Pivotree (PVT) Q2 2024 earnings summary

Executive summary

• Achieved seventh consecutive quarter of positive adjusted EBITDA, reflecting ongoing operational improvements and investment in managed and IP solutions (MIPS), despite revenue decline and increased net loss.

• MIPS revenue increased 31.1% to CAD 4 million, with bookings up 19% on a rolling four-quarter basis, indicating strong momentum.

• Total managed service bookings reached a record CAD 10.1 million, up 15.4% year-over-year, driven by large multi-year renewals in legacy managed services.

• Migration of final customers out of data centers to the cloud completed, improving profitability management.

• Continued investment in frictionless commerce products and new customer wins across key verticals.

Financial highlights

• Q2 total revenue was CAD 20.3 million, down 10.7% year-over-year; gross margin was 44.2%, and gross profit was $9.0 million.

• MIPS contributed CAD 4 million in revenue, representing over 31% year-over-year growth.

• Legacy managed services revenue declined 32% year-over-year; professional services revenue declined 8% year-over-year.

• Adjusted EBITDA improved to $0.3 million, positive for the seventh consecutive quarter.

• Ended the quarter with CAD 6.2 million in cash; net cash used in operating activities was $1.1 million, mainly due to restructuring.

Outlook and guidance

• Business is moving toward operating cash positive while maintaining investment in product revenue growth and exploring potential acquisitions.

• Expectation of improved cost control and margin benefits from data center closures and cloud migration.

• Priorities include executing new logo pipeline initiatives, investing in MIPS revenue growth, and driving EBITDA and cash growth.

• Management highlights growth strategies and addressable markets, but cautions on risks and uncertainties.