Release Date: November 20, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Wishpond Technologies Ltd (WPNDF, Financial) achieved nine consecutive quarters of positive adjusted EBITDA, with a 79% improvement in Q3 2024 compared to the previous year.
- The company reported an adjusted EBITDA margin exceeding 11% in Q3 2024, marking its most profitable quarter since 2022.
- The launch of SalesCloser AI, a virtual sales agent, has been a significant accomplishment, offering real-time sales calls and product demos in 10 different languages.
- SalesCloser AI has shown promising results, with 69% of demo participants moving to the next sales stage, compared to 38% with human agents.
- Wishpond Technologies Ltd (WPNDF) has a strong focus on cost optimization and operational efficiency, leading to positive cash flow from operations in Q3 2024.
Negative Points
- Wishpond Technologies Ltd (WPNDF) experienced a decline in quarterly revenue to $5.1 million in Q3 2024 from $5.8 million in Q3 2023, partly due to the loss of a large legacy customer.
- The reduction in the sales team size as part of cost optimization efforts negatively impacted revenue in the third quarter.
- Despite improvements in profitability, the company faced revenue declines in the past two quarters due to sales team cutbacks.
- The company's reliance on a hybrid sales model with SalesCloser AI and human agents may pose challenges in scaling efficiently.
- Wishpond Technologies Ltd (WPNDF) anticipates potential fluctuations in EBITDA margins due to planned headcount growth and seasonal expenses.
Q & A Highlights
Q: Ali, can you discuss the reasoning behind the significant reduction in the sales team over the past year? Was it due to personnel issues or demand environment concerns?
A: The reduction was not due to demand issues; demand has been strong. The decision was driven by a focus on profitability and cash flow. We aimed to ensure every salesperson was profitable, which led to optimizing the team. Moving forward, we plan to increase headcount again, focusing on high-value products.
Q: The quarterly revenue dropped from $5.8 million to $5.1 million. Was this primarily due to the reduction in sales reps, higher churn, or cutting unprofitable revenues?
A: It's a combination of factors, including cutting unprofitable revenue segments like a large legacy customer. While we're not pleased with the revenue decline, our focus is now on re-accelerating growth as we have stabilized cash flow.
Q: Regarding SalesCloser, what factors contribute to its better performance compared to human counterparts, with 69% of demos moving forward?
A: SalesCloser replicates the best team member's performance. Initial results were lower, but improvements were made, and AI retains these enhancements consistently. This leads to better performance over time.
Q: How do you see SalesCloser's metrics holding up with external customers, and what are the early signs from your first partnership?
A: It depends on the use case and client needs. We've seen a high willingness to interact with AI, with 80% preferring or being okay with AI interactions. This trend is expected to continue with external customers, especially for after-hours inquiries.
Q: With the growth plans for next year, what portion do you expect from SalesCloser versus the core Propel IQ business?
A: Most account executive hires next year will focus on SalesCloser due to larger deal sizes and better margins. SalesCloser is expected to become a significant portion of our revenue in 2025.
Q: Do you expect any changes in historical seasonality due to increased AI use in your business?
A: It's early to determine the impact on seasonality. Historically, Q1 and Q2 have been slower, and we expect some of that to continue in 2025.
Q: The 11% EBITDA margin this quarter is impressive. Do you see it as sustainable, considering expected headcount growth?
A: We aim to maintain EBITDA margins around this level, but it may fluctuate due to investments in headcount. Our goal is to achieve positive cash flow every quarter, which requires certain EBITDA margins.
Q: The revenue decline was mainly in the US segment. Are you seeing better pricing or margins in Canada compared to the US?
A: Pricing and margins are similar across regions. The decline in US revenue was largely due to the drop in a legacy customer's contribution, which impacted the regional mix.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
