Release Date: March 27, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Pivotree Inc (TSXV:PVT) achieved a record high adjusted EBITDA of $1.7 million in Q4 2024, marking a significant improvement since going public in 2020.

• The company successfully reduced annualized costs by approximately $8.5 million, contributing to improved financial performance.

• Pivotree Inc (TSXV:PVT) added 1.4 million SKUs to its SKU Build repository, bringing the total to around 2 million, using automation tools at a low cost.

• The company reported a strong quarter for TCV bookings in its Managed and IP Solutions segment, up 14% year-over-year.

• Pivotree Inc (TSXV:PVT) has filled key roles, including a new Chief Revenue Officer and Chief Product Officer, enhancing focus on revenue and product development.

Negative Points

• Revenue for Q4 2024 was $18.2 million, down 13% year-over-year, primarily due to a decline in legacy managed services.

• The legacy managed services segment continues to decline, with a 30% decrease in revenue for the year.

• Gross margin decreased to 44% in Q4 2024 from 46.7% the previous year, indicating pressure on profitability.

• The company experienced a decline in TCV bookings for Q4 2024, with a recorded $9.8 million, down from previous quarters.

• Pivotree Inc (TSXV:PVT) consumed $1.6 million in cash during the quarter, attributed to timing of working capital and restructuring payments.

Q & A Highlights

• Warning! GuruFocus has detected 2 Warning Signs with TSXV:PVT.

Q: Bill, in your CEO letter, you mentioned planned reductions in product investment areas that could provide additional upside in the future. Can you elaborate on specific areas or products you're referencing? A: Certainly, the focus will be on Control Tower and SKU Build. These are the products we're emphasizing, while de-emphasizing some past initiatives.

Q: How should we think about gross margins moving forward, considering the cost savings evident in COGS and OpEx this quarter? A: With operational changes and better controls, we expect gross margins to remain between 44% and 46%. There might be modest upside due to tighter operational controls.

Q: How has the trade dispute impacted conversations with clients so far? A: So far, it hasn't significantly impacted client conversations. While there's uncertainty, it hasn't explicitly affected budgets or spending decisions.

Q: Could you discuss the timeline for shifting attention to growth and whether this plan depends on the macro environment? A: While macroeconomics impact every business, we're focusing on managing costs and leveraging our solutions to offer potential cost savings to clients. We don't anticipate significant changes in growth due to the macro environment.