are you revising that timeline?
A: Charlie Glavin, CFO: We are refraining from giving a specific timeline due to visibility issues with closing deals, particularly with large banks. We want to avoid losing negotiation leverage with customers. We are making progress, and the adjusted EBITDA shows improvement despite lower revenue. We are cautious and conservative in our projections.
Q: Given the uncertainty regarding timing and potential delays, do you have enough cash for the next few quarters? Are you likely to seek additional funds?
A: Charlie Glavin, CFO: We have an AR-based credit facility with Celtic Bank to avoid going to the market at current stock prices. We believe we have the necessary resources. The size of some deals could significantly impact our financials, and we are optimistic about our ability to expand the credit facility based on our execution.
Q: Is there room for additional credit from the current facility, considering the limitations based on ARR?
A: Charlie Glavin, CFO: Yes, there is room for additional credit. Celtic Bank has been a supportive partner, and we are cautiously optimistic about expanding the facility based on our execution and performance.
Q: Can you provide more details on the strategic shift to a partner teaming model and its impact on sales and distribution?
A: Andrew Duncan, CEO: The strategic shift to a partner teaming model aims to accelerate deal closing times and reduce overhead costs. We have announced teaming agreements with leading global IT services firms, including Tata Consulting Services. This model allows us to leverage established customer relationships and larger support staff, enabling quicker software licensing and greater operating leverage.
Q: How is the pipeline of new business opportunities looking, and what sectors are you targeting?
A: Andrew Duncan, CEO: The pipeline has expanded significantly with new opportunities in various sectors, including financial services, aircraft manufacturing, grocery chains, and consumer healthcare. Our partners are introducing us to new opportunities outside of financial services, and we have several tier-one banks in discussions for deploying our Velocity product.
Q: What are the financial highlights for the first quarter of fiscal 2025?
A: Charlie Glavin, CFO: Total revenue for Q1 2025 was $1.25 million, a 20% decrease from the previous year. Gross margin was 87.9%, and the net loss was $800,000, a 14% improvement from the previous year. Adjusted EBITDA loss was $405,000, a 20% year-over-year improvement. The company finished the quarter with $1.7 million in cash and trade receivables.
Q: How are the teaming partners contributing to the company's growth?
A: Andrew Duncan, CEO: Teaming partners are not only using our Velocity product in-house but also introducing us to new opportunities. These partners are incentivized to drive growth in professional services revenue, and their involvement allows us to reduce costs for additional sales and support infrastructure.
Q: What are the expectations for gross margins in the coming quarters?
A: Charlie Glavin, CFO: We expect gross margins to return to prior levels at or above 90%, but they may fluctuate by quarter. The change in margin levels is primarily due to lower revenue levels.
Q: How is the company managing operating expenses and cash flow?
A: Charlie Glavin, CFO: Adjusted operating expenses have declined by over $400,000 since last June. We are diligent in our spending, focusing on growing our way to success rather than cutting costs. The company has a new credit facility in place and expects cash and deferred revenue to fluctuate less on a quarterly basis.
Q: What is the company's outlook for the rest of fiscal 2025?
A: Andrew Duncan, CEO: We are confident in our strategy and expect to see growth in the coming quarters. The pipeline of new deals has expanded, and we anticipate shorter sales cycles and higher conversion rates. We look forward to updating investors with our progress in the next earnings call.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
