mdf Commerce Inc Q1 2022 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Nick Agostino - Laurentian Bank Securities - Analyst : Congrats on the transformative deal. I guess my first question is, obviously, some impressive growth that this acquisition is bringing when you look at 2020 versus 2021. So look, can you maybe just talk about the history? Maybe give us a sense of the historical CAGR growth, maybe a five-year growth rate? That would be helpful.

Question: Nick Agostino - Laurentian Bank Securities - Analyst : Okay. Yes. When you have it, if you could either call it out or send me an e-mail, that would be great. Secondly, just trying to understand, obviously some revenue synergies, I think you said $15 million. And if I understood the multiple pay of 4.6 times, that includes the $15 million synergy, just to clarify?

Question: Nick Agostino - Laurentian Bank Securities - Analyst : Yes. Okay. So my question is, is there anything that -- just to kind of wrap my head around the synergy gains, obviously, cross-selling, they're more larger focused, you are more smaller market focused. Is there anything off their platform that you can -- that you see as value-add that you can turn around and offer to your clients and vice versa? In other words, anything that either party was doing that may be offered a little bit of competitive advantage or value proposition that you don't currently have? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 11, 2021 / 9:00PM, MDF.TO - Q1 2022 mdf Commerce Inc Earnings Call

Question: Nick Agostino - Laurentian Bank Securities - Analyst : Okay. But is there any product feature sets that they're bringing to the table that you currently don't have or vice versa?

Question: Nick Agostino - Laurentian Bank Securities - Analyst : Okay. Now when I look at the multiple pay, the 4.6x, as you know there was a transaction out in Europe that was done at a similar level as well. And I'm just wondering, was this particular transaction, was there any competition in getting this deal done? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 11, 2021 / 9:00PM, MDF.TO - Q1 2022 mdf Commerce Inc Earnings Call

Question: Nick Agostino - Laurentian Bank Securities - Analyst : Okay. And my last question, just maybe shifting gears to discuss Aldi. I think during the course of the pandemic in the U.K., you guys called out a slowing of implementation because of COVID. Now we're clearly seeing the U.K.'s reopening the economy and what have you. How is the implementation? Are you going to start to see an acceleration as far as getting into the targeted 1,000 stores? And any update on the timeline for getting that completed? I'll leave there.

Question: Kevin Krishnaratne - Desjardins Securities, Inc. - Analyst : Congrats on a very intriguing acquisition. Just the first question just on the revenue and the cost synergies. If you can just help us understand how to think about how does that actually scale over the next 3 years? Is it more backend loaded, front end? How -- or is it linear? Any of the thoughts there?

Question: Kevin Krishnaratne - Desjardins Securities, Inc. - Analyst : Okay. Awesome. That's very helpful on both those questions there. Kind of related to my next question, if I think about looking at the $23 million that Periscope gave, you're guiding sort of $33 million, can -- just to clarify, the -- how to think about the transaction revenue versus SaaS? How do we think about how that has evolved, that mix? And obviously, volume's driving the transaction. But just how do we think about the breakdown of that revenue? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 11, 2021 / 9:00PM, MDF.TO - Q1 2022 mdf Commerce Inc Earnings Call

Question: Kevin Krishnaratne - Desjardins Securities, Inc. - Analyst : Okay. Got it. And so -- but I guess if you're thinking about -- you've got the -- your thoughts on the guidance or the outlook for the $33 million. Is that mainly -- how do we think about that growth being driven from SaaS versus just pure volume? You made a $20 billion worth of volume, I think I saw it in the press release. Is that then -- is that really the main driver?

Question: Kevin Krishnaratne - Desjardins Securities, Inc. - Analyst : Yes. Okay. That's sort of what I was looking for. The last is sort of a bigger picture question. I'm looking at your Slide 7, where you've got the North American sort of U.S. government agency spend $1.8 trillion, $20 billion in spend. Can you talk about maybe the landscape, the competitive landscape? You also mentioned the increased government digitization. So maybe just help us understand what the landscape looks like now? You obviously have first-mover advantage as you've talked about with the B2G shopping experience that is provided. So any just thoughts on how you're thinking about the landscape competitively and the opportunity, whether that's legacy switching over to digital platforms like yourself?

Question: Kevin Krishnaratne - Desjardins Securities, Inc. - Analyst : No. That's helpful, Luc. Very intriguing deal, and good luck.

Question: Richard Tse - National Bank Financial - Analyst : Yes. Thank you. So congratulations team on Fonds de, it looks like a very long process. If you look at slide 14, I was wondering if you can maybe just quickly walk through the broad economics of the sort of the two models, the ePro SaaS and the ePro Transaction? Just trying to understand maybe a very simplistic transaction, just get the flow of what -- how the margins look on each of those respective models?

Question: Richard Tse - National Bank Financial - Analyst : Yes. No, I appreciate that. And in terms of Slide 8, you showed the agency solutions. And I'm just kind of curious to see, from a product set perspective, what that mix is? Is it proportionately leaning towards one or the other? And what you can kind of share with us at a high level, what the mix of revenue may be?

Question: Richard Tse - National Bank Financial - Analyst : Okay. And just a last one for me. If you look at, let's say, the immediate addressable market that you think you can pursue? Like, what's the market share environment look like? What's your share? And maybe what's the share of some of your -- maybe the top two other competitors in the marketplace? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 11, 2021 / 9:00PM, MDF.TO - Q1 2022 mdf Commerce Inc Earnings Call

Question: Richard Tse - National Bank Financial - Analyst : Okay. That's great. Congrats on pulling off this big deal.