Release Date: November 13, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Pivotree Inc (PVTRF, Financial) added close to $12 million of qualified new logo pipeline in Q3, marking the highest level of new logo additions since 2022.
- The company launched several new dashboards and connectors, enhancing their platform's observability and integration capabilities.
- Pivotree Inc (PVTRF) is seeing strong opportunities in late-stage pipeline opportunities in MPS, which could lead to a robust Q4.
- The company is focusing on expanding into new verticals such as customer, vendor, and location data management, driven by their innovative solutions.
- Pivotree Inc (PVTRF) is managing its accounts receivable effectively, benefiting from $600,000 in cash flow improvements.
Negative Points
- Total revenue for Q3 was $10.1 million, down 11% year over year, primarily due to a decline in Legacy Managed Services.
- Gross margins decreased to 38.7% from 46.2% in the previous year, impacted by one-time items and revenue adjustments.
- The company is experiencing a sequential decline in MIS revenue, which fell 14% year over year.
- Pivotree Inc (PVTRF) had to extract $8.5 million in costs from the business, indicating significant restructuring efforts.
- Legacy Managed Services are expected to continue declining, with an estimated drop of $1 to $2 million per quarter year over year.
Q & A Highlights
Q: Can you discuss the current state and future plans for sales and marketing, given that it remains higher than peers?
A: Unidentified_1: We were underinvesting in leadership in that group over the last 12 months. Now, with a new leader, we have confidence in better outcomes on bookings. We will overinvest for a period to improve bookings, aiming for efficiency gains through better bookings rather than fewer people in sales and marketing.
Q: Regarding the $12 million new logo pipeline this quarter, are you seeing macro improvements, or is it mainly due to sales focus?
A: Unidentified_1: We've reengaged our partners more effectively, ensuring they understand our differentiators. This has yielded good results. We're also targeting specific verticals with more intelligent conversations, which should help accelerate new logos.
Q: What kind of conversion rate should we expect from the $12 million pipeline to future bookings?
A: Unidentified_1: Historically, new logo conversions tend to be below 50%. We aim for 30-50% conversion rates, but these are early days. Existing customer conversions are much higher and more predictable.
Q: Can you elaborate on the B2B business traction, including contract size, sales cycle, and margin profile compared to B2C deals?
A: Unidentified_1: In the data space, contracts can start small with POCs and grow to multimillion-dollar contracts over 12-24 months. Margins for building and selling SKUs range from 40-60%, with potential for significant margin expansion if selling from a prebuilt library.
Q: As we approach the holiday season, will there be a typical revenue pickup due to higher customer usage?
A: Unidentified_1: The normal bump will be on a smaller base due to a decline in the legacy managed service commerce base. We've virtualized most customers to the cloud, smoothing out consumption over time.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
