Hello. Thank you everyone for joining us today and welcome to Wishpond's 2022 fiscal second quarter financial results conference call. My name is Angelica, and joining me on the call today are Ali Tajskandar, Chairman, Founder, and CEO of Wishpond, and David Pais, the company CFO. This call is being recorded. We'll be having a question and answer session at the end of the call, which will be limited to analysts only. I trust that everyone has received a copy of our financial results press release that was issued earlier today. Listeners are also encouraged to download a copy of our quarterly financial statements and management discussion and analysis from sedar.com. Oops. There you go. Please note, portions of today's call, other than historical performance, include statements of forward-looking information within the meaning of applicable securities laws. These statements are made under the safe harbor provision of those laws.
Forward-looking statements involve unknowns and known risks, uncertainties, assumptions, and other factors, many of which are outside of Wishpond's control, that may cause the actual results, performance, or achievements to differ materially from the anticipated actual results, performance, or achievements implied by such forward-looking statements. These factors are further outlined in today's press release and in our management discussion and analysis. We provide forward-looking statements solely for the purpose of providing information about management's current expectations and plans relating to the future. We don't undertake or accept any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements to reflect any change in our expectations or any change in events, conditions, assumptions, or circumstances on which any such statement is based, except if it's required by law.
We use terms such as gross profit, gross margin, adjusted EBITDA, annualized revenue run rate, and monthly recurring revenue on this conference call, which are non-IFRS and non-GAAP measures. For more information on how we define these terms, please refer to the definitions set out in our management discussion and analysis. With that, let me turn the call over to Mr. Ali Tajskandar, Chairman and CEO.
Thank you very much, Angelica. Good day, everyone. We hope that you're all keeping safe and healthy. We truly appreciate everyone for joining us today. We are very pleased with our second quarter results, which proved to be the strongest quarter in the company's history, with revenue of over CAD 5 million in the quarter, representing 55% year-over-year growth compared to the same period last year. During the second quarter, we achieved two significant milestones. First, Wishpond surpassed CAD 20 million of annualized revenue run rate. Secondly, the company achieved positive cash flow from operating activities. I'm particularly proud of having achieved positive cash flow from operations in the second quarter, as that puts Wishpond in an elite class of software companies. Technology companies are known to burn lots of cash for many years before becoming cash flow positive.
Very rarely do you find a software company of our size with CAD 20 million in annualized revenue run rate that generated positive cash flow from operations and is also rapidly growing with 30%-40% organic growth. Wishpond truly is a unique, high-growth, profitable company, and we remain committed to delivering profitable growth in the future. Despite the current challenging business environment with high inflation, increasing interest rates, and recessionary concerns, thus far, we have not noticed any slowing down in the demand for our products. Our sales pipeline remains robust, and our revenue growth shows tremendous resilience despite the current uncertain economic conditions.
Wishpond has a diversified customer base of small and medium-sized businesses, and its healthy organic growth over the past year has largely been driven by investments in the company's sales and marketing teams, applying our sales-driven methodology to the acquisitions we've made and new product introductions. Our outlook continues to look promising for the second half of the year with increasing sales, improving margins, and positive cash flows. I will provide additional details on our outlook later on the call. First, I would like to turn it over to our CFO, David Pais, who will review the financial results for the second quarter. David?
Thank you, Ali. I'm pleased to report that we had very strong second quarter results for the three months ended June 30, 2022. Our second quarter 2022 results are as follows: Wishpond achieved record quarterly revenue of CAD 5.5 million during Q2 2022, compared to revenue of CAD 3.2 million generated during Q2 2021, an increase of 55%. Revenue growth in Q2 2022 is attributable to the company's expanded sales team, new product introductions, and acquisitions. Wishpond achieved gross profit of CAD 3.4 million in Q2 2022, compared to CAD 2.2 million during Q2 of 2021, representing an increase of 50%, which is driven by an increase in overall revenue. Wishpond's gross margin percentage in Q2 2022 was 67% compared to 69% in Q2 of 2021.
The gross margins are within the company's historical range of 65%-70%. The United States remains our largest and fastest-growing market, generating 69% of our total revenue in the quarter, with approximately 15% and 16% of revenue generated from Canada and the rest of the world, respectively. During Q2 2022, Wishpond achieved an operating loss of CAD 659 thousand compared to an operating loss of CAD 1.1 million in Q2 2021. The operating loss reflects continued investment in sales and lead generation, as well as in product development. Earnings before interest, tax and depreciation, or EBITDA, improved from negative CAD 1.3 million in Q2 2021 to negative CAD 527 thousand in Q2 2022.
During Q2 2022, Wishpond recorded an Adjusted EBITDA loss of CAD 192 thousand compared to an Adjusted EBITDA loss of CAD 320 thousand in Q2 2021. The improvements in EBITDA and Adjusted EBITDA are primarily driven by higher revenue, recent cost savings initiatives, and operational efficiencies achieved in the latter half of the quarter. In Q2 2022, Wishpond returned to net positive cash provided by operating activities of CAD 81 thousand compared to a cash burn from operating activities of CAD 802 thousand in Q2 2021. We continue to have a clean and healthy balance sheet. As of June thirtieth, 2022, Wishpond had CAD 2.5 million in cash and cash equivalents, and the company has no debt.
Wishpond has a CAD 6 million re-secured revolving operating line of credit facility with National Bank of Canada's Technology and Innovation Banking Group, which remains undrawn as of today. In summary, Wishpond is in a very strong financial position with a healthy balance sheet, solid monthly recurring revenue, and very good visibility on revenue and cash flow for the current year. Wishpond is able to continue to grow comfortably from its cash flow from operations without the need for any additional equity dilution or debt. I will now provide an update on our normal course issuer bid for share buyback program. On June 15, 2022, the company announced the renewal of its normal course issuer bid, or NCIB, was approved by the exchange. During the second quarter, the company did not make any share purchases under the NCIB.
In comparison, in the first quarter of 2022, the company purchased 130,100 common shares under the NCIB for aggregate consideration of CAD 157,265. The board of directors of Wishpond believes that the recent market prices of the company's common shares do not properly reflect the underlying value of such shares, and that the purchase of the shares would be a desirable use of corporate funds in the best interest of the company and its shareholders. Hence, we intend to reinitiate share purchases under the NCIB program in the coming months. I would now like to provide some additional commentary on our recent cost reduction initiatives and operational efficiencies.
I'm pleased to report that the company implemented several cost reduction and operational efficiencies during the second quarter designed to conserve cash, which have resulted in the company expecting to realize more than CAD 1 million in cost savings over the course of the next 12 months. The management team spent a considerable amount of time on this project, and we are very happy with the results of this effort so far. The following are some of the key cost-cutting initiatives. Since completing 5 acquisitions over the past 18 months, we have slowed down our rate of acquisition activity, and we also cut our corporate development costs relating to sourcing new acquisition targets. With fewer acquisitions, we were also able to reduce the company's legal and professional fees. We have implemented a hiring freeze in most areas of the company.
We have implemented a number of optimizations and improved workflows and procedures that allow us to maintain the size of the lead generation team, even as the number of account executives grow. The net result will be a lower amount of sales and lead gen expenses as a percentage of revenue. To optimize our lead gen capabilities, we have implemented AI or artificial intelligence technologies to run certain campaigns, thereby eliminating labor-intensive processes and costs. From a technology perspective, we were able to consolidate some of our subscription and software costs across our acquisitions. We have also optimized our AWS and cloud storage costs. We are committed to having a focused mindset on realizing cost efficiencies while keeping our foot on the pedal of our sales generation engine. The company's financial success is predicated on increasing our revenue while running the business cost effectively.
This concludes my financial update, and I will turn the call back over to Ali Tajskandar.
Thank you very much, David. I would now like to share with you some recent business updates. On July twelfth, 2022, the company announced the launch of our all-new Website Builder product that includes lead tracking and segmentation tools, personalization abilities, advanced forms and pop-ups, integration with Wishpond's email marketing tool, referral marketing, calendar functionality, pop-ups, and more. Every element of this groundbreaking Website Builder has been designed to help businesses generate leads and sales. The Website Builder is expected to increase customer retention, reduce churn, and increase customer satisfaction. On April twentieth, 2022, the company announced that the number of Winback's customer installations had increased by over 50% since we acquired the company. We are encouraged to find that certain customers prefer Winback because of the benefits of SMS over email or newsletters as a marketing tool, and helps them to build customer loyalty more easily.
We are working on several initiatives designed to maximize growth from Winback, such as adding a number of features to improve the customer onboarding process and increase product effectiveness. We are also integrating Winback into the Wishpond platform to encourage ease of cross-selling. We began accelerating the growth of Winback's customer base through our outbound sales engine and are speaking to several agencies about how we can partner with them to sell Winback. On April 1, 2022, the company completed the acquisition of certain assets and specific liabilities of Viral Loops Ltd. Viral Loops is a software as a service or SaaS company, which helps its customers design, create, and manage campaigns that result in higher referral visits and revenue for their clients.
In consideration for the Viral Loops acquisition, Wishpond provided a cash payment of $1,380,000 and a one-time, one-year performance earn-out that may be paid in cash or by the issuance of company's shares at the sole discretion of the company. The one-year earn-out will be based on the projected revenue of the business and is payable on quarterly basis. The Viral Loops integration has been progressing very well. We have started leveraging our sales and marketing as well as our R&D teams to enable more efficiencies and growth of that business. For example, we're beginning to integrate the Viral Loops product with Wishpond products to enable a higher average revenue per user bundled sale. We expect to begin realizing the results of these efforts in Q4 and onwards.
The product complements Wishpond's other products very well, and we will be making some specific announcements about Viral Loops product integration and product pricing plans in months ahead. We are proud of the Viral Loops team and welcome their creative energy as they begin to work with the rest of the Wishpond family. Viral Loops was our fifth acquisition since the company's public listing in December 2020. One of the reasons for doing a public listing was so that we could pursue an acquisition strategy. Our acquisition strategy has been a resounding success as it has broadened our product offering, boosted our revenues, and increased our customer base. Think about this. When we went public, we had approximately 2,000 customers, and we achieved CAD 7.9 million in annualized annual revenue in the year 2020.
Today, just over 18 months later, we have over 4,000 customers, and we have exceeded CAD 20 million in annualized revenue run rates. Our acquisition strategy is working, and it has complemented the company's organic growth very nicely. I would now like to take this time to talk about Wishpond's resilience against a range of recessionary impacts. We believe that Wishpond remains well-positioned for continued growth with increasing revenue and improving cash flows in Q3 and Q4. Our current sales pipeline is robust, and we have continued to achieve revenue growth despite the current turbulent macroeconomic environment. The success we are achieving indicates that our products and services are valuable tools for our customers who rely on Wishpond to generate leads and increase their sales, especially when operating in this uncertain business climate. Wishpond is all about helping small businesses grow. That's our purpose.
Big businesses have armies of online marketing specialists, designers, and programmers, and they have access to best-in-breed technology and plenty of financial resources, and trying to compete with them is very difficult. Wishpond is the platform that makes it easy to use online marketing to bring in new sales and leads without tons of resources and deep expertise in marketing. That's something that is valued in this market more than anything. In an economic slowdown, companies often reduce or freeze their budgets on their in-house marketing and sales staff or on individual fragmented marketing solutions. However, they still need to acquire new clients to keep their business afloat. Businesses looking to cut costs find value in Wishpond's all-in-one consolidated software platform, which costs a fraction of all the individual products it would replace.
Wishpond is an effective, low-cost alternative that is more likely to thrive in a recession. As I mentioned previously, Wishpond has a diverse customer base of more than 4,000 businesses with very little customer concentration and financial dependence in any one industry. We serve a wide variety of industries, which provides us with the ability to shift focus quickly if market conditions adversely affect any specific industries. In addition, our organic growth rate does not show any signs of slowing down, and we're getting more new clients than ever before. These clients are increasingly signing up for our annual 12-month terms, which provides us with further stability in case of any economic downturns. Furthermore, the cross-selling opportunities provided by our acquisitions also improves the stickiness of our platform and aids in retaining customers for longer periods of time.
Moreover, with the company's focus on profitable growth, Wishpond is scrutinizing all discretionary expenditures across the organization with the intent of optimizing operations, achieving cost saving synergies, and remaining cash flow positive for the second half of the year. The company embraces a low-cost structure with a virtual head office and a remote team, which allows Wishpond to operate with lower overhead costs. Wishpond expects to achieve record revenues with positive Adjusted EBITDA and cash flows in second half of the year, driven by increased capacity in company sales team, positive contributions from its acquisitions, increased bundling of its products and services, new product related revenues, and favorable seasonal effects in Q3 and Q4. In line with the company's focus on profitable growth, Wishpond will continue to scrutinize all discretionary expenditures across the organization with the intent of optimizing operations and achieving cost saving synergies.
The company has a clean balance sheet and is able to continue to fund the growth of its sales team and new product launches from cash flows from operations without having to raise any additional equity or debt capital. Wishpond expects its sales to benefit from seasonality in the second half of 2022. This is due to small and medium-sized business online marketing campaigns, contests, and promotions to maximize their revenue from the increase in consumer spending during the back-to-school, Thanksgiving, and holiday seasons. Wishpond's fundamentals remain extremely strong, and we are very positive on our future outlook. We don't see demand slowing down because of two major reasons. One, our organic revenue growth is driven by our outbound sales team. Last year, we increased the size of our sales team from 12 to 24 account executives.
This year, we are currently at 36 account executives, and we plan to have approximately 40-45 account executives by year-end. We are generating significant demand for our products by ourselves. The sales team's calendars are completely booked for demos with no slowdown in sales activity in sight. Two, we have a solution that is unique, integrated, and cost-effective, making it more appealing to small businesses than ever before. Instead of having anywhere between 3-6 different marketing related point solutions, small, medium-sized businesses would rather have just one solution from Wishpond. Furthermore, businesses keeping a close eye on their costs or looking to cut costs find Wishpond as a much cheaper alternative to an internal marketing person or a complement to an internal marketing person instead of expanding. We believe Wishpond is the marketing platform available for small, medium-sized businesses.
Both our existing customers, as well as the acquired customers, are benefiting from the range of online marketing options that we provide under one roof. We are very satisfied with the features and functionality of our overall platform. We've already successfully created integrations between the different products across the acquired businesses, and we've implemented cross-selling capabilities. We are now developing bundled pricing plans that bring the most value for our customers. Our development team is working hard to build additional integrations, single sign-on capability, and a single dashboard for all the products in one integrated platform. In terms of acquisitions, we do not expect to be making acquisitions at the same pace that we have been doing over the previous 18 months, especially given the current economic environment and the weakness in capital markets.
We previously evaluated approximately 400 opportunities as potential acquisition targets, and we continue to remain in contact with some of these targets and receive new inbound acquisition opportunities. Wishpond continues to experience strong performance across all its businesses with robust demand for its products. Based on current MRR trends, monthly recurring revenue trends, we are very optimistic about the outlook for 2022 and beyond. Before closing, I would like to comment on the recent decline in our share price. As everyone on the call is aware, our share price has experienced a decline since the beginning of the year. We do not believe this drop in our share price is warranted, given our fundamentals remain extremely strong, and we are very positive on our future outlook.
We believe the general poor capital market conditions are the primary cause for the weakening in our share price, and small cap tech stocks have suffered the worst in this market correction. In closing, I want to thank all the employees at Wishpond whose hard work continues to elevate the company to higher levels. We want to thank our customers who rely on us to help them with their digital marketing needs and growth. Also, I'd like to thank you all for joining us on this call today. We look forward to providing an update next quarter. Thank you. I will now hand it back to Angelica for questions.
Thank you, Ali. With that, we will now open the call to questions. Just a reminder that the questions will be limited to analysts only. Okay. The first question is from Gabriel Leung, KeyBanc Capital Markets. Please go ahead, Mr. Leung.
Hi there, thanks for taking my questions. Just a couple of things. First, Ali, I'm curious with the focus around you know, cost savings initiatives and implementing tech to improve the efficiency of your sales group, and still with the expectations though of growing organically by 30%-40% year-over-year, have you guys thought about you know, how your EBITDA margins might scale into calendar 2023? Obviously, you're targeting positive for the second half. I'm curious, what are some near- to mid-term EBITDA margin targets that we should be thinking about?
I don't think we've openly discussed any of those targets and we haven't given a specific guidance on EBITDA. Having said that, I think you can see the trend already that in Q2 our EBITDA improved significantly. You have to also keep in mind that coming out of Q1, April was kind of the weaker, and every month became stronger and stronger, and more of the cost efficiencies were put in place. The second half of the quarter, in terms of EBITDA, was even stronger, and we're already talking about the, you know, second half of the year to be cash flow positive, adjusted EBITDA positive and all of those things.
I think your question is a very good one, and it's something that we keep in mind all the time, which is we want to have the right balance of aggressive growth and making sure that we're financially responsible and profitable, right? That is going to be our focus going forward. Naturally, as we scale and the fixed costs don't scale at the same rate as the revenue that is picking up, we're gonna see two things happen. Our margins are gonna improve. Our margins are already, you know, compared to Q1, you see, you know, 6-7%, but we expect it to continue to improve and get above 70%. We also expect our EBITDA to improve as well.
To what extent for next year, you know, we're not giving specifics on that.
Gotcha. Thanks for that. Just one last quick thing. I just wanted to confirm, I know you guys had talked about implementing a hiring freeze, but at the same time though you are still planning to increase that sales rep count from 36 to call it 40-45. Is that still the case?
That is correct. What we're doing is we're very careful about increasing those people. It's not a black and white hiring freeze. We're kind of scrutinizing every single decision before making it. As an example, even that 45 target for account executives, previously we were talking about 45-50, and now we're seeing that, no, you know, we can find efficiencies with the same account executives bringing more revenue. We can do the same or even better than what we expected with 40-45 account executives. We have to be careful at the rate that we add these people to the company. Again, it goes back to your first question in terms of EBITDA.
We are still very much a growth story here, which means that even though we're very careful about our cash flow, we're gonna invest in areas, but we're more careful than ever before in what we invest in and if it makes sense or not. As an example, account management and support to service the clients that we've onboarded, you know, meeting sales targets and adding account executives to make that happen, are still gonna continue.
Gotcha. Thanks for the feedback and congrats on the progress.
Thank you very much.
Great. Okay. Our next question is from Daniel Rosenberg of Paradigm Capital. Please go ahead.
Thanks. Hi, Ali. Hi, David.
Hi, Daniel.
I wanted to ask about the cash flow. It was nice to see you turn positive and guide to more positive cash flow for the back half of the year. I just want to understand directionally, given you mentioned some seasonality as well as just general working capital changes, should we expect cash flow to scale, or is this gonna be a lumpy type line item? How do you see it going forward?
I think, you know, I'd like to ask David for his thoughts as well, but I'll share, you know, my thoughts on that first. The way we're operating right now is even excluding seasonal positive seasonal effects helping us, we expect to continue to be cash flow positive and deliver cash flow positive for the next half of the year. To continue the current trends and even in some of them accelerating that, seasonal effects are just gonna help us even that much more. David, anything else you wanna add to that?
Sure, Ali, and thanks, Daniel, for the question. In terms of cash flow, you know, we've generally talked about things like EBITDA and adjusted EBITDA. The good news when you go straight out of the cash flow statement is you can give a GAAP-based, you know, context to saying, "Listen, just look at my cash flow statement. My cash flows from operations are positive." Right? We wanted to highlight that because in previous quarters it was not.
Your comment on, you know, variability of working capital is a good one. It may or may not go up and down. So long as the profitability is there in the business, which, you know, it seems to be improving, you know, I think directionally, just like Ali said, we'll be good from cash flow from operations staying positive.
I think, you know, thinking about it, Daniel, the main thing for us is that it's not just what we tell the investors in the company and the broader market. It is a matter of making sure that the company is safe and set up for success long term. You know, there are a lot of different numbers in terms of EBITDA and adjusted EBITDA and cash from operations and this and that. At the end of the day, the number that I ask the team to report to me every Wednesday at 12:00 P.M. is how much money do we have in the bank account. You know, really pure and simple, that is the number that we're focused on seeing grow, not decline.
This is something that is part of our strategy going forward as well, and it's gonna continue improving.
Yeah. If I can make one more point. You know, the cash decline, if you look at quarter-to-quarter cash decline, all of that came from amounts that we spent on acquisitions or payments for earn-outs. Again, if you look at Q1 to Q2, any decline in cash balance came specifically from those transactions and not from cash flow from operations. We wanna highlight that very clearly. That says, listen, our business is really doing well. Revenue growth has increased. We're really keeping costs under control, and here's the results. The results are evident for everybody to see.
Thanks for that. To that end, it does sound like the past acquisitions are performing really well and achieving their targets. Just curious to hear, were there any surprises on your end that you saw, you know, now that some of these acquisitions are well integrated or even just newly acquired that are performing better than expected?
I think, Daniel, I think one thing that we were quite excited to see was we always had this mandate of making these acquisitions for financial reasons as well as strategic and have the cross-selling opportunity and everything else. What we validated also with our customers and through new bundled sales packages was that as we put these products together, let's say you're a small business that comes to us, and we say, "Listen, with our Website Builder, we can actually migrate you or redesign your website on Wishpond platform, on Wishpond Website Builder." You're a B2B kind of business, you need to send sales emails, and PersistIQ is gonna be bundled part of that as well. You want referral marketing capabilities, and that's gonna be from Viral Loops. You need some SMS marketing that comes from Winback, as an example.
All of those you get as part of your subscription to Wishpond. Seeing how well our customers are responding to that and the value that that is creating, allowing us to charge higher monthly prices for the software subscription alone, has been something that we expected but now we're validating and we're seeing, and it's super exciting to see. I think that's gonna be a huge factor going forward. The way to look at the acquisitions we've made so far, and hopefully in the future, is that they all need to have that multiplier effect that in addition to them themselves on their own being able to grow, they can help Wishpond as a whole become a stickier product, a faster-growing product, a higher average revenue per user product offering, and really the best solution for small businesses.
That is really being realized right now.
That's good to hear. And lastly for me before I pass the line, I was just curious around retention. Are there any patterns you're seeing in the types of customers or verticals that tend to be stickier versus some churn you're seeing? Just any characterization there.
Generally what we do see is that, you know, there's e-commerce companies and B2B businesses and service-based businesses. What we're seeing, well, not what we're seeing, but what we're intentionally doing is we're diversifying the new customer acquisitions that we have more than we did in the past year. With everything that was going on in the world with COVID, e-commerce businesses were doing the best, and we kind of focused on new customer acquisition around e-commerce more. Now, with businesses having opened up, now we're adding the B2B businesses and the rest of the service businesses more in that. Generally, with e-commerce businesses, some of them are quite small and, you know, they might be a Shopify store that just opened and, you know, they might not be as established and sometimes, you know, stickiness could be a problem.
Just the risk of the business itself not existing is higher than, let's say, a B2B business or a more established service-based business. We do see that. In terms of trends within our business though, we haven't seen any choppiness, we haven't seen a negative trend. It actually has been improving over time. That's something that now with, you know, some of the bundled packages that in the future we will announce, we expect it to improve even further.
Thanks for taking my questions.
You're welcome.
Thanks, Daniel. The next question is from Chris Thompson of PI Financial. Please go ahead, Chris.
Great. Thanks. Ali, did I just hear you say your churn is declining? Did I get that right?
Overall, yes.
Okay, good. Happy to hear you guys being so positive on the outlook. Can you give us any anecdotal evidence? Is MRR tracking higher in July and August versus June?
That's more a question of what I can disclose. David, what have you already talked about? I think some of the things we talked about in the pre-preview of the earnings. We already talked about that every month we were hitting new MRR records. Coming into Q3, I guess you can really, you know, put the pieces together. We're almost more than half the way through Q3, and we're still bullish on Q3 and Q4. I think that tells you everything you need to know.
Okay. Just, Ali, you mentioned, you know, more clients are signing up for 12 months terms, which is really great. Do you have the ability or the willingness to break out, you know, self-managed versus fully managed revenue maybe in future quarters? I don't know if that's a question for both you and Dave.
I mean, in our investor presentations, generally, we've given some percentages about what the breakdown is. We're gonna make some updates to that, and we'll definitely share that. Yeah. Yeah.
Okay. Fair enough. Just, maybe I will keep it one, then I'll get back into the queue. Just the headcount, I think you're at 265 at the end of Q1. You know, it sounds like you're, you know, maybe a hiring freeze or some natural attrition. Like, where's your headcount at the end of Q2, maybe where are you now? Just kinda help us, you know, understand your kinda OpEx and your OpEx for headcount.
Yeah. Very good question. David, do you wanna take that one?
Sure, yeah. At the end of Q2, we had about 270 people, so it's a marginal increase. Keep in mind that we brought in, on April one, we completed the Viral Loops acquisition, and so we brought in a new team. Net-net, if you add the Viral Loops people, it wasn't a very big team. That's about twelve people. You know, we've actually scaled back slightly on our hiring and we're keeping a close watch on that.
More or less, I think the same headcount, all things considered. I would say average cost per employee is probably lower because some of the natural attrition was on some of the higher salaried employees versus some of the, you know, account management team members and other team members that might be lower costs.
Okay. On the account execs, you only added 1 net in the quarter, I suppose there was some attrition there. Like, just help us understand how seasoned are those 36 bodies now and, you know, is it gonna take time for a bunch of them to get up to speed so they can convert, you know, demos to, you know, customer acquisition?
Yeah. The ones that we have right now, I think almost all of them are fully ramped up. We don't have that problem, and we're now hiring more people to first get to around that 40 account executives. There's a new cohort that is gonna start soon.
Okay. Good luck. Keep it up, guys. Thank you.
Thank you, Chris.
Thanks.
Thanks, Chris. The next question is from Neil Bakshi of Canaccord Genuity. Please go ahead.
Hi, congratulations on the strong quarter.
Thank you.
I guess the first question, you know, you mentioned that, just following off of what Chris was asking about the more customers signing up for annual contracts, and in your formal remarks. Just wondering if you could provide more color on, you know, some of the size of these potential customers. Are you seeing just a general uptrend in terms of the size of businesses as you're shifting, you know, within the SMB space?
It is comparable to what it was before, slightly increasing, yeah. It goes back to that comment of diversifying the customer base. We're seeing slight uptick in terms of the sizes of businesses, but very much still centered around small- and medium-sized businesses.
Right. Within that space, you know, as you're bundling more of the services and driving higher MRR, is it part of the intention to go after potentially larger customers within that SMB market? Is that, does that seem to be, you know, as you're chasing after, you know, 500, 600 and then beyond in terms of MRR? Is that part of the intended kinda growth strategy for the outbound sales?
Well, I think that's part of it, and there are some really interesting partnership opportunities as well that we're looking at some larger clients. That is part of the strategy. It really is a mix, right? There's no silver bullet, really. It's as they say a thousand lead bullets. Primarily, I think what is very interesting is that, again, you know, when you think about, there are millions of small businesses that are underserved. We're serving 4,000. We're doing a great job with them. We're growing very fast.
There's so much underserved opportunity, and we're such a good solution for this, for this group that I think the best opportunity that we see is continuing to roll it out and reach out to more of the base. Naturally, we will also balance that with some larger customers as well. That's just expected.
Okay. Just one last question on that one. I guess, are you seeing anything in terms of, you know, sales cycle lengths with, you know, potentially larger customers or just generally comparable sized customers? In terms of securing and converting to revenue compared to, say, you know, earlier in the year, just trying to understand in this market if there's some-
Yeah.
more time being taken.
Not really. I mean, the sales cycle for our base is very short. You know, we're talking about 3-4 weeks to closing. The only thing that maybe we noticed a little bit was in July it took an extra week to close because some people were on vacation on average. Then in August is actually, you know, on the other side. Maybe they came back from vacation. But again, we did really well in and all of those. Overall, I guess if your question is, are you seeing more hesitance from the customers we're talking to? No, we're not seeing that.
Okay. All right. Great. Thank you, and congratulations again.
Thank you, Neil.
Thank you. Okay, our last question is from Christian Sgro of Eight Capital. Please go ahead.
Ali and David, thanks for taking my questions today.
Thank you.
The first one I wanted to jump into is on the core product value. I know the Wishpond platform has grown a lot through M&A and with integrations. I'm curious on your core go-to-market efforts, is that selling, you know, the broad Wishpond suite as a self-serve package? Is that where you start customers? That's probably where you're getting into bundling and other creative pricing options. What's the default offering right now for customers when you go to market?
We will share more details on that, but, you know, a little bit preliminary on that is that, with new customers, if they come to us inbound, a lot of times the default is self-serve, and I'm talking about Wishpond. If you talk about, you know, Winback or PersistIQ and all that is different, so it's not all the same. But the biggest sales engine that we have is on the Wishpond, you know, historic company. New customer acquisition through outbound, a lot of times the default is fully managed, which itself is a hybrid of self-serve and some services bundled together.
Now, what we've started shifting towards is these packages, the bundled packages that you rightly assume are a bundle of different platforms that we've integrated and we've acquired, that then the starting point actually is self-serve, and services are add-ons to that. That dynamic is being shifted, and it's gonna be a gradual rollout, you know, initially putting fewer account executives and then over a course of three or four months, switching all account executives to that.
Okay. Probably can't think of the business as narrow-mindedly as, you know, self-serve versus fully managed. But from your comments earlier, Ali, it sounds like, you know, fully managed is still the longer term contract, higher dollar value and stickier part of the platform, right? Is part of the strategy to push that?
Well, no, not really. Actually, the self-serve packages, the bundled packages that we're rolling out are also for the same 12 months. Average deal sizes are comparable to the initial first year, and we expect LTV, long-term value, to be substantially higher actually, because they're a lot more sticky. You know, again, think about it. If your website is running on Wishpond and all the elements that I talked about are on Wishpond and you wanna cancel, it is a lot more difficult than if it is not tied into your back office and the business processes with those softwares and, you know, if you weren't using the software as actively. So we expect LTV to be much higher. We expect margins to be substantially higher. You know, the software packages are, you know, reasonably sized for us.
They're not too low. They're still a fraction of what it would have cost them to get point solutions.
That's really helpful, Ali. I didn't appreciate all that before, and thanks for the color.
No problem.
That's all for me. Thanks for taking my questions.
Thank you, Christian.
Thank you. There are no further questions, so I'll now pass the call back to Ali Tajskandar for closing remarks.
Thank you very much, Angelica. In closing, I wanna thank everyone once again for joining our call today. Thank you to analysts for your questions. As always, very insightful. I look forward to you know, getting into more discussions. Everyone, please stay safe and healthy. We look forward to providing you with more updates this year. Thank you very much.
Thanks, everyone.