CS Disco (LAW) Q2 2025 Earnings Call August 06, 2025 05:00 PM ET Speaker0Ladies and gentlemen, thank you for standing by, and welcome to CS DISCO's Second Quarter Fiscal Year twenty twenty five Conference Call. At this time, all participants are in a listen only mode. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. I would now like to hand the conference over to your first speaker today, Head of Investor Relations, ...

Financial Data and Key Metrics Changes - The company generated a 2.2% year-over-year increase in total revenue to $55 million for Q2 2025, attributed to new restaurant openings [15][61] - Cost of goods sold as a percentage of restaurant sales increased by 97 basis points to 33.8% in Q2 2025, reflecting inflationary cost increases and more new restaurants in operation [16][61] - The company reported a net loss before income taxes of $1.8 million, equating to $0.05 per diluted share, compared to a net income of $2.1 million or $0.06 per diluted share in Q2 2024 [18][63] - Adjusted net income was $1.2 million or $0.04 per diluted share in Q2 2025, down from $4.4 million or $0.13 per share in the same period last year [19][64] - Restaurant level adjusted EBITDA was 16.3% for Q2 2025, an increase of 70 basis points from the previous year [20][65] Business Line Data and Key Metrics Changes - The company opened seven new restaurants in 2025, with a total of nine new restaurants opened year-to-date, on pace to exceed the target of 12 to 13 new stores [5][51] - The average unit volume (AUV) revenue is $5.3 million per restaurant, which is considered elite in the casual dining space [9][53] Market Data and Key Metrics Changes - The company experienced a sharp downturn in customer traffic in April due to global tariffs and immigration policies affecting regions with a large Hispanic customer base, which accounts for 35 of its 52 restaurants [6][52] - Improvements in sales and costs were noted starting in July, indicating a recovery from the downturn [8][52] Company Strategy and Development Direction - The company is focused on a value-oriented experimental dining model, which is believed to resonate with guests and support long-term growth [5][50] - Plans for international expansion include additional restaurant openings in South Korea, with the first store opened in a suburb of Seoul [5][50] - The company is enhancing its product offerings, including gift cards and packaged products, to diversify revenue streams beyond restaurant sales [12][58] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing macro pressures but expressed confidence in the company's growth strategy and operational efficiencies [4][5] - The company is implementing automation and AI tools to improve labor efficiency and overall margins [36][83] - Management remains committed to their guidance of 17% to 18% on four-wall margins despite recent challenges [81][82] Other Important Information - As of June 30, 2025, the company had $9.6 million in cash and cash equivalents, with only $7 million in long-term bank debt [20][66] - The balance sheet reflects $166 million in lease liabilities, offset by $142 million in operating lease assets, indicating no material debt [21][67] Q&A Session Summary Question: Can you quantify the same store sales progression throughout the quarter and the improvement seen in July? - Management noted a significant decline in sales during April, May, and June, with a bounce back in July, aided by a 2.8% price increase at the beginning of the year [25][28][73] Question: How have the new units from Q1 been performing, and what is the status of the South Korea location? - The new openings from Q1 are performing at an average level, while the South Korea location is seeing slow but improving sales [29][30][76] Question: What is the tracking of premium menu adoption and its implications for COGS? - Management indicated a COGS differential of 0.5% to 1% with an expected sales increase of 5% to 7% as premium menu items are rolled out [31][32][77] Question: Any updates on guidance for revenue and four-wall margin? - Management confirmed that projections for 17% to 18% on four-wall margins remain unchanged despite the challenging quarter [35][81] Question: What operational efficiencies are being implemented to offset macro challenges? - The company is deploying automation and AI tools to enhance labor efficiency, expecting to see benefits in margins in the upcoming quarters [36][83] Question: Is the quality of general managers the biggest challenge to accelerating unit development? - Management stated that the challenge is multifaceted, including the need for quality managers, real estate, and capital [37][85]

Financial Data and Key Metrics Changes - The company reported Q2 2025 revenue of $111.8 million, representing a year-over-year growth of 12% [5][28] - Non-GAAP operating margin expanded by almost 400 basis points to 9.2% [5][27] - Non-GAAP free cash flow for the quarter was $5.2 million, an increase of 110% year-over-year [27][28] - Remaining performance obligations (RPO) totaled $347 million, up 18% year-over-year [29] Business Line Data and Key Metrics Changes - Subscription revenue was $111.1 million, reflecting a 13% year-over-year increase [28] - The number of customers contributing more than $50,000 in annual recurring revenue (ARR) grew by 18% year-over-year [28] - The average contract value (ACV) for Q2 was $15,321, up 14% year-over-year [28] Market Data and Key Metrics Changes - The company secured strategic wins with global brands such as Honda, Cigna, and the U.S. Department of Transportation, indicating strong market presence [6][38] - The company earned 164 Leader Badges in G2's reports, showcasing its competitive positioning in the market [6] Company Strategy and Development Direction - The acquisition of Newswhip is seen as a pivotal milestone to enhance AI-powered predictive media intelligence capabilities [8][9] - The company aims to deepen customer engagement through use case expansion and premium modules [21][23] - The strategy focuses on winning enterprise customers, improving customer health and adoption, and expanding partnerships [13][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the core business performance and noted strong retention and renewal rates [38][71] - The company anticipates some near-term pressure on rep productivity due to the integration of Newswhip [33] - Management highlighted the importance of social media as a channel for product discovery, especially among Gen Z consumers [25][102] Other Important Information - The company launched several product innovations, including enhancements in influencer marketing and customer care [14][16] - The company is expanding partnerships with key networks to enhance its capabilities [21] Q&A Session Summary Question: How would you characterize the core business today? - Management noted strong performance and progress, with significant wins and growth in the enterprise customer segment [38] Question: What is the impact of Newswhip on guidance? - Management projected Newswhip to contribute approximately $2.5 million over the final five months of the year, taking a cautious approach to guidance [41] Question: What is the timeline for integrating Newswhip? - Management indicated that integration efforts are underway, with positive initial feedback from customers [48] Question: How are rising advertising costs affecting customer strategies? - Management noted that customers are increasingly looking to social media for discovery due to disruptions in traditional search [60] Question: What are the trends in the international market? - Management acknowledged that while international business is smaller, there is strong potential for growth and pipeline development [85]

Financial Data and Key Metrics Changes - The company facilitated 26,522 certified loans in Q2 2025, down from 28,963 in Q2 2024 and 27,638 in Q1 2025, attributed to seasonality and tightened lending standards [10][25] - Total revenue for Q2 2025 was $25.3 million, including an $8.3 million reduction in estimated profit share revenue associated with new originations [25][26] - Operating expenses increased to $18.6 million in Q2 2025 from $17 million in Q2 2024, representing a 9% year-over-year increase [28][29] - Net income for Q2 2025 was $1 million compared to $2.9 million in Q2 2024, with diluted net income per share at $0.01 versus $0.02 in the prior year [29][30] Business Line Data and Key Metrics Changes - Program fee revenues were $14.9 million, profit share revenue was $8 million, and claims administration fee and other revenue was $2.4 million in Q2 2025 [26] - Profit share revenue associated with new originations was $7.7 million or $289 per certified loan, down from $16 million or $552 per certified loan in Q2 2024 [27] Market Data and Key Metrics Changes - The total assets of the company at the end of Q2 2025 were $296.7 million, with $230.7 million in unrestricted cash [30] - The total loan growth in federally insured credit unions saw a year-over-year increase of 3.64% [22] Company Strategy and Development Direction - The company is focusing on four strategic priorities: profitable unit economics, improved customer retention, streamlined operations, and a culture of accountability [5][21] - The company aims to transition to an expense structure supported by program and TPA fees by 2026, targeting profitability based on profit share components [19][33] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the company's direction, indicating that 2026 will demonstrate the full financial impact of current initiatives [4][32] - The company is actively monitoring credit union health and macroeconomic conditions to identify growth opportunities [21][22] Other Important Information - The company announced the early extension of its agreement with AmTrust, reflecting strong partnership confidence [7][33] - Massimo Monaco was appointed as the new CFO, effective August 18, 2025, bringing over two decades of experience in lending and financial services [23][24] Q&A Session Summary Question: What drove the early extension with AmTrust? - Management indicated that AmTrust approached the company for the extension, signaling strong partnership support [36][37] Question: Is the positive profit share CIE a sign that negative adjustments are behind? - Management noted that while there are always minor fluctuations, the positive adjustment is a good sign, supported by lower claim frequencies and increased used vehicle values [39][40] Question: What factors are affecting the Q3 certified loan guidance? - Management explained that the decrease in OEM business due to tighter underwriting standards is a significant factor, while credit union demand remains strong [42][43]

Financial Data and Key Metrics Changes - The company reported Q2 revenue of $416 million, representing a 28% increase year-over-year, or $91 million more than the same quarter last year [28] - Adjusted EBITDA for the quarter was $89 million, reflecting a 37% increase, or $24 million more than Q2 of the previous year [31] - Adjusted EPS was $0.26, up from $0.19, marking a 37% increase year-over-year [37] Business Line Data and Key Metrics Changes - Company-operated same shop sales growth was 7.8%, with 5.9% attributed to transaction growth [31] - System same shop sales growth was 6.1%, driven by a 3.7% increase in transactions [29] - The company opened 31 new shops in Q2, bringing the total system shop count to 1,043 [30] Market Data and Key Metrics Changes - System-wide average unit volumes (AUVs) were $2,050,000, consistent with record levels [9] - Approximately 72% of system transactions were attributed to the loyalty program, a five-point increase from the same period last year [19] Company Strategy and Development Direction - The company aims to open at least 160 new shops in 2025, with a long-term goal of reaching 2,029 shops by 2029 [14] - A focus on transaction-driving initiatives includes enhancing category-wide innovation, increasing paid advertising, and emphasizing the Dutch rewards program [15] - The company is expanding its competitive advantages through strategic investments in market planning and operational efficiency [14][15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's growth trajectory, citing strong performance and a robust operator pipeline [12][25] - The company is well-positioned to capture additional market share, driven by rising demand for cold beverages and energy drinks [27] - Management raised full-year guidance for total revenues, same shop sales growth, and adjusted EBITDA based on strong Q2 results [39] Other Important Information - The company successfully refinanced its credit facility, securing $650 million in total capacity, enhancing liquidity for long-term growth [37] - Labor costs were 26.6% of company-operated shop revenue, showing a favorable year-over-year change due to sales leverage [34] Q&A Session Summary Question: CPG strategy for next year - Management indicated that the CPG rollout will focus on areas where shops are located, with early rollout expected in 2026 [42][43] Question: Update on speed and throughput initiatives - Management noted ongoing efforts in labor deployment and the introduction of speed dashboards to improve throughput [48][49] Question: Market specifics on new shop productivity - New shop productivity remains elevated, with strong results across various markets, including a new shop in Georgia [51][52] Question: Innovation and resource allocation - Management described innovation as a mix of art and science, focusing on customer testing and market trends to maintain competitive advantage [54][56] Question: Mobile order mix expectations - The mobile order mix is currently at 11.5%, with some newer markets exceeding this average, and management is optimistic about future growth [60][61] Question: Food program rollout decision - The phased rollout of the food program is to ensure proper training and equipment installation in shops [65][66] Question: Q3 performance and marketing strategy - Management confirmed strong underlying traffic trends entering Q3, with plans for a more normalized marketing approach [71][72] Question: Mobile order contribution to transaction growth - Mobile order is driving transaction growth, particularly in the morning daypart, with a focus on enhancing customer experience [78][80] Question: Marketing spend efficiency - Management is currently on the lower end of marketing spend as a percentage of sales but sees potential for increased efficiency [92][95]

Financial Data and Key Metrics Changes - Revenue increased sequentially by $817,000 to $18,700,000, but decreased by 13% compared to the prior year [7][18] - Gross profit rose by $1,800,000 from Q1 and $2,100,000 year over year, with gross margin expanding to 26.1% [7][19] - Adjusted EBITDA showed a loss of $335,000 for the quarter, which is a sequential improvement of $131,000 but fell short by $53,000 compared to the prior year [7][22] Business Line Data and Key Metrics Changes - The Tubular segment has been fully divested, with only the idle facility in Munhall remaining as a financial drag [4] - The company is now a pure play specialty chemical company, focusing on higher margin opportunities and operational efficiencies [5][10] Market Data and Key Metrics Changes - The broader chemical market has shown softness, with manufacturing activity remaining below expansion territory, impacting overall demand [18][19] - Despite a 29.6% year-over-year decline in volume, pricing actions have helped mitigate some of the impacts [20] Company Strategy and Development Direction - The company is focused on organic and inorganic growth, with a disciplined approach to capital allocation and share repurchases [6][22] - A significant increase in the selling project pipeline by $25,000,000 indicates a strong focus on higher value commercial engagements [12][30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving adjusted EBITDA margins of 15% by targeting $120,000,000 to $130,000,000 in revenue [28] - The company aims to maintain momentum through disciplined execution and capital stewardship, with expectations for continued improvement in profitability [23][41] Other Important Information - The company ended Q2 with $60,500,000 in cash, no debt, and $13,400,000 available under its revolver, indicating a strong financial position [22] - The share buyback program is not linked to any equity compensation plan but reflects the belief in the company's undervaluation [32] Q&A Session Summary Question: What revenue number is contemplated for the 2030 adjusted EBITDA margin target? - Management is confident in reaching $120,000,000 to $130,000,000 in revenue within the existing asset base [28] Question: How should the near to intermediate term new business pipeline be quantified? - The selling project pipeline increased by $25,000,000, spread across various market segments, indicating a mix of product sales and custom manufacturing [30] Question: Has the executive management equity compensation plan been presented to the board? - The share buyback was based on the belief that the company is undervalued, not related to any equity program for senior leaders [32] Question: What catalysts are expected for a rerating of the company? - Growth is seen as the primary catalyst, with a focus on both organic and inorganic growth [38] Question: Is a return to profitability expected in the near term? - Management is targeting profitability, excluding the Munhall aspect, and is optimistic about achieving this [41] Question: Will the company consider acquisitions in the future? - The company is looking for smaller transactions that can demonstrate growth synergies before pursuing larger acquisitions [46][58] Question: What multiples are expected for potential acquisitions? - The company aims to acquire assets at a lower end of the 6 to 8 times EBITDA range, focusing on disciplined growth [56][60]

Financial Data and Key Metrics Changes - Consolidated revenues for Q2 2025 were $1,110 million, representing a 4% year-over-year decrease, primarily due to decreased revenue in the Active Lifestyle segment [29] - Q2 adjusted EBITDA was $196 million, a 5% year-over-year decrease, mainly due to decreased revenue and incremental tariffs [30] - The company raised its full-year revenue guidance to a range of $3,800 million to $3,920 million, reflecting an increase of over $30 million at the midpoint compared to prior guidance [35] Business Line Data and Key Metrics Changes - Golf equipment revenue for Q2 was approximately flat year-over-year at $412 million, exceeding expectations [30] - Active Lifestyle segment revenue decreased by $36 million year-over-year to $214 million, primarily due to the sale of Jack Wolfskin and soft market conditions [31] - Topgolf Q2 revenue decreased by 2% year-over-year, primarily due to a 6% decline in same venue sales, partially offset by higher revenue from new venues [32] Market Data and Key Metrics Changes - Market conditions in the U.S. for golf equipment remain healthy, with rounds played approximately flat on a playable hour adjusted basis [8] - Conditions in the UK and Northern Europe markets are strong, while Asia and Central Europe are softer year-over-year [9] - The athleisure category in the Active Lifestyle segment is down mid to high single digits during Q2 [11] Company Strategy and Development Direction - The company closed the sale of Jack Wolfskin, enabling greater business focus and financial flexibility for Topgolf [4] - The company is committed to ongoing cost reduction and margin improvement initiatives, which have been beneficial in the current operating environment [6] - The strategic process for Topgolf is ongoing, with both a spin and sale being evaluated, although a spin is now impractical for the second half of the year [15][80] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the golf equipment segment, citing healthy consumer engagement and upcoming product launches [10] - The company is optimistic about the improving trends in same venue sales at Topgolf, driven by value initiatives and enhanced customer experience [12][39] - Management acknowledged the challenges posed by tariffs, increasing the estimated impact from $25 million to $40 million for the year [5][45] Other Important Information - The company reported an increase in available liquidity to $1,160 million as of June 30, 2025, primarily due to cash proceeds from the sale of Jack Wolfskin [32] - Net debt decreased to $2,390 million, down from $2,620 million year-over-year, reflecting improved cash balances [33] - The company expects to be free cash flow positive at both the total company and Topgolf in 2025 [38] Q&A Session Summary Question: Can you talk about the robust process regarding the spin and sale of Topgolf? - Management confirmed that the strategic direction remains unchanged, with only the timing of a potential spin being affected due to leadership changes [42][80] Question: What is the current health of the golf industry and drivers of the improving golf equipment business? - Management noted that the golf equipment business remains healthy, with consumer engagement strong and sell-through up low single digits [49] Question: What were the biggest contributors to the value initiatives at Topgolf? - Management highlighted the success of the Sunday Fun Pass and other value offerings, which significantly increased traffic and improved customer perception [57] Question: Can you provide an update on cost reduction efforts and labor efficiency initiatives? - Management indicated that teams have executed well on cost reduction, with improvements in labor efficiency and service speed contributing to stable margins [66] Question: How is the TravisMathew business trending? - Management reported that while the athleisure market is down, the women's category within TravisMathew continues to perform well [72]

Cerence (CRNC) Q3 2025 Earnings Call August 06, 2025 05:00 PM ET Speaker0Good day and thank you for standing by. Welcome to the Cerence Third Quarter twenty twenty five Earnings Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. Please be advised that today's conference is being recorded.I'd now like to hand the conference over to Kate Hickman, Vice President of Corporate Communications and Investor Relations. Please ...

Financial Data and Key Metrics Changes - Upwork reported record Q2 revenue of $194.9 million, a significant increase driven by AI enhancements and client hiring in AI-related work [5][19] - Net income reached $32.7 million, marking a 47% increase year-over-year, and adjusted EBITDA was $57.1 million, resulting in a 29.3% adjusted EBITDA margin [5][26] - The company raised its full-year revenue guidance to a range of $765 million to $775 million, reflecting strong marketplace performance [27][28] Business Line Data and Key Metrics Changes - The Business Plus segment saw a 190% quarter-over-quarter increase in GSV, with active clients growing by 45% [11][54] - Revenue from ads and monetization grew 17% year-over-year, with Connects revenue increasing by 19% and Freelancer Plus subscription revenue by 13% [12][25] - Average GSV per active client rose 5% year-over-year, surpassing $5,000 for the first time since 2022 [20] Market Data and Key Metrics Changes - GSV from AI-related work accelerated to 30% year-over-year growth, up from 25% in the first quarter [9][10] - The number of clients posting AI jobs grew by 38% year-over-year, indicating strong demand for AI services [10] - GSV from prompt engineering grew 51% year-over-year in Q2, showcasing the increasing reliance on AI tools across various categories [10] Company Strategy and Development Direction - The company is focusing on a three-pronged strategy centered on AI, ads and monetization, and enterprise solutions, which is expected to drive GSV growth [18][30] - Two strategic acquisitions were announced to enhance enterprise capabilities, aiming to capture a larger share of the $650 billion contingent workforce market [13][15] - The integration of AI into operations is expected to improve internal efficiency and margin profiles, with over 35% of deployed code now AI-generated [17][29] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the unpredictable macro environment but expressed confidence in the company's initiatives to offset pressures [40] - The company anticipates continued growth in GSV and revenue, particularly from AI-related work and the newly formed enterprise subsidiary [19][24] - The outlook for 2026 is optimistic, driven by multiple growth catalysts and the expected contributions from recent acquisitions [28][30] Other Important Information - Free cash flow for Q2 was $65.6 million, with $38 million used for share buybacks [26] - Non-GAAP gross margin reached 77.8%, reflecting disciplined cost management [25] - The company expects stock-based compensation to be between $60 million and $65 million for the year, indicating efforts to reduce expenses [29] Q&A Session Summary Question: Can you discuss the acquisitions and their integration into Upwork? - Management explained that the acquisitions will enhance Upwork's ability to serve enterprise clients with a comprehensive solution, addressing various contingent work needs [33][34] - The expected revenue contribution from these acquisitions is minor in 2025 but will grow significantly in 2026 [36] Question: How is the macro environment impacting the business? - Management noted that the macro environment remains unpredictable, but the company has successfully offset pressures through AI enablement and strategic initiatives [40] Question: What contributed to the take rate expansion this quarter? - The take rate increased by 50 basis points year-over-year, driven by supply and demand experimentation and growth in monetization products [45][46] Question: How are new customers using the platform? - Business Plus clients are converting faster and spending more than typical marketplace clients, indicating strong demand for the offering [54][55] Question: What is the distinction between the marketplace and enterprise business? - The marketplace serves smaller clients, while the enterprise business targets larger clients with complex needs, supported by the new acquisitions [60][62]

Financial Data and Key Metrics Changes - Adjusted EBITDA improved by nearly $6,000,000 compared to the previous year, reflecting successful productivity initiatives [6] - Consolidated net loss was $11,300,000 for Q2 2025, compared to a net loss of $3,400,000 in Q2 2024, primarily due to higher unrealized non-cash derivative losses and lower crush margins [21] - Net sales were $218,000,000, which is $18,000,000 lower than the prior year due to fewer gallons sold and lower average prices [17] Business Line Data and Key Metrics Changes - Sold 86,700,000 gallons compared to 95,100,000 gallons in the same quarter last year, reflecting a rationalization of unprofitable business [17] - Gross profit improved by $5,600,000 at Western facilities, with the addition of the Alto Carbonic Liquid CO2 Processing Facility contributing to a $3,000,000 improvement at the Columbia plant [21] - The Marketing and Distribution segment improved due to the integration of bulk volume customers and transitioning away from low-return businesses [8] Market Data and Key Metrics Changes - The annual uptick in demand from the summer driving season helped lift ethanol prices and improved crush spreads, with market crush averaging $0.30 per gallon for July [14][18] - The 45Z credit extensions through 2029 and new eligibility restrictions are expected to benefit domestic renewable fuel production [11] - Current carbon intensity scores indicate that Columbia will qualify for 10¢ per gallon for 2025 and up to 20¢ for 2026, equating to approximately $4,000,000 in 2025 and $8,000,000 in 2026 [12] Company Strategy and Development Direction - The company is focusing on short-term projects with immediate returns while laying groundwork for longer-term capital-intensive projects [7] - Evaluating projects to lower carbon intensity and capture benefits from 45Z regulations, as well as improving efficiency and productivity [7][24] - The regulatory environment is seen as positive, creating opportunities for the company to capitalize on [24] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the operational improvements and the potential for positive margins for the remainder of the summer [14] - The company is working on alternatives for CO2 sequestration following regulatory changes and is focused on optimizing the value of CO2 production [7][11] - Management highlighted the importance of repairing the dock to restore operational efficiency and capitalize on European sales opportunities [29] Other Important Information - The company has rightsized corporate overhead to align with its current footprint, aiming for annual savings of approximately $8,000,000 [9] - The annual meeting of stockholders resulted in the election of two new board members and the appointment of a new Chairman and Vice Chair [16] - The company is actively working with Guggenheim on Western asset optimization and monetization plans [24] Q&A Session Summary Question: Outlook for operational benefits from the Carbonic acquisition - Management indicated that there is still substantial capacity for growth at the Carbonic facility, with room to increase production [27][28] Question: Impact of dock damage on export strategy to Europe - Management confirmed that while dock damage has created challenges, they have developed workarounds and are exceeding initial sales projections for Europe [29][30] Question: Clarification on the Eagle Alcohol improvement - Management clarified that the $1,100,000 improvement was a one-time event related to deferred acquisition costs [34] Question: Further reductions in SG&A - Management noted ongoing efforts to scrutinize spending and negotiate better terms with suppliers, which collectively will have a meaningful impact [36] Question: Details on the Western asset monetization process - Management stated that they are in discussions with prospective buyers and evaluating opportunities, with the process taking time due to the unique nature of the assets [44][45]