Spotlio AS (SPOT) Earnings Call Transcript & Summary

Hello, and welcome to Canopy Holdings 2022/'23 Q2 presentation. I'm Christian Erlandson, your CEO of Canopy Holdings, and joining me today is James Price, Canopy Holdings' new CFO. Whilst James is new to the role, he's not new to the business as his prior role was CFO of the Spotlio business, and he's gotten up to speed quite quickly as you'll see. James will be talking to you through our financials and our KPIs. So stay tuned. We will start with our usual agenda with the Q2 highlights, and then leading on to the financials and KPIs, and after that, we'll take your questions. You can submit questions during our presentation, feel free to do so. So those of you that are new to Canopy Holdings, what we're trying to create here is really a platform of services, trying to help resorts and attractions to increase revenue, reduce costs, and improve the consumer journeys through digitization of the key process. And when you look at the size of the market within ski, it's around NOK 4 billion, and then move over to parks and attractions, this is about 3x the size. You know what we're in. We're involved in a huge market, and we're just at the very early days of this journey. So on to our Q2 highlights. I'd like to first start off by talking about our consistent growth. We have delivered over NOK 14.4 million in revenue. That is a 58% year-over-year growth rate, very impressive on a stand-alone basis, but even more impressive as this performance is consistent with Q1 where we saw a 59% year-over-year growth rate. Our strategic decision to expand into parks and attractions continues to pay off. Although this summer and autumn are traditionally low seasons for our ski business, which has limited activity, we continue to see strong performance in our parks and attractions business, leading to a diversified growth and lower seasonality. We continue to see new customers delivering revenue growth in this segment now. And 30% of our customer base within the Catalate business is coming from parks and attractions. And that segment grew 40% year-over-year. So impressive and still a huge amount to go after. On the number of resorts, we have 226 resorts reporting for Q2. This is usually not a strong quarter for growth. But we are managing to diversify our business from ski to parks and attractions and strive for profitability. In Q2, we have an active renewal period in our Skitude business. And within a large percent of our customers coming up for renewal, we've gone through an extensive process. We've looked at increasing our prices, and as a consequence, we have forced attrition with unprofitable customers, whilst at the same time, growing top line revenue and increasing ARPA. In Q1, when I stood before you back in September, I announced that I'm going to take on a strategic review of the business, and I promised to share the outcomes of this review with you. In an effort to create a more sustainable business going forward, so last week, we announced a strategic plan to accelerate our path towards profitability in '23/'24. And we've already delivered savings in an excess of NOK 15 million. I'm happy to report, we have a clear path to continue to pursue our growth objectives whilst at the same time, enhancing our margins and reducing our overhead costs. To put ourselves in a position for growth, we need a leaner, more competitive organization, one that can deliver a sustainable future. So what are the key components of this plan? There are 4 pillars that are part of our path to profitability: new customer acquisition; the acceleration of parks and attractions expansion; increase ARPA; and selling the enterprise solution. Our first pillar with new customer acquisition, growth through new customer acquisition has and continues to be core to our plan. As you can see from the logos on the right, we continue to secure market-leading brands with new customers. In addition to our focus on resorts and attractions, we are very aware of the need to establish partnerships with key tech platforms in the space from destination management, direct bookings and point-of-sale businesses to really enable that acceleration of bringing on new customers. And when looking at the second pillar, parks and attractions expansion, as this market is 3x the size of ski, it's obvious the potential this segment offers. And at the moment, as we go into the winter, 80% of our pipeline is weighted towards this sector in parks and attractions. So I'm happy to report we're actively delivering on this core pillar. Increasing ARPA. We need to be more selective in the types of customers that we engage, and we've revised our ideal customer profile, looking at our segmentation analysis. And in this quarter, we saw the benefits in the outcomes of this analysis. By forcing that attrition on the number of unprofitable customers, we have seen this increase in top line growth. So we're going to continue doing that. And selling the enterprise solution. Over the last year, since the formation of Canopy Holdings, we've talked about cross-selling. And when you look at the businesses, Catalate and Spotlio, there's very little cross-selling that has happened traditionally in the business. But now that we're taking the message to the market, explaining the benefits of the full proposition, we're starting to see the outcomes of this. And some of the logos we see on here are purchasing products from the full suite, everything that Canopy has to offer throughout the Catalate, [indiscernible] as well as Spotlio, and we're going to continue to do so. There's a lot of runway in selling the enterprise solution. And the more we engage with customers and explain the full benefit and the impact we have on their ability to drive new revenue streams, we see this as probably our top pillar for delivering additional growth. So with this, I'll now hand over to James, who's going to take you through the financials. And James, come on up. Thank you.

Thank you, Christian. Hello, everybody. I'm going to take you now through the financial part of the presentation. Starting off with the income statement. As highlighted by Christian, we've had a very strong revenue growth in Q2 of some 58% in comparison with the same quarter last year. This trend has continued at a similar pace to what we saw in Q1 with the upside mainly being driven by the increase in transactional revenues. Transactional revenues, as mentioned, is a 63% year-on-year growth. It's important to highlight that there is a currency impact due to a weaker Norwegian krone. So the underlying growth of this segment is 40%. The increase has largely been down to our parks and attractions business. As Christian mentioned, this has led to a more diversified growth and a reduction of seasonality during the quarter, which for us is traditionally the off season in our core ski business. In terms of the cost base, this is also impacted by the fluctuations in the Norwegian krone. Other expenses aside from this currency effect also increased due to changes in accounting principles surrounding capitalized R&D, an increase in professional fees and also a further increase in travel expenses coming out of the pandemic last year. In terms of the other lines you see here, depreciation and amortization this quarter continued to be lower than the previous year, and we had a total net loss of around NOK 25 million for the quarter. So moving on to the balance sheet. In terms of balance sheet, I'm not going to great details except highlighting the current cash position of NOK 26.7 million, which is down some NOK 51 million -- which is down from some NOK 51 million (sic) [ NOK 77 million ] in Q1. We will now go further into this when we see the cash flow statement. Other elements to highlight include an increased trade receivables position. This is due to the seasonality of our invoicing and renewals during the month of October, which Christian also alluded to, and also a continued reduction in other current liabilities throughout the quarter. So in terms of cash flow statement, we see obviously a negative EBITDA of NOK 17 million. And an increase in working capital changes, leading to a negative operational cash flow of around NOK 21.6 million for the quarter. We capitalize, as you see here, slightly more in R&D this quarter than both previously and the same quarter last year, leading to an overall net change of NOK 25 million over the quarter. I can say we expect a significantly lower cash burn throughout the second half of the year with both an increase in revenues. And also, we start to see the effects of a lower annualized cost base of at least NOK 20 million going forward, in line with the cost rationalization initiatives that were announced and put into effect as part of the strategic plan, which we announced last week. This overall leads us to be firmly confident that the -- and to be confident we have satisfactory cash position to take us at minimum throughout the rest of the financial year. Now I'll move on to the KPI updates. We'll have a brief update, in terms of the figures you see here, are updated for the November close. So this is updated from the last figures we shared with you a few weeks back. Overall here, we see, on the B2B SaaS, in particular, we see a growth in November. This is coming off the back of a decrease in Q2, mainly driven by the effects I mentioned earlier in terms of unprofitable customers, price increases and the consequent forced attrition of those customers, whilst the entire time growing total ARR and also increasing ARPA throughout the period. So this leads us to a total number of B2B results and attractions of 231 as of November. And in terms of the ARR evolution, we see a very strong year-on-year growth of 29% in November in the B2B SaaS segment, and we also continue to see attraction in the B2B transactional segment, which also going into the winter season, we have expectations that the positive trend will also continue then. Then finally, just a breakdown of the ARR between -- within transactional revenues between both our ski -- our traditional core ski segment and the parks and attractions segment. This is mainly water parks, amusement parks, and this is where a lot of the growth, particularly during the first half of the year, is coming from. The expansion into parks and attractions obviously reduces our seasonal exposure and allows us to have more diversified growth, which is something that is a key feature of our plans going forward. Now we'll move on to -- welcome, Christian, back, and move on to the Q&A session.

Okay. We have one question coming in, and it really leads to -- I think it's good lead in from the KPI section. Do you expect growth in the ski resort revenue in the next quarters given there was fewer season ticket sales last year? Great question because I did want to highlight, we look at the kind of transactions for people purchasing in advance and what I can say is we see an exceptionally high, call it red hot, consumer demand for both day passes and season passes for international. I think typically, we see the purchasing for international before we see it coming from North America. So the consumer appetite before the season really kicks in is at one of the highest levels we've ever seen. So we're cautiously optimistic. We need a combination of great snow weather. We need a powerful El Niño and some cold winter days ahead. And yes, let's see how it goes, but off to a good start at the moment. I don't see any other more questions. So with that, we will call it a wrap. Thanks for your time. From myself, Christian, and James, we'd like to thank you for attending, and see you next quarter.

Thank you. See you next quarter. Bye.