Spotlio AS (SPOT) Earnings Call Transcript & Summary

Good afternoon, everybody. Thank you so much for joining us during this monumental Q1 results presentation. The usual format today, we have, me, Christian Erlandson, your CTO, and we'll take you through the business update and key highlights from James Price, our CFO, who will take you through the results of the quarter as well as our KPIs. And after that, we'll have a live Q&A where we'll take your questions. I will start today by taking you through our business update as we have a significant update to share. Today, we're not just sharing the numbers. We're unveiling a transformative chapter in Spotlio's journey. Then I will share an update on sales and then the results. We have successfully integrated our European and U.S. businesses, combining the strengths of Spotlio and Catalate. This rebranding of the combined operations under the consolidated brand of Spotlio as well as the name change of our parent company from Canopy Holdings to Spotlio signifies a harmonization of our vision and shared commitment to delivering unmatched value to our clients worldwide. This strategic alignment sets the stage for a future characterized by innovation, growth and transformative experiences. We're primed to redefine destination digital technology. In a move towards streamlining the business, we had a strategic change to transform the business and looking at strengthening our competitiveness by delivering sustainable growth and maintaining a path to profitability. As part of this strategy, Liftopia.com will be discontinued as a brand. And in this regard, the company will also consider divesting Liftopia.com. This decision further reflects our commitment to streamlining operations, aligning resources with long-term vision and goals. This discontinuation of Liftopia.com will enable Spotlio to enhance operational efficiency, bolster core offerings and ultimately deliver greater value to our clients and stakeholders alike. We also, as bringing the businesses together, have accelerated our operational excellence by creating one unified leadership team as well as one Tech Hub in Spain. So by bringing together all of our tech resources around the world and centering that in Spain has allowed us to accelerate our -- what we're doing around the product stack. And last but not least, I'm excited to announce the appointment of Ben Faden as our Chief Revenue Officer. This is another important step in our strategy. Ben's extensive experience and dedication to delivering unparalleled value aligns perfectly with Spotlio's vision to elevate destination technology, significantly increasing customer centricity. We're thrilled to have Ben on board. Also on the team, we have Albert Ferrando, who was the founder and CEO of Spotlio. He has now taken on the role of Chief Product Officer. I'm very excited to have Albert leading the product technology and the strategy around that. David Huerva, our CTO, was the Founder and CTO of Skitude Group, and he's been with the business for greater than 12 years. So I really look forward to him and his -- the level of experience he has in integrating businesses. James Price, our CFO, is here with us today. And last but not least is Krystal Praast, who joins us from Catalate. So she has been with the Catalate business for greater than two years. So in essence, while the integration of two businesses promises a plethora of benefits, the real linchpin for actualizing this potential is the presence of a cohesive, unified leadership. It is this leadership that will steer Spotlio through the complexities of integration and towards a successful future. Before I delve into the mission and core purpose, let's first ground ourselves in the realities of the combined business. We are a global team of greater than 70 people working across multiple continents, supporting more than 230 customers and partners in 14 markets. Spotlio also connects millions across our platform with over 3 million guest experiences annually. Our mobile apps boasts an impressive average rating of over 4.6 across 37,000 reviews. And we facilitated more than USD 1 billion in transactions and online sales in the resorts and attraction sector, globally recognized by resorts and attractions around the world from Aspen Snowmass to Vail Resorts to Val Cenis, they trust our solutions and they trust us. Now with this great benefit, let's look at what we promised to deliver. So every day, when we come to work, we build on the importance of our mission, empowering attractions and ticketing business implies providing tools, insights and services that help our customers achieve success. Maximizing revenue. Revenue growth is a tangible metric whereby Spotlio offers solutions that drives profitability, connecting better with guests by helping improve customer relationships, ensuring guest satisfaction and building loyalty, simplifying the experience through digital journey in today's fast-paced tech-enabled world, ease of use is paramount. And Spotlio is dedicated to creating streamlined, user-friendly digital experiences. It's a powerful mission. And Spotlio's core purpose answers the why. Why we exist? At Spotlio, our foundational drive is a simple yet profound one, to elevate fun to enhance experiences. When we talk about elevating fun, it's not just about enjoyment, it's about transforming how resorts and attractions connect with consumers. We're making a journey of every skier or park visitor, not just enjoyable, but memorable. Enhancing experiences is about breaking down barriers. Our e-commerce solutions, combined with dynamic pricing and mobile platforms are designed to remove these obstacles and these pain points that make every interaction seamless, ensuring that fun isn't hindered by complexity. We're not just enhancing experience in isolation. With our global presence and our team spanning continents, our ambition is to elevate fun and experiences at attractions across the world. And while Spotlio has been on the path to achieving profitability and delivering upon our promises, this is not enough for us. We want to create a tier of change for the industry. So we create a strategy with positive outcomes linked to the core of our business. At Spotlio, we're putting positive outcomes and impact at the core of our strategy. Our focus on delivering guest experiences is amplified by our ability to positively impact good health and well-being, addressing 1 of the 17 UN sustainability goals. Spotlio isn't just about technology and pricing. We are in the business of promoting well-being and by helping our partners offer meaningful experiences, every ticket sold, every resort or attraction access contributes to somebody's physical and mental well-being. And we're not just making these experiences available. We're making them affordable and seamless. And we're doing it at scale. Today, we're delivering an impressive 3 million guest experiences annually. It's a reflection of the positive impact we're bringing on millions of lives and the positive change we aim to bring to the world. And here on the slide, you can see our product suite. Essentially, by combining the businesses together, you can see our seven propositions. And now the plan is to bring it all into one platform. And of course, we're also leveraging the data and the insights we capture in real time throughout the year to enhance every part of our propositions and the customer experience. So our sales update. When we last met in June, we discussed a recent launch of a weather guarantee in the ski resorts industry in France, and we did that with Val Cenis. Happy to say that, that has been a very successful launch. And since launching that, we have actually added several more partners across multiple markets in Europe, which means the ability to support multi-language, multicurrency. And we're really seeing this as a huge added benefit in the ski market. Given the environmental challenges on ski, and when people buy tickets in advance, they want that additional guarantee. So that's worked really well combined with our dynamic pricing model. We've also announced our partnership with JB Concepts back in June for dynamic pricing, and we continue to add partners through this partnership. Skidata has been another partner from the very foundation of all the businesses. And we recently launched Hatley Pointe, which is a new boutique mountain resort in the States. So through our partnerships, through customers direct, it's a very broad strategy. It's very interconnected, and we're very excited about it. But most excited about our ability as we combine the businesses to look at that potential to cross-sell across the platform. And I'm very happy to announce that Morey's Piers is the first app in the parks and attraction space. We're bringing much of the technology we have been offering in the ski industry for over 10 years. So we're very excited to see what we can do in this sector as it's 3x the size of ski. So with that, I'll hand over to James Price. Thank you.

Thank you, Christian. And I'll walk you through the Q1 FY '24 results. This is for the period from May 1 to July 31. Headline revenues are up 5% year-on-year, once excluding the Liftopia business, which Christian has mentioned is currently under strategic review. This revenue growth is mainly driven by expansion of existing customers. In terms of gross margin, we're around the 65% mark. This reflects the increase in transactional revenues within the revenue mix. Then the cost base, total personnel, other operating expenses, 11% lower year-on-year. This is despite one-off charges for severance expense, USD 0.3 million. This is part of our ongoing cost rationalization initiatives across the organization. And these initiatives are very much on track with personnel, other expenses, 21% lower once isolating the effect of these one-off severance expenses during the quarter. Overall, EBITDA is negative USD 1.6 million for the quarter, and this is an improvement on the same quarter last year. Now I'll take you through some of the key financial metrics. These are four metrics that are very useful in order to track the performance of the business. The first one, total ARR. This is annual recurring revenue. This came in at USD 7.5 million as of end of the first quarter. 75% of this approximately comes from the Transactional segment of the business, with the remaining quarter being made up by the SaaS segment of the business. Recurring revenue, as you see on the right, remains significantly high, around 97% of all revenue is recurring. This is important because this provides predictability within the revenues and the cash inflows of the business, both on a monthly basis and an annual basis. Then total logos. We currently stand at 227 logos. We have a very international, diverse and loyal customer base. We're combining both new logo growth whilst also continuing to evaluate forced attrition of certain customers to really focus on strategic high ARPU customers in which we can sell multiple products across our product suite. Practically all of our existing customers only have a single product from our product suite, and we see significant potential to focus on multiproduct offerings. We also feel we can unlock a significant potential now operating as one business, as Christian mentioned earlier. An example of this already in motion has been our first landmark sale of apps, which originally built for the ski sector being sold into the parks and attractions space with Morey's Piers. This we see as a huge opportunity going forward, in particular given that the parks and attraction space is 3x the size of the ski sector. Then finally, churn, this is kind of linked into what I've just been explaining. We're focused on retaining our customer base, maintaining low churn, 4%, anything below 5% is very much the target because this even allows for us to take decisions on forced attrition as centered in the previous KPI. So with that, I shall hand back to Christian, who will take us through the Q&A.

First question. With the recent integration of the U.S. and European business, do you foresee there will be any potential slowdown? Good question. Actually, we've seen quite the opposite. Both businesses come from ski and parks and attractions, and the ethos, the cultures are very, very similar. We have, as during the project working on bringing the businesses together, we've also worked on creating one culture, one set of values linked to personal beliefs for each individual. So there's a way to connect to those values. So the structure is clearly defined. And I'm happy to report everybody's on board and raring to go because we see the opportunity of working together is much greater than being two separate businesses. Here's the second question. How much of your cost base will be reduced by the discontinuation of Liftopia?

Liftopia is a business that I would say for a while, we've been having it under strategic review. It's something that as we've built the current structure, and we've embarked on the cost rationalization initiatives, we have not specifically built out Liftopia. It's been something that the existing team is working on all the remaining offerings in our product suite currently. So we don't anticipate a significant impact from a discontinuation of a possible divestment of Liftopia.

Yes. Another question on Liftopia. You discussed divesting Liftopia, and does that imply that you think someone out there could be willing to buy it? The decision to divest it is an option that we have under strategic review. The intention of the discontinuation of Liftopia.com has more to do with where the future strategy is going. That was a marketplace business. We are B2B, so it's a different business model. And it also unlocks the ability to enable some tech that sat within Liftopia and repurpose it other ways, but it's a very different strategy going forward. It doesn't include a marketplace. That's it for the questions. So with that, I'd like to thank you very much for your time, and look forward to seeing you on the next call.

Thank you.