Release Date: August 13, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Ansarada Group Ltd (ASX:AND, Financial) achieved a 10% year-on-year revenue growth, reaching $56.7 million.
- Annual recurring revenue (ARR) grew by 22% year-on-year, nearing $58 million.
- The company improved its net dollar retention rates, indicating strong customer loyalty.
- Ansarada's customer satisfaction score is 95%, significantly higher than the SaaS industry average of 80%.
- The company maintained a high gross margin of 96%, showcasing operational efficiency.
Negative Points
- Deal volume in the APAC region was unstable and challenging, impacting overall performance.
- Subscriber growth was flat, reflecting macroeconomic uncertainties and shorter contract durations.
- Increased marketing spend in Q4 led to a slight drop in adjusted EBITDA margin.
- Cash flow from operations showed lumpiness due to seasonality and large contract timings.
- There were regulatory approval delays, such as those from the ACCC, affecting deal timelines.
Q & A Highlights
Q: You had over 20% growth in the UK divisional revenue, any comments you can make on what some of the reasons were behind this growth?
A: (James Drake, CFO) We saw quite a few premium customers come in Q1 last year in the UK and Europe. There was a strong period of new win volume through Q2 and Q3, specifically out of the UK. Stability in the macro environment in the UK and Europe during that period led to an increase in premium customers and higher conversion rates in our funnel.
Q: What is Procure? Is that procurement?
A: (Sam Riley, CEO) Yes, it is high value, high risk procurement, predominantly around infrastructure. Our product is used by the government for projects like new roads, ports, rail lines, and battery storage. It helps disclose information to tenderers or bidders, ensuring fairness, probity, and audit trails, reducing risk and speeding up information dissemination.
Q: Can you elaborate on the 22% year-on-year growth in annual recurring revenues (ARR)?
A: (Sam Riley, CEO) The 22% growth in ARR, reaching close to $58 million, was driven by our focus on improving product and go-to-market strategies. This growth is more than double the overall revenue growth of 10%, indicating strong performance in generating recurring revenue.
Q: What contributed to the 35% increase in deferred revenue?
A: (James Drake, CFO) The increase in deferred revenue is due to our business model where contracts are paid upfront but recognized over the contract's life. A 12-month deal signed in June would only recognize one-twelfth of the revenue, with the rest deferred. This indicates a strong Q4 and customer growth.
Q: How did the different regions perform in terms of revenue growth?
A: (James Drake, CFO) All regions grew, with slightly better performance in the UK compared to APAC and Europe. Overall, there was a 10% international revenue growth and 9% APAC growth, resulting in relatively flat year-over-year performance.
Q: What is driving the flat subscriber growth despite new win volumes being up year-over-year?
A: (James Drake, CFO) The flat subscriber growth is due to consolidating multi-project or deal subscribers into single subscription contracts and a mix of shorter duration contracts reflecting macro uncertainty. This results in flat overall subscriber numbers despite growth in ARR subscriber contracts.
Q: How is the company balancing its investment across different areas?
A: (James Drake, CFO) We continue to balance our investment across go-to-market, product design, and technology. There was a slight increase in G&A in Q4 due to deal costs, but overall, our investment remains consistent, with a focus on improving operational efficiency and driving revenue growth.
Q: What are the key takeaways from the revenue breakdown by geography and product?
A: (James Drake, CFO) Revenue growth was consistent across all regions and products. The UK showed slightly better performance, and the Procure product saw higher growth, moving from 13% to 14% of overall revenue. Digital acquisition channels contributed significantly to new wins, indicating a trend towards digital customer acquisition.
Q: How is the company managing cash flow and operational efficiency?
A: (James Drake, CFO) We maintain a high gross margin of 96% and continue to invest in operational efficiency. Increased marketing spend has helped deliver more customers, and we start the year with a healthy deferred revenue balance. Cash flow from operations shows some seasonality, but overall, we maintain a consistent adjusted EBITDA profile.
Q: What is the outlook for the company moving forward?
A: (Sam Riley, CEO) We see a positive outlook across different products, industries, and solutions globally. The team has done a great job developing strengths in product, go-to-market strategies, and operational efficiency. We aim to continue growing ARR and improving customer conversion rates, focusing on delivering value and reducing friction in the customer journey.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
