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Cvent, Inc. (NYSE:CVT)

Q4 2013 Earnings Conference Call

February 20, 2014 17:00 ET

Executives

Pete Childs - Chief Financial Officer

Reggie Aggarwal - Chairman and Chief Executive Officer

Chuck Ghoorah - Executive Vice President, Sales and Marketing

Analysts

Greg Dunham - Goldman Sachs

Stan Zlotsky – Morgan Stanley

Gur Talpaz - Stifel

Michael Huang - Needham & Company

Brendan Barnicle - Pacific Crest Securities

Operator

Good afternoon, and welcome to the Cvent Fourth Quarter and Full Year 2013 Financial Results Conference Call. All participants will be in listen-only mode. (Operator Instructions) Please note this event is also being recorded.

I would now like to turn the conference over to Pete Childs, Chief Financial Officer. Please go ahead.

Pete Childs - Chief Financial Officer

Good afternoon, and welcome to Cvent’s conference call for the fourth quarter and full year 2013 financial results. This is Pete Childs, Chief Financial Officer of Cvent. And with me here today is Reggie Aggarwal, CEO and Chairman of Cvent and Chuck Ghoorah, our Executive Vice President of Sales and Marketing.

After the market close today, we issued a press release with details on our fourth quarter and full year performance. This can be accessed on the Investor Relations section of our website at investors.cvent.com. During today’s call, we will make statements related to our business that may be considered forward-looking under Federal Securities laws. These statements reflect our views only as of today and should not be considered representative of our views as of any subsequent date.

We disclaim any obligation to update any forward-looking statements or outlook. These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations. These risks are summarized in the press release that we issued today. For a further discussion of the material risks and other important factors that could affect our actual results, please refer to those continued in the Safe Harbor statements included in our earnings press release as well as our most recent filings with the Securities and Exchange Commission. As our Annual Report on 10-K as Form 10-K has not yet been filed, numbers presented today are preliminary, un-audited and may change. Also during the course of today’s call, we will refer to certain non-GAAP financial measures. A reconciliation of GAAP to non-GAAP measures is included in our press release.

Finally, at times in our prepared comments or in responses to your questions, we may offer metrics that are incremental to our usual presentation to provide greater insight into the dynamics of our business for our quarterly results. Please be advised that we may or may not continue to provide this additional detail in the future. This call is being recorded and a replay will be available following the conclusion of this call.

And with that, let me turn the call over to Reggie for his prepared remarks.

Reggie Aggarwal - Chairman and Chief Executive Officer

Thanks, Pete. 2013 was a very significant year for Cvent. We completed our IPO last August and we experienced tremendous success across all parts of our business. We are pleased to close out 2013 with a strong financial performance that was highlighted by continued momentum of our solutions for both meeting and event planners, as well as hotels and avenues.

Total revenue for the quarter was $30.7 million, a 30% increase from our year ago. The combination of our strong revenue performance and operational efficiency drove adjusted EBITDA to $2.3 million. For the full year, we generated revenue of $111.1 million, an increase of 33% from 2012 with an adjusted EBITDA of $15 million, both were above our guidance. As you look ahead, our business momentum remained strong and we are optimistic about our outlook, which is evidenced by our guidance for continued strong revenue growth for the full year 2014, which Pete will detail later. We are in the early stages of transforming the $565 billion meetings and event industry, an industry which are primary competitors than manual or homegrown processes that have been developed and used over time.

The macroeconomic trends that drive our business continue to foster a strong business climate for the company. Foremost among these trends is the ongoing adoption of technology within the industry in order to streamline processes and improve efficiencies and effectiveness throughout the meetings and events value chain. The events have become increasingly more difficult as the typical meeting planners now responsible for marketing the events electronically, integrating the data flows between event and their marketing systems, providing onsite technology such as mobile apps, plus incorporating all of the social aspects that today’s attendees have grown to expect.

Meeting planners are looking for an easier, more efficient way to meet these increasingly complex requirements. To take full advantage of the opportunity in front of us, we continue to invest in sales and marketing. And in 2013, we saw a solid return in the form of strong net customer additions with an overall annual growth at 15% as compared to 2012. As we stated above, our revenue grew much faster than the number of new customers, because our growth is also being fueled by moving up-market into large enterprise accounts and deepening relationships with existing customers.

With our land-and-expand strategy, we have been successful in selling existing customers’ additional modules of the platform, expanding their deployment to new departments and increasing the number of registrants to which they commit. Moreover, by serving both sides of the meetings and events value chain, we are able to leverage strong network effects, that means as the meeting planner hotels mutually benefit from each other’s greater participation or a platform.

Let me now review some key metrics that we committed to provide on an annual basis. Starting with the meetings and events side of our business, the number of meetings that were managed using our platform increased by 48% to over 205,000 meetings in 2013. This increase includes a one-time migration of 17,000 historical meetings by a large enterprise client implemented in 2013. Excluding this one-time import, meeting managed increased by 35% to 188,000 which we believe to be a more accurate view of our growth.

We processed and managed 8.7 million individual event registrations on our platform, a 19% increase from 2012. The number of registrations processed has historically grown slower than our revenue because an increasing amount of our revenue is generated by the sale of additional non-registration products and features such as mobile apps and web surveys. Additionally, we are earning more revenue for SMM clients who typically manage smaller internal meetings with fewer registrants.

Usage of our mobile products soared, as customers more than doubled the number of mobile apps deployed in 2013 compared to a year ago. On the marketing side of our business, we transmitted 1.2 million RFPs by this Cvent Supplier Network. We implemented deliberate strategy to have planners at fewer hotels to each individual RFP. Hotels view this positively because they had a better chance of winning the business. A better indicator of the growing value delivered to hotels and venues through the CSN is total RFP value transmitted between meeting planners and venues. Our meeting and event RFP value increased by 38% to 6.5 billion in 2013, even more significant was our growth in the number of hotel rooms sourced through the CSN. In 2013, 20.9 million room nights were requested to our platform, an increase of 50% from a year ago. And again the high value in customer satisfaction that our customers are seeing helped us maintain dollar value retention rates of over 95% for the year for our platform and over 100% for our marketing solutions.

Let me now provide an update on the performance of key aspects of our business during the fourth quarter. Starting with the meeting management side of our business, we continue to be successful with our enterprise level strategic meetings management solutions, which helps the meeting planners and procurement departments track and manage meeting expenditure as well as mitigate risk and create efficiencies. The SMM solution is particularly applicable to managing internal events, conferences incentive, meetings and trainings that are run by meeting and travel departments.

During the fourth quarter we signed a number of new SMM accounts including a big-four accounting firm Medtronic, SCIC, UCB Pharma and Ameriprise Financial. Renewals were also strong included organizations like Deloitte and Touche, Raytheon, salesforce.com and Roche Pharmaceuticals. Roche provided an excellent example of we expand our footprint with many of our enterprise customers. They started out in 2000 – they have started out in 2012 with a single location and in Q4 we renewed Roche at 3X the value of the original contract by expanding the use of our solutions to 12 global locations helping them centralize their meeting planning on enterprise level and adding additional registrations.

Turning to our mid-market event offering, in the fourth quarter we singed multi-year deals with new customers including Ellie Mae, Kenyon Fraser, Xtime and International Baccalaureate Organization, perhaps brands that are as well known as our enterprise customers, so that speaks to how big our market is. We saw renewal activity and upgrades in the quarter from customers including AARP, Bucknell University, FINRA, Mentor Graphics and Russell Investments.

With respect to our mobile apps, we continue to see huge demand as our customer transition – as our customers transitioned from thinking that mobile apps are nice to have to a must have. Mobile apps are no longer only for the early adopters because event attendees are mobile professionals who are starting to drive meeting planners to adopt mobile apps at their events. We are very excited about this space because in the next three to five years, we see tremendous growth in the use of mobile technology as it moves into the mainstream. We saw the same trend happen in online event registration years ago and we believe we can win our disproportionate share of this market as well. This is reflected in the doubling of the number of mobile apps our customers deployed in 2013.

Adopters of our mobile technology in the fourth quarter include Quest Diagnostics, Amway and Allergan. Quest Diagnostics initially reached out to us to replace the printed, folded-up agendas that they stuffed in the name badge holders the year before. The focus was our 1500 personal annual sales meeting, but they soon realized that our mobile app solution to be rolled out for other key internal sales meetings and chose to license the mobile app solution for five events just to start. We also saw mobile renewals for customers including Coronet, ALM Media and Human Capital Institute. As usual a number of our existing event management and SMM customers added mobile licenses, which is a key component of our land-and-expand strategy.

So now I’d like to turn to the other side of our platform and speak to our marketing solutions business. We monetize our Cvent Supplier Network, the largest database of hotels and venues for meeting and event planners through marketing solutions for hotels and venues. We entered the space six years ago. And over that time we have grown our volume from approximately $50 million to over $6.5 billion in volume. Having said that, we believe this market is significantly under-penetrated and represents a major opportunity for Cvent.

During the fourth quarter, we signed new deals with Club Core, Salamander Hotels, the St. Louis Convention and Visitors Commission and the San Francisco Travel Association. Similar to the suggested and diamond plus ads that we mentioned during our last call, we continue to innovate. In Q4, we launched our promotions hub, which gives hotels a way to directly market to planners who are looking for promotions offered by hotels and venues. Likewise, planners now have an efficient tool to assist them in search for specific offers among the 200,000 venues on our supplier network as they can now search for promotions by multiple factors such as market, popularity, date, most frequently claimed, or by criteria specifically tailored to the planner’s organization.

In a very short time, we already have over 3,000 hotels that are listed their promotions. Similar to the suggested and diamond plus ads, these ads are priced on a pay-per-lead basis. We continue to make great headway in our international markets increasing our RFP flow at a faster rate than domestic. As a result of the strong global RFP growth, in the fourth quarter, we continue to renew and expand our marketing solutions business with a number of significant customers, including Caesars Entertainment, Hilton Worldwide, Marriott Hotels and Millennium Hotels. Additionally, we continue to secure large multi-year deals with several of the largest global chains and management companies.

As we look to 2014, we continue to invest in sales and marketing to broaden our reach, while also investing in bringing on new and improved solutions to the market, continuing the strategy that drove our success in 2013. I’d like to highlight two new solutions that we expect to broaden our reach and depth of our offering to customers as we look ahead. I want to emphasize that this is still early days for both of these projects. While we don’t anticipate seeing immediate ROI in 2014, this will be an important year to set a foundation for future growth.

We have seen across Global 2000 companies that the marketing departments organize a high volume of events for prospects and customers. As a result, we have started an exciting new solution focused on providing companies with an enterprise event marketing, or EEM, to help companies increase lead generation and revenue. Marketing events are one of the most effective B2B marketing tactics that account for approximately a quarter of the company’s marketing budget. With the growth in digital marketing as well as marketing automation solutions, BMOs are trying to deliver intelligent insight into the effectiveness of their meeting spend.

Our EEM solution will bring together a number of our products, including mobile apps, event management, marketing, web survey, and our integrations to get companies’ insight in order to improve the ROI on their events. Similar to our SMM solution, which provides support for meeting planners and procurement departments with policy compliance and budget management, EEM helps sales and marketing teams create intelligent events with an emphasis on lead generation, digital engagement and integrations with their marketing automation and CRM systems, such as Salesforce.com, Eloqua, or Marketo. With solutions that address both the procurement and marketing clouds, we are excited to now offer event management platforms for both internally and externally focused meetings and events that are robust enough to serve the largest enterprises.

One customer who has seen this is Brainshark, a leading provider of cloud-based video presentation solutions. Brainshark chose us because we offer the most comprehensive platform and out-of-the-box integrations with others’ technology in the marketing cloud. They have increased their number of events they host by 50% tripling the number of registrations they tracked and more than doubling their participation metrics at these events. Their annual dollar commitment to Cvent has also grown by 5X. The significant business value we are delivering to our customers is why Cvent is increasingly becoming an essential component in their marketing and lead generation strategy.

Finally, I want to note that a few weeks ago we announced a new platform called CrowdTorch that combines two previously announced acquisitions, TicketMob and Seed Labs to create an end-to-end solution for consumer events. The new integrated platform combines ticketing, mobile, fan engagement, website, social media and deep analytics. This first of its kind audience management platform, which we’ll call, AMP help Cvent customers promote their brand, engage fans, increase ticket sales and build audience loyalty. Just as our event management platform eliminates, the corporate meeting planner’s need for manual processes and multiple point solutions, we believe AMP will provide similar benefits in the realm of consumer events. The CrowdTorch AMP solution gives venues, promoters and artists an integrated platform to engage with their fans and ultimately sell more tickets.

In summary, we had an excellent fourth quarter and year with strong performances from both the platform and marketing solutions businesses. We are excited to be developing a variety of new products from our new integrated end-to-end solution for consumer events to a new enterprise event platform, marketing platform. Combined with the momentum we are seeing with our leading solutions for meeting planners and hotels, we believe network effects that drive both planners and hotels to our platform will continue to grow in the future.

With that let me turn the call over to Pete.

Pete Childs - Chief Financial Officer

Thanks Reggie. Now let me take everyone through the details of our financial performance and provide our guidance for the first quarter and full year 2014. Total revenue for the quarter was $30.7 million, an increase of 30% from the fourth quarter 2012. In total revenue, platform subscription revenue was $21.4 million, an increase of 28% compared to a year ago and marketing solutions revenue was $9.3 million, an increase of 35% compared to a year ago.

I will discuss the results on a non-GAAP basis. A reconciliation of GAAP to non-GAAP results has been provided in our press release, issued after the market closed today. Non-GAAP gross profit in the fourth quarter was $20.2 million, resulting in a gross margin of 66%, which is a decrease from 76% in the fourth quarter of 2012 and 72% in the third quarter. The decrease reflects an increase in customer service headcount and technology infrastructure to support the long-term growth of our business. It also includes the reclassification of full year training costs for customer services of $600,000 and the one-time impact of $700,000 related to adjustment for capitalized R&D.

Excluding these items non-GAAP gross margin would have been approximately 70% for the quarter. As we look ahead we expect the gross margin to be around 70% in 2014 as we continue to make investments to support the long-term growth of our business. Longer term we remain confident that we can generate around 80% gross margins over time.

Turning to operating expenses, non-GAAP sales and marketing costs increased 37% from a year ago, as we are still in the early stages of ramping investments in sales and marketing to drive our top line growth on a global basis. R&D grew 47% on a non-GAAP basis from the fourth quarter last year, as we continue to make investments to support product enhancements and the development of new products like our new promotions hub.

Non-GAAP G&A costs increased 55%, due primarily to hiring to support the scaling of our business as well as incremental costs associated with operating as a public company. Non-GAAP operating income was $300,000 or 1% of revenue, compared to non-GAAP operating income of $3.8 million or 16% of revenue a year ago. Adjusted EBITDA of $2.3 million represented a 7% adjusted EBITDA margin and compares to adjusted EBITDA of $5.4 million or 23% adjusted EBITDA margin in the fourth quarter of last year.

As in the third quarter, our profitability metrics were lower in the fourth quarter 2013 compared to the prior year, due to the expected impact of investments in our growth including our CrowdTorch, CrowdCompass and TicketMob acquisitions increased investments in technology and sales and marketing as well as incremental costs associated with becoming a public company. We continue to focus on investing in our growth and are deploying resources as quickly as possible, while at the same time being sure to do so efficiently and maintaining our standards for hiring the highest quality employees to join our organization and culture.

Our expenses were lower than anticipated in the fourth quarter. We will continue to increase investments in our growth initiatives in 2014, consistent with our prior messaging. Non-GAAP net income was $400,000 million for the fourth quarter or $0.01 per share. This compares with non-GAAP net income of $3.6 million or $0.10 per share in the fourth quarter of 2012. On a GAAP basis, operating loss was $700,000 in the fourth quarter of 2013, GAAP net loss was $600,000 or a loss of $0.02 per share.

For the full year revenue was $111.1 million, an increase of 33% from 2012. Within total revenue for the year platform subscription revenue was $77.5 million, an increase of 32% compared to 2012 and marketing solutions revenue was $33.7 million, an increase of 36% compared to 2012.

Non-GAAP operating income for the full year was $7.3 million or 7% of revenue compared to non-GAAP operating income of $14.9 million or 18% of revenue in 2012. Adjusted EBITDA of $15 million represented a 14% adjusted EBITDA margin and compares to adjusted EBITDA of $20.3 million, which represented a 24% EBITDA margin in 2012.

Now, turning to our balance sheet, we ended the fourth quarter with cash, cash equivalents and short-term investments of $157.8 million equal to the balance at the end of the third quarter. Of note, subsequent to the end of the fourth quarter, we completed a follow-on offering that provided us with net proceeds of $24.7 million after underwriting discounts and commissions and deducting offerings related expenses. Deferred revenue at the end of the fourth quarter was $65.2 million, an increase of 27% on a year-over-year basis and up 34% from the third quarter. This is consistent with historical deferred revenue patterns with a strong sequential increase in deferred revenue in the fourth quarter followed by a small sequential increase in the first quarter and quarter-to-quarter decreases in the second and third quarters. We anticipate this pattern will continue.

Now, let me turn to thoughts on our financial outlook for the first quarter and full year 2014. After having made significant progress on many fronts in 2013, we are entering 2014 with strong market leadership business momentum. Looking at the year as a whole, we anticipate full year revenue in the range of $137.8 million to $139.6 million, representing approximately 24% to 26% growth. We expect 2014 adjusted EBITDA to be in the range of $12.8 million to $14.3 million, which represents an adjusted EBITDA margin of approximately 10% at the midpoint of our guidance ranges and reflects our continued investments in sales and marketing and technology.

We expect a non-GAAP net loss of $1.4 million to net income of $300,000 or a loss of $0.03 per share to a income of $0.01 per share based on an estimated 41.1 million basic shares and 42.8 million diluted average weighted shares outstanding respectively. Our non-GAAP guidance for 2014 excludes stock-based compensation expenses of approximately $7.6 million, acquisition-related costs of approximately $1.5 million and office relocation costs of $750,000. Adjusted EBITDA excludes these costs as well as interest income of approximately $1.1 million, cash taxes of approximately $4 million and depreciation and amortization expenses of approximately $11 million. Excluding these adjustments, we anticipate a GAAP net loss of $11.1 million to $9.6 million or a loss of $0.27 to $0.23 per share based on an estimated 41.1 million basic average weighted shares outstanding. While we expect a GAAP net loss for the year, we expect to pay cash tax of approximately $4 million for the year.

Looking at the first quarter of 2014, we expect to generate revenue of $30.6 million to $31 million, representing an increase of approximately 26% to 27% in the prior year. We expect adjusted EBITDA of $1.6 million to $2 million, This would lead to non-GAAP net loss of $600,000 to $200,000 or a loss of $0.01 to breakeven per share based on an estimated 40.9 million basic average weighted shares outstanding. Non-GAAP guidance for the first quarter, excludes stock-based compensation expenses of approximately $1.3 million in the first quarter and acquisition-related costs of $400,000.

Adjusted EBITDA excludes these expenses as well as interest income of approximately $300,000, cash taxes of approximately $300,000 and depreciation and amortization expenses of approximately $2.2 million. Excluding these adjustments, for the first quarter, we anticipate a GAAP net loss of $2.3 million to $1.9 million or a loss of $0.06 to $0.05 per share based on an estimated 40.9 million basic average weighted shares outstanding. While we expect a GAAP net loss in the first quarter, we expect to pay cash tax of approximately $300,000 in the quarter.

In summary, we are pleased to deliver a strong performance in the fourth quarter and for the full year. Most importantly, we believe that we are well-positioned to deliver another very successful year with expanding market leadership across all of our product lines and strong revenue growth combined with healthy profitability.

Now with that, operator, we can open the call to questions.

Question-and-Answer Session

Operator

At this time, we will begin the question-and-answer session. (Operator Instructions) And our first question will come from Greg Dunham of Goldman Sachs.

Greg Dunham - Goldman Sachs

Yes, thanks for taking my question. First question is on the EEM initiative and when that product actually is expected to go live, how is that going to be priced and when would you expect customers to actually start using that as you look to 2014 and 2015?

Reggie Aggarwal

Yes, Greg. It’s a good question. So we are still working on the product. It’s really just a natural extension of our platform, because we have been selling into the marketing side of corporations since we started the company. This is just more of the comprehensive to really focusing on the shift of the marketing cloud and just the increased demand and what’s happening in marketing, in general. So this is something we are still developing. We just – it’s the actual product coming out. We haven’t put a timeframe out there yet. We just wanted to announce that we are starting to build it and it will take some time. It won’t happen in ‘14 and it will be – just like any product that evolves, it’s a multi-year product.

In terms of the pricing, again we are still working through that, but its going to be pretty similar to the way we price SMM and it will be a per registrant basis as well as, as we had a different functionality we will price the same way in terms of the license fees. So we are still working through it is really that the direct answer, but we are excited about it because it’s a simple natural extension that we know that we will be able to get a high ROI on ones, as we make the investment.

Greg Dunham - Goldman Sachs

Okay, great. And one more for me, another product one, on the promotions hub, you mentioned that 3000 hotels that have signed up for, how has the activity been in regards to that launch and what are the kind of early lessons learned thus far?

Reggie Aggarwal

Yes. So, we just launched it in Q4. We have 3000 hotels that have signed up pretty quickly. We think its going to be something that will be successful. It’s going to take time to ramp up like anything else, because we have so many good relationships that kind of started off we think on the right foot. And we know that a lot of the people who are looking for venues of course one of the big drivers is going to be the cost effectiveness of the venue. So we think this is actually a very important step forward to helping customers search with one of the ways they like to look for which is special deals. That’s always kind of a natural human driver and so just started so we don’t have a lot of insight into it. But we like the fact that it’s a new innovative product and we are the first person to really put this out there and so we are optimistic for it, but it’s just starting.

Greg Dunham - Goldman Sachs

Okay, great. Thanks guys.

Operator

And the next question is from Jennifer Lowe of Morgan Stanley.

Stan Zlotsky – Morgan Stanley

Hi, guys. Good afternoon. It’s actually Stan Zlotsky sitting in for Jennifer. Thanks for taking our question. So I want to dig a little bit on the marketing solutions side. So it looks like it slowed down a tiny little bit to 35% growth in the year, although it still outperformed our numbers. But if you look at the room nights, that slowed down to about 36%, I am sorry the RFPs that slowed down to 36% as well, so was there some kind of end of year seasonality that you saw, and how are you thinking about that business going into 2014? Thank you.

Reggie Aggarwal

The first thing is that we actually feel really good about the business. I mean it is a little bit law of the big numbers as you grow. So it’s a little tougher, but in general we are feeling really good. I think in looking at the volume first, as you mentioned the key stat that we look at is the fact that we grew our volume to 6.5 billion with 38% increase and again the room nights when up about 50% to 20.9 million. So that’s the first thing to make sure that shows that the adoption of the product by the meeting planners continues to be strong and we consider – we continue to be the market leader. So that’s kind of the first thing I would say. In terms of the revenue growth as we saw moving into different areas like international, it does take time to ramp that up because you have to get the volume up in those cities. So as an example imagine Athens, Greece, just let’s say you have to get $20 million of RFP volume in there before the hotels in Athens are buying diamond packages are any of their other products. So as we continue to put more RFP volume both domestically and internationally the revenue will continue to go up.

So I think overall we feel really good. We are seeing great renewals with our hotel partners, deeper partnerships. We are coming out with more innovative product. But most importantly we are driving the most volume and we are the number one place for any hotel or venue to get the group and meetings business, just to make – to recall about generally around the third to the business of the large hotels comes from the groups and meetings and we are the number one place to go to and we are increasingly becoming strong and stronger on the globe.

Pete Childs

So if I could add two points to what Reggie said, first we mentioned the new ad types, we talked about the new ad types. We have mentioned this before, but there is variability in terms of how that revenue is going to be recognized with those new ad types. So we will add some variability to CSNs, the marketing solutions results. Secondly as you look at the – if you are looking at the growth sequentially, we did have a very strong Q3 as a result of new ad types and as a result of strong comparable for Q3 and Q4.

Stan Zlotsky – Morgan Stanley

Okay. And just one more very quick one, partnerships you announced, PSAV last quarter, how are you viewing partnerships as a contribution to 2014? And that’s it for me. Thank you.

Reggie Aggarwal

Yes. So historically we haven’t done a lot of partnerships, we have been a very grassroots marketing and direct kind of sales organization. So it’s an area that I think we can improve on. PSAV was one of our first partnerships and the great thing is that PSAV is the largest AV vendor in the United States. They implant themselves in hotels and provide the AV services that a lot of people assume are the hotel themselves. So they are in a good position to influence events. They are involved with the hundreds of thousands of events across the U.S. So the partnership was a good partnership to help us get in front of customers.

What was great is that they did by upfront. They committed to buying a certain amount of mobile apps. So it’s not one of these partnerships where you are not sure if they are going to work. So I think in general the partnership is going great. They are helping us to build our brand. They are helping us to distribute mobile apps. I think they are happy with our products and we are going to continue to do other partnerships in other areas of our business because we think that is a way to expanding, grow our company. And so this was a great kind of partnership to have, to start off with. And in terms of the contribution in 2014 we haven’t – we have modeled some out, and incremental growth to that, but it’s we are still – we are optimistic in getting more. And it’s – but what we see historically we just incrementally grown it a little bit for 2014 revenue contribution.

Stan Zlotsky – Morgan Stanley

Okay, thanks guys.

Operator

And the next question is from Tom Roderick of Stifel.

Gur Talpaz - Stifel

Hi, guys. This is Gur on for Tom. I was hoping you could talk a bit about your thoughts around the B2C market, particularly with regard to the launch of CrowdTorch. And then more specifically, do you see opportunities to compete against entrenched players like Ticketmaster, it’s really more about kind of taking over a separate niche?

Reggie Aggarwal

Yes, it’s a good question. So we are not AMP, as we call it, for the CrowdTorch platform, is not geared towards Ticketmaster which is really geared towards the larger venues and larger events that tend to be at the big stadiums that have 20,000, 30,000, 50,000. We are geared towards kind of the mid-market which we think is an underserved market, which is why we have been able to grow very quickly in the market. That isn’t at least right now, something that historically Ticketmaster has focused on. More importantly we think our product is more geared towards that vertical. So even though Ticketmaster is a competitor, we don’t generally run into them in terms of these mid-market venues and artists and the customers we would target there. And we have had a lot of great success in that business and it is growing more rapid than our core business. And we continue to see great successes.

Gur Talpaz - Stifel

In terms of how you price that solution, is it also on a per attendee basis and I saw you won some pretty sizable customers. Particularly the New Orleans Jazz Fest, which I think has 400,000 attendees each year. Is that priced on a per attendee basis or is it a bit different versus your core B2B products?

Reggie Aggarwal

The consumer side that we call like first cousin to the corporate side and the business side, so pretty similar, but what we charge is again a per registrant or ticketing fee. And then we charge also many times a percentage of the actual dollar amount of the ticket. So we do both. Where we don’t do that – we don’t do that on the corporate side in terms of the percentage of the dollar amount. So that’s probably the difference.

Gur Talpaz - Stifel

Got it and then just one last question, with regard to enterprise, can you talk about the SMM pipeline, you announced a few good wins and a few good renewals here, how is that looking for 2014?

Reggie Aggarwal

Yes. So enterprise we have had a lot of great success to note in 2013, if you recall we didn’t really get into this space, we got our first, literally handful a half dozen customers in ’09. And since then we have grown tremendously. We continue to have some great wins on enterprises and what’s great about the space is that as we get a customer, we are generally only about 15%, 20% penetrated, so a lot of room to grow within a current customers not just with our SMM solution but up selling our other solutions. But getting back to the question is that our pipeline looks fantastic. We are very optimistic and again that segment of our business growing. There aren’t as many competitors in that segment because there are some natural barriers including you have to have a global support organization to work with these enterprises, because they want the port product development and they want from a – of a global vendor so that limits the amount of vendors in the space number one.

Number two, with CSN, there is only a couple of companies that have Cvent Supplier Network, and that’s critical because part of the equation is cost savings and the cost savings primarily comes from the venue because that’s who usually gets the line share of the cost of an event besides the airlines. And so with our solution, we provide the full end-to-end solution which very few other companies have that and of course would really provide the biggest advantage is that were integrated global platform and the only one out there. And so, all this leads us to believe that we’ve built a fantastic reputation, our renewal rates have been basically, virtually 100% and so we got a great reputation in that all those well towards having the great pipeline for ’14 because amongst the Global 2000, it’s actually a smaller industry than you think because they all tend to each other. And right now, we’re taking a difficult portion of share of the SMM market and so, we continue to see those trends hopefully in 2014 with the strong pipeline.

Gur Talpaz - Stifel

Perfect. Thanks for the detail.

Operator

And next we have a question from Michael Huang of Needham & Company.

Michael Huang - Needham & Company

Thank very much. Hey guys, just a couple questions for you. First of all, if I heard it correctly, I think you had mentioned a renewal over Salesforce.com. And I was wondering if you could share maybe some thoughts around, are you the event platform behind Dreamforce, or are you powering something else for Salesforce?

Reggie Aggarwal

Yes, it’s a good question. We are not the platform behind Dreamforce. What happens, just as an example, these larger events, and I think in this case now it’s over a 100,000 plus attendees on the large trade shows let’s call it. We generally don’t power those because they tend to bring – build custom solutions for millions of dollars for that actually event because of the financial impact. So, we tend to focus on the events that would be call small to midsize kind of under 5,000, let’s call it. We’re expanding our solution to be able to address that market, that’s longer term. But getting back to sales force, what happen is that there is several different areas, they’re using us for their sourcing to find venues, for attendee management, and then meeting planning. Let me just take a second to go through that. So, from the attendee management side for their internal training and boot camps for example, they’re using our event registration platform, exact target using it for many of their different events also. So, it’s not just that the corporate is also sub-event, exact target.

In terms of the meeting planning side, what sales force is doing like a lot of large corporations, they have so many events around the world, they are using part of our SMM platform to register their meetings, just so that they can literally get a sense of how many meetings that they do across the company because there are so many different moving parts for a large growing company like that. So, we’ve had some good – some good penetration this year within sales force and a lot of room to hopefully grow.

Michael Huang - Needham & Company

Got it, okay. And then just a follow-up to some of the activity that you are seeing at the enterprise level with SMM, are you, I mean, in terms of some of the marketing wins that you were able to announce for us today, were those primarily replacing homegrown systems, or were there some vendors that you replaced there, and who often were you seeing from a competitive standpoint?

Reggie Aggarwal

So from a large view, if you look at the Global 5000, there is less than 10% penetration by all the vendors combined. So, the first thing is lots of Greenfield. This SMM really just became popular in the last three or four years. Some of our competitors have historically been in the business for a longtime, but it’s really just became a much more popular thing to adopt just more recently which is what part of that reason we’ve been growing fast. So, that’s kind of point number one, lots of Greenfield opportunity. So, our biggest competitor by far is the manual process in the disparate solutions in every different division and every different global office uses something different. So, the vast majority of our wins are competing against that the manual process in disparate solutions. So, most of those wins came from that. We have had wins of course from competitive and we are as Mike you know, we’re very competitive as a company and so, we are excited about those wins, but the majority is coming from the Greenfield opportunity and that’s what it will be for the remainder, I mean for the near foreseeable future.

Chuck Ghoorah

Mike, it’s Chuck. The only thing I would add is just to put some color around some of the things that we talked about. I would echo what Reggie said, is that the vast majority of the wins are Greenfield, but just put some color around it, the big four accounting firm was a takeaway from a large incumbent competitor that you’re familiar with and then for example, Kaiser Permanente, had a manual system that converted over to a online platform. So, that the business thesis is playing out across both, sort of buckets, as we like to view them internally.

Michael Huang - Needham & Company

Got it, okay. And then last question, I mean, obviously you guys are a horizontal platform, and have successes across verticals. But I was wondering from an industry standpoint, are there any verticals that are standing out to you right now as you look at the cross section of your pipeline for example?

Reggie Aggarwal

The thing is that they look – there is some verticals that have, that are little more meaning intensive pharmaceutical, financial services as suppose to natural resources, you don’t normally have a lot of coal mining conferences, internally. So, there are some that are more naturally disposed to having more meetings. But having said that, it’s – a great thing about the space is, it’s not a vertical strategies of horizontal also and because every vertical industry has meetings. They just don’t realize how big they are. As we had mentioned many times, it generally represents about 1% of their top-line revenue, but the point is that it goes across all the verticals, some are little more intensive in terms of the meetings that of course we’re focusing on the financial pharma, we continue to win lots of those customers, but it really is all the verticals.

Michael Huang - Needham & Company

Great, thanks very much guys.

Reggie Aggarwal

Thanks.

Operator

And the next question is from Brendan Barnicle of Pacific Crest Securities.

Brendan Barnicle - Pacific Crest Securities

Thanks so much. Reggie, in the past you have shared that your marketing fees are less than 1% of the rooms that are booked using your marketing tools. You think that these new product announcements can move that up as we look out to next year?

Reggie Aggarwal

Yes, so here is couple of thoughts of just to clarify your question, there is about $6.5 billion of volume that went through 2013 take that divided by the revenue that we had in our Cvent Supplier Network or our marketing side that comes out to about roughly let’s call it 0.5%, right and so, I know we’ve been asked the question is the room for expansion. Our view is that our hotels are our partners, and what’s critical that we – as we continue to provide them value whether it’s more volume, whether it’s also providing more, more efficiency tools, we developed tools to make them more efficient and responding to RPs and just more efficient in doing their business so, they can focus on their customers. These are the kind of things we have to value add and as we do that, then I think that we’re going to be able to monetize that more because we’re adding more value to the hotel. I think one of the things as we mentioned we’re doing multiyear deals are partners and hotels more because we were getting deeper with them and they really are starting to recognize us which is differentiated from I think almost all of the other competitors as truly a partner that we can develop things together, partner together and do thing is a win-win for both. We think that’s the right long-term view to have a sustainable partnership and frankly a nice revenue stream for us and a profitable revenue stream as we continue to grow. So, I think that as we increased the – I mean the value and the tools we provide them then we can continue to further monetize our partnership.

Brendan Barnicle - Pacific Crest Securities

Reggie, are there any areas that are particularly needed, particularly a value added that you guys can work on right now that might accelerate what that contribution might be to the value you are adding to those hotel partners?

Reggie Aggarwal

Yes, I think, we’re doing that now so for example, we’re giving them more opportunities to get more at the plate. Just, part of the thing they want is more opportunities to get in front of planners and so that’s why we’ve done some of these different ads, like suggested, diamond plus and the promotion so that kind of one. The other thing is we’re adding more productivity tools to our suite so, one of the things for example is when they – as they log in, we’re able to for example integrate with their backend CRN solutions so they have to double enter when they get an RP, that’s something we made a big emphasis on over the last couple of years. And so, there are different things that we’re looking at and I think that the big point is that as we talk to them getting into their – deeper to their operations and understanding that more, we are producing these productivity tools. I think that’s the kind of areas that we’ve been able to hopefully get and accelerate the monetization, but I want to stress to our investors as we have since we have been on our road show. Is that – this is a long-term play and we’re going to continue to invest on adoption and partnership with the hotels, because really what’s needed globally is for us to become the – continue to be the market leader where meeting planners look for when they are looking for a venue for their group or their meetings and events and that’s the prime thing we are focused on. And I think if we accomplish that goal, then automatically hotels will continue to be happy to invest in a partnership with Cvent, because we are adding so much value to them.

Brendan Barnicle - Pacific Crest Securities

Great. And then lastly, Reggie, you guys continue to have a huge part of your workforce in India, I was wondering what you saw for retention amongst employees over in India this past year?

Reggie Aggarwal

Yes, thanks for asking the question, because lot of people forget culture is actually probably the most important thing to our company, because it’s all about the people. So I just got back from India, I was there for – I usually go there for eight weeks personally as well as every executive does, and because it’s an important part of our company and it becomes even more important as we go global to have that beachhead of 750 employees in India. So in terms of retention, it continues to be extraordinarily high. And that happens from number of reasons. Number one, I still feel comfortable saying we have probably the best training program, at least I could say that in Delhi. I mean, we train our people anywhere between 6 and 14 weeks of investment in them. That’s number one. Number two, we think we pay very competitive salaries and part of that’s having our executives, we know how hard is to find good people and train them, so then we want to retain them.

I think the third thing is we are giving them a lot of intellectual work, a lot of companies look at India as a back end and what we have done is get in part involved in the whole company. And the way we have done that is we have every part of Cvent in our headquarters have been replicated, sales, marketing, client services, technology and so forth. So people feel part of an enterprise, not just part of a division. And I think that allows them to feel like they are making influence in learning themselves about how a company works not just development or just client services. And so with all that, I think we have done well. The final thing I will tell you just like the story you have had in the U.S. where 8 of our 10 original management team has been with us. In India it’s the same story. We opened that office in 2002 or 2003. It’s been a little over 10 years, and I think 85 or – 6 out of the 8 or 5 out of the 7 original management team are still there. And I think they have built a great culture with a team underneath it. But all this leads us to have a very strong office that allows us to expand quickly globally, but more importantly creates a nice foundation as we continue to grow as a company to be able to leverage them to be also cost efficient and again and to add more value as they move from a cost center to a value center.

Brendan Barnicle - Pacific Crest Securities

Great. Thanks a lot, Reggie.

Reggie Aggarwal

Thanks.

Operator

And this concludes our question-and-answer session. I would like to turn the conference back over to Reggie Aggarwal for any closing remarks.

Reggie Aggarwal - Chairman and Chief Executive Officer

Well, thank you again for joining us on our call today. We are pleased to see our momentum continue with strong fourth quarter results that exceeded expectations. We believe we are well-positioned to capitalize on the significant market opportunity ahead of us and further expand our leadership position as the technology solution provider to the event and meeting management industry. We believe we are well-poised to leverage our accomplishments in 2013 to even greater success in 2014. We look forward to speaking with you again on future calls. And thank you.

Operator

The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.

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