Release Date: August 28, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Gross margins improved to 23.5%, up 120 basis points year-over-year and 150 basis points sequentially.
- Net loss improved by $4 million this quarter.
- Over $25 million of annualized savings are in process.
- Legal and Loss Prevention services grew by 6.3% year-over-year and 45% sequentially.
- Added 119 new logos, an increase of 40% sequentially.
Negative Points
- Second quarter revenues were $245.7 million, down 10% year-over-year.
- Sequential revenue declined by 5.1%, driven by project fluctuations and volume seasonality.
- Information and transaction processing solutions declined by 15.2% year-over-year and 11% sequentially.
- Healthcare Solutions declined by 1.1% year-over-year and 2.9% sequentially.
- SG&A was up 30.5% year-over-year, including $10.1 million in write-downs.
Q & A Highlights
Q: Can you provide more details on the revenue decline and the factors contributing to it?
A: Matthew Brown, Interim Chief Financial Officer: The revenue decline of 10% year-over-year was primarily due to non-renewals in 2023, including a significant contract we discussed last quarter. Sequentially, revenue declined by 5.1%, driven by project fluctuations and volume seasonality.
Q: What were the main drivers behind the improvement in gross margins?
A: Matthew Brown, Interim Chief Financial Officer: Our gross margins improved to 23.5%, up 120 basis points year-over-year and 150 basis points sequentially. This was due to our ongoing focus on driving efficiencies and cost reductions.
Q: Can you elaborate on the $10.1 million write-down included in the adjusted EBITDA?
A: Matthew Brown, Interim Chief Financial Officer: The $10.1 million write-down was predominantly driven by a partner contract amendment that provides for higher pricing and service expansion, resulting in a non-cash write-down of the original contract assets.
Q: How did the different segments perform during the quarter?
A: Matthew Brown, Interim Chief Financial Officer: Information and Transaction Processing Solutions declined by 15.2% year-over-year and 11% sequentially. Healthcare Solutions declined by 1.1% year-over-year and 2.9% sequentially. Legal and Loss Prevention Services grew by 6.3% year-over-year and 45% sequentially.
Q: What are the key focus areas for the company in the second half of the year?
A: Matthew Brown, Interim Chief Financial Officer: Our focus for the back half of the year remains on driving revenue stabilization, continued margin improvement, and strategic growth initiatives.
Q: Can you provide more details on the new ACV and logos added during the quarter?
A: Matthew Brown, Interim Chief Financial Officer: We expanded growth opportunities with over $40 million of new Annual Contract Value (ACV) won in the quarter, an increase of 50% sequentially, and added 119 new logos, an increase of 40% sequentially.
Q: How is the company managing its liquidity and cash flow?
A: Matthew Brown, Interim Chief Financial Officer: We ended the quarter with over $30 million in unrestricted cash and made our semi-annual interest payment. Cash flow from operations continues to improve with over $12 million of positive operating cash flow in the quarter.
Q: What were the main reasons for the increase in SG&A expenses?
A: Matthew Brown, Interim Chief Financial Officer: SG&A was up 30.5% year-over-year, including $10.1 million in write-downs. Excluding these items, SG&A was down approximately 18% year-over-year, driven by reductions in legal and professional fees as well as employee-related costs.
Q: How did the Healthcare Solutions segment achieve margin improvements?
A: Matthew Brown, Interim Chief Financial Officer: Healthcare Solutions saw a 630 basis points gain in margins year-over-year due to the implementation of additional technology features and achieved savings.
Q: What are the company's strategic growth initiatives moving forward?
A: Matthew Brown, Interim Chief Financial Officer: We are focusing on driving revenue stabilization, continued margin improvement, and expanding growth opportunities through new contracts and strategic partnerships.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
