Release Date: August 13, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Pivotree Inc (TSXV:PVT, Financial) delivered its seventh consecutive quarter of positive adjusted EBITDA.
- Revenue from Managed & IP Solutions (MIPS) increased by 56% year-over-year, with bookings up 19% on a rolling four-quarter basis.
- The company achieved a record $10.1 million in total managed service bookings, driven by large multiyear renewals.
- The migration of customers to the cloud from data centers is expected to improve profitability and operational efficiency.
- The average deal size has increased by nearly 50% year-over-year, indicating larger customer commitments.
Negative Points
- Total revenue for Q2 was $20.3 million, representing an 11% decline year-over-year.
- Legacy managed services revenue declined by 32% year-over-year, reflecting a continuing downward trend.
- Professional Services (PS) revenue decreased by 8% year-over-year, with bookings also down sequentially.
- The company faces challenges with deal closures being pushed into future quarters, affecting revenue realization.
- Pivotree Inc (TSXV:PVT) has paused its M&A activities due to current stock price levels and market conditions.
Q & A Highlights
Q: Last quarter, you mentioned that customer conversations were more optimistic. Is that still the case given the mixed demand commentary in the industry?
A: William Di Nardo, CEO: We have seen some positive signs in our pipeline, but the challenge remains with deal closures being pushed to subsequent quarters. The demand is there, but the time to close deals is longer. We're seeing quicker decisions in data-related deals, while commerce and supply chain deals reflect industry trends.
Q: What is the demand for your data management services?
A: William Di Nardo, CEO: Customers are looking to simplify their ecosystems and improve data quality. Clean data is crucial for efficient data flows and leveraging AI and machine learning. We are helping customers achieve cleaner data, which is foundational for better system efficiency and future automation.
Q: What needs to happen for small proof-of-concept (POC) deals in SKU building to transform into larger contracts?
A: William Di Nardo, CEO: Customers often start with smaller POCs to test our capabilities. As we build credibility, we expect to see larger contracts without the need for POCs. We are currently working on a substantial deal where the customer is willing to commit to a longer contract after initial success.
Q: How are customers viewing AI opportunities now? Are they still in the early stages, or are they finding more use cases?
A: William Di Nardo, CEO: AI is here to stay, but customers are focused on outcomes rather than the technology itself. They care about time, quality, and cost. While AI is a tool, the focus is on demonstrating ROI and practical applications, which are still in the early stages.
Q: How should we think about M&A opportunities in the current environment?
A: William Di Nardo, CEO: We have paused M&A activities due to our current stock price and the difficulty in valuation discussions. Our focus is on core operations, producing more cash, and demonstrating the success of our MIPS. Once we achieve these, we may revisit M&A opportunities.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
