Financial Performance - The Company reported a net loss from continuing operations of $1,226,000 for the three months ended September 30, 2024, compared to a net loss of $1,219,000 for the same period in 2023[186]. - Adjusted EBITDA from continuing operations was $4,846,000 for the three months ended September 30, 2024, compared to $2,244,000 for the same period in 2023, reflecting a significant increase[186]. - For the three months ended September 30, 2024, the company's net revenue decreased by $2.1 million, or 5.6%, to $35.4 million from $37.5 million for the same period in 2023[200]. - The Bills & Payments segment generated $24.6 million in revenue, a decline of $0.8 million or 3.1%, primarily due to lower postage revenue and client contract ends[201]. - The Technology segment's revenue decreased by $1.3 million or 10.8%, to $10.8 million, largely due to lower license sales[202]. - For the nine months ended September 30, 2024, the company's net revenue decreased by $9.4 million, or 8.1%, to $107.0 million compared to $116.4 million for the same period in 2023[219]. - The Bills & Payments segment generated $75.9 million in revenue, a decline of $7.0 million, or 8.4%, primarily due to project completions and lower volumes[220]. - The Technology segment's revenue decreased by $2.4 million, or 7.2%, to $31.1 million, attributed to lower software license sales[222]. Costs and Expenses - Total cost of revenue decreased by $4.4 million, or 15.6%, compared to the same period in 2023, with a total cost of revenue of $23.8 million[203]. - Cost of revenue for the Bills & Payments segment decreased by $3.2 million, or 14.2%, due to completed projects and optimization efforts[204]. - Selling, general and administrative expenses slightly decreased by $28 thousand, or 0.4%, to $6.8 million[207]. - Selling, General and Administrative (SG&A) expenses decreased by $1.6 million, or 7.8%, to $19.8 million, driven by cost optimization initiatives[227]. - Interest expense increased to $1.8 million for the three months ended September 30, 2024, compared to $1.2 million for the same period in 2023[212]. - Interest expense increased to $4.7 million for the nine months ended September 30, 2024, compared to $3.6 million in the prior year, due to higher borrowing costs[230]. Foreign Exchange and Tax - The Company has experienced foreign exchange losses of $668,000 for the three months ended September 30, 2024[186]. - Foreign exchange losses were $0.7 million for the three months ended September 30, 2024, compared to gains of $0.5 million for the same period in 2023[214]. - The company reported an income tax expense of $1.7 million for the three months ended September 30, 2024, compared to $1.0 million for the same period in 2023[217]. Workforce and Operations - As of September 30, 2024, the Company had approximately 1,500 employees, with 147 being part-time, across 16 countries[173]. - A restructuring plan was approved in Q4 2023 to realign the Company's business and strategic priorities, involving workforce rightsizing[276]. Business Segments - The Company has two reportable segments: Bills & Payments and Technology, focusing on optimizing bill processing and software solutions respectively[177]. - Revenue from the Bills & Payments segment includes both project-based and recurring digital transformation revenue[178]. Debt and Financing - As of September 30, 2024, total debt increased by $14.8 million primarily due to borrowings under the 2024 Senior Credit Facilities[237]. - The Company incurred $1.6 million in debt issuance costs related to the 2024 Facilities Agreement[265]. - The 2024 Facilities Agreement requires maintenance of a consolidated total leverage ratio of not greater than 2.50 to 1.00, with stepdowns starting January 1, 2025[266]. - The Company had fully repaid the outstanding balance under the 2022 Committed Facility Agreement as of September 30, 2024[261]. - The Company incurred a loss on the sale of accounts receivables totaling approximately $0.3 million and $0.7 million for the three and nine months ended September 30, 2024, respectively[250]. Strategic Initiatives - The Company may explore strategic transactions, including joint ventures and acquisitions, which may require additional funds[278]. - There have been no material changes to the Company's market risk during the nine months ended September 30, 2024[282].
XBP Europe (XBP) - 2024 Q3 - Quarterly Report