Following the successful implementation of our Path to Profitability strategy, CM.com reached positive EBITDA levels at the end of the third quarter. Gross profit and gross margin grew to all-time high levels in the quarter, following the explicit focus on growing revenue in products with high margin. Typically, those are products in SaaS, Payments, and Ticketing. In CPaaS, revenues dropped as a consequence, with continued focus on profitability over volume. OPEX continued to decline, following the implementation of cost measurements, and the lowering of headcount. On the back of an anticipated OPEX reduction of approximately 25% for H2 2023, we comfortably reiterate our guidance to become EBITDA positive before restructuring costs over H2 2023, which is an important milestone on our trajectory to become free cash flow positive by H2 2024.
BREDA, 26 OCTOBER 2023
Q3 2023 highlights
• Gross profit reached an all-time high as it grew 3% YoY to €20.0 million;
• Gross margin continued to improve by 3.6 percentage points YoY to 31.6%, also an all-time high;
• OPEX declined further, following the implementation of cost control measures and a 16% decline YoY in FTE towards 786;
• Normalized EBITDA turned positive at the end of the third quarter;
• Following the successful implementation of our Path to Profitability strategy, revenue continued to grow in SaaS, Payments, and Ticketing, and slowed down in CPaaS, as we focus on profitable revenue streams;
• Generative AI tools were launched in September to assist agents in contact centers in their engagement with customers. First analysis already shows strong efficiency improvements for our clients;
• Juniper Research recognized CM.com as 'Established leader' in CDP (Customer Data Platform) market and Everest Group recognized CM.com as major contender in Conversational AI products;
• In SaaS, ARR grew 8% YoY to € 31.3 million, as new order wins continued to come through;
• In Payments, the migration of clients onto our in-house acquiring platform progressed well. Payment volumes processed grew 13% YoY;
• Ticketing was the strongest performer this quarter, as number of tickets sold grew 24% YoY.
Outlook
Given the developments in the third quarter, CM.com is comfortable to further specify its outlook. CM.com now expects:
• Q4 2023 gross profit growth to be at least 10% YoY;
• OPEX before restructuring cost over H2 2023 to decline approximately 25% YoY;
• Normalized EBITDA to be positive over H2 2023, which would be for the first time since H1 2021;
• Free cash flow to be structurally positive by H2 2024.
Message from the CEO
Today we released our Q3 2023 results, which are a confirmation of the success so far of our Path to Profitability strategy. CM.com again improved its profitability and acted decisively in lowering its OPEX. All this is in response to the rapidly changing macro-economic market circumstances in the last 12 months. As a result, CM.com reached an EBITDA positive state towards the end of the third quarter, an important mark in our financial roadmap towards 2026. After years of investing in our foundation, 2023 is all about optimizing the efficiency of our organization, to accommodate future growth.
The markets we operate in are sensitive to changing circumstances, but nevertheless are expected to grow further in the coming years. Many companies are still not communicating with their clients in an optimal way, something that is increasingly important nowadays for the survival of business models. CM.com continues to position itself in this field as a trusted, innovative partner that can accommodate the needs of our clients in all circumstances.
In Q3 2023 our gross margin and gross profit grew to all-time high levels, supported by topline growth in especially segments with high margin products. What stood out this quarter, was the performance in Ticketing. Museums, parcs and live events showed a pickup in the use of our tools and services. Furthermore, in SaaS, we launched our Gen AI tools last September. Since then, over 200.000 conversations have been supported by these tools. First analysis shows that in 73% of the conversations, a contact center agent directly used the answer generated through our Gen AI tool to respond to questions from customers. The level of satisfaction with the use of our AI chatbots increased by 40%. So that looks promising.
As CM.com continued to execute on its Path to Profitability, we further optimized our operational structure. This resulted in a steep decline in OPEX levels in Q3 2023, following further cost control measurements and a 16% decline YoY in our FTE numbers. The shift of our focus towards capitalizing upon our existing workforce, and optimizing our operational expenditure, has improved our resilience to be able to operate profitably in all market circumstances. As such, CM.com now expects OPEX levels over H2 2023 to be approximately 25% lower than H2 2022.
Overall, as proof points come through, we reiterate our guidance to be EBITDA positive over H2 2023 (normalized). That would be for the first time since H1 2021. Consequently we also reiterate our guidance to be free-cash-flow positive by H2 2024.
Jeroen van Glabbeek
CEO CM.com
BREDA, 26 OCTOBER 2023
Q3 2023 highlights
• Gross profit reached an all-time high as it grew 3% YoY to €20.0 million;
• Gross margin continued to improve by 3.6 percentage points YoY to 31.6%, also an all-time high;
• OPEX declined further, following the implementation of cost control measures and a 16% decline YoY in FTE towards 786;
• Normalized EBITDA turned positive at the end of the third quarter;
• Following the successful implementation of our Path to Profitability strategy, revenue continued to grow in SaaS, Payments, and Ticketing, and slowed down in CPaaS, as we focus on profitable revenue streams;
• Generative AI tools were launched in September to assist agents in contact centers in their engagement with customers. First analysis already shows strong efficiency improvements for our clients;
• Juniper Research recognized CM.com as 'Established leader' in CDP (Customer Data Platform) market and Everest Group recognized CM.com as major contender in Conversational AI products;
• In SaaS, ARR grew 8% YoY to € 31.3 million, as new order wins continued to come through;
• In Payments, the migration of clients onto our in-house acquiring platform progressed well. Payment volumes processed grew 13% YoY;
• Ticketing was the strongest performer this quarter, as number of tickets sold grew 24% YoY.
Outlook
Given the developments in the third quarter, CM.com is comfortable to further specify its outlook. CM.com now expects:
• Q4 2023 gross profit growth to be at least 10% YoY;
• OPEX before restructuring cost over H2 2023 to decline approximately 25% YoY;
• Normalized EBITDA to be positive over H2 2023, which would be for the first time since H1 2021;
• Free cash flow to be structurally positive by H2 2024.
Message from the CEO
Today we released our Q3 2023 results, which are a confirmation of the success so far of our Path to Profitability strategy. CM.com again improved its profitability and acted decisively in lowering its OPEX. All this is in response to the rapidly changing macro-economic market circumstances in the last 12 months. As a result, CM.com reached an EBITDA positive state towards the end of the third quarter, an important mark in our financial roadmap towards 2026. After years of investing in our foundation, 2023 is all about optimizing the efficiency of our organization, to accommodate future growth.
The markets we operate in are sensitive to changing circumstances, but nevertheless are expected to grow further in the coming years. Many companies are still not communicating with their clients in an optimal way, something that is increasingly important nowadays for the survival of business models. CM.com continues to position itself in this field as a trusted, innovative partner that can accommodate the needs of our clients in all circumstances.
In Q3 2023 our gross margin and gross profit grew to all-time high levels, supported by topline growth in especially segments with high margin products. What stood out this quarter, was the performance in Ticketing. Museums, parcs and live events showed a pickup in the use of our tools and services. Furthermore, in SaaS, we launched our Gen AI tools last September. Since then, over 200.000 conversations have been supported by these tools. First analysis shows that in 73% of the conversations, a contact center agent directly used the answer generated through our Gen AI tool to respond to questions from customers. The level of satisfaction with the use of our AI chatbots increased by 40%. So that looks promising.
As CM.com continued to execute on its Path to Profitability, we further optimized our operational structure. This resulted in a steep decline in OPEX levels in Q3 2023, following further cost control measurements and a 16% decline YoY in our FTE numbers. The shift of our focus towards capitalizing upon our existing workforce, and optimizing our operational expenditure, has improved our resilience to be able to operate profitably in all market circumstances. As such, CM.com now expects OPEX levels over H2 2023 to be approximately 25% lower than H2 2022.
Overall, as proof points come through, we reiterate our guidance to be EBITDA positive over H2 2023 (normalized). That would be for the first time since H1 2021. Consequently we also reiterate our guidance to be free-cash-flow positive by H2 2024.
Jeroen van Glabbeek
CEO CM.com
