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Thank you for standing by, and welcome to the Whispir WSP Q4 FY '21 Activities Update. [Operator Instructions] I would now like to hand the conference over to Mr. Jeromy Wells, CEO. Please go ahead.
Good morning, everyone. Thanks for joining us to discuss Whispir's progress over Q4 FY '21. Our CFO, Justin Owen, is here with me. This morning, I'll take you through a business update before providing some insights into our growth strategy, which has been supported by the recent capital raise in March this year. We have a clear plan for accelerating our growth across our key regions of ANZ, Asia and North America, our largest market opportunity. I'll spend some time on how we are progressing with our long-term strategic priorities in these markets. We welcome your questions at the end.Turning to Slide 2 and where we are today. The structural shift towards digital stakeholder engagement is gaining momentum among organizations globally. There is a clear need for our services, and this need is only increasing as organizations shift to more remote operations and the digitization of their business processes. Whispir is a global software business producing more than 2 billion interactions per year. We have delivered more than 11,000 use cases for our customers across 60 countries. As our platform scales, we're investing in our capability and leadership, now with over 200 staff worldwide servicing a growing global client base across our 3 key regions.Moving to Slide 3. Turning to our performance in the last quarter, starting with annualized recurring revenue of $53.6 million, which is in line with the guidance provided for FY '21. This is a growth rate of 28.5% from the same period last year and 6.6% up on the March quarter. This growth was largely driven by existing customers, expanding the use and spend on Whispir. In dollar terms, ARR is $11.9 million higher than the same period last year or a 14.4% increase. This growth is significant when considering we have maintained the same cost base, excluding growth-related investments in North America and product development. We are pleased with the robust underlying performance of the business.Turning to Slide 4. Customer revenue retention across the group remained steady at 115.9% and is underpinning stable growth and future revenue surety. Our customers are generally long term and increase their platform use and, therefore, revenue contribution over time. While new customers typically implement our easy-to-use platform for a single communications purpose, such as 2-way communications to staff, as they increase their use cases to 4 or more, there is a significant upshift in revenues per customer. This is what we refer to as our land-and-expand strategy.Turning to Slide 5. During the quarter, we onboarded 51 net new customers, spanning all regions, taking total customers to 801 for a year-on-year customer growth rate of 27%. In the 2 years since we listed, our customer base has grown 60%, and we expect this trajectory to continue as demand for easy-to-use communication software increases. There are solid momentum across the business to drive growth in FY '22 and beyond as these new customers increase their platform use.Slide 6 shows our quarterly customer cash receipts, which increased to 18.9% over the same period last year to $13.5 million, reflecting revenue growth and the stickiness of our existing customer base. We've maintained our cost management processes with net cash used in operating activities at $0.5 million. This reflects increased expenses in line with Whispir's growth during the quarter and includes our recent investment in expanding our talent and capability by adding 41 new hires into the business. The company has a cash and equivalent balance of $49.2 million at June 30, 2021. And we enter the financial year 2022 in a strong financial position to fund accelerated product development and our targeted go-to-market strategy in the attractive North American market.Moving to Slide 7, we look at Whispir's powerful growth drivers. We have multiple levers to sustain our growth and increase market penetration. One industry trend supporting our growth plans is the increased spend on digital transformation projects. The global digital transformation market is forecast to hit USD 1.4 trillion in the next 5 years. Almost every one of us has and continues to experience a rapid rise in the time spent online, which has accelerated since the onset of COVID-19 and has provided us with a substantial tailwind with significant short- and long-term growth opportunities. Governments, businesses and institutions have increased budget for digitization and are fast adopting cloud-based systems to transform their engagement with staff, customers and communities. Data-driven insights, artificial intelligence, machine learning functionality and, of course, innovation are all key ingredients that will drive their growth strategy and road map for building real defensible intellectual property. I'll spend more time updating you on our latest product road map in place shortly.Turning to Slide 8. With a strengthened balance sheet, we can really start to accelerate growth across 3 key areas: accelerating our product road map. This means we're developing high-value products and ensuring our platform remains industry-leading. We're driving new and existing customer growth through ANZ and Asia. And we're focused on expanding into the attractive North American market where our total addressable market is substantial. We are clear on where we need to focus, and we are building a world-class team capable of delivering our ambition for growth.Turning to Slide 9. Attracting and retaining top talent is key to us achieving our growth targets and product innovation agenda. You can see on the slide just how serious we are about accelerating our growth. Over the past year, we have increased new hires with a focus on product development by 95% and hired 140% more operations and support staff to ensure server performance and increased stability for our customers. We've already seen a 700% increase in security staff resourcing to reduce our risk footprint and have improved our customer onboarding initiatives by applying more focus on the customer trial experience, which is expected to improve new customer conversion rates. We've also seen a 300% increase in data science and mathematics roles in order to bring AI and machine learning programs to market faster.Turning now to Slide 10. Fiona Milne, our Head of AI and Data at Whispir, who joined us just over a year ago, has an impressive background in astrophysics and mathematics. Fiona has been overseeing a range of AI and machine learning initiatives to improve our predictive analysis, detection and automation capabilities. We have now completed 3 major projects, including AI-driven message type predictors with 87% accuracy; training and deploying a model to predict tone of voice conveyed in messages with 94% accuracy; and we've built an engagement score algorithm that allows measurement of engagement across all channels for each message sent out. We are continuing to focus on our sentiment analyzer to predict sentiment in messages. Our engagement predictor to drive better engagement for our customers and new stakeholders and our new spam detection capabilities to prevent misuse and ensure our customer experience is always improving. The ramp-up of project under Fiona's leadership is ensuring our platform continues to provide industry-leading data innovation, intelligence and insight for our customers.Moving to the next slide and our performance across Australia and New Zealand. Our Australian and New Zealand business continues to outperform expectations and was a core driver of new and existing customer growth during the quarter. In Q4, we onboarded and grew a diverse set of new customers, including Worksafe New Zealand and Ubimet. We continue to work closely with our channel partners, and we're focused on driving increased utility across our existing customer base with our evolving product suite.Slide 12. Whispir is providing COVID vaccine management communications to multiple state health departments around Australia. Victoria's Department of Health and Human Services is one example of a customer using Whispir's platform for end-to-end vaccine communication, vaccine appointment confirmation and post-vaccination surveys. The HHS has significantly benefited from Whispir's automated communications capabilities and ability to optimize the management of volume planning around the vaccine rollout. Australia is still in its relative infancy in terms of the vaccination program. This provides significant growth opportunities for Whispir in the short and medium term.Moving now to Slide 13 to update you on our progress in Asia, where a resurgence of COVID-19 cases is causing some disruption. Asia currently represents 15% of our total customer base, a figure we plan to increase over time as we grow our operations in the region through channel partners and regional hubs. New customers added during the quarter included OCBC Bank and Property Hub. In addition to traditional channel partners, we also work with consulting firms, Deloitte and Accenture, on digitization projects. The recent resurgence of COVID-19 outbreaks in Asia had caused substantial disruption to the business operations of existing and potential customers in the region. This has led to a short-term delay in revenue activations from some of our newly acquired customers in Q3 and Q4 FY '21. Important to note that this revenue is not lost. Merely it's delayed as customers balance their priorities in their response to immediate and pressing COVID-19 considerations. We remain very confident in this market's appetite for digital investments and our platform's ability to facilitate cost-effective digitization of our customers' business communications.Turning now to the next slide. We look more closely at one of our customers in the Philippines, FWD Insurance. FWD Insurance in the Philippines is now the fourth largest insurer in the country and is focused on digital-first experiences, spanning 10 markets across Asia. FWD's Customer Solutions' team needed the capability to promote the adoption and retention of the FWD Tapp, mobile app for customers. Using Whispir's rich message communications workflow, we were able to support FWD's commitment to fresh customer experiences by providing personalized and frictionless app activation flow.Turning now to North America on Slide 15. North America remains our largest market opportunity and we are well positioned to increase our investment in the region. New customers onboarded during the quarter include BEL USA and Fiberglass Products Inc. Channel partnerships are key to cost-effective customer growth, and we had Vonage, Amazon Web Services, Carahsoft and NASDAQ-listed communications provider, 8x8, to further support digital marketing activities in the region. Our refined go-to-market strategy in this region was targeting around 150,000 underserviced SME and SMB companies with annual revenue ranging from USD 10 million through to USD 1 billion. We are motivated by the progress we are seeing, especially with our persona-led marketing strategy, which has delivered new customers that are falling largely in line with those targeted performers. Our pipeline has grown by 50% over the last quarter by a number of customer opportunities. Our partner pull-through is increasing and our sales cycles are also getting faster. As business entrants in North America rebounds and the COVID vaccine rollout continues, there is strong momentum behind our pipeline of opportunities.Slide 16. Fiberglass Products Inc is a family-owned manufacturing business in Nebraska with a large and diverse operations team. Fiberglass has engaged Whispir to help them improve compliance and safety by their own internal target of 25%. They have utilized Whispir's communication platform to address 4 key areas: one, increase the ability to communicate internally; two, to deploy and streamline our real-time incident reporting system; three, to standardize compliance training with consistent communication; and four, to establish a bilingual system that supports the cultural and lingual diversity within the organization. Whispir's platform provides a communication solution to aid in achieving that 25% improvement in continual compliance and safety. This will also provide high accessibility by our personal devices to allow faster onboarding and safety training for new employees. And from increasing and enhancing engagement with the remote part of the Fiberglass workforce, Fiberglass has lowered their rate of employee turnover and reduced their hiring costs.Slide 18. In line with our growth strategy, the team is focused on increasing platform usage among our existing customers, acquiring new customers and growing revenue performance across ANZ, Asia and North America. Diversified channel partnerships with established local brands are key to our go-to-market strategy. It enables us to cost-effectively acquire new customers, particularly in new industry segments and geographies. We're also building our capability in a global leadership team. Our people and culture team are nurturing a pipeline of high-quality talent, which is critical to expanding our product road map and sustaining our competitive advantage. Our capital raising earlier in the year positions the business well to continue to unlock these opportunities in FY '22 and beyond.Turning to Slide 19. This slide serves as a reminder of Whispir's application across a very diverse range of industries, spanning critical infrastructure providers, financial services and insurance, banking, telco, transport and logistics, emergency services, all levels of government, transport, mining, media, to name a few. This is a key competitive strength for our business as it removes any dependency on a single customer or industry sector. Digital transformation is ubiquitous, and Whispir's low-code, no-code technology sets up our business with significant short- and long-term growth opportunities.Turning to Slide 20. Before we finish, a quick recap on why Whispir exists. Put simply, we want to change the way the world communicates. We can see a world in the near future where organizations can communicate by people who want to humanize the way organizations communicate with their stakeholders. We want to do this because we believe that value is created when people are engaged, while our promise to our customers is that we enable them to master connection and engagement with other people at scale.Thank you for joining us on the Whispir journey. We hope that today's update demonstrates that when organizations engage with people effectively, value is created. We'll now take questions, and I'll pass you back to the operator. Operator?
[Operator Instructions] Your first question comes from Ross Barrows of Wilsons Advisory.
Just 2 questions for me. In terms of North America, I was wondering if you could expand on that a little bit. You mentioned the pipeline has increased, I think, a little bit greater than 50%. You mentioned the sales cycle is getting faster. Could you provide a little bit more color just around that and potentially any commentary around the channel partners that you have and their involvement in that growth?
Look, it's the mixture of channel partner and direct activity. I think we're getting more pull-through, through our channel partners in North America. But I suppose it's tricky to provide sort of data in response to your question other than the anecdotal stuff that we've mentioned in the presentation, Ross.I think with pipelines increased substantially, 50% larger through the course of the quarter, which gives us confidence about Q1, Q2 and beyond, we see customer numbers and customer acquisition in North America are accelerating. It will be skewed, obviously, to the second half of the year as the digital marketing activities have impact and we continue to refine our approach, our technologies. And we're also continuing to invest substantially in people in terms of building our own capacity within the business. And so the team is substantially larger than what it was at the beginning of the year, but we still have some way to go to place for the hires. The deal size though, the quality of the deals is strong, and we've got a good diversity of larger-sized opportunities, balanced with sort of medium-sized opportunities and smaller ones as we might expect.
Just to clarify, you said skewed to the second half of the year, you're referring to the December part or are you talking about second half '22?
Yes. So financial year, so the second half of the year. So there is a consistent ramp-up quarter-on-quarter, but we see an acceleration of that ramp-up in Q3 and Q4 in terms of customer numbers in North America. I think we just got to be careful that we don't get ahead of ourselves. We're still creating the infrastructure. We're still refining the processes, and we're being measured about the spend and making sure that we do it in a sensitive way.
Yes. So just a second question, if I can. So Asia, you might have mentioned or you mentioned, I should say, delayed not lost revenue. Probably tricky to answer quantitatively, but can you give us a little bit more color just around the degree of delay and I guess, whether you think it's 1 quarter or 2 quarters and not everyone -- not all clients will be equal, of course. But any more color you can put around that would be handy.
Yes, for sure. It has been a challenge for us. In part, there are a couple of reasons. In Asia, when we think about the heavy dependence on relationships to sell, it's been challenging when many of our customers, their staff or family members are in a hospital ward and not even present there. And there's quite a bit of -- the sales process is one part of the relationship with the customer but then there's the activation process. And there's a sort of like a ratio of 5:1. Once a sale is sold, you need to engage with the customer and multiple -- often multiple stakeholders within those customers. And we've just found it's challenging, without the ability to travel, to get this revenue from contracted signings activated. So it will impact the revenue of the business. But I suppose, I think the key trend is going in the right direction as a leading indicator for where we're going. But for example, we have a large insurer that had a number of use cases, only managed to start switching them on in the second half of June, but they had anticipated for campaigns to be run from the beginning of March. So look, it's over the coming quarters, the next quarter and the quarter after, we would anticipate that those revenues will be switched on. But it's a sort of -- it's not really within our control, to be fair, like we see the situation is dynamic. Like Singapore, last overnight went back into another snap lockdown. It's a very dynamic situation. And it's -- as I mentioned before, I think in Australia, we're not as sensitive as we could be just to have substantial the problem is in markets like Indonesia and the Philippines with respect to COVID. There is a material problem in terms of the infection rates and the impact of COVID.
[Operator Instructions] Your next question comes from Robert Bruce of Acorn Capital.
I'm just going to actually follow up on that Asia question but it's been largely answered. But just specifically, in terms of the OCBC new customer win, without going into the detail, is that as the same potential size and use case you just lost -- you originally had with DBS Bank, and it could be of a similar size just in terms to be good for.
Rob, thanks for question. Look, OCBC is a terrific brand acquisition in the quarter. We're really proud of it. But the use cases are different this time from the original DBS use cases. So the reason for the customer signing was around talent acquisition, so it's the automation of the talent management process from candidate screening interactions through to the candidate onboarding and that employee life cycle. So we love it because it gets to touch right across the organization and lots of different departments where they get exposure to the Whispir platform. So we see it as another land-and-expand opportunity. We're not yet engaged with use cases like customer engagement or those sort of other more bank -- B2C kind of use cases. It's very much an operational start but it has potential to scale over time. But I would say that it's going to take a number of years.
Right, okay. I've got to ask, like the customer engagement piece they are running at the moment, if anything.
Yes, I'm not close to what their marketing departments are doing at the moment or what technologies they're using. But I suppose our initial focus is just ensuring success with these -- this initial use case in which build confidence and trust and integrate the relationship in a normal way.
Right. And so for Asia broadly, in terms of -- obviously, as you said, it was a slower revenue growth period. When do you expect that delayed revenue to pick up, given the number of new signings and you have some of those delays you spoke about? Is it this quarter or is it second quarter or back half of the year?
It's -- for some customers, that started already, but obviously, it didn't have any impact on the FY '21 numbers. And we would -- in an ideal world, it will be turning on over the next couple of quarters. But you can't say with confidence that it is because it's really outside of our control. It's really about how customers are balancing and juggling their priorities in the immediate short term. There's a very dynamic situation there at the moment.
[Operator Instructions] Your next question is a follow-up from Ross Barrows of Wilsons Advisory.
Just 2 other ones. Just on Slide 9, you did note the percentage growth in the various areas of the business, of the investments that you've made. Given we don't have a good feel for, I guess, the base headcount in each of those areas, can you just let us know where the biggest absolute increases were and where the new bodies will be or have been added?
For sure. So it's really in the -- the most substantive ones have been products and the development and operations or the tech teams. Some of them obviously came from off a smaller base. But I suppose these numbers really reflect painting a picture across the organization in terms of how serious we're taking this phase of investment. But those product teams and the technology teams will grow substantially and continue to grow.
Yes. And just the other one, the final question for me was just in terms of customers. You mentioned that it's a net -- on Slide 5, I think you say net new customers of 51, but obviously 46 in ANZ and 12 or so in North America. So could you just talk about, I guess, the churn in that quarter or any comments you can make around churn generally?
Yes, for sure. So the month of June is always sort of statistically the month for the greatest amount of churn because there's also the greatest amount of new signing. So you get the sort of -- you're not getting necessarily the same level of renewals. But understanding that we'll give more specific clarity on churn and customer revenue retention, but those metrics are largely consistent with what you've seen in prior quarters. So we see that it's a very healthy position to be in. And those customers that have churned are essentially low revenue customers and have minimal impact on the business.
[Operator Instructions] Your next question comes from [ Stella Wang ], a private investor.
Just got a question regarding the latest transaction on MessageMedia, which is also a Melbourne-based SMS marketing company. Obviously, it doesn't do exactly what Whispir does, but I just thought whether I can get some thoughts on your view of that company in terms of financials compared to Whispir's. Just based on what's publicly available, that company is growing slightly slower than Whispir, but about 4, 5x as big. The gross margin is about 62% with the EBITDA margin over 30%. So what's your view, Jeromy, in the long term? Should we think that if Whispir grows 4, 5x of its current size, you would still see about 60% gross margin but much higher, over 30% EBITDA margin?
Stella, it's nice to hear from you. A few things. I'm, by no means, an expert in the MessageMedia business and can only provide some sort of high-level commentary on that. I think the thing about MessageMedia is it's quite a different business to Whispir. It's built on the back of aggregating a number of smaller SMS aggregators, and the sort of customer profile and the revenue profile of that business is substantially different. I mean, Whispir is very much a software-led engagement with customers, and we build enduring relationships based on the value of that software and the heavy lifting. And it's challenging because in the CPaaS market, it's a very broad taxonomy and there are a number of different business models, and it's difficult to tell the difference between the two. Notwithstanding, congratulations to the MessageMedia team. I think they've done a terrific job. But we see, as a consistent theme, a lot of aggregation at the lower end of the market as we see the sort of consolidation from North American and European organizations that have, up until recently, had limited exposure to that part of what we described as sort of the lower end of the market. In terms of our own growth, we see gross margin incrementally improving over time over the next 3 to 5 years, as we bring new higher gross margin products to market for the benefit of our existing customers and for new customers. So we see the unit economics improving. We haven't yet provided sort of a view on sort of longer-term EBITDA performance. But needless to say, I think we are seeing the jewels appearing and we've seen it before in this business. There's a lot of operating leverage in this business that goes straight to the bottom line. And I think we are going to build a substantially large and successful business with really compelling unit economics over time. But at the moment, the focus of now is really on accelerating our rate of growth and being super laser-focused on deploying the capital efficiently that we raised earlier in the year. Next month, on the 25th of August, we'll be -- obviously, we'll be releasing a more comprehensive analysis of the FY '21 performance and will provide some -- an indication of guidance for FY '22. I think that's probably the time for more of a conversation around that.
[Operator Instructions] There are no further questions at this time. I'll now hand back to Mr. Wells for closing remarks.
Look, just a quick thank you for everyone making the time this morning. We've had an absolutely terrific year. The business has been sort of the substantial capital raising, and we've dealt with a lot of the structural aspects of dealing with shareholders coming out of escrow after the IPO. And I really want to thank the institutional investors that have supported the business and provided us with a fabulous platform that we have now, super focused on the task ahead in terms of execution as we scale the business. We look forward to sharing much more comprehensive review in terms of metrics for FY '21 in a month's time, sort of the trends that obviously I've mentioned before, and we'll provide guidance and more commentary on the outlook for FY '22 then. So again, thanks very much, and we're only a phone call away if anyone wants to talk to us certainly.
That does conclude our conference for today. Thank you for participating. You may now disconnect.